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OMB APPROVAL |
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OMB Number:
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3235-0059 |
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January 31, 2008 |
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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. )
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Filed by the Registrant
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Kimberly-Clark Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) 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) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o 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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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (11-01) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
March 14, 2006
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Thomas J. Falk |
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Chairman of the Board and |
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Chief Executive Officer |
TO OUR STOCKHOLDERS:
On behalf of the Board of
Directors and management of Kimberly-Clark Corporation, I
cordially invite you to the Annual Meeting of Stockholders to be
held on Thursday, April 27, 2006, at 11:00 a.m. at the
Four Seasons Resort and Club, which is located at 4150 North
MacArthur Boulevard, Irving, Texas.
At the Annual Meeting,
stockholders will be asked to elect four directors for a
three-year term, approve the selection of the Corporations
independent auditors and vote on four stockholder proposals.
These matters are fully described in the accompanying Notice of
Annual Meeting and proxy statement.
It is important that your
stock be represented at the meeting regardless of the number of
shares you hold. You are encouraged to specify your voting
preferences by marking and dating the enclosed proxy card,
voting electronically using the Internet or using the telephone
voting procedures.
If you plan to attend the
meeting, please check the card in the space provided or so
indicate electronically or by telephone. This will assist us
with meeting preparations and will enable us to expedite your
admittance. If your shares are not registered in your own name
and you would like to attend the meeting, please ask the broker,
trust, bank or other nominee that holds your shares to provide
you with evidence of your share ownership, which will enable you
to gain admission to the meeting.
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Sincerely, |
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Thomas J. Falk |
KIMBERLY-CLARK CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 2006
The Annual Meeting of Stockholders of KIMBERLY-CLARK CORPORATION
will be held at the Four Seasons Resort and Club, which is
located at 4150 North MacArthur Boulevard, Irving, Texas, on
Thursday, April 27, 2006, at 11:00 a.m. for the
following purposes:
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1. |
To elect four directors for a three-year term to expire at the
2009 Annual Meeting of Stockholders; |
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To approve the selection of Deloitte & Touche LLP as
the Corporations independent auditors; |
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To vote on four stockholder proposals which may be presented at
the meeting; and |
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To take action upon any other business which may properly come
before the meeting or any adjournment thereof. |
Stockholders of record at the close of business on
February 27, 2006 are entitled to notice of and to vote at
the meeting and any adjournment thereof.
It is important that your shares be represented at the meeting.
I urge you to sign, date and promptly return the enclosed proxy
card in the enclosed business reply envelope, or vote using the
Internet or telephone.
The accompanying proxy statement also is being used to solicit
voting instructions for the shares of the Corporations
common stock which are held by the trustees of the
Corporations employee benefit and stock purchase plans for
the benefit of the participants in the plans. It is important
that each participant in the plans signs, dates and returns the
voting instruction card, which is enclosed with the proxy
statement, in the business reply envelope provided, or indicates
his or her preferences using the Internet or telephone.
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By order of the Board of Directors. |
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Timothy C. Everett |
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Vice President and Secretary |
P.O. Box 619100
Dallas, Texas 75261-9100
March 14, 2006
TABLE OF CONTENTS
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ii
March 14, 2006
PROXY STATEMENT
INTRODUCTION
The accompanying proxy is solicited on behalf of the Board of
Directors of Kimberly-Clark Corporation for use at the Annual
Meeting of Stockholders to be held on April 27, 2006 and at
any adjournment thereof. We are first mailing this proxy
statement and the accompanying proxy to holders of the
Corporations common stock on March 14, 2006.
Who May Vote
Each stockholder of record at the close of business on
February 27, 2006 will be entitled to one vote for each
share registered in the stockholders name. As of that
date, there were outstanding 461,083,650 shares of common
stock of the Corporation.
How You May Vote
You may vote in person by attending the meeting, by completing
and returning a proxy by mail, or by using the Internet or
telephone. To vote your proxy by mail, mark your vote on the
enclosed proxy card, then follow the instructions on the card.
To vote your proxy using the Internet or telephone, see the
instructions on the proxy form and have the proxy form available
when you access the Internet website or place your telephone
call.
The named proxies will vote your shares according to your
directions. If you sign and return your proxy but do not make
any of the selections, the named proxies will vote your shares
for the election of directors, for approval of the selection of
the Corporations independent auditors and against approval
of the stockholder proposals.
How You May Revoke or Change Your Vote
You may revoke your proxy before the time of voting at the
meeting in any of the following ways:
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by mailing a revised proxy to the Secretary of the Corporation |
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by changing your vote on the Internet website |
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by using the telephone voting procedures |
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by voting in person at the meeting |
Confidential Voting
Proxy cards are received by the Corporations independent
proxy processing agent, and the vote is certified by independent
Inspectors of Election. Proxy cards and ballots that identify
the vote of stockholders and plan participants will be kept
confidential, except as necessary to meet legal requirements, in
cases where stockholders and participants request disclosure or
write comments on their cards, or in a contested matter
involving an opposing proxy solicitation. During the proxy
solicitation period, the Corporation will receive daily
tabulation reports from the independent proxy processing agent,
but these reports provide only aggregate data. In addition, the
agent will identify stockholders who fail to vote so that the
Corporation may contact them and request they do so.
Costs of Solicitation
The Corporation will bear the cost of preparing, printing and
delivering materials in connection with this solicitation of
proxies including the cost of the proxy solicitation and the
expenses of brokers, fiduciaries and other nominees in
forwarding proxy material to beneficial owners. In addition to
the use of mail and electronic delivery, solicitation may be
made by telephone or otherwise by regular employees of the
Corporation. The Corporation has retained D. F. King &
Co., Inc. to aid in the solicitation at a cost of approximately
$14,000 plus reimbursement of
out-of-pocket expenses.
Votes Required/ Voting Procedures
A majority of the shares of the Corporations common stock,
present in person or represented by proxy, shall constitute a
quorum for purposes of the Annual Meeting. Directors shall be
elected by a plurality of the votes present in person or
represented by proxy at the Annual Meeting and entitled to vote
on the election of directors. In all matters other than the
election of directors, the affirmative vote of a majority of
shares present in person or represented by proxy at the Annual
Meeting and entitled to vote on the subject matter shall be the
act of the stockholders. Abstentions are treated as votes
against a proposal and broker non-votes will not be considered
present and entitled to vote.
Dividend Reinvestment and Stock Purchase Plan
If a stockholder is a participant in the Corporations
Automatic Dividend Reinvestment and Stock Purchase Plan, the
proxy card represents the number of full shares in the
stockholders account in the plan, as well as shares
registered in the stockholders name.
Employee Benefit Plans
The Corporation also is sending this proxy statement and voting
materials to participants in various employee benefit and stock
purchase plans of the Corporation. The trustee of each plan, as
the stockholder of record of the shares of the common stock of
the Corporation held in the plans, will vote whole shares of
stock attributable to each participants interest in the
plans in accordance with the directions the participant gives
or, if no directions are given by the participant, in accordance
with the directions of the respective plan committee.
Electronic Delivery of Proxy Materials and Annual Report
The Notice of Annual Meeting and proxy statement and the
Corporations 2005 Annual Report are available on our
website at www.kimberly-clark.com. Instead of receiving copies
of the proxy statement and annual report in the mail,
stockholders may elect to receive an
e-mail with a link to
these documents on the Internet. Receiving your proxy materials
online saves the Corporation the cost of producing and mailing
documents to your home or business and gives you an automatic
link to the proxy voting site.
Stockholders of Record. If your shares are registered in
your own name, to enroll in the electronic delivery service, go
directly to our transfer agents website at
www.econsent.com/kmb anytime and follow the instructions.
Beneficial Stockholders. If your shares are not
registered in your name, to enroll in the electronic delivery
service, check the information provided to you by your bank or
broker, or contact your bank or broker for information on
electronic delivery service.
Plan Participants. If you are a participant in one or
more of the Corporations employee benefit or stock
purchase plans, to enroll in the electronic delivery service, go
directly to our transfer agents website at
www.econsent.com/kmb anytime and follow the instructions.
2
Delivery of One Proxy Statement and Annual Report to a Single
Household to Reduce Duplicate Mailings
Each year in connection with the Corporations Annual
Meeting of Stockholders, the Corporation is required to send to
each stockholder of record a proxy statement and annual report,
and to arrange for a proxy statement and annual report to be
sent to each beneficial stockholder whose shares are held by or
in the name of a broker, bank, trust or other nominee. Because
many stockholders hold shares of the Corporations common
stock in multiple accounts or share an address with other
stockholders, this process results in duplicate mailings of
proxy statements and annual reports. Stockholders may avoid
receiving duplicate mailings and save the Corporation the cost
of producing and mailing duplicate documents as follows:
Stockholders of Record. If your shares are registered in
your own name and you are interested in consenting to the
delivery of a single proxy statement or annual report, you may
contact Stockholder Services by mail at P.O. Box 612606,
Dallas, Texas 75261-2606, by telephone at
972-281-1522 or by
e-mail at
stockholders@kcc.com.
Beneficial Stockholders. If your shares are not
registered in your own name, your broker, bank, trust or other
nominee that holds your shares may have asked you to consent to
the delivery of a single proxy statement or annual report if
there are other Kimberly-Clark stockholders who share an address
with you. If you currently receive more than one proxy statement
or annual report at your household, and would like to receive
only one copy of each in the future, you should contact your
nominee.
Right to Request Separate Copies. If you consent to the
delivery of a single proxy statement and annual report but later
decide that you would prefer to receive a separate copy of the
proxy statement or annual report, as applicable, for each
stockholder sharing your address, then please notify us or your
nominee, as applicable, and we or they will promptly deliver
such additional proxy statements or annual reports. If you wish
to receive a separate copy of the proxy statement or annual
report for each stockholder sharing your address in the future,
you may also contact Stockholder Services by mail at P.O.
Box 612606, Dallas, Texas 75261-2606, by telephone at
972-281-1522 or by
e-mail at
stockholders@kcc.com.
PROPOSAL 1. ELECTION OF
DIRECTORS
General Information
The Board of Directors is divided into three classes, as
required by the Corporations Restated Certificate of
Incorporation (the Charter). Directors of one class
are elected each year for a term of three years. As of the date
of this proxy statement, the Board of Directors consists of
twelve members, including Abelardo E. Bru who was elected to the
Board by the Board of Directors effective as of
September 1, 2005 and John R. Alm who was elected to the
Board by the Board of Directors effective as of
February 22, 2006. Four of the directors have terms which
expire at this years Annual Meeting (Class of 2006), four
have terms which expire at the 2007 Annual Meeting (Class of
2007) and four have terms which expire at the 2008 Annual
Meeting (Class of 2008).
The four nominees for director set forth on the following pages
are proposed to be elected at this years Annual Meeting to
serve for a term to expire at the 2009 Annual Meeting of
Stockholders (Class of 2009) and until their successors are
elected and have qualified. Should any nominee become unable to
serve, proxies may be voted for another person designated by
management. All nominees have advised the Corporation that they
will serve if elected. The remaining eight directors will
continue to serve as directors for the terms set forth on the
following pages.
3
Certain Information Regarding Directors and Nominees
The names of the nominees for the Class of 2009 and of the other
directors continuing in office, their ages as of the date of the
Annual Meeting, the year each first became a director, their
principal occupations during at least the past five years, other
directorships held by each as of March 1, 2006 and certain
other biographical information are set forth on the following
pages by Class, in the order of the next Class to stand for
election.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For a Three-Year Term Expiring at the
2009 Annual Meeting of Stockholders
(Class of 2009)
Dennis R. Beresford, 67, Director since 2002
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Ernst & Young Executive Professor of Accounting,
University of Georgia |
Mr. Beresford has served as Ernst & Young
Executive Professor of Accounting at the J.M. Tull School of
Accounting, Terry College of Business, University of Georgia
since 1997. From 1987 to 1997, he served as the Chairman of the
Financial Accounting Standards Board. Prior to that,
Mr. Beresford held various positions at the accounting firm
of Ernst & Young. He serves on the board of directors
and audit committee of Legg Mason, Inc.
Abelardo E. Bru, 57, Director since 2005
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Retired Vice Chairman, PepsiCo, Inc. |
Mr. Bru retired as Vice Chairman of PepsiCo, a food and
beverage company, in 2005. He joined PepsiCo in 1976.
Mr. Bru served from 1999 to 2003 as President and Chief
Executive Officer and in 2003 to 2004 as Chief Executive Officer
and Chairman of Frito-Lay Inc., a division of PepsiCo. Prior to
leading Frito-Lay, Mr. Bru led PepsiCos largest
international business, Sabritas Mexico, as President and
General Manager from 1992 to 1999. Mr. Bru is a member of
the board of directors of Office Depot Inc. and the Education is
Freedom Foundation.
Thomas J. Falk, 47, Director since 1999
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Chairman of the Board and Chief Executive Officer |
Mr. Falk was elected Chairman of the Board and Chief
Executive Officer of the Corporation in 2003 and President and
Chief Executive Officer in 2002. Prior to that, he served as
President and Chief Operating Officer since 1999. Mr. Falk
previously had been elected Group President-Global Tissue, Pulp
and Paper in 1998, where he was responsible for the
Corporations global tissue businesses. Earlier in his
career, Mr. Falk had responsibility for the
Corporations North American Infant Care, Child Care and
Wet Wipes businesses. Mr. Falk joined the Corporation in
1983 and has held other senior management positions in the
Corporation. He also serves on the board of directors of Centex
Corporation, Grocery Manufacturers of America, Inc. and the
University of Wisconsin Foundation, and serves as a governor of
the Boys & Girls Clubs of America.
4
Mae C. Jemison, M.D., 49, Director since 2002
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President, BioSentient Corporation |
Dr. Jemison is founder and President of The Jemison Group,
Inc., a technology consulting company, and BioSentient
Corporation, a medical devices company. She chairs The Earth We
Share international science camp. Dr. Jemison served as a
professor of Environmental Studies at Dartmouth College from
1995 to 2002. From 1987 to 1993, she served as a National
Aeronautics and Space Administration (NASA) astronaut.
Dr. Jemison serves on the board of directors of Scholastic
Corporation, Valspar Corporation, Gen-Probe Incorporated and The
Dorothy Jemison Foundation for Excellence and is a member of the
National Academy of Sciences Institute of Medicine.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Term Expiring at the
2007 Annual Meeting of Stockholders
(Class of 2007)
Pastora San Juan Cafferty, 65, Director since
1976
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Professor Emerita, University of Chicago |
Ms. Cafferty has served since 2005 as a Professor Emerita
at the University of Chicagos School of Social Service
Administration where she had been a member of the faculty since
1971. Ms. Cafferty is a director of Harris Financial Corp.
(formerly Bankmont Financial Corp.), a private company, Waste
Management, Inc. and the Peoples Energy Corporation and its
subsidiaries, and a trustee of the Lyric Opera Association and
Rush-Presbyterian-St. Lukes Medical Center in Chicago.
Claudio X. Gonzalez, 71, Director since 1976
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Chairman of the Board and Managing Director, Kimberly-Clark
de Mexico, S.A. de C.V. |
Mr. Gonzalez has served as Chairman of the Board and
Managing Director of Kimberly-Clark de Mexico, S.A. de C.V., an
equity company of the Corporation, since 1973. He was employed
by the Corporation in 1956 and by Kimberly-Clark de Mexico,
S.A., the predecessor of Kimberly-Clark de Mexico, S.A. de C.V.,
in 1957. Mr. Gonzalez is a director of Kellogg Company,
General Electric Company, The Investment Company of America,
Home Depot Inc., The Mexico Fund, Grupo ALFA, Grupo Carso, Grupo
Mexico, Grupo Televisa and America Movil.
Linda Johnson Rice, 48, Director since 1995
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President and Chief Executive Officer, Johnson Publishing
Company, Inc. |
Mrs. Johnson Rice has been President and Chief Executive
Officer of Johnson Publishing Company, Inc., a multi-media
company, since 2002. She joined that company in 1980, became
Vice President in 1985 and was elected President and Chief
Operating Officer in 1987. Mrs. Johnson Rice is a director
of Bausch & Lomb Incorporated, MoneyGram International,
Inc. and Omnicom Group, Inc.
5
Marc J. Shapiro, 58, Director since 2001
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Retired Vice Chairman, J. P. Morgan Chase & Co. |
Mr. Shapiro retired in 2003 as Vice Chairman of J. P.
Morgan Chase & Co., a financial services company.
Before becoming Vice Chairman of J. P. Morgan Chase &
Co. in 1997, Mr. Shapiro was Chairman, President and Chief
Executive Officer of Chase Bank of Texas, a wholly-owned
subsidiary of J. P. Morgan Chase & Co., from 1989 until
1997. He now serves as a consultant to J. P. Morgan
Chase & Co. as a non-executive Chairman of its Texas
operations. Mr. Shapiro is a member of the board of
directors of Burlington Northern Santa Fe Corporation and a
trustee of Weingarten Realty Investors. He also serves on the
boards of M.D. Anderson Cancer Center, Baylor College of
Medicine, the Hobby Center for the Performing Arts, Rice
University and BioHouston.
Term Expiring at the
2008 Annual Meeting of Stockholders
(Class of 2008)
John R. Alm, 60, Director since February 2006
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Retired President and Chief Executive Officer, Coca-Cola
Enterprises Inc. |
Mr. Alm retired as President and Chief Executive Officer of
Coca-Cola Enterprises Inc., a beverage company, in December
2005. He had been Chief Executive Officer since January 2004 and
President and Chief Operating Officer since January 2000.
Mr. Alm joined Coca-Cola Enterprises Inc. in 1992 and held
numerous other senior management positions until his retirement.
He is a member of the board of directors of Washington Group
International, Inc.
John F. Bergstrom, 59, Director since 1987
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Chairman and Chief Executive Officer, Bergstrom
Corporation |
Mr. Bergstrom has served as Chairman and Chief Executive
Officer of Bergstrom Corporation, Neenah, Wisconsin, for more
than the past five years. Bergstrom Corporation owns and
operates automobile sales and leasing businesses and a credit
life insurance company in Wisconsin. Mr. Bergstrom is a
director of the Wisconsin Energy Corporation and its
wholly-owned subsidiary Wisconsin Electric Power Company,
Sensient Technologies Corp., Banta Corporation, and Midwest Air
Group, Inc. He also is a member of the board of trustees of
Marquette University and the Theda Clark Hospital Foundation.
Robert W. Decherd, 55, Director since 1996
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Chairman of the Board, President and Chief Executive Officer,
Belo Corp. |
Mr. Decherd has served as Chairman of the Board and Chief
Executive Officer of Belo Corp., a broadcasting and publishing
company, since 1987. Mr. Decherd became President of that
company in 1994, and previously served as President from 1985
through 1986. He has been a director of Belo Corp. since 1976.
Mr. Decherd is a member of the Advisory Council for the
Harvard University Center for Ethics and the Professions, and
serves on the Media Security and Reliability Council as part of
President Bushs Homeland Security initiative. He is
co-chair of the Dallas Chief Executive Officer Roundtable.
6
G. Craig Sullivan, 66, Director since 2004
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Retired Chairman and Chief Executive Officer, The Clorox
Company |
Mr. Sullivan retired as Chairman and Chief Executive
Officer of The Clorox Company, a consumer products company, in
December 2003. He joined The Clorox Company in 1971 and held a
number of senior sales and management positions during his
career, culminating in his election as Chief Executive Officer
and Chairman of the Board in 1992. Mr. Sullivan also serves
as a director of Mattel, Inc. In addition, he is a director of
The American Ireland Fund, and serves on the capital campaign
committee for St. Anthonys Foundation in
San Francisco.
Compensation of Directors
The Corporations objectives for director compensation are
to remain competitive with the compensation paid to directors of
comparable companies, to keep pace with changes in best
corporate governance practices in such compensation, and to
reinforce the Corporations practices of encouraging stock
ownership. In 2003, the Nominating and Corporate Governance
Committee recommended to the Board the current director
compensation policies following its determination that the
policy met these objectives. The current policies have been in
place for calendar years 2004 and 2005, and are expected to be
the same for 2006.
In 2005, directors who were not officers or employees of the
Corporation or any of its subsidiaries, affiliates or equity
companies (Outside Directors) received (1) an
annual cash retainer of $70,000 payable pro rata quarterly in
advance and (2) a grant of 2,000 restricted share units.
Outside Directors who join the Board during a calendar year
receive a pro-rated portion of the annual retainer and grant of
restricted share units. Outside Directors who were also chairmen
of the Audit Committee, Management Development and Compensation
Committee or Nominating and Corporate Governance Committee on
January 3, 2005 each received an additional grant of
300 restricted share units, and the Lead Director received
an additional grant of 500 restricted share units. In addition,
the Corporation reimbursed Outside Directors for expenses
incurred as a result of attending Board or committee meetings.
Other than the cash retainer, grants of restricted share units,
dividends on restricted share units and participation in the
programs described above, no Outside Director received any other
compensation or perquisites from the Corporation for services as
a director in 2005.
Restricted share units are not shares of common stock of the
Corporation. Rather, restricted share units represent the right
to receive an amount, payable in shares of common stock of the
Corporation, equal to the value of a specified number of shares
of common stock of the Corporation within 90 days following
the restricted period. The restricted period for the restricted
share units begins on the date of grant and expires on the date
the Outside Director retires from or otherwise terminates
service on the Board. During the restricted period,
(1) restricted share units may not be sold, assigned,
transferred or otherwise disposed of, or mortgaged, pledged or
otherwise encumbered and (2) Outside Directors are credited
with dividends, equivalent in value to those declared and paid
on shares of the Corporations common stock, on all
restricted share units granted to them.
The aggregate value of the compensation paid to each Outside
Director in 2005, based on the closing price of the
Corporations common stock on the date of grants of
restricted share units and the payment dates of dividends on
restricted share units, was: Mr. Beresford ($226,658);
Mr. Bergstrom ($206,943); Mr. Bru ($76,787);
Ms. Cafferty ($227,207); Mr. Decherd ($240,351);
Dr. Jemison ($206,943); Mrs. Rice ($206,943);
Mr. Shapiro ($226,523); and Mr. Sullivan ($201,438).
7
A director who is not an Outside Director does not receive any
compensation for services as a member of the Board or any
committee, but is reimbursed for expenses incurred as a result
of the services.
The Board of Directors unanimously recommends a vote FOR
the election of the four nominees for director.
CORPORATE GOVERNANCE
Since 1996, the Corporations By-Laws have provided that a
majority of the directors be independent directors
(Independent Directors). In addition, the Corporate
Governance Policies adopted by the Board provide independence
standards consistent with the listing standards of the New York
Stock Exchange (NYSE). The relevant portions of the
Corporate Governance Policies are attached as Appendix A.
The nominees for director are such that immediately after the
election of the nominees to the Board of Directors, a majority
of all directors holding office will be Independent Directors.
The Board has determined that all directors and nominees are
Independent Directors, except for Thomas J. Falk and Claudio X.
Gonzalez.
The Corporations independent Board of Directors helps
ensure good corporate governance and strong internal controls.
The Corporation is in compliance with all corporate governance
requirements of the NYSE, Securities and Exchange Commission and
Sarbanes-Oxley Act of 2002.
Board of Directors and Board Committees
The Board of Directors met six times in 2005. All of the
incumbent directors attended in excess of 75 percent of the
total number of meetings of the Board and committees of the
Board on which they served.
Although the Corporation does not have a formal policy with
respect to director attendance at Annual Meetings, since 1997,
all nominees and continuing directors have attended the Annual
Meetings. Ten of the Corporations directors then in
office, which constituted all nominees and continuing directors,
attended the Corporations 2005 Annual Meeting.
The standing committees of the Board include the Audit
Committee, Management Development and Compensation Committee,
Nominating and Corporate Governance Committee and Executive
Committee. In compliance with applicable NYSE corporate
governance rules, the Board has adopted charters for the Audit,
Management Development and Compensation, and Nominating and
Corporate Governance Committees. These charters are available on
the Corporations website at www.kimberly-clark.com.
Stockholders may also contact Stockholder Services, P.O.
Box 612606, Dallas, Texas 75261-2606 or call
(972) 281-1522 to obtain copies of the charters without
charge. The Audit Committee charter is also attached as
Appendix B.
8
The following table identifies the membership, functions, and
number of meetings in 2005 of each of the standing committees:
|
|
|
|
|
|
|
Name of Committee |
|
|
|
Number of |
and Members |
|
Principal Functions of the Committee |
|
Meetings in 2005 |
|
|
|
|
|
|
AUDIT(1)
Dennis R. Beresford, Chair(2)
John R. Alm(3)
John F. Bergstrom
Mae C. Jemison, M.D.
|
|
Oversees (i) the quality and integrity of the
financial statements; (ii) compliance with ethical policies
contained in the Code of Conduct, and legal and regulatory
requirements; (iii) the independence, qualification and
performance of the Corporations independent auditors; and
(iv) the performance of the Corporations internal
auditors
Selects, subject to stockholder approval, and
engages and oversees the work of the Corporations
independent auditors
Reviews the scope of the audits and audit findings,
including any comments or recommendations of the
Corporations independent auditors
Establishes policy in connection with internal audit
programs
Pre-approves all audit and non-audit services
provided by the independent auditors
Reviews risk assessment and management policies |
|
|
9 |
|
|
MANAGEMENT DEVELOPMENT AND COMPENSATION(4)
Marc J. Shapiro, Chair
Abelardo E. Bru(5)
Pastora San Juan Cafferty
G. Craig Sullivan
|
|
Establishes and administers the policies governing
annual compensation and long-term compensation, including stock
option awards, restricted share awards and restricted share unit
awards
Oversees (i) leadership development for senior
management and future senior management candidates; and
(ii) key organizational effectiveness and engagement
policies
Reviews diversity programs and key metrics |
|
|
6 |
|
9
|
|
|
|
|
|
|
Name of Committee |
|
|
|
Number of |
and Members |
|
Principal Functions of the Committee |
|
Meetings in 2005 |
|
|
|
|
|
NOMINATING AND CORPORATE GOVERNANCE(6)
Linda Johnson Rice, Chair
Abelardo E. Bru(5)
Pastora San Juan Cafferty(7)
G. Craig Sullivan
|
|
Oversees the process by which individuals are
nominated to become Board members
Oversees matters of corporate governance, including
developing and recommending to the Board changes to Corporate
Governance Policies
Advises the Board on (i) Board organization,
membership, function, performance and compensation;
(ii) committee structure and membership; and
(iii) policies and positions regarding significant
stockholder relations issues
Reviews director independence standards and makes
recommendations to the Board with respect to the determination
of independence of directors
Monitors and recommends improvements to the
practices and procedures of the Board
Reviews stockholder proposals and considers
responses or actions with respect to such proposals |
|
|
5 |
|
|
EXECUTIVE
Robert W. Decherd, Chair
John F. Bergstrom
Thomas J. Falk
Claudio X. Gonzalez
|
|
Exercises all the powers of the Board to direct the
business and affairs of the Corporation between meetings of the
Board |
|
|
4 |
(8) |
|
|
(1) |
Each Audit Committee member is an Independent Director and
satisfies the financial literacy requirements of the NYSE. |
|
(2) |
The Board has determined that Mr. Beresford satisfies the
requirements for an audit committee financial expert
under the rules and regulations of the Securities and Exchange
Commission. Mr. Beresford participated in two additional
conference calls as Chairman of the Audit Committee to preview
earnings press releases during 2005. |
|
(3) |
Mr. Alm was appointed a member of the Audit Committee
effective as of February 22, 2006. |
|
(4) |
Each Management Development and Compensation Committee member is
an Independent Director. |
|
(5) |
Mr. Bru was appointed a member of the Management
Development & Compensation Committee and the Nominating
and Corporate Governance Committee effective September 15,
2005. |
|
(6) |
Each Nominating and Corporate Governance Committee member is an
Independent Director. |
|
(7) |
Ms. Cafferty was the Chairman of the Nominating and
Corporate Governance Committee through April 27, 2005.
Mrs. Johnson Rice succeeded her in that position on
April 28, 2005. |
|
(8) |
Includes three actions taken during 2005 by unanimous written
consent of the Executive Committee on matters that previously
had been reviewed by the Board. |
Director Nominee Criteria and Process
The Board of Directors is responsible for approving candidates
for Board membership. The Board has delegated the screening and
recruitment process to the Nominating and Corporate
10
Governance Committee, in consultation with the Chairman of the
Board and Chief Executive Officer. The Nominating and Corporate
Governance Committee believes that the criteria for director
nominees should ensure effective corporate governance, support
the Corporations strategies and businesses, account for
individual director attributes and the effect of the overall mix
of those attributes on the Boards effectiveness, and
support the successful recruitment of qualified candidates for
the Board.
Qualified candidates for director are those who, in the judgment
of the Nominating and Corporate Governance Committee, possess
all of the personal attributes and a sufficient mix of the
experience attributes described below to assure effective
service on the Board. Personal attributes of a Board candidate
considered by the Nominating and Corporate Governance Committee
include: leadership, ethical nature, contributing nature,
independence, interpersonal skills, and effectiveness.
Experience attributes of a Board candidate considered by the
Nominating and Corporate Governance Committee include: financial
acumen, general business experience, industry knowledge,
diversity of view points, special business experience and
expertise.
The Nominating and Corporate Governance Committee may receive
recommendations for Board candidates from various sources,
including the Corporations directors, management and
stockholders.
The Corporate Secretarys office, at the request of the
Nominating and Corporate Governance Committee, researches the
qualifications of recommended candidates and reports its
findings to the Chairman of the Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance
Committee periodically evaluates the qualifications of
recommended Board candidates.
When a vacancy occurs on the Board, the Nominating and Corporate
Governance Committee recommends to the Board a nominee to fill
the vacancy. As provided in the Corporations Charter, the
Board elects a new director when a vacancy occurs between Annual
Meetings of Stockholders. The Nominating and Corporate
Governance Committee also annually evaluates and recommends to
the Board nominees for election as directors at the
Corporations Annual Meeting of Stockholders.
The Nominating and Corporate Governance Committee has retained a
search firm to assist the Committee in identifying and
recruiting director candidates meeting the criteria specified by
the Committee.
Stockholder Nominations for Directors
The Nominating and Corporate Governance Committee considers
nominees recommended by stockholders as candidates for election
to the Board of Directors. A stockholder wishing to nominate a
candidate for election to the Board at the Annual Meeting is
required to give written notice to the Secretary of the
Corporation of his or her intention to make a nomination. The
notice of nomination must be received by the Corporation not
less than 50 days nor more than 75 days prior to the
stockholders meeting, or if the Corporation gives less
than 60 days notice of the meeting date, the notice of
nomination must be received within 10 days after the
meeting date is announced. The notice of nomination is required
to contain information about both the nominee and the
stockholder making the nomination, including information
sufficient to allow the Nominating and Corporate Governance
Committee to determine if the candidate meets the criteria for
Board membership described above. The Corporation may require
that the proposed nominee furnish other information to determine
that persons eligibility to serve as a director. A
nomination that does not comply with the above procedure will
not be considered for presentation at the Annual Meeting, but
will be considered by the Nominating and Corporate Governance
Committee for any vacancies arising on the Board between Annual
Meetings in accordance with the process described above in
Director Nominee Criteria and Process.
11
Stockholder Communications to Directors
The Board of Directors has established a process by which
interested stockholders may communicate with the Board. That
process can be found at www.kimberly-clark.com.
Stockholders may send written correspondence to the Board in the
care of the Lead Director:
|
|
|
Lead Director |
|
Kimberly-Clark Corporation |
|
P. O. Box 619100 |
|
Dallas, Texas 75261-9100 |
Other Corporate Governance Matters
Corporate Governance Policies. The Board of Directors
adopted Corporate Governance Policies in 1994, which have been
amended from time to time in accordance with changes in rules
and regulations and developing governance practices. These
policies guide the Corporation and the Board on matters of
corporate governance, including director responsibilities, Board
committees and their charters, director independence, director
qualifications, director compensation and evaluations, director
orientation and education, director access to management, Board
access to outside financial, business and legal advisors, and
management development and succession planning. These policies
are available on the Corporations website at
www.kimberly-clark.com.
Stockholders may also contact Stockholder Services, P.O.
Box 612606, Dallas, Texas 75261-2606 or call
(972) 281-1522 to obtain a copy of the policies without
charge.
Code of Conduct. The Corporation has a Code of Conduct
that applies to all of the Corporations directors,
executive officers and employees, including the chief executive
officer, chief financial officer, and the principal accounting
officer and controller. The Code of Conduct is available on the
Corporations website at
www.kimberly-clark.com.
Stockholders may also contact Stockholder Services, P.O.
Box 612606, Dallas, Texas 75261-2606 or call
(972) 281-1522 to obtain a copy of the Code of Conduct
without charge.
Lead Director. Mr. Decherd served as Lead Director
in 2005. The Lead Director chairs executive session meetings of
non-management directors and serves as Chairman of the Executive
Committee, among other responsibilities. The non-management
directors are scheduled to meet in executive session without the
presence of management at least quarterly.
Committee Authority to Retain Independent Advisors. Each
of the Audit, Management Development and Compensation, and
Nominating and Corporate Governance Committees has the authority
to retain independent advisors and consultants, with all fees
and expenses to be paid by the Corporation.
Whistleblower Procedures. The Audit Committee has
established procedures for (1) the receipt, retention and
treatment of complaints received by the Corporation regarding
accounting, internal accounting controls or auditing matters,
and (2) the confidential and anonymous submission by the
Corporations employees and others of concerns regarding
questionable accounting or auditing matters. These procedures
are available on the Corporations website at
www.kimberly-clark.com.
In 2005, the Corporation introduced a toll-free,
around-the-clock Code
of Conduct Line which allows employees and others to voice their
concerns anonymously. Information on how to access the line is
available on the Corporations website at
www.kimberly-clark.com.
Chief Compliance Officer. Ronald D. Mc Cray is the Senior
Vice President Law and Government Affairs and Chief
Compliance Officer of the Corporation. The Chief Compliance
Officer oversees the Corporations compliance program,
reports to the Audit Committee on the programs
effectiveness, provides periodic reports to the Board, and works
closely with various compliance functions to provide
coordination and sharing of best practices across the compliance
groups.
12
Disclosure Committee. The Corporation has established a
disclosure committee composed of members of management to assist
the Corporation in fulfilling its obligations to maintain
disclosure controls and procedures, and to coordinate and
oversee the process of preparing the Corporations periodic
securities filings.
No Executive Loans. The Corporation does not extend loans
to executive officers or directors and has no such loans
outstanding.
Stockholder Rights Plan. The Board has adopted the
following policy statement on stockholder rights plans:
Kimberly-Clark does not have a poison pill or
stockholder rights plan. If Kimberly-Clark were to adopt a
stockholder rights plan, the Board would seek prior stockholder
approval of the plan unless, due to timing constraints or other
reasons, a majority of independent directors of the Board
determines that it would be in the best interests of
stockholders to adopt a plan before obtaining stockholder
approval. If a stockholder rights plan is adopted without prior
stockholder approval, the plan must either be ratified by
stockholders or must expire, without being renewed or replaced,
within one year. The Nominating and Corporate Governance
Committee shall review this policy statement periodically and
report to the Board on any recommendations it may have
concerning the policy.
Charitable Contributions. The Nominating and Corporate
Governance Committee has adopted guidelines for the review and
approval of charitable contributions by the Corporation or any
foundation controlled by the Corporation to organizations or
entities of which a member of the Board of Directors or an
executive officer is or may be affiliated.
PROPOSAL 2. APPROVAL OF
AUDITORS
The Audit Committee of the Board of Directors has selected
Deloitte & Touche LLP as the independent registered
public accounting firm to audit the financial statements of the
Corporation for 2006, subject to ratification by the
stockholders. If the stockholders do not approve the selection
of Deloitte & Touche LLP, the selection of other
independent auditors will be considered by the Audit Committee.
Deloitte & Touche LLP have been the independent
auditors for the Corporation since 1928.
Representatives of Deloitte & Touche LLP are expected
to be present at the Annual Meeting with the opportunity to make
a statement if they desire to do so, and will be available to
respond to questions.
Principal Accounting Firm Fees
The aggregate fees (excluding value added taxes) billed to the
Corporation and its subsidiaries for the fiscal years ended
December 31, 2005 and 2004 by the Corporations
principal accounting
13
firm, Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu and their respective affiliates
(collectively, Deloitte), were:
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
2004 |
|
|
|
|
|
Audit Fees(a)
|
|
$ |
8,616,000 |
|
|
$ |
8,677,000 |
|
Audit-Related Fees(b)
|
|
|
769,000 |
|
|
|
2,266,000 |
|
Tax Fees(c)
|
|
|
2,502,000 |
|
|
|
3,678,000 |
|
All Other Fees
|
|
|
0 |
|
|
|
0 |
|
|
|
|
(a) |
|
Includes fees for statutory audits, comfort letters, attest
services, consents, assistance with and review of Securities and
Exchange Commission filings and other related matters. These
fees include an audit of internal control over financial
reporting pursuant to Section 404 of the Sarbanes-Oxley Act
of 2002. |
|
(b) |
|
2005 fees include work with respect to employee benefit plans,
due diligence assistance and other matters. 2004 fees include
$1,501,000 for work related to the Neenah Paper, Inc. spin-off. |
|
(c) |
|
Includes fees for expatriate tax compliance of $1,476,000 in
2005 and $2,288,000 in 2004. During 2005, expatriate tax work
was transferred to another accounting firm. |
Audit Committee Approval of Audit and Non-Audit Services
All audit and non-audit services provided by Deloitte to the
Corporation must be pre-approved by the Audit Committee. The
Audit Committee utilizes the following procedures in
pre-approving all audit and non-audit services provided by
Deloitte. At or before the first meeting of the Audit Committee
each year, the Corporations Vice President and Controller
prepares a detailed memorandum outlining the audit services to
be provided by Deloitte together with the related fees. In
addition, the business and staff units of the Corporation
prepare individual requests for non-audit services to be
provided by Deloitte during the year. These requests describe
the services to be provided, the estimated cost of such
services, why the requested service is not inconsistent with the
independence rules of the Securities and Exchange Commission,
and why it is appropriate to have Deloitte provide such
services. The Corporations Vice President and Controller
reviews and summarizes the individual non-audit service requests
and fees (separately describing audit-related services, tax
services and other services) to be provided by Deloitte. Before
each subsequent meeting of the Committee, the Vice President and
Controller prepares an additional memorandum that includes
updated information regarding approved services and highlights
any new audit and non-audit services to be provided by Deloitte.
All new non-audit services to be provided are described in
individual requests for services. The Audit Committee reviews
these memoranda and the individual requests for non-audit
services and approves the services described therein if such
services are acceptable to the Committee.
To ensure prompt handling of unexpected matters, the Committee
delegates to the Chairman of the Audit Committee the authority
to amend or modify the list of audit and non-audit services and
fees; provided, however, that such additional or amended
services may not affect Deloittes independence under
applicable Securities and Exchange Commission rules. The
Chairman reports action taken to the Committee at the next
Committee meeting.
All Deloitte services and fees in 2005 were pre-approved by the
Audit Committee.
The Board of Directors unanimously recommends a vote FOR
approval of this selection.
PROPOSAL 3. STOCKHOLDER
PROPOSAL REGARDING CLASSIFIED BOARD
Mr. Nick Rossi, P.O. Box 249, Boonville, California
95415, owning 3,000 shares of the Corporations common
stock, has given notice that he or his designee intends to
present for action at the Annual Meeting the resolution set
forth below. The Board of Directors opposes such stockholder
proposal for the reasons set forth below the proposal.
14
Proxies solicited by management will be voted against the
stockholder proposal below unless stockholders specify a
contrary choice in their proxies.
Stockholder Proposal
In accordance with applicable rules of the Securities and
Exchange Commission, we have set forth the stockholders
proposal below:
3 Elect Each Director Annually
RESOLVED: Shareholders request that our Directors take the
necessary steps, in the most expeditious manner possible, to
adopt and implement annual election of each director. This would
include that our director elections completely transition from
the current staggered system to 100% annual election of each
director in one election cycle if practicable. Also to
transition solely through direct action of our board if this is
practicable.
The Safeway 2004 definitive proxy is one example of converting
from a 100% staggered system to a 100% annual election of each
director system in one election cycle. Southwest Airlines began
transition to annual election of each director solely through
direct action by the Southwest Airlines board in 2005.
Nick Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted
this proposal.
Thirty-three (33) shareholder proposals on this topic
achieved an impressive 66% average yes vote in 2005 through late
September. The Council of Institutional Investors www.cii.org,
whose members have $3 trillion invested, recommends adoption of
this proposal topic.
|
|
|
Progress Begins with One Step |
The reason to take the above RESOLVED step is reinforced by
viewing our overall corporate governance vulnerability. For
instance in 2005 it was reported (and corresponding concerns are
noted):
|
|
|
|
|
The Corporate Library, an independent investment research firm
in Portland, Maine rated our company: |
|
|
|
D in Board Composition. |
|
D in Shareholder Responsiveness. |
|
|
|
|
|
One director, Mr. Claudio Gonzalez was designated a problem
director by The Corporate Library because he chaired the
committee that set executive pay at Home Depot, which received a
CEO Compensation rating of F. |
|
|
We had no Independent Chairman Independent oversight
concern. |
|
|
Shareholders were only allowed to vote on individual directors
once in
3-years
Accountability concern. |
|
|
An awesome 80% shareholder vote was required to make certain key
changes Entrenchment concern. |
|
|
Cumulative voting was not permitted. |
Additionally:
|
|
|
|
|
Our full Board met only 6-times in a full year
Commitment concern. |
|
|
Six directors were allowed to hold from 4 to 13 director
seats each Over-extension concern. |
|
|
Our lead director was allowed to have an additional link to our
company Independence concern. |
This list of deficiencies reinforces the reason to adopt the
initial RESOLVED statement of this proposal.
15
Our directors should be comfortable with this proposal because
our unopposed directors typically need only one vote for
election out of tens of millions of shares.
Arthur Levitt, Chairman of the Securities and Exchange
Commission, 1993-2001 said:
In my view its best for the investor if the entire board
is elected once a year. Without annual election of each director
shareholders have far less control over who represents them.
|
|
|
Take on the Street by Arthur Levitt |
Elect Each Director Annually
Yes on 3
Response of the Corporation to Stockholder Proposal
The Board of Directors unanimously recommends a vote against
this proposal for the reasons set forth below.
Kimberly-Clark has a history of strong corporate governance.
Many of the Corporations corporate governance practices
long predate the recent Securities and Exchange Commission and
NYSE rule changes. Ten of our 12 Board members are independent
as determined using standards consistent with the rules and
regulations of the Securities and Exchange Commission and NYSE.
The Corporation has had formal Corporate Governance Policies in
place since 1994, an independent Lead Director since 2002 and
independent Board Committees for more than 20 years. The
Board consistently reviews the Corporations Corporate
Governance Policies and practices to ensure that the Corporation
remains at the forefront of corporate governance best practices.
In fact, the Corporation was recently cited as one of only
33 companies receiving the highest global governance
ranking from Governance Metrics International, a leading
independent governance rating organization.
The classified board structure promotes continuity and stability
at a company because it ensures that a majority of the board
will always have prior experience with the company. Directors
who have experience with the Corporation and knowledge about its
business and affairs are a valuable resource and are best
positioned to pursue long-term strategies and make decisions
that are in the best interests of the Corporation and its
stockholders. A classified board also helps the Corporation
attract and retain highly qualified directors willing to commit
the time and resources necessary to understand the Corporation,
its operations and its competitive environment.
The Board believes that the Corporations classified board
structure continues to be in the best interests of the
Corporation and its stockholders. Leading corporate legal and
financial advisors believe that classified boards are among the
most effective defenses against unfair hostile takeovers. An
entity seeking control of a target company is more likely to
initiate discussions with the board because the entity would be
unable to replace the entire board in a single election. With
staggered elections, at least two annual stockholder meetings
would be required to effect a change in control of the Board of
Directors. This dynamic has become more useful today in
countering the renewed use of the proxy fight by hostile,
short-term oriented investors. A classified board thereby
increases the Boards opportunity to negotiate with
potential acquirers and thus to maximize shareholder value.
Finally, classified boards promote director independence because
directors elected for multi-year terms can make balanced
decisions that are not influenced by hostile short-term oriented
investors. The directors of Kimberly-Clark recognize their
accountability to stockholders and will uphold their fiduciary
duties to the Corporation and its stockholders regardless of how
often they stand for election.
The Board unanimously recommends that the stockholders
vote AGAINST the adoption of this proposal.
16
PROPOSAL 4. STOCKHOLDER
PROPOSAL REGARDING ADOPTION OF GLOBAL
HUMAN RIGHTS STANDARDS BASED ON INTERNATIONAL LABOR
CONVENTIONS
The Comptroller of the City of New York, as custodian and
trustee of the New York City Employees Retirement System,
the New York City Police Pension Fund, the New York City Fire
Department Pension Fund, and the New York City Teachers
Retirement System and custodian of the New York City Board of
Education Retirement System, 1 Centre Street, New York, New York
10007-2341 (the Funds), owning an aggregate amount
of 1,460,235 shares of the Corporations common stock,
has given notice that he intends to present for action at the
Annual Meeting the resolution set forth below. The Board of
Directors opposes such stockholder proposal for the reasons set
forth below the proposal.
Proxies solicited by management will be voted against the
stockholder proposal below unless stockholders specify a
contrary choice in their proxies.
Stockholder Proposal
In accordance with applicable rules of the Securities and
Exchange Commission, we have set forth the Funds proposal
below:
KIMBERLY-CLARK CORPORATION
GLOBAL HUMAN RIGHTS STANDARDS
Submitted by William C. Thompson, Jr., Comptroller,
City of New York, on behalf of the Boards of Trustees of the New
York City Pension Funds
|
|
|
Whereas, Kimberly-Clark Corporation currently has
extensive overseas operations, and |
|
|
Whereas, reports of human rights abuses in the overseas
subsidiaries and suppliers of
U.S.-based corporations
has led to an increased public awareness of the problems of
child labor, sweatshop conditions, and the denial of
labor rights in U.S. corporate overseas operations, and |
|
|
Whereas, corporate violations of human rights in these
overseas operations can lead to negative publicity, public
protests, and a loss of consumer confidence which can have a
negative impact on shareholder value, and |
|
|
Whereas, a number of corporations have implemented
independent monitoring programs with respected human rights and
religious organizations to strengthen compliance with
international human rights norms in subsidiary and supplier
factories, and |
|
|
Whereas, many of these programs incorporate the
conventions of the International Labor Organization
(ILO) on workplace human rights, and the United
Nations Norms on the Responsibilities of Transnational
Corporations with Regard to Human Rights (UN Norms),
which include the following principles: |
|
|
|
|
1. |
All workers have the right to form and join trade unions and to
Bargain collectively. (ILO Conventions 87 and 98; UN Norms,
section D9). |
|
|
2. |
Workers representatives shall not be the subject of
discrimination and shall have access to all workplaces necessary
to enable them to carry out their representation functions. (ILO
Convention 135; UN Norms, section D9). |
|
|
3. |
There shall be no discrimination or intimidation in employment.
Equality of opportunity and treatment shall be provided
regardless of race, color, sex, religion, political opinion,
age, nationality, social origin or other distinguishing
characteristics. (ILO Conventions 100 and 111;UN Norms, section
B2). |
17
|
|
|
|
4. |
Employment shall be freely chosen. There shall be no use of
force, including bonded or prison labor. (ILO Conventions 29 and
105; UN Norms, section D5). |
|
|
5. |
There shall be no use of child labor. (ILO Convention 138; UN
Norms, section D6), and, |
|
|
|
Whereas, independent monitoring of corporate adherence to
these internationally recognized principles is essential if
consumer and investor confidence in our companys
commitment to human rights is to be maintained, |
|
|
Therefore, be it resolved that the shareholders request
that the company commit itself to the implementation of a code
of conduct based on the aforementioned ILO human rights
standards and United Nations Norms on the Responsibilities
of Transnational Corporations with Regard to Human Rights, by
its international suppliers and in its own international
production facilities, and commit to a program of outside,
independent monitoring of compliance with these standards. |
Response of the Corporation to Stockholder Proposal
The Board of Directors unanimously recommends a vote against
this proposal for the reasons set forth below.
Although the Board agrees with the principles espoused by the
proponent relative to human rights in employment, the Board does
not believe that adoption of this proposal is in the best
interests of the Corporation and its stockholders. Stockholders
may be interested to know that the Corporation received a
similar proposal last year, which received support from less
than eight percent of the votes cast.
The Corporation has a long-standing and well-recognized record
of support for the rights of its employees with emphasis placed
on the importance of their health and safety. The Corporation
unequivocally prohibits discrimination on the basis of race,
color, sex, sexual orientation, age, religion, national origin,
disability and other categories. It is committed to conducting
business according to the highest ethical standards and in full
compliance with applicable laws in every country in which it
operates. The Corporations Code of Conduct, as described
above in Corporate Governance Other Corporate
Governance Matters Code of Conduct, provides a
uniform set of workplace standards and principles that apply to
the worldwide operations of the Corporation and its affiliates.
The Corporations policies and procedures have consistently
reflected its position on human rights in the workplace.
Suppliers, vendors and contractors of the Corporation are
expected to meet similar standards.
The Board believes the Corporations Code of Conduct and
its business practices address the substantive areas covered by
the proposal, and that its existing monitoring processes
effectively ensure compliance with the business principles and
human rights standards advocated by the proponent. In addition,
the Corporations compliance with applicable laws is
periodically reviewed by federal, state and local government
agencies that are empowered to perform reviews. The Board
believes that third party monitoring of the Corporation and its
suppliers would require expenditure beyond any benefit which
reasonably could be expected, and is not in the best interests
of stockholders.
The Board unanimously recommends that the stockholders
vote AGAINST the adoption of this proposal.
PROPOSAL 5. STOCKHOLDER
PROPOSAL REGARDING MAJORITY VOTING
The United Brotherhood of Carpenters, 101 Constitution Avenue,
NW, Washington, D.C. 20001, owning 8,200 shares of the
Corporations common stock, has given notice that it
intends to present
18
for action at the Annual Meeting the resolution set forth below.
The Board of Directors opposes such stockholder proposal for the
reasons set forth below the proposal.
Proxies solicited by management will be voted against the
stockholder proposal below unless stockholders specify a
contrary choice in their proxies.
Stockholder Proposal
In accordance with applicable rules of the Securities and
Exchange Commission, we have set forth the stockholders
proposal below:
Director Election Majority Vote Standard Proposal
RESOLVED: That the shareholders of Kimberly-Clark
Corporation (Company) hereby request that the Board
of Directors initiate the appropriate process to amend the
Companys governance documents (certificate of
incorporation or bylaws) to provide that director nominees shall
be elected by the affirmative vote of the majority of votes cast
at an annual meeting of shareholders.
Supporting Statement: Our Company is incorporated in
Delaware. Delaware law provides that a companys
certificate of incorporation or bylaws may specify the number of
votes that shall be necessary for the transaction of any
business, including the election of directors. (DGCL,
Title 8, Chapter 1, Subchapter VII, Section 216).
The law provides that if the level of voting support necessary
for a specific action is not specified in a corporations
certificate or bylaws, directors shall be elected by a
plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
election of directors.
Our Company presently uses the plurality vote standard to elect
directors. This proposal requests that the Board initiate a
change in the Companys director election vote standard to
provide that nominees for the board of directors must receive a
majority of the vote cast in order to be elected or re-elected
to the Board.
We believe that a majority vote standard in director elections
would give shareholders a meaningful role in the director
election process. Under the Companys current standard, a
nominee in a director election can be elected with as little as
a single affirmative vote, even if a substantial majority of the
votes cast are withheld from that nominee. The
majority vote standard would require that a director receive a
majority of the vote cast in order to be elected to the Board.
The majority vote proposal received high levels of support last
year, winning majority support at Advanced Micro Devices,
Freeport McMoRan, Marathon Oil, Marsh and McClennan, Office
Depot, Raytheon, and others. Leading proxy advisory firms
recommended voting in favor of the proposal.
Some companies have adopted board governance policies requiring
director nominees that fail to receive majority support from
shareholders to tender their resignations to the board. We
believe that these policies are inadequate for they are based on
continued use of the plurality standard and would allow director
nominees to be elected despite only minimal shareholder support.
We contend that changing the legal standard to a majority vote
is a superior solution that merits shareholder support.
Our proposal is not intended to limit the judgment of the Board
in crafting the requested governance change. For instance, the
Board should address the status of incumbent director nominees
who fail to receive a majority vote under a majority vote
standard and whether a plurality vote standard may be
appropriate in director elections when the number of director
nominees exceeds the available board seats.
We urge your support for this important director election reform.
19
Response of the Corporation to Stockholder Proposal
The Board of Directors unanimously recommends a vote against
this proposal for the reasons set forth below.
The Board of Directors agrees with many aspects of the majority
voting concept and believes the fundamental principles of
majority voting may potentially be beneficial to stockholders.
The Board maintains sound and effective corporate governance
practices that reflect the highest standards of responsibility,
ethics and integrity. The Board also seeks to ensure that the
Corporations director elections are fair, impartial and in
the best interests of stockholders. However, there are complex
legal and practical issues surrounding the issue of majority
voting that this proposal does not address and that must be
resolved before the Board could adopt such a policy.
The plurality voting system that the Corporation currently uses
is the primary system used by most large corporations in the
United States and is the established standard under Delaware
law. The methodology and rules governing the plurality standard
are well-known and well-understood. Plurality voting allows
stockholders to express dissatisfaction with corporate
governance practices without disrupting the election process.
A number of governmental authorities, associations, scholars,
corporations and investors are currently evaluating the
feasibility and implications of adoption of a majority voting
standard. The Board continues to monitor the progress of these
discussions and, once the issues surrounding majority voting are
resolved, will take appropriate action to maintain
Kimberly-Clarks commitment to the highest standards of
corporate governance.
At this time, the Board believes that adoption of a majority
voting standard would be premature and would not serve the best
interests of stockholders, particularly in light of the fact
that the proposal does not address the legal and practical
issues of changing long-standing, successful voting procedures.
The Board does not believe that stockholders should be asked to
approve a proposal without understanding the full ramifications
of its adoption.
The Board unanimously recommends that the stockholders
vote AGAINST the adoption of this proposal.
PROPOSAL 6. STOCKHOLDER
PROPOSAL REQUESTING A REPORT
ON SUSTAINABLE FORESTRY PRACTICES
Domini Social Investments, 536 Broadway, 7th Floor, New
York, New York 10012-3915; The Basilian Fathers of Toronto,
15015 Piedmont, Detroit, Michigan 48223; The Sisters of the
Order of St. Dominic of Grand Rapids, Michigan,
2025 E. Fulton Street, Grand Rapids, Michigan
49503-3895; Vanderryn International Corporation and the
Vanderryn Trading Corporations,
8112 Whittier Boulevard, Bethesda, Maryland 20817; and
Calvert Asset Management Company, Inc.,
4550 Montgomery Avenue, Bethesda, Maryland 20814, have
given notice that they intend to present for action at the
Annual Meeting the resolution set forth below. These
shareholders own shares of the Corporations common stock
ranging from 3,120 to 124,000 shares for an aggregate
amount of 368,490 shares. The Board of Directors opposes
such stockholder proposal for the reasons set forth below the
proposal.
Proxies solicited by management will be voted against the
stockholder proposal below unless stockholders specify a
contrary choice in their proxies.
20
Stockholder Proposal
In accordance with applicable rules of the Securities and
Exchange Commission, we have set forth the stockholders
proposal below:
Sustainable Forestry
Whereas:
Kimberly-Clark is a leader in the global forest products
industry and the largest manufacturer of tissue products in the
world. The forest products industry is the largest industrial
consumer of ancient forests. Kimberly-Clark uses more than
3 million metric tons of virgin fiber each year.
Kimberly-Clark sources virgin tree fiber from Canadas
Boreal forest, the largest remaining ancient forest left in
North America. As one of the worlds largest storehouses of
carbon, preservation of the Boreal is critical to mitigating
climate change. The Boreal is home to nearly 50% of North
Americas bird species and contains the largest remaining
populations of woodland caribou and wolverines. These and other
species have declined significantly due to habitat loss, in
part, from unsustainable logging.
Forest certification programs recognize forestry operations that
adopt environmentally and socially responsible practices. Our
company is requiring all of its global fiber suppliers to adhere
to one of five international forest certification systems by the
end of 2005. Of the certified fiber currently procured by
Kimberly-Clark, 62% is certified to the Sustainable Forest
Initiative (SFI), developed by the American Forest &
Paper Association, a forest industry trade association.
The Forest Stewardship Council (FSC), a third-party auditor, is
the only independent certification system in the world accepted
by the conservation, aboriginal and business communities. Virgin
tree fiber from logging operations certified to FSC standards is
increasingly available. Credibility is the most important
criterion for the selection of any certification scheme. By
accepting fiber from the full panoply of available certification
schemes, our company fails to set any standard at all.
Protests across North America have targeted our company for its
fiber sourcing practices. Companies such as Home Depot,
Lowes, Ikea and Andersen Windows have FSC-certified wood
procurement preferences. Major banks, such as JP Morgan Chase
and Bank of America, have adopted policies limiting or
prohibiting investment in companies and industries that
negatively impact ancient forests.
JP Morgan Chases 2005 Public Environmental Policy
Statement states, The Forest Stewardship Council
(FSC) is one of the most robust high conservation value
assessment processes. We prefer FSC certification when we
finance forestry projects. . .
RESOLVED: Shareholders request the Board to prepare a
report, at reasonable cost and omitting proprietary information,
by November 1, 2006, assessing the feasibility of phasing
out our companys use of non-FSC certified fiber within
10 years.
Supporting Statement:
Proponents believe that our companys current practices
present serious risks to long-term shareholder value. It is
critical for Kimberly-Clark to develop policies to ensure a
long-term sustainable supply of raw materials and mitigate
reputational risks by procuring fiber certified using credible
standards.
We believe that a thorough feasibility study should discuss the
Companys explicit goals and timeframes with respect to
both:
|
|
|
|
|
Increasing the use of FSC-certified virgin fiber with the goal
of phasing out virgin fiber certified by less reliable and
credible certification schemes; and |
21
|
|
|
|
|
Increasing the use of recycled fiber in both consumer and
commercial products as a means to reduce reliance on virgin
materials. |
Response of the Corporation to Stockholder Proposal
The Board of Directors unanimously recommends a vote against
this proposal for the reasons set forth below.
Kimberly-Clarks Dedication to Sustainable Forestry
Kimberly-Clark has a long history of dedication to responsible
use of natural resources. Kimberly-Clark is a member of the
World Business Council for Sustainable Development and its
Sustainable Forest Products Industry Working Group.
Kimberly-Clark has practiced sustainable forestry on its own
forestlands for more than 60 years and, although it no
longer owns or manages any forest lands in North America, it
remains committed to the promotion of sustainable forestry and
only sources fiber from suppliers that practice sustainable
forestry management.
The Corporation is continuously reviewing its sustainable
forestry policies and practices and seeking to improve its
efforts to influence the practice of sustainable forestry on a
global level. Kimberly-Clark highlights its dedication to
sustainable forestry on its website, which includes the
Corporations sustainability report. The Corporation will
continue to communicate with stockholders and the public about
its environmental conservation work.
The Corporation maintains a comprehensive set of fiber
procurement policies and practices. When Kimberly-Clark selects
fibers for use in its products, it seeks to ensure that
applicable product performance and customer requirements are
met, as well as to ensure that sustainable forestry policies are
followed. Kimberly-Clarks corporate policy prohibits the
use of wood fiber from virgin rainforests or from designated
ecologically significant old growth areas, including mixed
hardwood forestlands in Indonesia; temperate rainforests in
coastal British Columbia, Canada; and designated areas in
Canadas Boreal Forest.
Fiber Certification
It is the Corporations policy that all of its global fiber
suppliers of round wood, wood chips and other forms of fiber, as
well as all virgin pulp, be certified by one of five
internationally recognized forest certification systems, and
currently approximately 88 percent of the suppliers are
certified. As of the end of 2005, Kimberly-Clark had audited all
of its top suppliers, which account for 90 percent of our
global fiber purchases, for compliance with the
Corporations sustainable forestry policies. Suppliers
found not to be in compliance with the Corporations
sustainable forestry policies have developed action plans to
correct any deficiencies and must complete their action plans by
the end of 2006 as a condition of having their supply agreements
renewed. The Corporation plans to conduct these audits on a
continuing basis.
Availability of FSC Certified Fiber
The stockholder proposal recommends that Kimberly-Clark only use
fiber certified by the Forest Stewardship Council (FSC) and
not fiber certified by any of the other recognized forest
certification systems referenced above. This recommendation is
not practical.
Kimberly-Clarks use of certified fiber depends on meeting
the following requirements:
|
|
|
|
|
There must be sufficient certified forest fiber available; |
|
|
|
Pulp made from fiber sourced from certified forests must be
commercially available for purchase by the Corporation in
locations where the Corporation sources its fiber; and |
|
|
|
Fiber available to the Corporation must meet our product
performance and cost requirements. |
22
Kimberly-Clark purchases FSC-certified fiber to the extent that
it is available and meets its product performance and fiber cost
requirements. However, the global supply of FSC-certified fiber
is not sufficient to allow Kimberly-Clark to rely exclusively on
FSC-certified fiber. As shown in the following chart, as of
February 2006, approximately seven percent of the worlds
forests were certified. As noted above, approximately
88 percent of the pulp fiber used globally by the
Corporation is sourced from suppliers certified by one of five
certification systems.
|
|
Source: |
(a) The Food and Agriculture organization of the United
Nations. |
|
(b) Data from the Forest Stewardship Council and the
environmental group Metafore. |
With respect to North America, northern bleached softwood kraft
pulp, which is required to produce the strength of premium
tissue products preferred by most consumers, is purchased from
Canadian suppliers. As of February 2006, only about
10 percent of Canadas managed forests were
FSC-certified. There are only two major suppliers producing
softwood pulp from FSC-certified forests in Canada and they use
a significant amount of their pulp internally. Thus, little of
the pulp made from this fiber is commercially available to third
party buyers such as Kimberly-Clark.
Use of Recycled Fiber
The proposal also recommends increasing the Corporations
use of recycled fiber in both consumer and commercial products
as a means to reduce reliance on virgin materials.
Kimberly-Clark has conducted extensive research regarding the
various types of fiber and is a leader in the industry in the
use of recycled fiber in its products. Recycled fiber currently
accounts for 29 percent of the Corporations overall
fiber use.
Kimberly-Clarks studies show that as the amount of
recycled fiber in the product is increased, product performance
attributes, such as softness and absorbency, are adversely
affected. For this reason, the combined total of all branded
consumer tissue products, including napkins, that contain
recycled fiber accounted for only 1.8 percent of all
dollars spent on these products in the United States in 2005.
Away-from-home tissue products often contain a higher percentage
of recycled fiber. Some Kimberly-Clark away-from-home tissue
products, such as Scott Coreless bath tissue, are made from
45 percent post-consumer recycled fiber, and some
away-from-home paper towel brands, such as Scott tradition brown
towels, contain a minimum 60 percent post-consumer recycled
fiber. Kimberly-Clark continues to examine the use of recycled
fiber in its products and to seek ways to reduce the
Corporations need for virgin fiber.
23
Stockholder Communication
Representatives of the Corporation met by telephone with
representatives of the proponents of the proposal in December
2005 to discuss their concerns and share the Corporations
sustainable forestry policies and practices.
In any case, the Board believes the information requested by the
proponents has been communicated to stockholders and, therefore,
additional reporting on this issue is not necessary.
The Board unanimously recommends that the stockholders
vote AGAINST the adoption of this proposal.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth information as of
December 31, 2005, unless otherwise indicated, regarding
the number of shares of the common stock of the Corporation
beneficially owned by all directors and nominees, by each of the
executive officers named in Executive Compensation
below (collectively, the Named Executive Officers),
and by all directors, nominees and executive officers as a group.
|
|
|
|
|
Name of Individual or |
|
Amount and Nature of |
Identity of Group |
|
Beneficial Ownership(1)(2)(3)(4) |
|
|
|
Robert E. Abernathy
|
|
|
648,950 |
(5) |
John R. Alm
|
|
|
1,833 |
(6) |
Dennis R. Beresford
|
|
|
12,135 |
(5) |
John F. Bergstrom
|
|
|
29,277 |
(5)(7) |
Abelardo E. Bru
|
|
|
672 |
|
Mark A. Buthman
|
|
|
305,401 |
(5) |
Pastora San Juan Cafferty
|
|
|
19,171 |
(5)(8) |
Robert W. Decherd
|
|
|
43,561 |
(5) |
Thomas J. Falk
|
|
|
1,776,210 |
(5)(9) |
Claudio X. Gonzalez
|
|
|
194,581 |
|
Mae C. Jemison, M.D.
|
|
|
10,459 |
(5) |
Steven R. Kalmanson
|
|
|
586,617 |
(5) |
W. Dudley Lehman
|
|
|
520,491 |
(5) |
Linda Johnson Rice
|
|
|
18,171 |
(5)(10) |
Marc J. Shapiro
|
|
|
24,475 |
(5) |
G. Craig Sullivan
|
|
|
4,044 |
(11) |
All directors, nominees and executive officers as a group
|
|
|
4,448,520 |
(5)(12) |
24
|
|
|
|
(1) |
Except as otherwise noted, the directors, nominees and Named
Executive Officers, and the directors, nominees and executive
officers as a group, have sole voting and investment power with
respect to the shares listed. |
|
|
(2) |
Each director, nominee and Named Executive Officer, and all
directors, nominees and executive officers as a group, own less
than one percent of the outstanding shares of the
Corporations common stock. |
|
|
(3) |
For each Named Executive Officer, share amounts include the
following restricted share units granted under the 2001 Equity
Participation Plan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Based |
Name of Individual |
|
Time Based Restricted Share Units(a) |
|
Restricted Share Units(b) |
|
|
|
|
|
Robert E. Abernathy
|
|
|
18,771 |
|
|
|
18,771 |
|
Mark A. Buthman
|
|
|
17,251 |
|
|
|
17,251 |
|
Thomas J. Falk
|
|
|
81,944 |
|
|
|
81,944 |
|
Steven R. Kalmanson
|
|
|
20,924 |
|
|
|
20,924 |
|
W. Dudley Lehman
|
|
|
18,065 |
|
|
|
18,065 |
|
|
|
|
|
(a) |
Such awards vest based on time rather than the achievement of
performance-based standards. |
|
|
(b) |
Such awards require performance-based standards to be met before
awards vest. The amounts described in this column represent the
target levels for such awards of performance-based restricted
share units that may be earned by each Named Executive Officer.
The actual number earned will range from 0 to 150 percent
of the target levels indicated based on the achievement of
specific performance goals. |
|
|
|
|
(4) |
For each director who is not an officer or employee of the
Corporation or any of its subsidiaries or equity companies,
share amounts include the following restricted share units
granted under the Outside Directors Compensation Plan: |
|
|
|
|
|
Name of Individual |
|
Number of Restricted Share Units(a) |
|
|
|
John R. Alm
|
|
|
1,833 |
(b) |
Dennis R. Beresford
|
|
|
5,551 |
|
John F. Bergstrom
|
|
|
5,245 |
|
Abelardo E. Bru
|
|
|
672 |
|
Pastora San Juan Cafferty
|
|
|
5,871 |
|
Robert W. Decherd
|
|
|
6,075 |
|
Mae C. Jemison, M.D.
|
|
|
5,245 |
|
Linda Johnson Rice
|
|
|
5,245 |
|
Marc J. Shapiro
|
|
|
5,551 |
|
G. Craig Sullivan
|
|
|
2,044 |
|
|
|
|
|
(a) |
Such awards vest on the date the Outside Director retires from
or otherwise terminates service on the Board. |
|
|
(b) |
Represents restricted share units granted to Mr. Alm on
February 22, 2006, the effective date of his election to
the Board of Directors. |
25
|
|
|
|
(5) |
Includes shares of common stock held by the trustee of the
Corporations Incentive Investment Plan for the benefit of,
and which are attributable to the accounts in the plan of, the
Named Executive Officers. Also includes the following shares
which could be acquired within 60 days of December 31,
2005 by: |
|
|
|
|
|
|
|
Number of Shares That Could be Acquired Within |
Name of Individual |
|
60 Days of December 31, 2005 |
|
|
|
Robert E. Abernathy
|
|
|
519,032 |
|
Dennis R. Beresford
|
|
|
5,084 |
|
John F. Bergstrom
|
|
|
8,032 |
|
Mark A. Buthman
|
|
|
238,816 |
|
Pastora San Juan Cafferty
|
|
|
8,337 |
|
Robert W. Decherd
|
|
|
8,236 |
|
Thomas J. Falk
|
|
|
1,404,366 |
|
Mae C. Jemison, M.D.
|
|
|
5,084 |
|
Steven R. Kalmanson
|
|
|
444,776 |
|
W. Dudley Lehman
|
|
|
442,458 |
|
Linda Johnson Rice
|
|
|
7,626 |
|
Marc J. Shapiro
|
|
|
17,924 |
|
|
|
|
|
(6) |
Represents restricted share units granted to Mr. Alm on
February 22, 2006, the effective date of his election to
the Board of Directors. These shares are not included in the
total of shares held by all directors, nominees and executive
officers as a group. |
|
|
(7) |
Includes 5,000 shares held by Bergstrom Investments L.P., a
partnership of which Mr. Bergstrom and his brother are
general partners and their respective children are limited
partners, and of which Mr. Bergstrom shares voting control. |
|
|
(8) |
Ms. Cafferty also has 25,498.93 stock credits allocated to
her deferred compensation account as of December 31, 2005
under the Corporations deferred compensation plan for
directors. The account reflects the election by
Ms. Cafferty to defer into stock credits compensation
previously earned by her as a director of the Corporation.
Although Ms. Cafferty is fully at risk as to the price of
the Corporations common stock represented by stock
credits, the stock credits are not shares of stock and
Ms. Cafferty does not have any rights as a holder of common
stock with respect to the stock credits. |
|
|
(9) |
Includes 109,544 shares held by TKM II, Ltd., a
partnership of which Mr. Falk and his wife are the limited
partners and an entity wholly-owned by Mr. Falk and his
wife is the general partner, and of which Mr. Falk shares
voting control, and 13,100 shares held by TKM, Ltd., a
partnership of which an entity wholly-owned by Mr. Falk and
his wife is the general partner, and of which Mr. Falk
shares voting control. TKM, Ltd. also has the right to acquire
204,380 shares within 60 days of December 31,
2005. These 204,380 shares are included in the
1,404,366 shares listed for Mr. Falk in
footnote 5 above. |
|
|
(10) |
Includes 300 shares held by a trust for the benefit of
Mrs. Johnson Rices daughter and for which
Mrs. Johnson Rice serves as a co-trustee and shares voting
and investment power. |
|
(11) |
Includes 2,000 shares held by a trust for the benefit of
Mr. Sullivans children and for which
Mr. Sullivan serves as the sole trustee. |
|
(12) |
Voting and investment power with respect to 332,324 of the
shares is shared. |
To further align managements financial interests with
those of the stockholders, the Corporation maintains stock
ownership guidelines for approximately 400 key managers,
including the Named Executive Officers (see Executive
Compensation Management Development and Compensation
Committee Report on Executive Compensation Target
Stock Ownership).
26
The following table sets forth the information, as of
December 31, 2005, regarding persons or groups known to the
Corporation to be beneficial owners of more than 5 percent
of the Corporations common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of |
|
|
|
|
Common Stock |
|
|
Number of Common Shares |
|
Outstanding on |
Name and Address of Beneficial Owner |
|
Beneficially Owned |
|
December 31, 2005 |
|
|
|
|
|
Barclays Global Investors, NA(1)
45 Fremont Street
San Francisco, CA 94105 |
|
|
25,227,755 |
|
|
|
5.4 |
|
|
|
(1) |
The address and number of shares of the Corporations
common stock beneficially owned by Barclays Global Investors, NA
and certain of its affiliates are based on the Schedule 13G
filed by Barclays Global Investors, NA and its affiliates with
the Securities and Exchange Commission on January 26, 2006.
In addition to Barclays Global Investors, NA, affiliates on the
filing are Barclays Global Fund Advisors, Barclays Global
Investors, Ltd., and Barclays Global Investors Japan Trust and
Banking Company Limited. According to the filing, the reporting
entities do not affirm the existence of a group, and the
reporting entities, taken as a whole, had sole voting power with
respect to 21,970,049 shares and sole dispositive power
with respect to 25,227,755 shares, and did not have shared
voting or dispositive power as to any shares. |
EXECUTIVE COMPENSATION
Management Development and Compensation Committee Report on
Executive Compensation
The Management Development and Compensation Committee is
composed entirely of Independent Directors. See Corporate
Governance Board of Directors and Board
Committees. The Board designates the members and the
Chairman of the Committee. The Committee is responsible for
establishing and administering the policies governing annual
salary and incentive compensation and long-term compensation
including awards of stock options, restricted shares, and
restricted share units. The Committee also oversees leadership
development for senior management and future senior management
candidates.
|
|
|
Executive Compensation Philosophy |
The Committee has adopted executive compensation policies that
are designed to align compensation with the Corporations
overall business strategies, values and management initiatives.
These policies are intended to:
|
|
|
|
|
Attract and retain executives whose abilities are considered
essential to the long-term success and competitiveness of the
Corporation through the Corporations executive
compensation programs. |
|
|
|
Support a performance-oriented environment that rewards
achievement of the Corporations financial and
non-financial goals and recognizes company performance compared
to the performance of similarly situated companies through the
annual payment of incentive cash bonuses. |
|
|
|
Reward executives for long-term strategic management and the
enhancement of stockholder value through stock option,
restricted shares, restricted share unit and other long-term
incentive awards. |
27
|
|
|
Competitive Compensation Objectives |
The Corporation annually engages an outside compensation
consultant to assist management and the Committee in assessing
and determining appropriate compensation for the
Corporations executives. The Committee also separately
retains an additional compensation consultant, independent of
management, who reviews the analysis and recommendations of the
consultant retained by the Corporation and advises the Committee
whether such analysis and recommendations are appropriate and in
line with the market and general compensation trends and
consistent with the Corporations compensation philosophy.
With respect to 2005 compensation, the Corporations
consultant assessed the Corporations executive
compensation as compared against a peer group. The peer group
was comprised of 19 other companies, primarily consumer-packaged
goods companies, which included the companies in the Peer Group
for the Performance Graph referenced later in this proxy
statement (see Executive Compensation
Performance Graph below). Median revenues for this peer
group of 19 companies were $14.5 billion, ranging from
$4 billion to $54 billion at the time 2005
compensation and performance objectives were determined. The
Committee believes this is an appropriate peer group to evaluate
executive compensation since it consists of similarly situated,
large consumer-packaged goods companies with global operations.
The Corporations base salary program is targeted at or
near the median of this peer group. Annual incentive and
long-term compensation programs are targeted to provide total
compensation between the 50th and 75th percentiles of
the peer group if the Corporations goals are met.
Base Salary. Salary ranges and individual salaries for
executive officers are reviewed annually. In determining
individual salaries, the Committee considers the scope of the
executives job responsibilities, individual contributions,
market conditions, experience in position, the
Corporations salary budget guidelines and current
compensation as compared to peer companies. The base salaries
for the Corporations five most highly-paid executives can
be found in Executive Compensation Summary
Compensation Table.
Annual Incentives. Annual incentives are based on
performance against the Corporations and individual
business unit goals that are established at the beginning of
each year. These goals are aligned with the goals stated in the
Corporations Global Business Plan and include financial
goals based on objective standards such as top-line growth,
earnings per share (EPS), and return on invested
capital (ROIC), as well as non-financial strategic
goals that improve the longer-term capabilities of the
Corporation. Depending upon the performance for the year,
payments under the annual incentive program may range from zero
to 240 percent of the target bonus established by the
Committee. Target bonuses currently are established at
120 percent of base salary for the Chief Executive Officer
and 80 percent of base salary for the other Named Executive
Officers.
For 2005, the performance measures for the Chief Executive
Officer were based solely on the Corporations actual
performance against its 2005 corporate objectives. For all other
executive officers, the performance measures for 2005 were based
70 percent on the Corporations actual performance
against its 2005 corporate objectives and 30 percent on the
actual performance of the business unit or function for which
the executive was responsible against the 2005 objectives for
the business unit or function.
The corporate financial goals for 2005 executive compensation
were consistent with the Corporations long-term global
business plan objectives of 3 to 5 percent top-line sales
growth, mid to high single digit EPS growth and a 40 to
50 basis point increase in ROIC. The Committee determined
that 2005 financial performance was above the top end of the
target range for sales growth, exceeded the target for ROIC
improvement on an operating basis, and was in the middle of the
range for target EPS growth on an operating basis. In making its
assessment, the Committee excluded certain items which were
deemed to be non-recurring in nature based on predetermined
28
criteria and its best judgment. In assessing the
Corporations performance against its 2005 financial goals,
the Committee also considered factors such as total shareholder
return, market share and cash flows.
The Committee also assessed the Corporations performance
against non-financial goals established at the beginning of
2005. Non-financial goal accomplishments during 2005 included
completion by the Corporation of an updated global business
plan, above target execution of cost savings programs,
implementation of customer/shopper/user insights processes in
North Atlantic businesses, disciplined use of portfolio
management processes for allocation of capital and other
resources, improvement in working capital as a percentage of net
sales in excess of target levels, and fully implementing talent
management programs to improve and assess the Corporations
human resource capabilities.
Payout of 100 percent of target bonuses is dependent on
achieving the top end of the target range for the financial
goals and excellent performance on the non-financial goals.
Accordingly, based on the Committees assessment of the
Corporations performance in 2005 against its 2005
corporate objectives, the Committee approved awards to executive
officers under this plan for 2005 at 90 percent of the
corporate objective target. This compares with awards of
185 percent of target in 2004.
The Committee also assessed each individual business units
or functions 2005 performance against 2005 objectives for
those business units or functions. Based on that assessment, the
Committee approved awards to the executive officers under this
plan for 2005 at a range of 70 percent to 150 percent,
depending on the executive and the performance in the
executives areas of responsibility. The 2005 incentive
awards for each Named Executive Officer other than the Chief
Executive Officer set forth in the Summary Compensation Table
below reflect the combination of the 70 percent/
30 percent weighting of the awards for 2005 performance
against the corporate and individual objectives. As a result of
this weighting and the Committees determination of 2005
performance, the executive officers of the Corporation received
2005 incentive bonuses that ranged from 89 percent to
98 percent of their 2005 target amounts.
When determining the amount of 2005 long-term incentive awards
to be granted to executives, the Committee considered the
following factors, among others: the specific responsibilities
and performance of the executive, the performance of the
Corporation, the stock price of the Corporation and market
factors. The 2005 long-term incentive awards were granted in
April 2005 based on an assessment at that time.
Executive officers may receive long-term incentive awards of
stock options, restricted shares and restricted share units or a
combination of stock options, restricted shares and restricted
share units under the Corporations 2001 Equity
Participation Plan, as amended (the 2001 Plan). The
2001 Plan provides the Committee with discretion to require
performance-based standards to be met before awards vest. The
Corporations deferred compensation plans were amended in
response to section 409A of the Internal Revenue Code and
no further deferral of the payment of awards granted after 2004
is allowed.
Prior to 2004, the Corporations primary long-term
incentive program consisted of stock option awards. Restricted
shares had been used on a periodic basis, primarily for
retention of key executives. Beginning in 2004, the Corporation
began reducing the number of stock options granted to key
executives and increasing the number of restricted shares and
restricted share units, with a significant portion of such
restricted share units being performance-based. Since 2004, the
targeted value of long-term incentive grants to executive
officers has been allocated one-third stock options, one-third
restricted share units and one-third performance-based
restricted share units.
29
Restricted Share and Restricted Share Unit Awards. The
Committee determines the number of restricted shares or
restricted share units to be granted to participants and the
time period for restriction on transferability. A participant
who is awarded restricted shares will be entitled to vote such
shares and to receive dividends declared on such shares during
the restricted period. Upon expiration of the restricted period,
payment of restricted share units will be made in cash or shares
of common stock as determined by the Committee at the time of
grant. During the restricted period, a participant who is
awarded restricted share units will not be entitled to vote such
units but will receive either cash or a credit equal to
dividends paid on the Corporations common stock which will
be reinvested in restricted share units at the fair market value
of the Corporations common stock on the date dividends are
paid.
In 2005, executives received awards of both time-vested and
performance-based restricted share units. For performance-based
restricted share unit awards in 2005, the actual number of
shares to be received by the executives will range from zero to
150 percent of the target levels established by the
Committee for each executive depending on the degree to which
the performance objective is met. The performance objective for
the awards is based on the three-year average ROIC for the
period January 1, 2005 through December 31, 2007. This
performance objective is consistent with the Corporations
Global Business Plan objective to improve ROIC 40 to
50 basis points per year during this period. In 2005,
results were above the target performance range. Information
regarding restricted share and restricted share unit awards
granted to the Corporations Named Executive Officers can
be found in Security Ownership of Management and Certain
Beneficial Owners and Executive
Compensation Summary Compensation Table.
Stock Option Awards. For a description of the material
terms of stock option grants pursuant to the long-term incentive
plans in 2005, including pursuant to the 2001 Plan, and for
stock options granted to the Corporations Named Executive
Officers, see Executive Compensation Option
Grants in 2005.
|
|
|
Compensation of Chief Executive Officer |
Base Salary. The Committee increased the salary of
Mr. Falk to $1,175,000 on April 1, 2005. This increase
of 9.3 percent over his 2004 base salary put
Mr. Falks base salary at the median of the peer
companies referred to above, consistent with the
Corporations compensation policies and objectives.
Cash Bonus. As described above, the cash bonus payment
paid to Mr. Falk for 2005 reflects the Committees
assessment of the Corporations performance in 2005 against
its 2005 corporate objectives. Accordingly, the bonus paid to
Mr. Falk was 90 percent of the target award level that
had been established by the Committee for 2005. This compares
with Mr. Falks award of 185 percent of target in
2004.
The Committee believes that, based upon most recent comparisons
to the peer group as provided by the consultant retained by the
Corporation and verified by the consultant retained by the
Committee, Mr. Falks compensation in 2005 met the
Committees goals as described above in Executive
Compensation Philosophy.
|
|
|
Executive Compensation for 2006 |
On February 8, 2006, the Committee established objectives
for 2006 bonuses payable in 2007 to executive officers. Bonus
awards for 2006 will be based on the Committees judgment
regarding the Corporations and the executive
officers performance in 2006 against the objectives. The
corporate objective includes both financial and non-financial
goals. The financial goals for 2006 are aligned with the
Corporations long-term global business objectives and
include growth in net sales, growth in earnings and improvement
in ROIC. Performance must be at the top end of these ranges for
participants to receive 100 percent of the target bonuses
established by the Committee. Non-financial goals for 2006
include various qualitative and quantitative measures that are
intended to
30
further align compensation with achieving the Corporations
Global Business Plan, including increasing brand equity in
certain key brands, improving product development cycle times,
completing an organization design plan, achieving executive
recruitment goals, and achieving the Corporations
diversity and inclusion goals. In addition, goals have been
established for each executive officer, other than the Chief
Executive Officer, relating to their specific function or
business unit. The goals vary by executive officer depending on
their areas of responsibilities. Depending on actual performance
in 2006 against the financial and non-financial goals, 2006
bonus awards could range from zero to 240 percent of each
executive officers target bonus.
The Corporation strongly believes that the financial interests
of its executives should be aligned with those of its
stockholders. Accordingly, the Corporation maintains stock
ownership guidelines for approximately 400 key managers,
including the Named Executive Officers. All executive officers
are expected to own the Corporations stock in an amount
equivalent to three times their annual salary. The Chief
Executive Officer is expected to own an amount of the
Corporations stock which is six times his annual salary.
These guidelines have been met or exceeded by each of the Named
Executive Officers. Failure to attain targeted stock ownership
levels within three years can result in a reduction in future
long-term incentive awards granted to the executive.
|
|
|
Tax Deduction for Executive Compensation |
The United States income tax laws generally limit the
deductibility of compensation paid to each Named Executive
Officer to $1,000,000 per annum. An exception to this
general rule exists for performance-based compensation that
meets certain Internal Revenue Service requirements. The annual
bonus payments and option grants to executive officers are
designed to meet these requirements for deductibility. The other
long-term incentive awards described above may be subject to the
$1,000,000 deductibility limit.
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|
MANAGEMENT DEVELOPMENT AND |
|
COMPENSATION COMMITTEE OF THE |
|
BOARD OF DIRECTORS |
|
|
Marc J. Shapiro, Chairman |
|
Abelardo E. Bru |
|
Pastora San Juan Cafferty |
|
G. Craig Sullivan |
31
Summary Compensation Table
The following table sets forth information concerning
compensation for each of 2003, 2004 and 2005 awarded to, earned
by, or paid to the Chief Executive Officer and the four most
highly compensated executive officers of the Corporation (the
Named Executive Officers), other than the Chief
Executive Officer, whose total annual salary and bonus exceeded
$100,000:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation |
|
Awards |
|
Payouts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted |
|
Securities |
|
|
|
|
|
|
|
|
|
|
Other Annual |
|
Stock |
|
Underlying |
|
LTIP |
|
All Other |
Name and Principal |
|
|
|
|
|
Compensation |
|
Awards |
|
Options |
|
Payouts |
|
Compensation |
Position |
|
Year |
|
Salary($) |
|
Bonus($) |
|
($)(1) |
|
($)(2)(3) |
|
(#)(4) |
|
($)(5) |
|
($)(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Falk
|
|
|
2005 |
|
|
|
1,150,000 |
|
|
|
1,269,000 |
|
|
|
69,191 |
|
|
|
5,166,662 |
|
|
|
167,776 |
|
|
|
0 |
|
|
|
6,300 |
|
Chairman of the
|
|
|
2004 |
|
|
|
1,075,000 |
|
|
|
2,386,500 |
|
|
|
82,734 |
|
|
|
5,136,800 |
|
|
|
122,031 |
|
|
|
838,152 |
|
|
|
6,150 |
|
|
Board and Chief
|
|
|
2003 |
|
|
|
987,500 |
|
|
|
840,000 |
|
|
|
71,581 |
|
|
|
0 |
|
|
|
406,770 |
|
|
|
728,833 |
|
|
|
6,000 |
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Abernathy
|
|
|
2005 |
|
|
|
490,000 |
|
|
|
352,440 |
|
|
|
0 |
|
|
|
1,166,638 |
|
|
|
37,885 |
|
|
|
0 |
|
|
|
6,300 |
|
Group President
|
|
|
2004 |
|
|
|
475,000 |
|
|
|
703,000 |
|
|
|
0 |
|
|
|
1,194,306 |
|
|
|
28,473 |
|
|
|
670,521 |
|
|
|
6,150 |
|
|
Developing and
|
|
|
2003 |
|
|
|
445,000 |
|
|
|
261,314 |
|
|
|
1,179 |
|
|
|
311,780 |
|
|
|
91,523 |
|
|
|
485,889 |
|
|
|
6,000 |
|
|
Emerging Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A. Buthman
|
|
|
2005 |
|
|
|
468,750 |
|
|
|
372,480 |
|
|
|
0 |
|
|
|
1,133,379 |
|
|
|
36,803 |
|
|
|
0 |
|
|
|
86,726 |
|
Senior Vice President
|
|
|
2004 |
|
|
|
420,000 |
|
|
|
621,600 |
|
|
|
584 |
|
|
|
1,033,781 |
|
|
|
24,558 |
|
|
|
223,507 |
|
|
|
47,271 |
|
|
and Chief Financial
|
|
|
2003 |
|
|
|
350,000 |
|
|
|
208,740 |
|
|
|
12,000 |
|
|
|
445,400 |
|
|
|
91,523 |
|
|
|
155,485 |
|
|
|
35,781 |
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven R. Kalmanson
|
|
|
2005 |
|
|
|
578,750 |
|
|
|
424,800 |
|
|
|
0 |
|
|
|
1,333,300 |
|
|
|
43,297 |
|
|
|
0 |
|
|
|
6,300 |
|
Group President
|
|
|
2004 |
|
|
|
515,000 |
|
|
|
762,200 |
|
|
|
0 |
|
|
|
1,297,042 |
|
|
|
31,524 |
|
|
|
502,891 |
|
|
|
6,150 |
|
|
North Atlantic
|
|
|
2003 |
|
|
|
465,000 |
|
|
|
119,280 |
|
|
|
0 |
|
|
|
311,780 |
|
|
|
91,523 |
|
|
|
437,300 |
|
|
|
6,000 |
|
|
Consumer Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Dudley Lehman(7)
|
|
|
2005 |
|
|
|
470,000 |
|
|
|
370,500 |
|
|
|
0 |
|
|
|
1,116,627 |
|
|
|
36,261 |
|
|
|
0 |
|
|
|
6,300 |
|
Group President
|
|
|
2004 |
|
|
|
455,000 |
|
|
|
673,400 |
|
|
|
70,422 |
|
|
|
1,155,780 |
|
|
|
27,456 |
|
|
|
502,891 |
|
|
|
6,150 |
|
|
Business to Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
(1) |
Except with respect to Mr. Falk for all years,
Mr. Buthman for 2003 and Mr. Lehman for 2004, amounts
shown do not include perquisites provided by the Corporation to
the Named Executive Officers because the aggregate amount of
such perquisites did not exceed $10,000 for any of such officers
in any year. The amount shown for Mr. Buthman in 2003 is
for financial counseling services pursuant to the
Corporations Executive Financial Counseling Program. The
amount shown for Mr. Lehman in 2004 includes relocation
assistance of $40,420. The amounts shown for Mr. Falk
consist of the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites($)(a) |
|
|
|
|
|
Executive Financial |
|
Personal use of |
|
|
|
|
Counseling |
|
Corporations |
|
|
|
|
Program |
|
Aircraft(b) |
|
Security Services(c) |
|
|
|
|
|
|
|
2005
|
|
|
12,000 |
|
|
|
8,938 |
|
|
|
39,823 |
|
2004
|
|
|
12,000 |
|
|
|
18,970 |
|
|
|
36,073 |
|
2003
|
|
|
12,000 |
|
|
|
39,730 |
|
|
|
994 |
|
|
|
|
|
(a) |
Excludes amounts for perquisites that constitute less than
10 percent of the total perquisites for each year,
including amounts in 2003 and 2004 relating to personal use of
the Corporations sporting event and other entertainment
tickets when not being used for business purposes. |
|
|
(b) |
The Chief Executive Officer is required to use aircraft owned by
the Corporation for personal travel pursuant to the
Corporations executive security program established by the
Board of Directors. The amount shown for personal use of the
Corporations aircraft by Mr. Falk is the incremental
cost to the Corporation of operating the aircraft. |
|
|
(c) |
Personal security services provided when mandated by the
Corporations executive security program. |
32
|
|
|
In addition, the following amounts were paid to the following
Named Executive Officers for tax reimbursement and related
gross-up with respect
to certain business and personal use of corporate aircraft:
Mr. Falk (2005 $8,430; 2004
$13,811; 2003 $14,572); Mr. Abernathy
(2003 $1,179); and Mr. Buthman
(2004 $584). In 2004, Mr. Lehman was paid
$27,037 in tax reimbursement and related gross-ups with respect
to relocation expenses. |
|
|
(2) |
2004 and 2005 Restricted Share Unit Awards. Amounts shown
for 2004 and 2005 reflect restricted share unit awards granted
pursuant to the Corporations 2001 Equity Participation
Plan, as amended (the 2001 Plan), including those
awards that vest based on time and those awards that vest based
on the achievement of performance-based standards. All
restricted share awards were valued at the closing price of the
Corporations stock on the date of grant. Performance-based
awards are included in this table at target levels. See
footnote 3 in the Security Ownership of Management table.
The restricted share unit awards were granted on April 28,
2004 and April 28, 2005, and the closing prices of the
Corporations stock on those dates were $63.14, after
adjustment to reflect the change in capitalization due to the
Neenah Paper, Inc. spin-off, and $61.59 per share,
respectively. |
|
|
|
The awards to the Named Executive Officers in 2004 and 2005 were
split equally between time-vested share units and
performance-based share units. The vesting schedule for the
restricted share unit awards that vest based on time rather than
the achievement of performance-based standards is as follows:
33 percent after three years following the grant thereof,
an additional 33 percent after the fourth year and the
remaining 34 percent after the fifth year.
Performance-based restricted share unit awards vest three years
following grant in a range from zero to 150 percent of the
target levels established based on the Return on Invested
Capital (ROIC) performance for the Corporation
during the three years. Dividend equivalents are paid on the
target number of restricted share units at the same rate paid to
all stockholders of the Corporation. As of December 31,
2005, the performance-based restricted share units granted in
2004 and 2005 were on pace to vest at or near target levels. |
|
|
2003 Restricted Share Awards. Amounts shown for 2003
reflect restricted share awards granted pursuant to the 2001
Plan. All restricted share awards were valued at the closing
price of the Corporations stock on the date of grant. The
restricted share awards were granted on February 17, 2003,
and the closing price of the Corporations stock on that
date was $44.54 per share. The restricted shares granted in
2003 to the Named Executive Officers vest on February 17,
2008. |
|
|
Total Restricted Shares and Restricted Share Units. As of
December 31, 2005, the number and value (based on
December 30, 2005 stock price of $59.65 per share) of
the total shares of restricted stock and restricted share units
held by the Named Executive Officers were: Mr. Falk
(238,888 shares, $14,249,669); Mr. Kalmanson
(54,848 shares, $3,271,683); Mr. Abernathy
(50,540 shares, $3,014,711); Mr. Buthman
(47,502 shares, $2,833,494); and Mr. Lehman
(48,130 shares, $2,870,955). |
|
|
(3) |
During 2005, the following dividends were paid to the following
Named Executive Officers on restricted shares and restricted
share units held by them during the year: Mr. Falk
($352,699); Mr. Kalmanson ($81,833); Mr. Abernathy
($79,598); Mr. Buthman ($70,037); and Mr. Lehman
($74,067). These dividends were paid at the same rate and on the
same dates as dividends were paid to the Corporations
stockholders. |
|
(4) |
Includes adjustments to the options granted to reflect the
change in capitalization due to the Neenah Paper, Inc. spin-off. |
|
(5) |
Amounts shown consist of participation share payments made
pursuant to the 1992 Equity Participation Plan for awards that
were granted to Named Executive Officers of the Corporation in
February of 1997 and 1998. The awards granted in 1997 matured on
December 31, 2002 and were paid according to their terms in
the first quarter of 2003. The awards granted in 1998 matured on
December 31, 2003 and were paid according to their terms in
the first quarter of 2004. No awards of participation shares
have been granted to Named Executive Officers since 1998. Each
participation share was assigned a base value equal to the book
value of one share of the Corporations common stock as of
the close of the fiscal year immediately prior to the award. The
value was adjusted each quarter based on multiplying dividends
declared per share of the Corporations common stock during
the quarter by the total number of participation shares and
dividend shares in the participants account. The normal
maturity date of a participation share award was the close of
the fiscal year in which the fifth or seventh anniversary of the
date of the award occurred. The participant received a cash
payment equal to the sum of (i) the increase in book value
of the participation shares on the maturity date of the award
over the base value of the shares, and (ii) the book value
of the dividend shares on the maturity date (equal to the book
value of an equivalent number of shares of the
Corporations common stock). |
|
(6) |
Amounts shown for each Named Executive Officer other than
Mr. Buthman consist solely of the Corporations
matching contributions under the Corporations Incentive
Investment Plan, a defined contribution plan. |
33
|
|
|
Amounts shown for Mr. Buthman include (i) payment in
2003 of $3,846 for unused vacation earned in the prior year,
(ii) the Corporations matching contribution under the
Incentive Investment Plan, and (iii) amounts contributed or
allocated to two additional defined contribution plans, the
Retirement Contribution Plan and the Excess Benefit Plan.
Mr. Buthman is the only Named Executive Officer who
participates in the Retirement Contribution Plan and the Excess
Benefit Plan, which are described below under Defined Benefit
Retirement Plan. |
|
|
In addition, the following Named Executive Officers earned in
2005 the following amounts on income previously deferred
pursuant to the Corporations Deferred Compensation Plan:
Mr. Falk ($71,533); Mr. Abernathy ($960);
Mr. Kalmanson ($64,926); and Mr. Lehman ($52,609).
This income was based on hypothetical earnings on hypothetical
investment options chosen by each Named Executive Officer. The
hypothetical investment options are the same as the investment
options available to employees under the Corporations
Incentive Investment Plan. As noted above, the Deferred
Compensation Plan was frozen in 2005 and, as a result, no future
compensation may be deferred by the executive officers. |
|
(7) |
Mr. Lehman became an executive officer of the Corporation
when he was elected Group President
Business-to-Business on
January 19, 2004. Since Mr. Lehman was not an
executive officer in 2003, his 2003 compensation is not included
in the table. |
The executive compensation policies and practices of the
Corporation, pursuant to which the compensation set forth in the
Summary Compensation Table was paid or awarded, are described
above in Management Development and Compensation Committee
Report on Executive Compensation.
The following table sets forth information concerning grants of
stock options during 2005 to each of the Named Executive
Officers:
Option Grants in 2005(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants |
|
|
|
|
|
|
|
|
|
Number of |
|
% of Total |
|
|
|
|
|
|
Securities |
|
Options |
|
|
|
|
|
|
Underlying |
|
Granted to |
|
|
|
|
|
|
Options |
|
Employees |
|
Exercise or |
|
|
|
|
|
|
Granted |
|
in Fiscal |
|
Base Price |
|
Expiration |
|
Grant Date Present |
Name |
|
(#) |
|
Year |
|
($/Sh) |
|
Date |
|
Value($)(2) |
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Falk
|
|
|
167,776 |
|
|
|
3.7 |
|
|
|
61.59 |
|
|
|
4/28/15 |
|
|
|
2,003,631 |
|
Robert E. Abernathy
|
|
|
37,885 |
|
|
|
0.8 |
|
|
|
61.59 |
|
|
|
4/28/15 |
|
|
|
452,434 |
|
Mark A. Buthman
|
|
|
36,803 |
|
|
|
0.8 |
|
|
|
61.59 |
|
|
|
4/28/15 |
|
|
|
439,513 |
|
Steven R. Kalmanson
|
|
|
43,297 |
|
|
|
0.9 |
|
|
|
61.59 |
|
|
|
4/28/15 |
|
|
|
517,066 |
|
W. Dudley Lehman
|
|
|
36,261 |
|
|
|
0.8 |
|
|
|
61.59 |
|
|
|
4/28/15 |
|
|
|
433,040 |
|
|
|
(1) |
The plan governing stock option grants provides that the option
price per share shall be no less than the market value per share
of the Corporations common stock at the date of grant. The
term of any option is no more than ten years from the date of
grant. Options granted in 2005 become exercisable
30 percent after the first year following the grant
thereof, an additional 30 percent after the second year and
the remaining 40 percent after the third year; provided,
however, that all of the options become exercisable for three
years upon death or total or permanent disability, and for five
years upon the retirement of the officer. In addition, options
generally become exercisable upon a termination of employment
following a change in control and options granted to the
officers named in this table are subject to the
Corporations Executive Severance Plan described later in
this proxy statement (see Executive Severance Plan
below). The options may be transferred by the officers to family
members or certain entities in which family members have
interests. |
|
(2) |
The dollar amounts in this column were determined using the
Black-Scholes-Merton option pricing model, consistent with the
valuation method to be used by the Corporation for expensing
stock options beginning on January 1, 2006. See Note 1
to the Corporations audited financial statements included
within its Annual Report on
Form 10-K for the
assumptions used in connection with the valuation of stock
options granted in 2005. |
34
The following table sets forth information concerning exercises
of stock options during 2005 by each of the Named Executive
Officers and the value of each officers unexercised
options as of December 31, 2005 based on a closing stock
price of $59.65 per share of the Corporations common
stock on December 30, 2005:
Aggregated Option Exercises in 2005
and Option Values as of December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
Number of Securities |
|
|
|
|
Acquired |
|
|
|
Underlying Unexercised |
|
Value of Unexercised |
|
|
on |
|
Value |
|
Options at |
|
In-the-Money Options at |
|
|
Exercise |
|
Realized |
|
December 31, 2005(#) |
|
December 31, 2005($) |
Name |
|
(#) |
|
($) |
|
Exercisable/Unexercisable |
|
Exercisable/Unexercisable |
|
|
|
|
|
|
|
|
|
Thomas J. Falk
|
|
|
0 |
|
|
|
0 |
|
|
|
1,241,658 |
|
|
|
7,583,183 |
|
|
|
|
|
|
|
|
|
|
|
|
415,906 |
|
|
|
2,579,134 |
|
Robert E. Abernathy
|
|
|
48,716 |
|
|
|
2,071,663 |
|
|
|
482,422 |
|
|
|
3,430,008 |
|
|
|
|
|
|
|
|
|
|
|
|
94,427 |
|
|
|
580,316 |
|
Mark A. Buthman
|
|
|
3,660 |
|
|
|
74,219 |
|
|
|
202,206 |
|
|
|
1,497,015 |
|
|
|
|
|
|
|
|
|
|
|
|
90,604 |
|
|
|
580,316 |
|
Steven R. Kalmanson
|
|
|
36,609 |
|
|
|
1,039,593 |
|
|
|
408,166 |
|
|
|
2,558,822 |
|
|
|
|
|
|
|
|
|
|
|
|
101,974 |
|
|
|
580,316 |
|
W. Dudley Lehman
|
|
|
36,609 |
|
|
|
939,284 |
|
|
|
409,916 |
|
|
|
2,551,459 |
|
|
|
|
|
|
|
|
|
|
|
|
88,023 |
|
|
|
515,833 |
|
35
Performance Graph
Comparison of
Five Year Cumulative Total Return Among
Kimberly-Clark, S&P 500, Peer Group(1) & S&P 500
Consumer Staples Index(2)
The stock price performance shown on the graph below may not be
indicative of future price performance.
TOTAL SHAREHOLDER RETURN
Indexed Returns
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending |
|
|
|
Company Name/Index |
|
Dec 00 |
|
Dec 01 |
|
Dec 02 |
|
Dec 03 |
|
Dec 04 |
|
Dec 05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly-Clark Corp
|
|
|
100.00 |
|
|
|
86.16 |
|
|
|
69.85 |
|
|
|
89.26 |
|
|
|
103.53 |
|
|
|
96.61 |
|
S&P 500 Index
|
|
|
100.00 |
|
|
|
88.11 |
|
|
|
68.64 |
|
|
|
88.33 |
|
|
|
97.94 |
|
|
|
102.75 |
|
S&P 500 Consumer Staples Index
|
|
|
100.00 |
|
|
|
93.60 |
|
|
|
89.61 |
|
|
|
99.98 |
|
|
|
108.14 |
|
|
|
112.01 |
|
Peer Group
|
|
|
100.00 |
|
|
|
104.60 |
|
|
|
103.56 |
|
|
|
111.55 |
|
|
|
131.19 |
|
|
|
134.00 |
|
|
|
(1) |
The companies included in the Peer Group are The Clorox Co.,
Colgate-Palmolive Company, Johnson & Johnson, The
Procter & Gamble Company and Unilever Group. The Peer
Group used in this proxy statement includes the same companies
as those included in the Peer Group used in the proxy statement
for the Corporations prior fiscal year except that The
Gillette Company and Georgia-Pacific Corp., which were included
in last years Peer Group, were acquired by The
Procter & Gamble Company and Koch Industries, Inc.,
respectively, in 2005. |
|
(2) |
Because two of the seven companies in the Peer Group used by the
Corporation in the 2005 Proxy Statement were subsequently
acquired in 2005, the Corporation has added the S&P 500
Consumer Staples Index (the Consumer Staples Group)
to this years Performance Graph. The Consumer Staples
Group is a broader and widely recognized index that is more
readily available to the Corporations stockholders. In the
future, the Corporation expects to use the Consumer Staples
Group instead of a Peer Group in the Performance Graph. |
36
Compensation Committee Interlocks and Insider
Participation
During 2005, or a portion thereof, the following directors
served as members of the Management Development and Compensation
Committee of the Board of Directors of the Corporation: Abelardo
E. Bru, Pastora San Juan Cafferty, Linda Johnson Rice, Marc
J. Shapiro and G. Craig Sullivan.
Thomas J. Falk, Chairman of the Board and Chief Executive
Officer of the Corporation, served as a member of the
Compensation Committee of the Board of Directors of
Kimberly-Clark de Mexico, S.A. de C.V. Claudio X. Gonzalez,
Chairman of the Board and Managing Director of Kimberly-Clark de
Mexico, S.A. de C.V., serves as a member of the Board of
Directors of the Corporation.
Defined Benefit Retirement Plan
The table below illustrates the estimated annual standard
pension benefit payable upon retirement in 2005 at specified
compensation levels and years of service classifications.
Pension Plan Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of Benefit Service |
|
|
|
Remuneration |
|
15 Years |
|
20 Years |
|
25 Years |
|
30 Years |
|
35 Years |
|
40 Years |
|
45 Years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
400,000 |
|
|
$ |
90,000 |
|
|
$ |
120,000 |
|
|
$ |
145,000 |
|
|
$ |
175,000 |
|
|
$ |
205,000 |
|
|
$ |
235,000 |
|
|
$ |
260,000 |
|
|
600,000 |
|
|
|
135,000 |
|
|
|
180,000 |
|
|
|
220,000 |
|
|
|
265,000 |
|
|
|
310,000 |
|
|
|
355,000 |
|
|
|
395,000 |
|
|
800,000 |
|
|
|
180,000 |
|
|
|
240,000 |
|
|
|
295,000 |
|
|
|
355,000 |
|
|
|
415,000 |
|
|
|
475,000 |
|
|
|
530,000 |
|
|
1,000,000 |
|
|
|
225,000 |
|
|
|
300,000 |
|
|
|
370,000 |
|
|
|
445,000 |
|
|
|
520,000 |
|
|
|
595,000 |
|
|
|
665,000 |
|
|
1,200,000 |
|
|
|
270,000 |
|
|
|
360,000 |
|
|
|
445,000 |
|
|
|
535,000 |
|
|
|
625,000 |
|
|
|
715,000 |
|
|
|
800,000 |
|
|
1,400,000 |
|
|
|
315,000 |
|
|
|
420,000 |
|
|
|
520,000 |
|
|
|
625,000 |
|
|
|
730,000 |
|
|
|
835,000 |
|
|
|
935,000 |
|
|
1,600,000 |
|
|
|
360,000 |
|
|
|
480,000 |
|
|
|
595,000 |
|
|
|
715,000 |
|
|
|
835,000 |
|
|
|
955,000 |
|
|
|
1,070,000 |
|
|
1,800,000 |
|
|
|
405,000 |
|
|
|
540,000 |
|
|
|
670,000 |
|
|
|
805,000 |
|
|
|
940,000 |
|
|
|
1,075,000 |
|
|
|
1,205,000 |
|
|
2,000,000 |
|
|
|
450,000 |
|
|
|
600,000 |
|
|
|
745,000 |
|
|
|
895,000 |
|
|
|
1,045,000 |
|
|
|
1,195,000 |
|
|
|
1,340,000 |
|
|
2,200,000 |
|
|
|
495,000 |
|
|
|
660,000 |
|
|
|
820,000 |
|
|
|
985,000 |
|
|
|
1,150,000 |
|
|
|
1,315,000 |
|
|
|
1,475,000 |
|
|
2,400,000 |
|
|
|
540,000 |
|
|
|
720,000 |
|
|
|
895,000 |
|
|
|
1,075,000 |
|
|
|
1,255,000 |
|
|
|
1,435,000 |
|
|
|
1,610,000 |
|
|
2,600,000 |
|
|
|
585,000 |
|
|
|
780,000 |
|
|
|
970,000 |
|
|
|
1,165,000 |
|
|
|
1,360,000 |
|
|
|
1,555,000 |
|
|
|
1,745,000 |
|
|
2,800,000 |
|
|
|
630,000 |
|
|
|
840,000 |
|
|
|
1,045,000 |
|
|
|
1,255,000 |
|
|
|
1,465,000 |
|
|
|
1,675,000 |
|
|
|
1,880,000 |
|
|
3,000,000 |
|
|
|
675,000 |
|
|
|
900,000 |
|
|
|
1,120,000 |
|
|
|
1,345,000 |
|
|
|
1,570,000 |
|
|
|
1,795,000 |
|
|
|
2,015,000 |
|
|
3,200,000 |
|
|
|
720,000 |
|
|
|
960,000 |
|
|
|
1,195,000 |
|
|
|
1,435,000 |
|
|
|
1,675,000 |
|
|
|
1,915,000 |
|
|
|
2,150,000 |
|
|
3,400,000 |
|
|
|
765,000 |
|
|
|
1,020,000 |
|
|
|
1,270,000 |
|
|
|
1,525,000 |
|
|
|
1,780,000 |
|
|
|
2,035,000 |
|
|
|
2,285,000 |
|
|
3,600,000 |
|
|
|
810,000 |
|
|
|
1,080,000 |
|
|
|
1,345,000 |
|
|
|
1,615,000 |
|
|
|
1,885,000 |
|
|
|
2,155,000 |
|
|
|
2,420,000 |
|
|
3,800,000 |
|
|
|
855,000 |
|
|
|
1,140,000 |
|
|
|
1,420,000 |
|
|
|
1,705,000 |
|
|
|
1,990,000 |
|
|
|
2,275,000 |
|
|
|
2,555,000 |
|
|
4,000,000 |
|
|
|
900,000 |
|
|
|
1,200,000 |
|
|
|
1,495,000 |
|
|
|
1,795,000 |
|
|
|
2,095,000 |
|
|
|
2,395,000 |
|
|
|
2,690,000 |
|
|
4,200,000 |
|
|
|
945,000 |
|
|
|
1,260,000 |
|
|
|
1,570,000 |
|
|
|
1,885,000 |
|
|
|
2,200,000 |
|
|
|
2,515,000 |
|
|
|
2,825,000 |
|
The compensation covered by the Corporations defined
benefit plans for which the above table is provided includes the
salary and bonus information set forth in the Summary
Compensation Table. The estimated years of benefit service under
the defined benefit plan, as of normal retirement at
age 65, for the Named Executive Officers are: Thomas J.
Falk, 39.9 years; Robert E. Abernathy, 37.8 years;
Mark A. Buthman, 15.2 years; Steven R. Kalmanson,
40.3 years; and W. Dudley Lehman, 40.1 years. Under
the plan, an employee is entitled to receive an annual standard
benefit based on years of benefit service and integrated with
social security benefits. The Internal Revenue Code of 1986, as
amended, generally places limits on the amount of pension
benefits that may be paid from
37
the tax qualified defined benefit plan. However, the Corporation
through its supplemental plans will make payment to any
participant in the amount of the benefit payable under the tax
qualified defined benefit plan that was limited by the Internal
Revenue Code of 1986. Any such amount payable under the
supplemental plans is included in the table above.
Retirement benefits for participants who have at least five
years of vesting service may begin on a reduced basis at
age 55, or on an unreduced basis at normal retirement age.
Unreduced benefits also are available (i) for participants
with 10 years of vesting service at age 62 or as early
as age 60 with 30 years of vesting service and
(ii) for certain involuntary terminations related to the
Corporations Global Business Plan. The normal form of
benefit is a single-life annuity payable monthly and other
optional forms of benefit are available including a joint and
survivor benefit. Accrued benefits prior to 2005 under the
supplemental plans will at the participants option, either
be paid as monthly payments in the same form as the retirement
payments from the tax qualified defined benefit plan or as an
actuarially determined lump sum payment upon retirement after
age 55. Accrued benefits in 2005 or later years will only
be payable as an actuarially determined lump sum payment six
months after termination of employment.
In 1997, pursuant to a broad-based election offered certain
employees of the Corporation, Mr. Buthman elected to no
longer accrue any additional years of benefit service under the
Corporations defined benefit retirement plan and instead
to participate in the Corporations retirement contribution
plan. Under this defined contribution plan, the Corporation
provides monthly contributions to a retirement contribution
account pursuant to a schedule based on the participants
age and eligible earnings. Contributions are invested in certain
designated investment options as elected by the participant.
Distributions of the participants account balance are only
available after termination of employment. The participant will
receive credit under a supplemental plan account to the extent
contributions are limited as required by the Internal Revenue
Code of 1986. Mr. Buthman is the only Named Executive
Officer who is a participant in this defined contribution plan
and its supplemental plan.
Further, under all the supplemental plans described above, in
the event of a change of control of the Corporation or a
reduction in the Corporations long-term credit rating
below investment grade, each participant would have the option
of receiving the present value of his or her accrued benefits
prior to 2005 in the supplemental plans in a lump sum, reduced
by 10 percent and 5 percent for active and former
employees, respectively. While these supplemental plans remain
unfunded, in 1994 the Board of Directors approved the
establishment of a trust and authorized the Corporation to make
contributions to this trust in order to provide a source of
funds to assist the Corporation in meeting its liabilities under
the plans.
Executive Officer Severance Plans
The Corporation maintains a variety of severance plans for its
executive officers, depending on the circumstances that resulted
in their termination. Those plans include the Executive
Severance Plan (the Executive Severance Plan), which
is applicable when an officer is terminated following a change
in control, and two severance pay plans, which are applicable in
the event of certain other involuntary terminations. An
executive officer may not receive severance under more than one
of the plans described below.
The Corporation has agreements under the Corporations
Executive Severance Plan with each Named Executive Officer. The
agreements provide that in the event of a Qualified
Termination of Employment (as described below), the
participant will receive a cash payment in an amount equal to
the sum of (1) three times annual base salary and the
target bonus award which would be payable as if the performance
goals established at the beginning of each year were met under
the Executive Officer Achievement Award Program, (2) the
value, based on the Corporations stock
38
price at the date of the participants termination, of
forfeited restricted shares and restricted share units and
certain unvested incentive stock options, (3) the value of
three additional years of service and compensation under the
Corporations pension plan and its related supplemental
plans, and (4) three years of COBRA premiums for medical
and dental coverage. In addition, nonqualified stock options,
and certain incentive stock options, will vest and be
exercisable within the earlier of five years from the
participants termination or the remaining term of the
option. This Plan also provides that in certain circumstances if
the participant incurs excise tax due to the application of
Section 280G of the Internal Revenue Code of 1986, the
participant is entitled to an additional cash payment so that
the participant will be in the same position as if the excise
tax were not applicable. Qualified Termination of Employment is
defined in this Plan to mean termination of employment within
two years following a change of control of the Corporation (as
defined in this Plan) either involuntarily without cause or by
the participant with good reason. In addition, any involuntary
termination without cause within one year before a change of
control will also be determined to be a Qualified Termination of
Employment if it is in connection with, or in anticipation of, a
change of control. The Board has determined the eligibility
criteria for participation in this Plan. Each agreement expires
three years from its date of execution, unless extended by the
Board of Directors.
Had a Qualified Termination of Employment under the Executive
Severance Plan occurred on December 31, 2005 with respect
to each Named Executive Officer, the approximate value of the
severance benefits under the plan for each such officer would
have been as follows: Mr. Falk
$20.3 million; Mr. Abernathy
$5.9 million; Mr. Buthman
$5.7 million; Mr. Kalmanson
$7.0 million; and Mr. Lehman
$4.4 million.
The Corporations severance pay plans generally provide
eligible employees (including the Named Executive Officers)
severance payments and benefits in the event of certain
involuntary terminations. If such termination was related to the
Corporations Global Business Plan, the Named Executive
Officer would receive either (1) a lump sum severance
payment of two weeks pay for each year of employment with
a minimum severance payment of 26 weeks pay, six months of
COBRA medical coverage and outplacement or (2) if the Named
Executive Officer were retirement eligible, the plans allow the
eligible employee to elect an unreduced pension benefit and a
severance payment of $10,000 in lieu of other severance benefits
under the plans. In the event a Named Executive Officers
termination was not related to the Corporations Global
Business Plan, the Named Executive Officer would receive a lump
sum severance payment of one weeks pay for each year of
employment with a minimum severance payment of six weeks pay and
a maximum of 26 weeks pay.
The approximate value of the severance benefits payable to the
Named Executive Officers if they had been terminated on
December 31, 2005 would have been as follows:
|
|
|
|
|
|
|
|
|
|
|
Value if Termination Related to |
|
Value if Termination Not Related |
Name |
|
Global Business Plan($) |
|
to Global Business Plan($) |
|
|
|
|
|
Thomas J. Falk
|
|
|
1,007,731 |
|
|
|
587,500 |
|
Robert E. Abernathy
|
|
|
470,423 |
|
|
|
247,500 |
|
Mark A. Buthman
|
|
|
461,192 |
|
|
|
242,500 |
|
Steven R. Kalmanson
|
|
|
682,731 |
|
|
|
334,615 |
|
W. Dudley Lehman
|
|
|
543,308 |
|
|
|
264,904 |
|
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporations directors, executive officers
and any person owning more than 10 percent of a class of
the Corporations stock
39
to file reports with the Securities and Exchange Commission
regarding their ownership of the Corporations stock and
any changes in ownership. The Corporation maintains a compliance
program to assist the Corporations directors and executive
officers in making these filings. With one exception noted
below, we believe that the Corporations executive officers
and directors timely complied with their filing requirements for
2005.
During 2005, Mr. Bergstrom relinquished to his son control
of 800 shares of the Corporations stock previously
reported as indirectly owned for the benefit of his son. The
report reflecting the change in beneficial ownership of the
shares was not filed until February 21, 2006.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
The Corporation owns and operates a corporate aircraft based at
the Appleton, Wisconsin airport. The aircraft is used to support
the operations of the Corporations Neenah, Wisconsin based
businesses. The only fixed base operator at the airport is
Maxair, Inc. (Maxair), a corporation owned
100 percent by Steven R. Kalmanson and his family.
Mr. Kalmanson is a Named Executive Officer.
Mr. Kalmansons wife is responsible for the
day-to-day operations
of Maxair.
Pursuant to a lease agreement entered into in 1999, from
January 1, 2005 through December 21, 2005, the
Corporation leased aircraft hangar and related office space at
the Appleton, Wisconsin airport from Maxair. On
December 21, 2005, the Corporation purchased the hangar and
related office space from Maxair for a purchase price of
$1.6 million. In determining a fair purchase price for the
hangar and related office space, the Corporation obtained an
appraisal from CB Richard Ellis Group, Inc., a nationally
recognized appraisal firm. The Corporation believes that the
price paid for the hangar and related office space is reasonable
and comparable to the amounts it would have paid to a third
party to purchase similar facilities. The purchase of the hangar
and related office space from Maxair was reviewed with the
Corporations Audit Committee and authorized and approved
by the Chairman of the Audit Committee.
Prior to its purchase of the hangar and related office space
from Maxair, in 2005 the Corporation paid $159,000 to Maxair for
rental and other payments under the lease agreement for hangar
and related office space. Also in 2005, the Corporation paid to
Maxair pursuant to a fueling agreement $20,300 for fuel pumping
services. Beginning on January 1, 2006, the Corporation has
made arrangements to obtain fueling services from an independent
third party.
The Corporation utilized the services of Maxair at the Appleton,
Wisconsin airport for more than eight years. The transactions
with Maxair were reviewed annually by the Corporations
internal audit group. The Corporation believes that the prices
it paid to Maxair for the hangar and related office space, and
the fueling services were reasonable and comparable to the
amounts it would have paid to a third party for similar
services. As a result of the Corporations purchase of the
hangar and related office space, and its arrangement to purchase
fuel from an independent third party, the Corporation does not
expect to engage in similar transactions with Maxair in the
future.
2007 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the
Corporations 2007 proxy statement and form of proxy for
the Annual Meeting of Stockholders to be held in 2007 should be
addressed to the Secretary, Kimberly-Clark Corporation, P.O.
Box 619100, Dallas, Texas 75261-9100, and must be received
at this address no later than November 14, 2006. Upon
receipt of a proposal, the Corporation will determine whether or
not to include the proposal in the proxy statement and proxy in
accordance with applicable law. It is suggested that proposals
be forwarded by certified mail return receipt
requested.
40
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
The Corporations By-Laws require advance notice for any
business to be brought before a meeting of stockholders. In
general, for business to properly be brought before an Annual
Meeting by a stockholder (other than in connection with the
election of directors; see Corporate
Governance Stockholder Nominations for
Directors above), written notice of the stockholder
proposal must be received by the Secretary of the Corporation
not less than 75 days nor more than 100 days prior to
the first anniversary of the preceding years Annual
Meeting. Certain other notice periods are provided if the date
of the Annual Meeting is advanced by more than 30 days or
delayed by more than 60 days from the anniversary date. The
stockholders notice to the Secretary must contain a brief
description of the business to be brought before the meeting and
the reasons for conducting such business at the meeting, as well
as certain other information. Additional information concerning
the advance notice requirement and a copy of the
Corporations By-Laws may be obtained from the Secretary of
the Corporation at the address provided below.
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee of the Board assists the Board in
fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing and financial reporting
practices of the Corporation.
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained from the independent
registered public accounting firm (the auditors) a
formal written statement describing all relationships between
the auditors and the Corporation that might bear on the
auditors independence consistent with Independence
Standards Board Standard No. 1, Independence
Discussions with Audit Committees, discussed with the
auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors
independence. The Audit Committee also discussed with
management, the internal auditors, and the auditors the quality
and adequacy of the Corporations internal controls and the
internal audit functions organization, responsibilities,
and budget and staffing. The Audit Committee reviewed with both
the auditors and the internal auditors their audit plans, audit
scope and identification of audit risks.
The Audit Committee discussed and reviewed with the auditors all
communications required by generally accepted auditing
standards, including those described in Statement on Auditing
Standards No. 61, as amended, Communication with
Audit Committees and, with and without management present,
discussed and reviewed the results of the auditors
examination of the financial statements. The Committee also
discussed the results of the internal audit examinations.
The Audit Committee reviewed the audited financial statements of
the Corporation as of and for the fiscal year ended
December 31, 2005, with management and the auditors. The
Audit Committee also reviewed managements assessment of
the effectiveness of internal controls as of December 31,
2005 and the auditors report thereon. Management has the
responsibility for the preparation of the Corporations
financial statements, and the auditors have the responsibility
for the examination of those statements.
41
Based on the above-mentioned review and discussions with
management and the auditors, the Audit Committee recommended to
the Board that the Corporations audited financial
statements be included in its Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005, for filing with the
Securities and Exchange Commission. The Audit Committee also has
selected and recommended to stockholders for approval the
reappointment of Deloitte & Touche LLP as the
independent registered public accounting firm to audit the
consolidated financial statements of the Corporation for 2006.
|
|
|
AUDIT COMMITTEE OF THE BOARD OF |
|
DIRECTORS |
|
|
Dennis R. Beresford, Chairman |
|
John R. Alm |
|
John F. Bergstrom |
|
Mae C. Jemison, M.D. |
OTHER MATTERS
The management of the Corporation knows of no other matters to
be presented at the meeting. Should any other matter requiring a
vote of the stockholders arise at the meeting, the persons named
in the proxy will vote the proxies in accordance with their best
judgment.
|
|
|
By Order of the Board of Directors. |
|
|
|
|
|
Timothy C. Everett |
|
Vice President and Secretary |
KIMBERLY-CLARK CORPORATION
P.O. Box 619100
Dallas, Texas 75261-9100
Telephone (972) 281-1200
March 14, 2006
42
Appendix A
Independence of Directors
The Board has established the standards described below for what
constitutes independence for directors. Those standards are
intended to be consistent with the provisions of the Securities
Exchange Act of 1934, the rules and regulations of the
Securities and Exchange Commission and the New York Stock
Exchange. The Board will determine the independence of directors
in its business judgment, consistent with applicable laws.
A director will be independent if the Board makes an affirmative
determination that a director has no material relationship with
the Corporation (directly or as a partner, shareholder or
officer of an organization that has a material relationship with
the Company). In making this determination the Board will
consider all relevant facts and circumstances including the
materiality of the relationship to the director and to persons
or organizations with which the director has an affiliation.
Material relationships can include commercial, industrial,
banking, consultant, legal, accounting, charitable and familial
relationships (among others). The Board will review all
commercial and other relationships the Corporation has with
directors on at least an annual basis and with nominees prior to
their election to the Board.
The Board has determined that a director is presumed to be
independent unless any of the following are
applicable to the director:
|
|
A. |
Employment with Corporation: |
|
|
|
|
|
the director is, or during the preceding three years has been,
an employee of the Corporation, its subsidiaries or equity
affiliates; |
|
|
|
the director has received during any twelve-month period within
the preceding three years more than $100,000 in direct
compensation from the Corporation, its subsidiaries or equity
affiliates, other than (i) director and committee fees and
(ii) pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in
any way on continued service); |
|
|
|
an immediate family member of the director is, or during the
preceding three years has been, an executive officer of the
Corporation or one of its subsidiaries; |
|
|
|
an immediate family member of the director has received during
any twelve-month period within the preceding three years more
than $100,000 in direct compensation for service as an executive
employee of the Corporation, its subsidiaries or equity
affiliates, other than (i) director and committee fees and
(ii) pension or other forms of deferred compensation for
prior service (provided such compensation is not contingent in
any way on continued service); |
|
|
B. |
Affiliation with Independent Auditor or Internal Auditor: |
|
|
|
|
|
the director is (i) a current partner or employee of a firm
that is the Corporations internal or external auditor, or
(ii) was a partner or employee of such firm within the
preceding three years (but is no longer) and personally worked
on the Corporations audit within that time; |
|
|
|
an immediate family member of the director is (i) a current
partner of a firm that is the Corporations internal or
external auditor, (ii) is a current employee of such firm
and participates in the firms audit, assurance or tax
compliance (but not tax planning) practices, or (iii) was a
partner or employee of such firm within the preceding three
years (but is no longer) and personally worked on the
Corporations audit within that time; |
A-1
|
|
C. |
Management Development and Compensation Committee
Interlocks: |
|
|
|
|
|
the director is, or has been within the last three years,
employed as an executive officer of another company where any of
the Corporations current executive officers at the same
time serves or served as a member of the compensation committee
of such other company; |
|
|
|
an immediate family member of the director is, or has been
within the last three years, employed as an executive officer of
another company where any of the Corporations current
executive officers at the same time serves or served as a member
of the compensation committee of such other company; |
|
|
D. |
Business or Charitable Relationships with the Corporation: |
|
|
|
|
|
Director Transactions Material to Corporation. The
director is a current executive officer, employee or owner of
more than ten percent of the equity of another company that has
made payments to or received payments from the Corporation, its
subsidiaries or equity affiliates for property or services in an
amount which, in any of the last three fiscal years, exceeds two
percent of the Corporations annual consolidated gross
revenues; |
|
|
|
Family Member Transactions Material to Corporation. An
immediate family member of the director is a current executive
officer of another company that has made payments to or received
payments from the Corporation, its subsidiaries or equity
affiliates for property or services in an amount which, in any
of the last three fiscal years, exceeds two percent of the
Corporations annual consolidated gross revenues; |
|
|
|
Director Transactions Material to Director. The director
is a current executive officer, employee or owner of more than
ten percent of the equity of another company that has made
payments to or received payments from the Corporation, its
subsidiaries or equity affiliates for property or services in an
amount which, in any of the last three fiscal years, exceeds
(i) two percent of the other companys annual
consolidated gross revenues or (ii) $1 million,
whichever is greater; |
|
|
|
Family Member Transactions Material to Director. An
immediate family member of the director is a current executive
officer of another company that has made payments to or received
payments from the Corporation, its subsidiaries or equity
affiliates for property or services in an amount which, in any
of the last three fiscal years, exceeds (i) two percent of
the other companys annual consolidated gross revenues or
(ii) $1 million, whichever is greater; |
|
|
|
Director Indebtedness. The director is an executive
officer, employee or owner of more than ten percent of the
equity of another company that is indebted to the Corporation or
to whom the Corporation is indebted and the total amount of
either companys indebtedness to the other is greater than
five percent of the total consolidated assets of the company
owing the indebtedness; |
|
|
|
Family Member Indebtedness. An immediate family member of
the director is an executive officer of another company that is
indebted to the Corporation or to whom the Corporation is
indebted and the total amount of either companys
indebtedness to the other is greater than five percent of the
total consolidated assets of the company owing the
indebtedness; and |
|
|
|
Charitable Relationships. The director or an immediate
family member of the director serves as an executive officer,
director or trustee of a charitable organization, and the
Corporations charitable contributions to that organization
during any of the prior three years exceeded the greater of
(i) $1 million or (ii) two percent of the
charitable organizations consolidated gross revenues for
that year. Contributions made pursuant to |
A-2
|
|
|
|
|
the automatic matching of employee contributions will not be
included in the determination of charitable contributions or
receipts for this purpose. |
An immediate family member means a persons
spouse, parents, children, siblings, mothers and
fathers-in-law, sons
and daughters-in-law,
brothers and
sisters-in-law, and
anyone (other than domestic employees) who shares that
persons home. An individual will no longer be considered
an immediate family member after legal separation, divorce,
death or incapacity.
To the extent permitted by applicable rules of the Securities
and Exchange Commission and New York Stock Exchange, the Board
may determine that a director or nominee is an independent
director for other reasons as long as the Board determines that
such person is independent of management and free from any
relationship that in the opinion of the Board would interfere
with such persons independent judgment as a member of the
Board. Prior to the Board making this determination, the
Nominating and Corporate Governance Committee must make a
similar determination and recommend to the Board that the
director be determined to be independent.
Similarly, the Committee may determine that a director or
nominee is not independent even if he or she otherwise satisfies
the presumptions described above if the Board determines that
such person has a relationship to the Corporation or management
that interferes with such persons independent judgment as
a member of the Board.
A-3
Appendix B
Kimberly-Clark Corporation
Audit Committee Charter
Adopted on November 12, 2002
[As amended through November 16, 2005]
Organization
This charter governs the operations of the Audit Committee. The
Audit Committee shall review and reassess the adequacy of this
charter annually and recommend any proposed changes of the
charter to the Board for approval. The Corporations
Nominating and Corporate Governance Committee, in consultation
with the Chairman of the Board, shall recommend members for
appointment to, and the Chairman of, the Audit Committee to the
Board for its approval. The Audit Committee shall be comprised
of at least three directors, each of whom shall meet the
independence requirements of the New York Stock Exchange
(NYSE), the Securities Exchange Act of 1934, and the
rules and regulations of the Securities and Exchange Commission
(SEC). All Audit Committee members shall be
financially literate, and the Committee desires that at least
one member of the Audit Committee be an audit committee
financial expert, as defined by the rules and regulations
of the SEC. No member of the Audit Committee shall serve on the
audit committee of more than two other public companies without
reviewing this service in advance with the Board. The Audit
Committee shall maintain minutes of its meetings and report to
the Board.
Policy
The Audit Committee shall assist the Board in fulfilling its
oversight responsibilities to stockholders, the investment
community and others for monitoring (1) the quality and
integrity of the financial statements of the Corporation;
(2) the Corporations compliance with ethical policies
contained in the Corporations Code of Conduct and legal
and regulatory requirements; (3) the independence,
qualification and performance of the Corporations
independent auditors; and (4) the performance of the
Corporations internal auditors. The Audit Committee shall
have the authority to retain special legal, accounting or other
consultants to advise the Audit Committee. The Audit Committee
may request any officer or employee of the Corporation or the
Corporations outside counsel or independent auditors to
attend a meeting of the Audit Committee or to meet with any
members of, or consultants to, the Audit Committee.
Responsibilities and Processes
The Audit Committee, in carrying out its responsibilities, shall
review its policies and procedures periodically in order to best
react to changing conditions and circumstances. The Audit
Committee shall take appropriate actions to ensure a management
environment for quality financial reporting, sound business risk
practices, and ethical behavior. The following shall be the
principal duties and responsibilities of the Audit Committee.
These are set forth as a guide with the understanding that the
Audit Committee may supplement them as appropriate.
In carrying out its responsibilities, the Audit Committee shall:
|
|
|
|
1. |
Engage, subject to stockholder approval, the independent
auditors of the Corporation to conduct the examination of the
books and records of the Corporation and its affiliates, and to
terminate any such engagement if circumstances warrant. The
independent auditors are ultimately accountable to, and shall
report directly to, the Audit Committee. The Audit Committee
shall have the sole authority to approve all audit and non-audit
engagement fees and terms. The Audit Committee shall provide
oversight of the work of the independent auditors, including
resolution of disagreements between management and the
independent auditors regarding financial reporting. |
B-1
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|
|
2. |
Pre-approve all audit services and, to the extent permitted by
law, all non-audit services provided by the independent
auditors. The Audit Committee may delegate pre-approval
authority to a member of the Audit Committee. The decisions of
any Audit Committee member to whom pre-approval authority is
delegated shall be presented to the full Audit Committee at its
next scheduled meeting. |
|
|
3. |
Meet with the Corporations independent auditors and
management to review the scope of the proposed annual audit (and
related quarterly reviews), the audit procedures to be followed
and, at the conclusion of the audit, review the principal audit
findings including any comments or recommendations of the
Corporations independent auditors. |
|
|
4. |
Discuss with the Corporations independent auditors and
management information relating to the auditors judgments
about the quality, not just the acceptability, of the
Corporations accounting principles and matters identified
by the auditors during their interim reviews. Also, the
Committee shall discuss the results of the annual audit and any
other matters that may be required to be communicated to the
Audit Committee by the Corporations independent auditors. |
|
|
5. |
In accordance with SEC rules, review managements assertion
on its assessment of the effectiveness of internal controls as
of the end of the most recent fiscal year and the independent
auditors report thereon. Review and discuss with
management and the independent auditors any significant issues
as to the adequacy of the Corporations internal controls
and the adequacy of disclosures about internal controls over
financial reporting. |
|
|
6. |
At least annually, receive from and discuss with the independent
auditors and management, separately or together as determined by
the Committee, a report on (1) all critical accounting
policies and practices to be used; (2) all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with management
of the Corporation, the ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditors; and (3) other
material written communications between the independent auditors
and management of the Corporation, such as any management letter
or schedule of unadjusted audit differences. |
|
|
7. |
Obtain assurance from the Corporations independent
auditors that they have complied with their obligation to
identify and report fraud in connection with their audit of the
financial statements of the Corporation. |
|
|
8. |
Prior to filing with the SEC, discuss the Corporations
annual audited financial statements and unaudited quarterly
financial statements with management and the independent
auditors, including managements discussion and analysis of
financial condition and results of operations. Discuss other
matters with the Corporations independent auditors as
required by the SEC and, if appropriate, recommend that the
audited financial statements be included in the
Corporations
Form 10-K.
|
|
|
9. |
Approve the content of the report of the Audit Committee
required by the SEC to be included in the Corporations
annual Proxy Statement. |
|
|
|
|
10. |
Provide sufficient opportunity at its meetings to meet
separately in executive session with the Corporations
independent auditors, members of management and representatives
of internal audit. Among the items to be discussed with the
Corporations independent auditors are (1) the
independent auditors evaluation of the Corporations
financial and accounting personnel; (2) the cooperation
that the independent auditors received during the course of
their audit; (3) any management letter provided by the
independent auditors and managements response; and (4) any
other matters the Audit Committee may determine from time to
time. |
|
|
11. |
At least annually, obtain and review a report by the independent
auditors describing: (1) the firms internal
quality-control procedures; and (2) any material issues
raised by the most recent internal quality-control review, peer
review or Public Company Accounting Oversight |
B-2
|
|
|
|
|
Board review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, respecting any independent audits carried out by the
firm and any steps taken to deal with any such items. |
|
|
12. |
At least annually, receive reports from the Corporations
independent auditors regarding the auditors independence
from management and the Corporation (including the
identification of all relationships between the independent
auditors and the Corporation), discuss such reports with the
independent auditors, consider whether the provision of
non-audit services by the independent auditors is compatible
with the auditors independence, and, if determined by the
Audit Committee, recommend that the Board take action to satisfy
itself of the independence of the auditors. |
|
|
13. |
Evaluate the performance of the Corporations independent
auditors and lead audit partner, and report its conclusions to
the full Board. Ascertain that the Corporations
independent auditors are in compliance with the audit partner
rotation rules of the SEC. |
|
|
14. |
Set hiring policies that conform to applicable SEC or other
external guidelines for employment by the Corporation of
employees and former employees of the independent auditors. At
least annually, receive a report from management on the
Corporations hiring of former employees of the independent
auditors. |
|
|
15. |
Review major changes to the Corporations auditing and
accounting principles and practices as suggested by the
independent auditors, internal auditors or management. |
|
|
16. |
Discuss with the Corporations independent auditors, the
internal audit executive and management the adequacy and
effectiveness of the Corporations internal auditing,
accounting and financial controls, and elicit any
recommendations for improvement. |
|
|
17. |
Review the internal audit function, budgeting and staffing,
including appointment or replacement of the senior internal
auditing executive and the proposed audit scope for the year. At
least annually, review the performance of the senior internal
auditing executive. The senior internal auditing executive is
accountable to, and shall report directly to, the Audit
Committee. |
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Receive from the internal audit executive a summary of findings
from completed audits (and managements response) and a
progress report on the proposed internal audit plan with
explanations for any deviations from the original plan. |
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Provide oversight of the Corporations compliance program
and receive periodic reports from management on compliance
program effectiveness and significant issues. Review periodic
reports from the internal audit executive with respect to, and
advise the Board regarding compliance with, the
Corporations Code of Conduct. |
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Review periodic reports from management with respect to related
party transactions and review potential conflict of interest
situations where appropriate. |
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Discuss with management the outline of press releases regarding
results of operations, as well as general policies on earnings
guidance to be provided to analysts, rating agencies, and the
general public. Review any relevant items with management and
the Corporations independent auditors prior to release of
any such press releases or earnings guidance. The review shall
be with the Chairman of the Audit Committee or the full Audit
Committee, as may be appropriate. |
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Meet, at least annually, with management to discuss, as
appropriate, significant accounting accruals, estimates and
reserves; litigation matters; managements representations
to the independent auditors; new or proposed regulatory
accounting and reporting rules; any significant off-balance
sheet transactions and variable interest entities; and any
significant financial reporting issues or judgments disputed
with the Corporations independent auditors. |
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Discuss with management policies with respect to risk assessment
and risk management. |
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Review with the Corporations general counsel legal matters
that may have a material impact on the financial statements. |
B-3
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Establish procedures for (1) the receipt, retention, and
treatment of complaints received by the Corporation regarding
accounting, internal accounting controls, or auditing matters,
and (2) the confidential, anonymous submission by employees
of the Corporation of concerns regarding questionable accounting
or auditing matters. |
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Report regularly to the Board any issues that arise with respect
to the quality or integrity of the Corporations financial
statements. |
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In consultation with the Nominating and Corporate Governance
Committee, conduct an annual evaluation of the performance and
effectiveness of the Audit Committee and report the results of
that evaluation to the Board. |
While the Audit Committee has the responsibilities and powers
set forth in this charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the
Corporations financial statements are complete and
accurate and are in accordance with generally accepted
accounting principles. Management is responsible for preparing
the Corporations financial statements and the
Corporations independent auditors are responsible for
auditing the annual financial statements and for reviewing the
unaudited interim financial statements. Nor is it the duty of
the Audit Committee to conduct investigations to assure
compliance with laws and regulations and the Corporations
Code of Conduct.
B-4
Invitation to Stockholders
Notice Of 2006 Annual Meeting
Proxy Statement
(BARCODE)
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(BARCODE)
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MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
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(MAIL CODE) |
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
C 1234567890 JNT
(BARCODE)
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Mark this box with an X if you have made
changes to your name or address details above. |
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Annual Meeting Proxy Card
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123456 |
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C0123456789
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PLEASE REFER TO THE REVERSE SIDE FOR TELEPHONE AND INTERNET VOTING INSTRUCTIONS.
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A
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Election
of Directors |
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The Board of
Directors recommends a vote FOR the listed nominees (term to expire at 2009 Annual
Meeting of Stockholders). |
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1.
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Nominees:
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For
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Withhold
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For
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Withhold
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For
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Withhold
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Withhold |
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01 Dennis R. Beresford
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02 Abelardo E. Bru
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03 Thomas J. Falk
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04 Mae C. Jemison
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B
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Management
Proposal |
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The Board of Directors recommends a vote FOR Management Proposal 2. |
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For
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Against
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Abstain |
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2.
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Management Proposal Approval of Auditors
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Stockholder Proposals |
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The Board of
Directors recommends a vote AGAINST Stockholder Proposals 3, 4, 5 and 6. |
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For
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3.
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Stockholder Proposal Regarding Classified Board
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4.
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Stockholder Proposal Regarding Adoption of Global
Human Rights Standards Based on International
Labor Conventions
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Stockholder Proposal Regarding Majority Voting
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6.
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Stockholder Proposal Requesting A Report on
Sustainable Forestry Practices
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Mark this box with an X if you plan to attend the meeting. |
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D
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Authorized Signatures Sign Here This section must be completed for your instructions to
be executed. |
Please sign below exactly as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full title as such. If
signing in the name of a corporation or partnership, please sign full corporate or partnership name
and indicate title of authorized signatory.
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Signature 1 Please keep signature within the box
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Signature 2 Please keep signature within the box
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Date (mm/dd/yyyy) |
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/ /
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Proxy Kimberly-Clark Corporation
Proxy/Voting Instructions for the Annual Meeting of Stockholders April 27, 2006
Solicited on Behalf of the Board of Directors
Thomas J. Falk, Ronald D. Mc Cray and Timothy C. Everett, or any of them, with full power of
substitution to each, hereby are appointed proxies and are authorized to vote, as specified on the
reverse side of this card, all shares of common stock that the undersigned is entitled to vote at
the Annual Meeting of Stockholders of Kimberly-Clark Corporation, to be held at the Four Seasons
Resort and Club, 4150 North MacArthur Boulevard, Irving, Texas on April 27, 2006 at 11:00 a.m. and
at any adjournment thereof. In their discretion, the proxies are authorized to vote on such other
business as may properly come before the meeting.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3,
4, 5 AND 6. IF YOU PREFER TO VOTE SEPARATELY ON INDIVIDUAL ISSUES YOU MAY DO SO BY MARKING THE
APPROPRIATE BOXES ON THE REVERSE SIDE.
This card
also constitutes voting instructions to the trustees of the
Corporations employee benefits and stock purchase plans to vote whole
shares attributable to accounts the undersigned may hold under such plans. If no voting
instructions are provided, the respective plan committees, which are composed of management
personnel, will direct the trustees to vote the shares.
Please date, sign and return this proxy/voting instruction card promptly. If you own shares
directly and plan to attend the meeting, please so indicate in the space provided on the reverse
side.
IMPORTANT: TO BE SIGNED AND DATED ON THE REVERSE SIDE
PLEASE RETURN THIS CARD IN THE SELF-ADDRESSED ENVELOPE PROVIDED.
Its a win-win solution! Reduce paper flow to your home and help the environment, too! If you have access to the
Internet, we encourage you to consider receiving Kimberly-Clarks future Annual
Reports and Proxy Statements in electronic format rather than in printed form. In electing to do so, you conserve natural resources
and save your company money! To sign up for electronic delivery service, go to our transfer agents website at
http://www.econsent.com/kmb at any time and follow the instructions. Act Now!
Telephone and Internet Voting Instructions
You can vote by telephone OR Internet! Available 24 hours a day 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
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To vote using the Telephone (within U.S. and Canada)
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To vote using the Internet |
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Call toll free 1-800-652-VOTE (8683) in the United States
or Canada any time on a touch tone telephone. There is NO
CHARGE to you for the call.
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Go to the following website:
WWW.COMPUTERSHARE.COM/US/PROXY |
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Follow the simple instructions provided by the recorded
message.
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Enter the information requested on your
computer screen and follow the simple instructions. |
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If you vote by telephone or the Internet, please DO NOT mail back this proxy card.
Proxies submitted by telephone or the Internet must be received by 1:00 a.m., Central Time, on April 27, 2006.
THANK YOU FOR VOTING