UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed
by the
Registrant x
Filed
by a Party
other than the Registrant o
Check
the
appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
x Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Materials Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
ENERGIZER
HOLDINGS, INC.
—————————————————————————
(Exact
Name of
Registrant as Specified in its Charter)
Payment
of Filing
Fee (Check the appropriate box)
x No
fee required.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.1
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(1)
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Title
of each
class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit or
other underlying value of transaction computed pursuant to Exchange
Act
Rule 0-11 (set forth the amount on which the filing fee is calculated
and
state how it was determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee
paid:
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o Fee
paid previously with preliminary materials.
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)
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Amount
Previously Paid
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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ENERGIZER
HOLDINGS, INC.
533
Maryville University Drive
St. Louis,
Missouri 63141
Dear
Shareholder:
You
are cordially
invited to attend the Annual Meeting of Shareholders of Energizer Holdings,
Inc.
to be held at 3:30 p.m. on Monday, January 28, 2008 at Energizer World
Headquarters, 533 Maryville University Drive, St. Louis, Missouri
63141.
We
hope you will
attend in person. If you plan to do so, please bring the enclosed Shareholder
Admittance Ticket with you.
Whether
you plan to
attend the meeting or not, we encourage you to read this Proxy Statement
and
vote your shares. You may sign, date and return the enclosed proxy as soon
as
possible in the postage-paid envelope provided, or you may vote by telephone
or
via Internet. However you decide to vote, we would appreciate your voting
as
soon as possible.
We
look forward to
seeing you at the Annual Meeting!
WARD
M.
KLEIN
Chief
Executive
Officer
November 29,
2007
ENERGIZER
HOLDINGS, INC.
533
Maryville University Drive
St. Louis,
Missouri 63141
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
To
the
Shareholders:
The
Annual Meeting
of Shareholders of Energizer Holdings, Inc. will be held at 3:30 p.m. on
Monday, January 28, 2008, at Energizer World Headquarters, 533 Maryville
University Drive, St. Louis, Missouri 63141.
The
purpose of the
meeting is to elect four directors to serve three-year terms ending at the
Annual Meeting held in 2011, or until their respective successors are elected
and qualified, and to act upon such other matters as may properly come before
the meeting.
You
may vote if you
are a shareholder of record on November 19, 2007. It is important that your
shares be represented and voted at the Meeting. Please vote in one of these
ways:
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USE
THE
TOLL-FREE TELEPHONE NUMBER shown on the proxy
card;
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VISIT
THE WEB
SITE noted on the enclosed proxy card to vote via the
Internet;
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MARK,
SIGN,
DATE AND PROMPTLY RETURN the enclosed proxy card in the postage-paid
envelope; OR
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VOTE
BY
WRITTEN BALLOT at the Annual
Meeting.
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By
Order of the Board of Directors,
Timothy
L.
Grosch
Secretary
November 29,
2007
PROXY
STATEMENT—VOTING PROCEDURES
YOUR
VOTE
IS VERY IMPORTANT
The
board
of directors is soliciting proxies to be used at the 2008 Annual
Meeting. This proxy statement and the form of proxy will be mailed to
shareholders beginning November 29, 2007.
Who
Can
Vote
Record
holders of
Energizer Holdings, Inc. common stock on November 19, 2007 may vote at
the meeting. On November 19, 2007, there were 57,381,620 shares of
common stock outstanding. The shares of common stock held in our treasury
will
not be voted.
How
You Can
Vote
There
are four
voting methods:
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Voting
by
Mail. If you choose to vote by mail, simply mark the enclosed proxy
card,
date and sign it, and return it in the postage-paid envelope
provided.
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Voting
by
Telephone. You can vote your shares by telephone by calling the
toll-free
telephone number on the enclosed proxy
card.
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Voting
by
Internet. You can also vote via the Internet. The web site for
Internet
voting is on the enclosed proxy card, and voting is available
24 hours a day.
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Voting
by
written ballot at the meeting.
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If
you vote by
telephone or via the Internet, you should not return the proxy
card.
How
You May
Revoke or Change Your Vote
You
can revoke the
proxy at any time before it is voted at the meeting by:
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sending
written notice of revocation to our
Secretary;
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submitting
another proper proxy by telephone, Internet or paper
ballot; or
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attending
the
annual meeting and voting in person. If your shares are held in
the name
of a bank, broker or other holder of record, you must obtain a
proxy,
executed in your favor from the holder of record, to be able to
vote at
the meeting.
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General
Information on Voting
You
are entitled to
cast one vote for each share of common stock you own on the record date.
Shareholders do not have the right to vote cumulatively in electing directors.
The election of each director nominee must be approved by a majority of shares
entitled to vote and represented at the annual meeting in person or by proxy.
Shares represented by a proxy marked “abstain” on any matter, or that provide
that a vote be withheld with respect to the election of any one or more of
the
nominees for election as directors, will be considered present at the meeting
for purposes of determining a quorum and for purposes of calculating the
vote,
but will not be considered to have voted in favor of the proposal or nominee.
Therefore, any proxy marked “abstain” will have the effect of a vote against the
matter. Shares represented by a proxy as to which there is a “broker non-vote”
(for example, where a broker does not have discretionary authority to vote
the
shares), will be considered present at the meeting for purposes of determining
a
quorum, but will have no effect on the vote.
All
shares that
have been properly voted—whether by telephone, Internet or mail—and not revoked,
will be voted at the annual meeting in accordance with your instructions.
If you
sign the enclosed proxy card but do not give voting instructions, the shares
represented by that proxy will be voted as recommended by our board of
directors.
If
any other
matters are properly presented at the annual meeting for consideration, the
persons named in the enclosed proxy card will have the discretion to vote
on
those matters for you. At the date this proxy statement went to press, no
other
matters had been raised for consideration at the annual meeting.
Voting
By
Participants in the Company’s Savings Investment Plan
If
you participate
in our savings investment plan and had an account in the Energizer common
stock
fund on November 12, 2007, the proxy will also serve as voting instructions
to the trustee for that plan, Vanguard Fiduciary Trust Company, an
affiliate of The Vanguard Group of Investment Companies, for the shares of
common stock credited to your account on that date. If the trustee does not
receive directions with respect to any shares of common stock held in the
plan,
it will vote those shares in the same proportion as it votes shares for which
directions were received.
Costs
of
Solicitation
We
will pay for
preparing, printing and mailing this proxy statement. We have engaged
Georgeson & Company, Inc. to help solicit proxies from shareholders for
a fee of $11,500 plus its expenses. Proxies may also be solicited personally
or
by telephone by our employees without additional compensation, as well as
by
employees of Georgeson. We will also reimburse banks, brokers and other
custodians, nominees and fiduciaries for their costs of sending the proxy
materials to our beneficial owners.
ITEM 1.
ELECTION OF DIRECTORS
Our
board of
directors currently consists of twelve members and is divided into three
classes, with each class currently consisting of four members, with terms
of
service expiring at successive annual meetings.
Four
directors will
be elected at the 2008 Annual Meeting to serve for a three-year term expiring
at
our annual meeting in the year 2011. The board has nominated Ward M. Klein,
Richard A. Liddy, W. Patrick McGinnis, and Joe R. Micheletto for election
as
directors at this Meeting. Mr. Liddy has attained the age of 72 and, under
our corporate governance principles, would not be eligible to stand for
re-election unless the nominating and executive compensation committee of
our
board determined that he continued to meet our criteria for board service.
The
committee did determine that Mr. Liddy continued to meet those criteria and
recommended his nomination to the board. Each nominee is currently serving
as a
director and has consented to serve for a new term. Each nominee elected
as a
director will continue in office until his successor has been elected and
qualified. If any nominee is unable to serve as a director at the time of
the
annual meeting, your proxy may be voted for the election of another person
the
board may nominate in his or her place, unless you indicate
otherwise.
Vote
Required. The affirmative vote of a majority of the
outstanding shares of common stock entitled to vote and represented in person
or
by proxy is required for the election of each director.
The
board
of directors recommends a vote FOR the election of these nominees as
directors of the Company.
INFORMATION
ABOUT NOMINEES AND OTHER DIRECTORS
Please
review the
following information about the nominees and other directors continuing in
office. The ages shown are as of December 31, 2007.
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WARD
M. KLEIN, Director Since 2005, Age 52
(Standing
for election at this meeting for a term expiring in
2011)
Mr. Klein
has served as Chief Executive Officer, Energizer Holdings, Inc.
since
January 25, 2005. Prior to that time, he served as President and
Chief Operating Officer from 2004 to 2005, as President, International
from 2002 to 2004, and as Vice President, Asia Pacific and Latin
America
from 2000 to 2002. Also a director of Brown Shoe Company,
Inc.
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RICHARD
A. LIDDY, Director Since 2000, Age 72
(Standing
for election at this meeting for a term expiring in
2011)
Mr. Liddy
served as Chairman of the Board of GenAmerica Financial Corporation
(insurance holding company) from 2000 to 2002. He also served as
Chairman
of the Board of the Reinsurance Group of America, Incorporated
(insurance)
from 1995 to 2002. Mr. Liddy is now retired. Mr. Liddy was
President of GenAmerica Financial from 1988 to 2000 and Chief Executive
Officer of General American Life Insurance Company from 1992 to
2000. Also
a director of Ralcorp Holdings, Inc. and Ameren
Corporation.
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W.
PATRICK MCGINNIS, Director Since 2002, Age 60
(Standing
for election at this meetingfor a term expiring in
2011)
Mr. McGinnis
has served as Chief Executive Officer and President, Nestlé Purina PetCare
Company (pet foods and related products) since 2001. From 1999
to 2001, he
served as Chief Executive Officer and President, Ralston Purina
Company.
Also a director of Brown Shoe Company, Inc.
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JOE
R. MICHELETTO, Director Since 2000, Age 71
(Standing
for election at this meetingfor a term expiring in
2011)
Mr. Micheletto
served as Chief Executive Officer and President, Ralcorp Holdings,
Inc.
(food products) from 1996 to 2003. He is now retired. Also a director
of
Ralcorp Holdings, Inc. and Vail Resorts, Inc.
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R.
DAVID HOOVER, Director Since 2000, Age 62
(Continuing
in Office—Term expiring in 2010)
Mr. Hoover
has served as Chairman, President and Chief Executive Officer,
Ball
Corporation (beverage and food packaging and aerospace products
and
services) since 2002. Prior to that, he served as President and
Chief
Executive Officer from 2001 to 2002, and as Vice Chairman, President
and
Chief Operating Officer from April 2000 to 2001. Also a director
of Ball
Corporation, Irwin Financial Corporation and Qwest Communications
International, Inc.
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JOHN
C. HUNTER, Director Since 2005, Age 60
(Continuing
in Office—Term expiring in 2010)
Mr. Hunter
served as Chairman, President and Chief Executive Officer of Solutia,
Inc.
(chemical products) from 1999 to 2004. He is now retired. On
December 17, 2003, while Mr. Hunter served as President and
Chief Executive Officer, Solutia, Inc. and fourteen of its U.S.
subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Also a director of Penford
Corporation and Hercules, Inc.
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JOHN
E. KLEIN, Director Since 2003, Age 62
(Continuing
in Office—Term expiring in 2010)
Mr. Klein
has served as President of Randolph College (education) since August
2007.
Prior to that, Mr. Klein served as Executive Vice Chancellor for
Administration, Washington University in St. Louis (education) from
2004 to August 2007. From 1985 to 2004, he served as President
and Chief
Executive Officer, Bunge North America, Inc.
(agribusiness).
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JOHN
R. ROBERTS, Director Since 2003, Age 66
(Continuing
in Office—Term expiring in 2010)
Mr. Roberts
served as Executive Director, Civic Progress St. Louis (civic
organization) from 2001 through 2006. He is now retired. From 1993
to
1998, he served as Managing Partner, Mid-South Region, Arthur Andersen
LLP
(public accountancy). Also a director of Regions Financial Corporation
and
Centene Corporation.
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BILL
G. ARMSTRONG, Director Since 2005, Age 59
(Continuing
in Office—Term expiring in 2009)
Mr. Armstrong
served as Executive Vice President and Chief Operating Officer,
Cargill
Animal Nutrition (animal feed products), from 2001 to 2004. He
is now
retired. Prior to that, Mr. Armstrong served as Chief Operating
Officer, Agribrands International, Inc. (animal feed products)
from 1998
to 2001. Also a director of Ralcorp Holdings, Inc.
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J.
PATRICK MULCAHY, Director Since 2000, Age 63
(Continuing
in Office—Term expiring in 2009)
Mr. Mulcahy
has served as Chairman of the Board of Energizer Holdings, Inc.
since
January 2007. Mr. Mulcahy served as Vice Chairman of the Board from
January 2005 to January 2007, and prior to that time served as
Chief
Executive Officer, Energizer Holdings, Inc. from 2000 to 2005,
and as
Chairman of the Board and Chief Executive Officer of Eveready Battery
Company, Inc. from 1987 to 2005. He is now retired. Also a director
of
Solutia, Inc., Ralcorp Holdings, Inc. and Hanesbrands,
Inc.
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PAMELA
M. NICHOLSON, Director Since 2002, Age 48
(Continuing
in Office—Term expiring in 2009)
Ms. Nicholson
has served as Executive Vice President and Chief Operating Officer,
Enterprise Rent-A-Car (auto leasing) since 2004. She served as
Senior Vice
President, North American Operations for Enterprise from 1999 to
2004.
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WILLIAM
P. STIRITZ, Director Since 2000, Age 73
(Continuing
in Office—Term expiring in 2009)
Mr. Stiritz
has served as Chairman Emeritus of the Board of Energizer Holdings,
Inc.
since January 2007, and served as Chairman of the Board from 2000
to
January 2007. He was employed as chair of our employee Management
Strategy
and Finance Committee from 2000 to 2005. He is now retired.
Mr. Stiritz served as Chairman of the Board, Chief Executive Officer
and President of Agribrands International (animal feed products)
from 1998
to 2001. He also served as Chairman of the Board of Ralston Purina
Company
from 1982 to 2001. Also a director of Ralcorp Holdings, Inc., Vail
Resorts, Inc. and Federated Department Stores,
Inc.
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BOARD
OF
DIRECTORS STANDING COMMITTEES
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Nominating
and
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Board
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Executive
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Finance
and
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Member
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Board
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Audit
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Executive
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Compensation
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Oversight
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Bill
G.
Armstrong
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ü
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ü
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ü
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R.
David
Hoover
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ü
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John
C.
Hunter
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ü
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ü
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John
E.
Klein
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ü
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ü
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ü*
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Ward
M.
Klein
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ü
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ü
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ü
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Richard
A.
Liddy
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ü
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ü
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ü
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ü
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W.
Patrick
McGinnis
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ü
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ü
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ü
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Joe
R.
Micheletto
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ü
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ü
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ü
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J.
Patrick
Mulcahy
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ü*
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ü*
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ü
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Pamela
M.
Nicholson
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ü
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ü
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ü
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ü
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John
R.
Roberts
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ü
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ü*
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ü
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ü
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William
P.
Stiritz
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ü
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ü
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ü*
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Meetings
held
in 2007
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9
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7
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0
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5
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8
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*
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Chairperson
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Audit: Reviews
auditing, accounting, financial reporting and internal control functions.
Responsible for engaging and supervising our independent accountants, resolving
differences between management and our independent accountants regarding
financial reporting, pre-approving all audit and non-audit services provided
by
our independent accountants, and establishing procedures for the receipt,
retention and treatment of complaints regarding accounting, internal accounting
controls or auditing matters. Our board has determined that all members are
independent and financially literate in accordance with the criteria established
by the Securities and Exchange Commission and the New York Stock Exchange.
Our board has elected John R. Roberts as chair of the audit committee, and
has
determined that he is both independent and an audit committee financial expert,
as defined by Securities and Exchange Commission guidelines.
Executive: May
act on behalf of the Board in the intervals between Board meetings.
Nominating
and Executive Compensation: Sets compensation of our
executive officers, approves deferrals under our deferred compensation plan,
administers our 2000 incentive stock plan and grants equity-based awards,
including performance-based awards, under that plan. Administers and approves
performance-based awards under our executive officer bonus plan. Establishes
performance criteria for performance-based awards and certifies as to their
achievement. Monitors management compensation and benefit programs, and reviews
principal employee relations policies. Recommends nominees for election as
directors or executive officers to the board. Recommends committee memberships
and compensation and benefits for directors. Also responsible for conducting
the
annual self-assessment process of the board and its committees, and regular
review and updating of our corporate governance principles. Our board has
determined that all members are non-employee directors, and are independent,
as
defined in the listing standards of the New York Stock Exchange.
Finance
and
Oversight: Reviews our financial condition, objectives and
strategies, and acquisitions and other major transactions, and makes
recommendations to the board concerning financing requirements, our stock
repurchase program and dividend policy, foreign currency management and pension
fund performance.
During
fiscal year
2007, all directors attended 75% or more of the board meetings and committee
meetings on which they served during their period of service. Each director
is
encouraged to attend our annual meeting of shareholders each year. All directors
attended the 2007 annual meeting.
Compensation
Committee Interlocks and Insider Participation
No
member of the
nominating and executive compensation committee is or has been an officer
or
employee of the Company or any of its subsidiaries. In addition, no member
of
the committee had any relationships with the Company or any other entity
that
require disclosure under the proxy rules and regulations promulgated by the
U.S. Securities and Exchange Commission.
Committee
Charters, Governance and Codes of Conduct
The
charters of the
committees of our board of directors, and our corporate governance principles,
have been posted on our website at www.energizer.com, under “About
Energizer: Corporate Governance”. Our code of business conduct and ethics
applicable to the members of the board of directors, as well as the code
applicable to the officers and employees, have each been posted on our website
as well, under “—Codes of Conduct.”
Copies
of the
committee charters, the corporate governance principles, and the codes of
conduct will be provided without charge to any shareholder upon request directed
in writing to the Secretary, Energizer Holdings, Inc., 533 Maryville University
Drive, St. Louis, Missouri 63141.
Director
Independence
Our
corporate
governance principles, adopted by our board, provide that a majority of the
board, and the entire membership of the audit and the nominating and executive
compensation committees of the board, shall consist of independent,
non-management directors who meet the criteria for independence required
by the
New York Stock Exchange. A director will be considered independent if he
or she
does not have a material relationship with us, as determined by our board.
To
that end, the board, in the corporate governance principles, has established
the
following guidelines for determining whether a director is independent,
consistent with the listing standards of the New York Stock Exchange: a director
will not be considered independent if, within the last three years (i) the
director or an immediate family member was employed by the Company or a
subsidiary as an executive officer, (ii) the director or an immediate
family member was employed in a professional capacity by the Company’s external
auditor, or in the Company’s internal audit department, or (iii) any of our
present executive officers serve on the compensation committee of another
company that employs the director or an immediate family member of the director
as an executive officer.
The
following
relationships will be considered material, which would also impact independence:
(i) a director or an immediate family member is an executive officer, or
the director is an employee, of another company which does business with
the
Company and the payments to, or amounts received from, that other company
exceed
the greater of $1 million, or 2% of such other company’s consolidated gross
revenues; (ii) a director or an immediate family member, within the last
three years, received more than $100,000 per year in direct compensation
from
the Company, other than director and committee fees and pension or other
forms
of deferred compensation for prior service (provided such compensation is
not
contingent in any way on continued service); (iii) a director is an
executive officer of a charitable organization and our annual charitable
contributions to the organization (exclusive of gift-match payments) exceed
the
greater of $100,000 or 2% of the organization’s total annual charitable
receipts; (iv) a director is a partner of or of counsel to a law firm that
performs substantial legal services for us on a regular basis; or (v) a
director is a partner, officer or employee of an investment bank or consulting
firm that performs substantial services for us on a regular basis. For other
significant relationships not specifically covered, a majority of our
independent directors, after considering all of the relevant circumstances,
may
make a determination whether or not such relationship is material and whether
the director may therefore be considered independent under the New York Stock
Exchange listing standards.
Director
affiliations and transactions are regularly reviewed to ensure that there
are no
conflicts or relationships with the Company that might impair a director’s
independence. Every year, we submit a questionnaire to each director and
executive officer, and conduct our own internal review, for the purpose of
identifying all transactions or relationships between each director, or any
member of his or her immediate family, and the Company, its senior management
and its independent auditor. Pursuant to that review, the Board has considered
the independence of W. Patrick McGinnis and Joe R. Micheletto in light of
the
fact that we jointly own three corporate aircraft with Nestle Purina Petcare
Company, for which Mr. McGinnis serves as chief executive officer and
president, and Ralcorp Holdings, Inc., for which Mr. Micheletto serves as
vice chairman of the board. (Mr. Stiritz also serves as chairman of the
board of Ralcorp Holdings, Inc., but because of his former employment with
us,
he is not deemed independent at the current time.) The aircraft are jointly
owned in order to share the fixed costs associated with ownership which do
not
change based on usage, such as pilots’ salaries, aircraft acquisition expenses,
and non-trip related maintenance and hangar fees. The aircraft are maintained
and operated by employees of Nestle, and a pro rata portion of the fixed
expenses are reimbursed to Nestle by the other owners based upon their
respective percentages of ownership. Each owner is also assessed a charge
per
flight hour to cover all variable operating costs. No additional margin or
operating fee is paid to Nestle. The independent members of the board determined
that neither Mr. McGinnis nor Mr. Micheletto have any direct or
indirect financial or other interests in our reimbursement of our aircraft
expenses, or our continued ownership of our share of the aircraft, and
consequently determined that the independence of Mr. McGinnis and
Mr. Micheletto was not impacted.
Accordingly,
based
on the responses to the 2007 questionnaire and the results of its review,
the
board has affirmatively determined that the following nine non-employee
directors are independent from management: Bill G. Armstrong, R. David Hoover,
John C. Hunter, John E. Klein, Richard A. Liddy, W. Patrick McGinnis, Joe
R.
Micheletto, Pamela M. Nicholson, and John R. Roberts.
Director
Nominations
The
nominating and
executive compensation committee is responsible for recommending candidates
for
election to our board of directors, consistent with the requirements for
membership set forth in our corporate governance principles. Those requirements
include integrity, independence, energy, forthrightness, analytical skills
and a
willingness to challenge and stimulate management, and the ability to work
as
part of a team in an environment of trust. The principles also indicate the
board’s belief that each director should have a basic understanding of
(i) our principal operational and financial objectives and plans and
strategies, (ii) our results of operations and financial condition, and
(iii) the relative standing of the Company and our business segments in
relation to our competitors. In addition to those standards, the committee
seeks
directors who will represent the diverse interests of our shareholders, and
who
bring to the board a breadth of experience from a variety of industries and
professional disciplines. The committee is also responsible for articulating
and
refining specific criteria for board and committee membership to supplement,
as
appropriate, the more general criteria set forth in the principles.
The
committee
expects a high level of commitment from board members and evaluates each
candidate’s leadership and experience, skills, expertise and character traits,
including the candidate’s ability to devote sufficient time to board and
committee meetings in light of other professional commitments. The committee
also reviews whether a potential candidate meets board and/or committee
membership requirements, as set forth in our corporate governance principles,
determines whether a potential candidate is independent according to the
board’s
established criteria, and evaluates the potential for a conflict of interest
between the director and the Company.
Historically,
when
vacancies have occurred, or when our board determined that increasing its
size
was appropriate, candidates have been recommended to the committee by other
board members or the chief executive officer. The committee, however, will
consider and evaluate any shareholder-recommended candidates by applying
the
same criteria used to evaluate candidates recommended by directors or
management. The committee also has authority to retain a recruitment firm
if it
deems it advisable. Shareholders who wish to suggest an individual for
consideration for election to the board of directors may submit a written
nomination to the Secretary of the Company, 533 Maryville University Drive,
St. Louis, Missouri 63141, along with the shareholder’s name, address and
number of shares of common stock beneficially owned; the name of the individual
being nominated and number of shares of common stock beneficially owned;
the
candidate’s biographical information, including age, business and residential
address, and principal occupation for the previous 5 years, and the
nominee’s consent to being named as a nominee and to serving on the board. A
description of factors qualifying or recommending the nominee for service
on the
board would also be helpful to the committee in its consideration. To assist
in
the evaluation of shareholder-recommended candidates, the committee may request
that the shareholder provide certain additional information required to be
disclosed in our proxy statement under Regulation 14A of the Securities
Exchange Act of 1934. If the committee determines a candidate, however proposed,
is suitable for board membership, it will make a recommendation to the board
for
its consideration.
Under
our bylaws,
shareholders may also nominate a candidate for election at an annual meeting
of
shareholders. See “Shareholder Proposals for 2009 Annual Meeting” for details
regarding the procedures and timing for the submission of such nominations.
Director nominees submitted through this process will be eligible for election
at the annual meeting, but will not be included in proxy material sent to
shareholders prior to the meeting, except as described in that
section.
Communicating
Concerns to the Board
We
have established
several means for shareholders or others to communicate their concerns to
our
board. If the concern relates to our financial statements, business ethics,
corporate conduct, accounting practices or internal controls, the concern
should
be submitted in writing to Mr. John R. Roberts, the chairman of the
audit committee, in care of the Secretary of the Company, whose address is
533
Maryville University Drive, St. Louis, Missouri 63141. If the concern
relates to our governance practices, the concern may be submitted in writing
to
Mr. John Klein, the chairman of the nominating and executive compensation
committee, in care of the Secretary of the Company. Executive sessions without
management directors present are scheduled at each board meeting, and are
chaired by Mr. J. Patrick Mulcahy, the chairman of the board. Concerns may
be raised with the non-management directors by written communication to
Mr. Mulcahy, in care of the Secretary of the Company. If the shareholder is
unsure as to which category his or her concern relates, he or she may
communicate it to any one of the independent directors in care of the Secretary
of the Company.
Our
“whistleblower”
policy prohibits the Company or any of its employees from retaliating or
taking
any adverse action against anyone for raising a concern. If a shareholder
or
employee nonetheless prefers to raise his or her concern in a confidential
or
anonymous manner, he or she may call Global Compliance Services’ AlertLine, our
outside service provider, toll-free at 877-521-5625, or leave a message at
our
confidential web address: https:/energizer.alertline.com. Confidential letters
may be sent to any independent director at:
AlertLine
PMB
3767
13950
Ballantyne
Corporate Place
Charlotte,
North
Carolina 28273
U.S.A.
DIRECTOR
COMPENSATION
We
provided several
elements of compensation to our directors for service on our board during
fiscal
year 2007:
Retainers
and Meeting Fees
All
directors,
other than Mr. Ward Klein, received the following fees for serving on the
board or its committees. Mr. Klein receives no compensation other than his
normal salary for his service on the board and its committees.
|
Annual
Retainer..................................................................................................................
|
$ 40,000
|
|
fee
for each
board
meeting................................................................................................
|
$ 1,000
|
|
fee
for each
committee
meeting........................................................................................
|
$ 1,000
|
The
chairpersons of
the committees also receive an additional annual retainer of $10,000 for
each
committee that they chair, and the chairman of the board (but not the chairman
emeritus) receives the same additional annual retainer for his services as
chairman.
Deferred
Compensation Plan
Directors
are
permitted to defer all or a portion of their retainers and fees under the
terms
of our deferred compensation plan. Deferrals may be made into: the Energizer
common stock unit fund, which tracks the value of our common stock; the prime
rate option, under which deferrals are credited with interest at Morgan Guaranty
Trust Company of New York’s prime rate, an above-market rate; or any
of the twenty-one measurement fund options which track the performance of
the
Vanguard investment funds offered under our savings investment plan, a 401(k)
savings plan available generally to our salaried U.S. employees. Deferrals
in the deferred compensation plan are paid out in a lump sum in cash within
60 days following the director’s termination of service on the
board.
Company
Matching Contributions. Deferrals of retainers and fees into the
Energizer common stock unit fund of the deferred compensation plan receive
a 33
1/3% Company match at the end of each calendar year, which match is immediately
vested. However, these Company matches must be retained in the Energizer
common
stock unit fund for a period of 36 months from the date of
crediting.
Additional
Contribution. On December 31st of
each year,
each director, other than Mr. Ward Klein, is also credited with a number of
stock equivalents in the Energizer common stock unit fund of the deferred
compensation plan. The value of these equivalents (which do not receive an
additional Company match) is currently $57,000. These equivalents are vested
at
grant, and may be transferred to any other fund of the plan.
The
nominating and
executive compensation committee, which makes recommendations to the full
board
regarding director compensation, strives to set director compensation at
the
50th percentile
of
the peer group selected for purposes of evaluating our executive compensation,
based on market data provided by the committee’s independent consultant, Hewitt
Associates. The committee reviewed director compensation at its November,
2007
meeting, and based on that review recommended that the annual retainer for
each
non-management director should be increased to $50,000, effective as of
October 1, 2007, in order to maintain the targeted 50th percentile
level. The board approved the recommended increase at its November 5, 2007
meeting.
Restricted
Stock Equivalents
Each
non-employee
director appointed to the board between April 1, 2000 and October 1,
2003 was granted a restricted stock equivalent award, under which the director
was credited with a restricted stock equivalent for each share of our common
stock he or she acquired within two years of the date of grant, up to a limit
per individual. This program was discontinued in 2003. As of September 30,
2007, all outstanding equivalents granted under these awards have vested,
and
each director has elected to defer receipt until termination of service on
our
board. The number of vested equivalents credited to each director is set
forth
in footnote (3) to the Director Compensation table below. The
FAS 123R expense associated with unvested stock equivalents during fiscal
year 2007 is included in the Stock Awards column of the Director Compensation
table below.
Special
Restricted Stock Equivalent Award
In
January, 2005,
upon his retirement as our chief executive officer, Mr. Mulcahy was granted
10,000 restricted stock equivalents as consideration for an agreement not
to
compete with us. These equivalents will vest in January, 2010 provided that
Mr. Mulcahy does not violate the terms of the non-compete agreement prior
to that time. The equivalents will also accelerate and vest upon
Mr. Mulcahy’s death or declaration of total and permanent disability, or
upon a change in control of the Company. They will not accelerate upon his
retirement or resignation from the board, if he leaves board service before
January, 2010.
Non-Qualified
Stock Options
Each
new director
appointed to the board between April 1, 2000 and 2005 also received a
non-qualified stock option to purchase 10,000 shares on the date of his or
her appointment to the board. (Mr. Stiritz and Mr. Mulcahy, as
officers of the Company at the time of their initial appointment to the board,
received options to purchase 500,000 shares each upon the same terms.)
These options, which were granted under our 2000 incentive stock plan and
have a
ten year term, have an exercise price equal to the closing price, as of the
date
of grant, of our common stock on the New York Stock Exchange composite
index, and are exercisable at the rate of 20% per year, beginning on the
first
anniversary of the date of grant. They are exercisable prior to that date
upon
the director’s death, declaration of total and permanent disability, retirement
or resignation from the board, or upon a change in control of the Company.
The
FAS 123R expense associated with unvested stock options during fiscal year
2007 is included in the Option Awards column of the Director Compensation
table
below, and the current number of vested and unvested stock options held by
each
director is set forth in the Common Stock Ownership of Directors and Executive
Officers table below.
At
its
November 5, 2007 meeting, the board also approved suspending the option
grant for new directors that may be appointed or elected in the future, and
replacing it with a grant of restricted stock equivalents with a grant-date
value of $100,000, which equivalents would vest three years from the date
of
grant.
Personal
Use of Company-Owned Aircraft
On
May 2,
2005, the board approved a resolution authorizing Mr. Stiritz and
Mr. Mulcahy, the chairman emeritus, and chairman, respectively, and
Mr. Ward Klein, the chief executive officer and a member of the board, to
use our aircraft for personal travel for up to 30 flight hours per year,
per
individual, when the aircraft are not being used on business related trips.
This
authorization, by its terms, continues in effect for each of them until they
terminate their service on the board. In addition, each of them was authorized
to permit family members and guests to accompany them on business or personal
flights on our aircraft. The board also approved reimbursement of both
individuals for any taxes associated with (i) their personal use of our
aircraft, and (ii) the personal use by their family members and guests, but
not including any taxes on such reimbursement. As noted under Director
Independence above, our aircraft is jointly owned with two other
corporations in order to share the fixed costs associated with such ownership.
We are, however, assessed a charge per flight hour to cover all variable
operating costs associated with each flight, including fuel costs, mileage,
trip-related maintenance, landing fees, trip-related hangar and parking costs,
and on-board catering. The incremental cost to us for the directors’ personal
use shown below reflects the assessed charge per flight hour for such use.
Since
the aircraft are used primarily for business travel, those amounts exclude
any
prorated portion of our fixed costs.
DIRECTOR
COMPENSATION TABLE
|
Change
in Pension
|
|||||||
|
Value
and Non-
|
|||||||
|
Non-Equity
|
Qualified
Deferred
|
||||||
|
Fees
Earned or
|
Incentive
|
Compensation
|
All
Other
|
||||
|
Paid
in Cash
|
Stock
Awards
|
Option
Awards
|
Plan
|
Earnings
|
Compensation
|
||
|
Name
|
($)(1)
|
($)(2)(3)
|
($)(4)(5)
|
Compensation
|
($)
|
($)(6)(7)
|
Total ($)
|
|
W.P.
Stiritz
|
$124,000
|
$
23,269
|
$ 0
|
$0
|
$ 0
|
$82,487
|
$229,756
|
|
J.P.
Mulcahy
|
$124,000
|
$133,277
|
$ 0
|
$0
|
$ 0
|
$23,773
|
$281,050
|
|
B.G.
Armstrong
|
$117,000
|
$
19,880
|
$32,627
|
$0
|
$ 0
|
$ 0
|
$169,507
|
|
R.D.
Hoover
|
$106,000
|
$
16,980
|
$ 0
|
$0
|
$ 0
|
$ 0
|
$122,980
|
|
J.C.
Hunter
|
$110,000
|
$
9,034
|
$32,627
|
$0
|
$ 0
|
$ 0
|
$151,661
|
|
J.E.
Klein
|
$126,000
|
$
33,712
|
$
5,420
|
$0
|
$ 0
|
$ 0
|
$165,132
|
|
R.A.
Liddy
|
$116,000
|
$
19,520
|
$ 0
|
$0
|
$10,930
|
$ 0
|
$146,450
|
|
J.R.
Micheletto
|
$109,000
|
$
16,650
|
$ 0
|
$0
|
$ 0
|
$ 0
|
$125,650
|
|
W.P.
McGinnis
|
$110,000
|
$ 0
|
$
4,344
|
$0
|
$ 0
|
$ 0
|
$114,344
|
|
P.M. Nicholson
|
$118,000
|
$108,075
|
$
4,344
|
$0
|
$ 0
|
$ 0
|
$230,419
|
|
J.R.
Roberts
|
$128,000
|
$
23,966
|
$
6,000
|
$0
|
$ 157
|
$ 0
|
$158,123
|
|
(1)
|
This
column
reflects retainers and meeting fees earned during the fiscal year,
as well
as additional compensation of $57,000 of stock equivalents in the
Energizer common stock unit fund of our deferred compensation plan
(a
total of 824 equivalents for each director was credited on
December 31, 2006) as described in the narrative
above.
|
|
(2)
|
Because
the
Company matching contributions described in the narrative above
were
immediately vested at grant, the aggregate grant date value of
those
awards, in accordance with FAS 123R, is included in this column.
Amounts shown for Mr. J. Klein, Ms. Nicholson and
Mr. Mulcahy also include the FAS 123R compensation expenses
associated with the unvested restricted stock equivalents described
in
footnote 3 (for Mr. Mulcahy) and equivalents which vested during
fiscal year 2007 for the other two directors. The FAS 123R expenses
related to unvested equivalents during fiscal year 2007 is as follows:
Mr. J. Klein, $10,138; Ms. Nicholson, $88,195; and
Mr. Mulcahy, $110,400. Assumptions utilized in the valuation are set
forth in “Note 7. Share-Based Payments” of the Notes to Consolidated
Financial Statements of our 2007 Annual Report.
|
|
(3)
|
As
of
September 30, 2007, Mr. Mulcahy was credited with 10,000
unvested restricted stock equivalents, granted under the special
restricted stock equivalent award described in the narrative above.
The
number of vested but deferred stock equivalents credited to each
director
as of that date is as follows: Mr. Stiritz, 130,000; Mr. Hoover,
10,000; Mr. Liddy, 10,000; Mr. Micheletto, 10,000;
Mr. Roberts, 10,000; Mr. J. Klein, 10,000; and
Ms. Nicholson, 10,000.
|
|
(4)
|
The
dollar
amount recognized for stock options for financial reporting purposes
in
accordance with FAS 123R is set forth with respect to each of the
directors in the table above. Assumptions utilized in the valuation
are
set forth in “Note 7. Share-Based Payments” of the Notes to
Consolidated Financial Statements of our 2007 Annual
Report.
|
|
(5)
|
The
number of
stock options held by each director as of September 30, 2007 is as
follows: Mr. Armstrong, 10,000; Mr. Hoover, 5,000;
Mr. Hunter, 10,000; Mr. J. Klein, 10,000; Mr. McGinnis,
10,000; Mr. Micheletto, 10,000; Ms. Nicholson, 10,000;
Mr. Roberts, 10,000; and Mr. Stiritz,
500,000.
|
|
(6)
|
In
fiscal
year 2007, the incremental cost of directors’ personal use of the Company
aircraft, on a variable cost basis, was $57,301 for Mr. Stiritz and
$15,040 for Mr. Mulcahy, and the approximate amount of disallowed
federal tax deductions associated with such use was $21,201 and
$5,565,
respectively. In addition the amounts reimbursed to those individuals
for
taxes associated with personal use, in the prior calendar year
(which is
paid on a delayed basis) were $3,985 and $3,168,
respectively.
|
|
|
All
of the
directors were also, from time to time during the fiscal year,
provided
with samples of our products, with an incremental cost of less
than
$25.
|
|
(7)
|
The
following
items are not considered perquisites and are not included within
the above
disclosure of director
compensation:
|
|
(i)
|
The
directors
are covered under the terms of our general directors’ and officers’
liability insurance policies, the premiums for which are a general
expense
of the Company—we do not obtain a specific policy for each director, or
for the directors as a group.
|
|
(ii)
|
We
provide
transportation and lodging for out-of-town directors attending
board and
committee meetings at our
headquarters.
|
|
(iii)
|
The
directors
may make requests for contributions to charitable organizations
from the
Energizer charitable trust, which we have funded from time to time,
and
the trustees of that trust, all employees of the Company, have
determined
to honor such requests which are in accordance with the charitable
purpose
of the trust, and which do not exceed $10,000 in any year. The
directors
may request contributions in excess of that amount, but such requests
are
at the sole discretion of the trustees. All contributions are made
out of
the funds of the trust, and are not made in the name of the requesting
director.
|
|
(iv)
|
In
light of
Mr. Mulcahy’s responsibilities as chairman of the board, he is
provided use of an office and computer at our headquarters, as
well as a
cellphone and certain business publication subscriptions. From
time to
time, as part of his responsibilities as chairman, he incurs travel
and
other business expenses, for which he is
reimbursed.
|
OTHER
BUSINESS
The
board knows of
no business which will be presented at the 2008 annual meeting other than
that
described above. Our bylaws provide that shareholders may nominate candidates
for directors or present a proposal or bring other business before an annual
meeting only if they give timely written notice of the nomination or the
matter
to be brought not less than 90 nor more than 120 days prior to the meeting.
No such notice with respect to the 2008 annual meeting was received by the
deadline of October 31, 2007.
SELECTION
OF AUDITORS
Our
audit
committee, in accordance with authority granted in its charter by the board,
appointed PricewaterhouseCoopers LLP (“PwC”) as independent accountants for the
current fiscal year. PwC has served as our independent accountant for every
fiscal year since 2000. A representative of that firm will be present at
the
2008 annual meeting of shareholders and will have an opportunity to make
a
statement, if desired, as well as to respond to appropriate
questions.
Fees
Paid
to PricewaterhouseCoopers LLP (in thousands)
|
FY
06
|
FY
07
|
|
|
Audit
Fees
|
$4,223
|
$3,879
|
|
Audit-Related
Fees
|
$ 83
|
$ 85
|
|
Tax
Fees
|
||
|
Tax
Compliance/preparation
|
$ 780
|
$ 828
|
|
Other
Tax Services
|
$ 326
|
$ 405
|
|
Total
Tax Fees
|
$1,106
|
$1,233
|
|
All
Other Fees
|
$ 0
|
$ 0
|
|
Total
Fees
|
$5,412
|
$5,197
|
Services
Provided by PricewaterhouseCoopers LLP
The
table above
discloses fees paid to PwC during the last two fiscal years for the following
professional services:
|
•
|
Audit
Fees—These are fees for professional services performed by
PwC
for the audit of our annual financial statements and review of
financial
statements included in our 10-Q filings, and services that are
normally
provided in connection with statutory and regulatory filings or
engagements.
|
|
•
|
Audit-Related
Fees—These are fees for assurance and related services performed
by PwC that are reasonably related to the performance of the audit
or
review of our financial statements. This includes: employee benefit
and
compensation plan audits; due diligence related to mergers and
acquisitions; internal control reviews; attestations by PwC that
are not
required by statute or regulation; and consulting on financial
accounting/reporting standards.
|
|
•
|
Tax
Fees—These are fees for professional services performed by
PwC
with respect to tax compliance, tax advice and tax planning. This
includes
preparation of original and amended tax returns for the Company
and our
consolidated subsidiaries; refund claims; payment planning; tax
audit
assistance; and tax work stemming from “Audit-Related”
items.
|
|
•
|
All
Other Fees—These are fees for other permissible work performed by
PwC that does not meet the above category descriptions. This includes
litigation assistance, tax filing and planning for individual employees
involved in our expatriate program and various local engagements
that are
permissible under applicable laws and
regulations.
|
Audit
Committee Pre-Approval Policy
The
audit committee
has a formal policy concerning approval of all services to be provided by
PwC,
our independent auditor, including audit, audit-related, tax and other services.
The policy requires that all services PwC may provide to us must be pre-approved
by the committee. The chairman of the committee has the authority to pre-approve
permitted services that require action between regular committee meetings,
provided he reports to the committee at the next regular meeting. Early in
each
fiscal year, the committee approves the list of planned audit and non-audit
services to be provided by PwC during that year, as well as a budget estimating
spending for such services for the fiscal year. Any proposed services exceeding
the maximum fee levels set forth in that budget must receive specific
pre-approval by the audit committee. The committee approved all services
provided by PwC during fiscal year 2007.
STOCK
OWNERSHIP INFORMATION
Five
Percent Owners of Common Stock. The table below lists
the persons known by the Company to beneficially own at least 5% of the
Company’s common stock as of November 1, 2007.
|
Amount
and
|
|||
|
Nature
of
|
|
||
|
Name
and Address of Beneficial Owner
|
Title
of
Class
|
Beneficial
Ownership
|
%
of
Shares
Outstanding
|
|
|
|
|
|
|
Ariel
Capital
Management, LLC
200
East
Randolph Drive
Suite 2900
Chicago,
IL
60601
|
Common
Stock
|
4,756,870(A)
|
8.29%
|
|
Goldman
Sachs
Asset Management
32
Old
Slip
New
York, NY
10005
|
Common
Stock
|
5,116,108(B)
|
8.92%
|
|
William
P.
Stiritz
533
Maryville
University Drive
St. Louis,
MO 63141
Attn.:
Corporate Secretary
|
Common Stock |
3,420,957(C)
|
5.90%(D)
|
|
(A)
|
Based
on a
written statement by the shareholder, which disclaims any beneficial
economic interest in any of the shares, and states that it holds
the
voting power and/or investment discretion solely in a fiduciary
capacity
as an investment adviser for its clients, none of which individually
owns
more than 5% of our common stock. Of the total shares beneficially
owned,
the shareholder has voting and investment powers as follows: sole
voting—3,734,564 shares; shared voting—0 shares; sole
dispositive—4,740,645 shares; and shared
dispositive—0 shares.
|
|
(B)
|
Based
on a
13F filed as of September 30, 2007 by the shareholder, a separate
operating unit of Goldman Sachs & Co., which disclaims any
beneficial economic interest in any of the shares, and states that
it
holds the voting power and/or investment discretion solely in a
fiduciary
capacity as an investment adviser for its clients, none of which
individually owns more than 5% of our common stock. Of the total
shares
beneficially owned, the shareholder has voting and investment powers
as
follows: sole voting—3,626,639 shares; shared
voting—144,852 shares; shared dispositive—4,960,456 shares; and
other dispositive power—155,652 shares.
|
|
(C)
|
Based
on a
written statement from the shareholder. Mr. Stiritz disclaims any
beneficial interest in 521,357 shares owned by his spouse. The total
shares beneficially owned also includes shares which may be acquired
within 60 days upon exercise of vested options and conversion of
restricted stock equivalents. Of the total shares beneficially
owned,
Mr. Stiritz has voting and investment powers as follows: sole
voting—2,269,600 shares; shared voting—0 shares; sole
dispositive—2,269,600 shares; and shared dispositive—0 shares.
The total shares beneficially owned include 2,500,000 shares owned by
Mr. Stiritz and his wife which are subject to prepaid variable share
forward transactions pursuant to which they will, in the future,
deliver a
number of shares of our common stock, or the cash equivalent, the
amount
of which will depend upon the current market price for the common
stock at
the time of delivery.
|
|
(D)
|
The
number of
shares outstanding used in this calculation was the number actually
outstanding on November 1, 2007, plus 630,000 shares which
Mr. Stiritz could acquire upon exercise of options or conversion of
stock equivalents within
60 days.
|
COMMON
STOCK OWNERSHIP OF DIRECTORS
AND
EXECUTIVE OFFICERS
The
table below
contains information regarding beneficial common stock ownership of directors,
nominees and executive officers as of November 1, 2007. It does not reflect
any changes in ownership that may have occurred after that date. In general,
“beneficial ownership” includes those shares a director or executive officer has
the power to vote or transfer, as well as shares owned by immediate family
members that reside with the director or officer. Unless otherwise indicated,
directors and executive officers named in the table below have sole voting
and
investment authority with respect to the shares set forth in the table. The
table also indicates shares that may be obtained within 60 days upon the
exercise of options, or upon the conversion of vested stock equivalents into
shares of common stock.
|
%
of
|
||||
|
Shares
|
||||
|
Shares
|
Outstanding
|
|||
|
Directors
|
held
in
|
Options
|
(C)
|
|
|
And
|
Shares
|
Savings
|
Exercisable
|
(*denotes
|
|
Executive
|
Beneficially
|
Investment
|
Within
|
less
|
|
Officers
|
Owned
|
Plan
(A)
|
60
Days (B)
|
than
1%)
|
|
Bill
G.
Armstrong
|
1,000
|
0
|
10,000
|
*
|
|
R.
David
Hoover
|
20,000(H)
|
0
|
5,000
|
*
|
|
John
C.
Hunter
|
0
|
0
|
10,000
|
*
|
|
John
E.
Klein
|
18,700(H)
|
0
|
10,000
|
*
|
|
Richard
A.
Liddy
|
19,000(H)
|
0
|
0
|
*
|
|
W.
Patrick
McGinnis
|
38,918(F)
|
0
|
10,000
|
*
|
|
Joe
R.
Micheletto
|
20,008(H)
|
0
|
10,000
|
*
|
|
Pamela
M.
Nicholson
|
20,000(H)
|
0
|
10,000
|
*
|
|
John
R.
Roberts
|
20,000(H)
|
0
|
10,000
|
*
|
|
William
P.
Stiritz
|
2,920,957(D)(G)(H)
|
0
|
500,000
|
5.84%
|
|
J.
Patrick
Mulcahy
|
681,079(E)
|
29,138
|
0
|
1.21%
|
|
Ward
M.
Klein
|
79,757(H)
|
5,256
|
172,500
|
*
|
|
David
P.
Hatfield
|
5,440(H)
|
2,440
|
29,167
|
*
|
|
Joseph
W.
McClanathan
|
53,127(H)
|
3,751
|
120,000
|
*
|
|
Daniel
J.
Sescleifer
|
10,417(H)
|
0
|
19,168
|
*
|
|
Gayle
G.
Stratmann
|
12,003(H)
|
3,146
|
0
|
*
|
|
All
Officers
and Directors
|
3,924,965(H)
|
43,731
|
919,335
|
8.34%
|
|
(A)
|
Column
indicates the most recent approximation of the number of shares
of common
stock as to which participants in our savings investment plan have
voting
and transfer rights. Shares of common stock which are held in the
plan are
not directly allocated to individual participants but instead are
held in
a separate fund in which participants acquire units. Such fund
also holds
varying amounts of cash and short-term investments. The number
of shares
allocable to a participant will vary on a daily basis based upon
the cash
position of the fund and the market price of the stock.
|
|
(B)
|
Under
the
terms of the stock option agreements granted to the directors,
all options
granted to a director that have otherwise not vested will vest
and become
exercisable in the event that he or she retires or resigns from
the board.
The following directors have unvested options that would accelerate
and
vest upon retirement or resignation from the board: Mr. Roberts,
2,000 options; Mr. J. Klein, 2,000 options; Mr. Armstrong, 6,000
options; and Mr. Hunter, 6,000 options. Options granted to each of
the officers provide that they will vest and become exercisable
in the
event that the officer retires after attaining age 55; accordingly,
25,000 options granted to Mr. McClanathan would become exercisable if
he were to retire.
|
|
(C)
|
The
number of
shares outstanding for purposes of this calculation was the number
outstanding as of November 1, 2007 plus the number of shares which
could be acquired upon the exercise of vested options, or options
that
could vest within 60 days, by all officers and directors, and the
conversion of vested stock equivalents and equivalents that could
vest
within 60 days.
|
|
(D)
|
Mr. Stiritz
disclaims beneficial ownership of 521,357 shares of common stock
owned by his wife.
|
|
(E)
|
Mr. Mulcahy
disclaims beneficial ownership of 12,500 shares of common stock owned
by his wife and 111 shares owned by his
step-daughter.
|
|
(F)
|
Includes
30,000 shares which are subject to a prepaid variable share forward
transaction pursuant to which Mr. McGinnis will, in the future,
deliver a number of shares of common stock, or the cash equivalent,
the
amount of which will depend upon the current market price for the
common
stock at the time of delivery.
|
|
(G)
|
Includes
2,500,000 shares owned by Mr. Stiritz and his wife which are
subject to prepaid variable share forward transactions pursuant
to which
they will, in the future, deliver a number of shares of common
stock, or
the cash equivalent, the amount of which will depend upon the current
market price for the common stock at the time of
delivery.
|
|
(H)
|
Includes
vested common stock equivalents which will convert to shares of
common
stock upon the individual’s retirement, resignation from the Board or
termination of employment with the Company. The number of vested
equivalents credited to each individual officer or director is
as follows:
Mr. Stiritz, 130,000; Mr. Hoover, 10,000; Mr. Liddy,
10,000; Mr. Micheletto, 10,000; Mr. Roberts, 10,000; Mr. J.
Klein, 10,000; Ms. Nicholson, 10,000; Mr. Ward Klein, 47,917;
Mr. McClanathan, 36,667; Mr. Sescleifer, 10,417;
Mr. Hatfield, 3,334; Ms. Stratmann, 10,417; and all other
executive officers, 0. In addition, under the terms of restricted
stock
equivalent awards granted in May, 2003, unvested equivalents will,
by
their terms, vest and convert to shares of common stock in the
event the
officer retires after attaining age 55. Accordingly, this number also
includes 13,333 of these equivalents granted to Mr. McClanathan which
would vest and convert to shares of common stock if he were to
retire.
|
EXECUTIVE
COMPENSATION
The
following
narratives and tables discuss the compensation paid in fiscal year 2007 to
our
chief executive officer, chief financial officer and our other three most
highly
compensated executive officers, whom we refer to as our “named executive
officers”.
COMPENSATION
DISCUSSION AND ANALYSIS
This
Compensation
Discussion and Analysis describes the key principles and approaches used
to
determine the compensation of our named executive officers listed in the
Summary
Compensation Table. You should read it in conjunction with the executive
compensation tables and narrative which follow.
The
nominating and
executive compensation committee of our board of directors, or the “committee,”
is responsible for approving compensation for our executive officers, and
for
setting the overall objectives and goals of the executive compensation
program.
The
elements of our
executive compensation program are:
|
•
|
base
salary,
|
|
•
|
incentive
program—a three-tier program (annual and two-year cash bonuses, and
three-year equity awards) focused on consistent earnings per share
(“EPS”)
growth from year to year and over longer term
periods,
|
|
•
|
a
deferred
compensation plan with a 25% Company match for deferrals into a
fund
tracking the performance of our common
stock,
|
|
•
|
supplemental
retirement plans which restore retirement benefits otherwise limited
by
IRS regulations,
|
|
•
|
change
of
control severance
benefits, and
|
|
•
|
limited
perquisites.
|
Objectives
The
key objective
of our compensation philosophy is to reward management based upon its success
in
building shareholder value. With that objective, the overall executive
compensation program is designed to provide a compensation package that will
enable us to attract and retain highly talented executives and maintain a
performance-oriented culture.
Pay
for
Performance
Our
goal is to
instill a “pay for performance” culture throughout our operations, with total
compensation targeted at the 50th percentile
of
our peer group. To attain that overall targeted level, while focusing on
compensation linked to our financial performance, we generally
target:
|
•
|
below
the
50th percentile
for base salary,
|
|
•
|
at
or below
the 50th percentile
for target total cash (base and
bonus), and
|
|
•
|
above
the
50th percentile
for long-term incentives.
|
In
2007, a
significant portion of targeted compensation for our named executive officers
was variable, as opposed to fixed, compensation, and much of that was dependent
upon achievement of pre-established earnings goals—subject to forfeiture if
threshold goals are not achieved. We believe this compensation structure
offers
high potential rewards for superior performance, and steep reduction for
results
below target.
Consistent
EPS Growth
Our
incentive
programs are focused on consistent EPS growth from year to year. We believe
that
focus has provided strong motivation for superior executive performance that
directly benefits shareholders, and that the continuing use of EPS as a
performance metric is strongly supported by a number of factors:
|
•
|
EPS
performance reflects the cumulative impact of operating and financial
management decisions throughout our organization and provides a
unified
and consistent measure of performance. It also enables the design
of
underlying performance metrics which build up to annual and longer-term
EPS goals.
|
|
•
|
EPS
is a
readily determinable figure included in our reported results—making it a
measure easily understood and accessed by executives and employees
in our
incentive programs, as well as by our
shareholders.
|
|
•
|
There
is a
demonstrably high correlation of almost 90% between movement in
the share
price of our common stock and changes in our trailing four quarters
EPS,
adjusted for the unusual items described under Adjustment of Goals
below. After the end of fiscal year 2001, when we experienced
a net
loss, we implemented an annual incentive program focused on consistent
year over year growth in EPS, which has evolved into our current
three-tier program. From that time until the end of fiscal year
2007,
Energizer has produced a 37% compound annual growth in its diluted
EPS, as
adjusted, and a 36% compound annual growth in share price. (The
above
growth rate in EPS is based on fully diluted EPS for 2001 and 2007,
determined in accordance with U.S. generally accepted accounting
principles (“GAAP”) and adjusted for a write-off of goodwill in 2001 of
$119 million, and for a one-time non-cash tax benefit of
$7.4 million recognized in 2007, as discussed in Adjustment of
Goals below.)
|
|
•
|
We
believe
that this focus on consistent EPS growth has resulted in superior
executive decision-making and performance, as well as excellent
share
price growth, and, therefore, that the continued utilization of
EPS as the
key performance metric for our executive officers remains
appropriate.
|
The
choice of any
performance metric involves a consideration of its advantages and drawbacks,
and
the committee has carefully considered these issues with respect to the use
of
EPS. The committee has recognized that non-operating factors, in particular
our
share repurchases over the past five years, have impacted EPS growth, even
though the primary component of our EPS growth, historically, has been
contributions from operations. We believe our share repurchase program has
been
an important factor in increasing shareholder value—a practical and tax
efficient means of providing shareholder returns—and that our officers should be
rewarded for its success. Consequently, the committee believes that it is
appropriate to utilize EPS, without adjustment for share repurchases, as
our key
performance metric. Nevertheless, the committee is regularly advised of share
repurchases and other discretionary management actions which can impact EPS
growth. The committee also periodically considers the impact of our focus
on EPS
improvement on operational and cash management decisions.
Retention
Our
management team
is highly experienced (the average length of service with the Company for
our
named executive officers is over 20 years), and has been successful in
significantly improving operating results since 2001, as well as in sustaining
consistent “year over year” growth in EPS, as adjusted. Because of management’s
level of experience and successful track record, as well as the value of
maintaining continuity in senior executive positions, we view retention of
these
executives as critical to the ongoing success of our operations. Consequently,
we utilize benchmarking against a peer group of companies in order to ensure
that we can retain key executives and remain competitive in attracting new
employees.
During
fiscal year
2007, several key executives and high potential employees throughout our
organization terminated employment with us in order to take positions with
other
firms. Because of our concerns over retaining key individuals, during the
course
of the next year we will be reviewing whether our retention programs are
sufficiently effective.
Other
Considerations
Because
an overall
compensation program addresses numerous compensatory, health, welfare, and
retirement concerns of employees, our executive compensation program also
includes various other programs and benefits addressing these concerns. At
the
time of our spin-off in 2000, our management and board of directors elected
to
retain the executive benefit programs provided by our former parent, Ralston
Purina Company, in order to provide continuity of benefit programs. Our
executives are very familiar with these programs and value them highly as
a part
of their overall compensation package. We view these legacy benefits as also
strengthening our ability to retain senior executives, as we believe that
they
can be a key consideration whenever employment changes might be contemplated.
The committee has determined, based on comparative market data provided by
its
consultant, that the total value of the overall benefits offered to our named
executive officers for fiscal year 2007 is approximately at the 50th percentile
relative to our peer group.
In
the context of
these objectives, we describe below the material elements of our executive
compensation program, and the reasons why each element is included.
Compensation
Committee’s Role and Procedures
Our
board of
directors has delegated authority to the committee to approve all compensation
and benefits for our executive officers. The committee sets executive salaries
and bonuses, reviews executive benefit programs, including change in control
severance agreements, and grants cash bonus awards under our annual and two-year
cash bonus program, as well as equity awards under our 2000 incentive stock
plan. The committee has not delegated this authority to any other individuals
or
groups, but it has delegated certain general administrative tasks involving
our
benefit programs to the Energizer plans administrative committee, which is
comprised of members of management.
Committee
Consultant
To
assist it in
evaluating our executive and director compensation programs on a competitive
market basis, the committee has directly retained an outside consultant,
Hewitt
Associates, Inc., which is asked to:
|
•
|
provide
comparative market data from our peer group with respect to the
compensation of the named executive officers and the
directors,
|
|
•
|
analyze
our
compensation and benefit programs relative to our peer group, at
target
compensation levels, and
|
|
•
|
advise
the
committee on trends in compensation practice and on management
proposals
with respect to executive
compensation.
|
Although,
in the
past, Hewitt has worked with management in developing and analyzing compensation
proposals, during fiscal year 2007, management decided to retain a separate
consultant, Watson Wyatt, which advises it (but not the committee) on market
trends in executive compensation, provides ad hoc analysis and recommendations,
and reviews and comments on compensation proposals. It is expected that having
separate consultants will promote Hewitt’s independence with respect to the
advice it provides the committee. Hewitt does provide our management with
executive market pricing data, based on our peer group, for approximately
25
direct reports of our executives, in order to ensure consistency in market
compensation comparisons. The charge for the additional data is minimal,
and as
Hewitt does not provide any other services to the Company, we do not believe
that its independence is compromised. The committee has been apprised of
all
dealings between its consultant and management, and regularly reviews the
total
fees paid to Hewitt.
Hewitt,
with input
from the committee and from our management, has developed a customized peer
group of 22 companies based on a variety of criteria, including consumer
products businesses, businesses with a strong brand focus, competitors for
executive talent, and similarly sized businesses in terms of revenues and
market
capitalization. Hewitt uses data provided by that peer group to determine
a
market comparison for our executive compensation program, with targeted total
compensation at the 50th percentile
of
the peer group, size-adjusted by revenues. The market comparison is made
on the
basis of target total compensation, as well as on the basis of the individual
components—base pay, target annual bonus, target total cash compensation, target
long-term incentives (both equity and long-term bonuses), overall benefits,
and
perquisites.
Equity
grants are
also compared to market data on dilution and overhang, to ensure that they
are
consistent with the median run rate for the peer group. Hewitt also analyzes
the
peer group with respect to change of control severance benefits.
The
peer group
utilized by Hewitt for its review of fiscal year 2007 executive compensation
consists of the following companies. The industries in which the companies
are
engaged (1. household products; 2. personal care; 3. food and beverage; 4.
apparel), are noted.
|
Alberto
Culver(2)
|
Brown
Shoe(4)
|
Fortune
Brands(1)(3)
|
Newell
Rubbermaid(1)
|
Tupperware(1)
|
|
Anheuser
Busch(3)
|
Church
&
Dwight(2)
|
Hasbro(3)
|
NuSkin
Enterprises(2)
|
Wrigley(3)
|
|
Avon
Products(2)
|
Clorox(1)
|
Hershey(3)
|
Playtex
Products(2)
|
|
|
Bausch &
Lomb(2)
|
Colgate-Palmolive(2)
|
J.M.
Smucker(3)
|
Revlon(2)
|
|
|
Black &
Decker(1)
|
Del
Monte
Foods(3)
|
Kellogg(3)
|
Spectrum(1)(2)
|
The
committee is
annually apprised of the current value of all equity-based compensation awarded
to the officers, which it considers in determining whether additional retention
protections are necessary. It is also apprised of the value of payments to
the
officers following a termination of employment under various scenarios. Because
of our program’s emphasis on pay for performance and compensation at competitive
market rates, the committee does not view prior equity awards to our executives
as a significant factor in its determination of appropriate equity grants
or
other compensatory awards.
Elements
of
Compensation
Base
pay—We benchmark base pay against our peer group on an annual basis
as
a guide to setting compensation for all key positions throughout the
Company—including the named executive officers. Because the executive
compensation program is designed to emphasize variable pay over fixed
compensation, our management and the committee have agreed that the target
for
base salaries should generally be below the 50th percentile
for the peer group. With that underlying framework, at the beginning of each
fiscal year the committee establishes the salaries of the executive officers
(other than the chief executive officer) based on recommendations of the
chief
executive officer. These recommendations include an assessment of the
individual’s responsibilities, experience, and individual performance against
focal points. We also review a number of external sources relating to average
merit increases for executives, as a comparison to our recommendations. The
committee also reviews the peer group benchmarked salary data provided by
the
committee’s compensation consultant. The consultant, without input from
management, provides the committee with a range of possible salary levels
for
the chief executive officer, which is also based on benchmarked salary data
from
the peer group. The committee then assesses the chief executive officer’s
contributions during the prior year and performance against focal points,
and
subjectively determines an appropriate salary for the upcoming year. (The
process of setting focal points for the named executive officers is described
in
more detail below.)
During
fiscal year
2007, the aggregate salaries of the named executive officers were more than
10%
below the 50th percentile,
and the individual salaries of each of the officers ranged from 5% to 30%
below
the 50th percentile
for the peer group. The differences in the range below median were based
upon
their individual experience, time in job, and performance, as well as changes
in
benchmarked data for each position, which can vary from year to year based
upon
compensation changes by the peer group companies.
Each
year,
recommendations for the specific salaries for the executive officers are
determined by a subjective consideration of the above performance factors,
as
well as by consideration of the interplay of all of the benchmarked elements
making up total compensation for the officers. These considerations are made
in
light of our overriding compensation goal of setting target total compensation
at the 50th percentile
for the peer group, and then setting the individual components either above
or
below that market point, in line with our “pay for performance” philosophy,
which emphasizes long-term incentives over fixed pay. We look at these factors
for each individual officer as well as for the entire executive officer group
in
the aggregate. If market or subjective factors suggest an increase in salary
for
an officer is merited, the range of increases (subject to our goal of staying
below the 50th percentile
for salaries) is evaluated in terms of:
|
•
|
their
impact
on the aggregate salaries of the executive
group,
|
|
•
|
their
impact
on total compensation paid, individually and to all of the
officers, and
|
|
•
|
their
impact
on the individual components of that total compensation which change
as a
result of a change in base salaries—such as target annual bonus, target
long-term bonus, and benefits.
|
We
evaluate all of
these factors to ensure that our pay is consistent with our 50th percentile
pay philosophy. The amount of increase which best achieves the subjective
goal
of rewarding an officer, and which keeps all of the other elements of
compensation in line, is then recommended to the committee. The committee
reviews the recommendations with its consultant, and as long as they remain
within the targeted range relative to the peer group, the committee has
historically approved the recommendations as made. For fiscal year 2007,
the
base salaries of the named executive officers approved by the committee were
as
follows: W. Klein—$750,000; D. Sescleifer—$400,000; J.
McClanathan—$450,000; D. Hatfield—$310,000; and G.
Stratmann—$320,000.
Because
salaries
are based on individual responsibilities and performance, and on benchmarked
data for similar positions at our peer group, the committee generally does
not
consider parity among the officers or between officers and employees. However,
parity between the two officers leading each of our operating divisions is
one
of the subjective factors which has been considered in the past. Because
the
chief executive officer exercises a level of responsibility higher than that
of
our other executive officers, his salary, in line with benchmarking data
from
our peer group, has historically been set at a higher level than the other
officers, although still significantly below the median. (For fiscal year
2007,
his salary was approximately 30% below the 50th percentile.)
On
April 1,
2007, upon the retirement of Mr. Joseph Lynch, Mr. David Hatfield was
promoted to president and chief executive officer of our Schick-Wilkinson
Sword
division. In light of his additional responsibilities, and based on benchmarked
data, the committee at that time increased Mr. Hatfield’s base salary for
the remainder of fiscal year 2007 to $350,000, but his salary as increased
remained more than 10% below the fiftieth percentile. The committee also
increased his target bonus from 60% to 80% to keep it in line with our other
officers at similar levels.
The
committee
evaluated the annual salaries of the named executive officers after the end
of
fiscal 2007, and based upon successful performance during 2007, the increasing
responsibilities associated with the acquisition of Playtex (which grew the
Company from $3 billion to $4 billion in annualized revenues) and
benchmarking data, the committee elected to increase their salaries for fiscal
2008. For 2008, the base salaries of the named executive offices will be
as
follows: W. Klein—$825,000; D. Sescleifer—$440,000; J. McClanathan—$475,000; D.
Hatfield—$400,000; and G. Stratmann—$350,000. The committee’s consultant has
indicated that these salaries generally meet the intended goal of below 50th percentile
for base salaries. All officers, as a group, are at approximately 16% below,
and
the named executive officers individually, other than Mr. McClanathan, are
in a range between 9% and 30% below, the 50th percentile
for the peer group. The committee’s consultant determined that
Mr. McClanathan’s new base salary is approximately 3% above the 50th percentile
position, primarily as a result of a decline in benchmarked data for his
position, which can vary from year to year based upon compensation changes
by
the peer group companies. The differences in the range below median for the
other officers resulted primarily from the fact that the benchmarked data
changed in reflection of changes in the scope of their positions following
the
acquisition of Playtex.
We
believe that a
competitive base pay structure which is annually adjusted to reflect individual
performance serves to attract and retain key individuals, motivates performance
against focal points for the year, and rewards exceptional
performance.
The
amounts of
salary paid to each of the named executive officers during fiscal
year2007 is set forth in the Summary Compensation
Table below.
Incentive
programs—As noted above, a primary focus of our executive compensation
program is consistent EPS growth from year to year, and over long-term periods
(adjusted as described below). To achieve this goal, we have developed a
three-tier incentive compensation structure for our key executives:
|
•
|
an
annual
cash bonus program with a target for annual EPS growth, as adjusted,
set
at 10% above prior year results, as well as a subjective component
focused
on individual performance;
|
|
•
|
a
two-year
cash bonus program which provides an opportunity for an additional
cash
bonus for year over year increases in EPS
results; and
|
|
•
|
a
three-year
performance award of restricted stock equivalents, 75% of which
are
performance-linked and vest only if goals for three-year compound
annual
growth in EPS are achieved. (These are described under EQUITY AWARDS
below.)
|
ANNUAL
AND
TWO-YEAR BONUS PROGRAM
Awards
to officers
under our annual and two-year cash bonus program are made under the terms
of our
shareholder-approved executive officer bonus plan, and the three-year
performance awards are granted under the terms of our shareholder approved
2000
incentive stock plan, so that they can qualify as performance-based compensation
under IRS Reg. 162(m). The performance goals are set by the committee at
the
beginning of each fiscal year, and are intended to promote an acceptable
level
of shareholder return by means of healthy and consistent EPS
improvement.
Annual
Bonus
The
annual bonus is
designed to promote achievement of both Company and individual performance
goals, with a component equal to 70% of the annual bonus focused on objective
Company performance, and a component equal to the remaining 30% of the annual
bonus focused on more subjective individual performance.
|
•
|
Company
performance. This component rewards achievement of Company
performance goals established at the beginning of each fiscal year.
For
the executive officers, the program is designed to reward significant
annual EPS growth, and provides the following potential
bonuses:
|
|
Goals
for Annual Objective Component—
|
Bonus
which will be Awarded
|
|
Set
at Beginning of Each Fiscal Year
|
upon
Achievement of Goals
|
|
Threshold—set
at prior year’s final GAAP results
|
50%
of 70% of
officer’s “bonus target”
|
|
10%
(target)-
set at 10% above Threshold goal
|
100%
of 70%
of officer’s “bonus target”
|
|
Stretch—set
at 20% above Threshold goal
|
150%
of 70%
of officer’s “bonus target”
|
|
(Bonuses
indicated increase proportionately for final results between the
goals
indicated—with maximum bonus at stretch. No bonuses are paid for
results below the Threshold
goal.)
|
|
The
committee has
assigned individual “bonus targets” (a percentage of annual salary) to each of
the officers, based upon historical practice at the Company and benchmarked
data
provided by the committee’s consultant. For fiscal years 2007 and 2008, the
following “bonus targets” have been assigned to the named executive
officers:
|
|
•
|
Mr. Klein
- 100%
|
|
|
•
|
Mr. Sescleifer
- 80%
|
|
|
•
|
Mr. Hatfield
- 80%
|
|
|
•
|
Mr. McClanathan
- 80%
|
|
|
•
|
Ms. Stratmann
- 60%
|
For
2007, the 10%
and stretch EPS goals were increased, as described under
Adjustmentof Goals below, and consequently were actually
greater than the program’s formula otherwise provided. The actual goals for
fiscal year 2007 and fiscal year 2008 are also set forth under Adjustment of
Goals. Based on final EPS results for fiscal 2007, adjusted as described
in
Adjustment of Goals, which exceeded the increased stretch EPS goal for
the year, bonuses under this objective component were awarded to the named
executive officers, as described in the Summary Compensation Table
below, at the maximum level.
|
•
|
Individual
performance. The individual performance component of the
annual bonus is based upon a subjective evaluation of the officer’s
performance during the year, including performance against pre-established
“focal points” for business and personal improvement. Based on that
evaluation, a subjective rating is assigned to each officer, each
of which
ratings provide the following potential
bonuses:
|
|
Rating
|
Individual
Performance Bonus
|
|
“1”
or
“major contributor”
|
200%
of
30% of officer’s “bonus target”
|
|
“2”
or
“significant contributor”
|
125%
of
30% of officer’s “bonus target”
|
|
“3”
or
“solid contributor”
|
50%
of
30% of officer’s “bonus target”
|
|
“4”
or
“marginal contributor”
|
0
|
|
“5”
or
“unsatisfactory contributor”
|
0
|
The
board of
directors establishes the focal points of the chief executive officer at
the
beginning of the year, and the chief executive officer sets the focal points
for
the other executive officers. The focal points for those other officers for
2007
generally addressed specific operational objectives, budgeted financial
objectives, organizational and management objectives, and more specific
objectives directly related to each officer’s position. The focal points for the
chief executive officer addressed top-line operating objectives for our
household products and personal care products businesses, sales and profit
growth objectives, strategic objectives for use of operating cash flows,
and
organizational and management objectives.
The
committee
determines the rating for the chief executive officer, based on his performance
during the year, with input from the chairman of the board. The committee
also
reviews subjective assessments of the chief executive officer’s performance
which are provided by each of the directors. The ratings for all other executive
officers are recommended by the chief executive officer and are subject to
committee approval, but the committee generally accords great weight to these
recommendations. For fiscal 2007, the committee determined that each of the
officers either achieved, or made significant progress toward achievement
of,
all of their pre-established focal points. In assessing the chief executive
officer’s performance for fiscal 2007, the Committee assigned him a “1” rating,
indicating that they viewed his leadership during fiscal year 2007 as
outstanding, particularly with respect to:
|
•
|
the
acquisition of Playtex,
|
|
•
|
the
achievement of solid growth in sales and operating profit in the
Company’s
two divisions despite a difficult business
environment, and
|
|
•
|
the
Company’s
continuing growth in EPS above targeted
levels.
|
The
other named
executive officers were rated either “1” or “2” for their performance during
2007.
Two-Year
Bonus
The
two-year bonus
is designed to promote consistent growth in EPS from year to year, with no
fall-back in performance. It provides the following potential
bonuses:
|
Amount
of Bonus
|
|||
|
EPS
Goals for
|
Opportunity
if Goals for
|
Bonus
Payment if Goals
|
|
|
Year
One
|
Year
One
Achieved
|
EPS
Goals for Year
Two
|
for
Year Two
Achieved
|
|
10%
(target)—set at 10% above prior year’s final EPS results
|
50%
of
officer’s “bonus target”
|
Threshold—set
at final EPS results for year one
|
50%
of bonus
opportunity created after year one
|
|
Stretch—set
at 20% above prior
year’s
final EPS results
|
100%
of
officer’s “bonus target”
|
10%(target)—set
at 10% above final EPS results for year one
|
100%
of bonus
opportunity created after year one
|
|
(Bonus
opportunities and payments indicated increase proportionately for
final
results between the goals indicated. No opportunity created or
bonus paid for results below the above
goals.)
|
|||
Because
adjusted
EPS results for fiscal 2007, adjusted as described in Adjustment
ofGoals below, of $5.39 exceeded the 10% and stretch EPS
goals for that year, the bonus opportunity created after fiscal year 2006
became
payable, and a new bonus opportunity based on fiscal 2007 results (equal
to 100%
of each officer’s bonus target) was created, payment of which is dependent upon
fiscal year 2008 results. The two-year cash bonus paid after fiscal 2007
is set
forth in the Summary CompensationTable below,
and the bonus opportunity created is set forth in the Grants of
Plan-Based Awards Table below.
Targeted
Compensation Under the Annual and Two-Year Bonus Program
Because
of our
focus on incentive “pay for performance” compensation, we provide higher than
market “bonus target” percentages for our executive officers, other than our
chief executive officer, whose bonus target is below market. However, because
our base salaries have been set below the 50th percentile
of
our peer group, our target annual bonus and target total cash for 2007, in
the
aggregate and individually for each officer, were generally at least 5% below
the 50th percentile,
in line with our overall goals for total compensation targeted at the 50th percentile
of
our peer companies. The committee reviews our targeted bonus opportunities
annually.
Our
compensation
goal is to provide pay opportunities to our executive officers that are
competitive and consistent with our pay philosophy. What may actually be
realized by them, especially under our annual and two-year cash bonuses and
performance awards, is entirely a function of realized results. To the extent
actual or earned compensation varies from our targeted total
compensation percentile, it is a function of the individual’s and our company’s
performance.
Adjustment
of
Goals
The
calculation of
EPS for purposes of the annual and two-year cash bonus program, and our
three-year performance awards, is made in accordance with U.S. generally
accepted accounting principles (“GAAP”), subject to adjustment for the
following, if they occur during a measurement period:
|
•
|
extraordinary
dividends, stock splits or stock
dividends;
|
|
•
|
recapitalizations
or reorganizations of the Company, including spin-offs or
liquidations;
|
|
•
|
any
merger or
consolidation of the Company with another
corporation;
|
|
•
|
unusual
or
non-recurring non-cash accounting impacts or changes in accounting
standards or treatment;
|
|
•
|
unusual
or
non-recurring non-cash accounting treatments related to an acquisition
by
the Company completed during the fiscal
year.
|
The
committee has
agreed that these adjustments will be mandatory under our program; in the
event
of any ambiguity, the committee determines if adjustment is appropriate.
Consequently, the committee determined that GAAP EPS for fiscal 2007 was
required to be adjusted to reflect the non-cash accounting impact of a portion
of one-time deferred income tax benefits recognized by our German subsidiaries
in that year. In our fiscal 2007 reported earnings, we recorded a
$9.7 million, or $0.16 per diluted share, income tax benefit which resulted
from deferred tax balances being adjusted to reflect lower German tax rates
in
2008 and beyond. Of this amount, $7.4 million, or $0.12 per diluted share,
associated with indefinite-lived intangible assets, was determined by the
committee to be deferred tax benefits with no economic substance within the
foreseeable future. As a result, solely for purposes of our incentive programs,
final GAAP EPS for fiscal 2007 of $5.51 was reduced by $0.12 to $5.39. The
adjusted figure of $5.39 will be the threshold EPS goal for our 2008 annual
and
two-year cash bonus program and the base for determining compound growth
percentages under our three-year performance awards granted in October of
2007.
Similarly,
in the
event of inventory write-ups or other non-cash accounting adjustments associated
with our acquisition of Playtex during fiscal year 2008, EPS goals under
these
incentive programs would be further adjusted to reflect any unusual or
non-recurring non-cash accounting treatments that may be required.
The
committee also
has authority to adjust targets to exclude the effects of other extraordinary
or
unusual events occurring during measurement periods. In December of 2005,
because of the significant and unusual nature of the Company’s European
restructuring program and the closure of its Caudebec, France facility, the
committee approved relief of $0.25 from the EPS performance goals for fiscal
year 2006, reflecting the actual expenses incurred in the restructuring and
closure. However, in recognition of the one-time nature of the charge, and
the
fact that the restructuring project was anticipated to generate future cost
savings, the committee also determined that the threshold, as well as 10%
and
stretch EPS goals for the 2007 bonus program would be increased by that amount,
and that the 10% and stretch EPS goals would also be increased by an additional
$.07, reflecting the anticipated annual savings from the restructuring project.
The goals for fiscal year 2007, as adjusted, are shown below.
|
Increase
Due to
|
Increase
|
Adjusted
|
||
|
Bonus
|
|
European
|
Reflecting
|
2007
Bonus
|
|
Program
|
Formula
for
|
Restructuring
|
Annual
|
Program
EPS
|
|
Goals
|
Setting
Goals
|
Relief
in FY 2006
|
Savings
|
Goals
|
|
Threshold
|
FY
2006 EPS
results—$4.14
|
$0.25
|
—
|
$ 4.39
|
|
10%
|
10%
above
Threshold
|
10%
above
adjusted Threshold
|
$ .07
|
$ 4.90
|
|
Stretch
|
20%
above
Threshold
|
20%
above
adjusted Threshold
|
$ .07
|
$ 5.34
|
Goals
for fiscal
year 2008 were determined by application of the above formula to final EPS
results for fiscal year 2007 (adjusted as described above).
|
Adjusted
2008
|
|||
|
Bonus
|
|
Decrease
Reflecting Non-Cash
|
Bonus
|
|
Program
|
Formula
for
|
Accounting
Impact of German
|
Program
EPS
|
|
Goals
|
Setting
Goals
|
Tax
Benefit in FY 2007
|
Goals
|
|
Threshold
|
FY
2007 EPS
results—$5.51
|
$0.12
|
$ 5.39
|
|
10%
|
10%
above
Threshold
|
10%
above
adjusted Threshold
|
$ 5.93
|
|
Stretch
|
20%
above
Threshold
|
20%
above
adjusted Threshold
|
$ 6.47
|
The
annual and
two-year cash bonuses are intended to ensure that executives focus on both
short-term profit maximization as well as consistent growth from year to
year,
and the potential of large payouts for achievement of stretch EPS goals provides
a strong incentive for outstanding performance. In addition, because long-term
awards under the program are not payable unless the executive remains with
us
throughout the two-year measurement period, the program also helps to retain
key
executives.
The
amounts of
the annual Company performance cash bonus and the individualperformance
cash bonus, and the two-year cash bonus earned by each of the
namedexecutive officers for fiscal year 2007 is set forth in footnote
4
to the Summary Compensation Table
below.
The value of two-year bonus opportunities created for
eachof the officers during fiscal year 2007, payment of which is
contingent upon fiscalyear 2008 EPS results, is set forth in the
Grants of Plan-Based Awards
Tablebelow.
EQUITY
AWARDS
At
the time of our
spin-off, we adopted our 2000 incentive stock plan (which was later approved
by
shareholders) providing authority for the committee to grant up to
15 million shares of common stock, in the form of stock options (qualified
and non-qualified), restricted stock or stock equivalents, and other stock
awards. The plan expires in 2009, and approximately 2,800,000 shares remain
available for grant. We believe that equity grants provide a direct link
to
shareholder interests by tying a significant portion of the officers’ personal
wealth to the performance of our common stock. Such grants reinforce a strong
interest in share price growth, and also, because of vesting requirements,
help
to retain key employees.
Over
the course of
the plan’s life, the committee has granted non-qualified stock options. However,
in order to strengthen the pay for performance aspect of equity awards, the
committee, for the past three years, has granted performance restricted stock
equivalent awards (“performance awards”) to the named executive officers and
other key employees.
Performance
awards
are designed to promote consistent and significant EPS growth, as adjusted,
over
a three-year period, as well as to provide an additional means of retaining
key
employees and executives. These awards have performance- and
non-performance-linked components, and provide that:
Non-performance-linked
component
|
•
|
25%
of the
equivalents awarded vest on the third anniversary of grant, provided
that
the executive remains employed with us at that
time,
|
Performance-linked
component
|
•
|
an
additional
25% vests only if 10% compound annual growth in EPS, as adjusted,
over the 3-year period is
achieved, and
|
|
•
|
the
remaining
50% vests ratably for compound growth in EPS, as adjusted, above
10% (up
to a maximum of 15%) over the three-year
period.
|
If
at least 10%
compound annual growth is not attained, none of the performance-linked component
will vest.
Grants
during
2007
Three
year
performance awards with the above terms were granted to the named executive
officers at the beginning of fiscal year 2007, as set forth in the
Grantsof Plan Based Awards table below. At the
election of the committee, the base EPS number used for calculation of growth
rates under those awards was $4.45. This increase over the final GAAP EPS
results for fiscal year 2006 of $4.14 reflected the $.25 relief given for
the
European restructuring project under the 2006 annual and two-year bonus program,
described under Adjustment of Goals above, and an additional $.06
charge to earnings for fiscal 2006 taken at the end of that year.
Additional
performance awards were granted to the officers and other key employees in
October of 2007 (which is fiscal year 2008). As noted above, under earlier
awards, including those granted during fiscal year 2007, 75% of the total
award
granted to each officer will be forfeited if compound growth of at least
10% is
not achieved over the three-year period of the award. Because of the harshness
of that cliff, and because the committee’s consultant advised that performance
awards among our peer group generally had lower targets than ours, the
performance awards granted during fiscal year 2008 have a slightly lower
threshold for vesting of a portion of the performance-linked component. These
awards now provide that 5% of the total equivalents granted will vest if
compound annual growth of 8% is achieved, and 15% will vest if compound annual
growth of 9% is achieved (with the remainder of the award vesting as described
above). The total equivalents granted to each officer under these awards
was: W.
Klein—56,000 equivalents; J. McClanathan—14,000 equivalents; D. Hatfield—14,000
equivalents; D. Sescleifer—14,000 equivalents; and G. Stratmann—10,000
equivalents. The base used for calculation of growth rates for purposes of
these
awards is equal to final adjusted EPS for fiscal 2007, as described in
Adjustment of Goals above, of $5.39.
The
determination
of whether targeted growth in EPS is achieved will be made in accordance
with
GAAP, adjusted for unusual items, as described in Adjustment of Goals
above.
Timing
and
Procedures for Grants
Except
in
exceptional cases of promotions or new hires, performance awards and other
restricted stock equivalent awards are granted at the fall meeting of the
committee. At that meeting, which occurs just after the beginning of the
fiscal
year, salary levels and bonus programs for the new fiscal year are determined,
and the committee and management have agreed that it is also an appropriate
time
to review and consider additional awards, as part of the total compensation
packages offered. If options are awarded, although there is no current plan
to
do so, they would be granted at that meeting, at the closing price of the
common
stock on that date. As the committee meeting generally occurs prior to the
Company’s final determination of fiscal year end results, and as the specific
date of the meeting is set a year in advance, we believe that there would
be
little or no opportunity to obtain favorable option pricing through manipulation
of the grant date.
For
the past
several years, the size of equity awards for the executive officers has been,
in
part, based upon benchmarked data from our peer group provided by the
committee’s consultant, valued on the basis of grant-date present
value.
|
•
|
The
consultant uses pricing models comparable to Black-Scholes for
restricted
stock equivalents and performance awards, giving consideration
to risk of
forfeiture and degree of upside potential for performance
shares.
|
|
•
|
In
valuing
the performance component of our performance awards, the consultant
assigns a premium to reflect the fact that our maximum payout,
for 15%
compound growth in EPS over the three-year term of the award, is
three
times our target payout (for 10% compound growth) instead of the
more
customary two times target. This structure reflects our greater
emphasis
on “pay at risk”.
|
|
•
|
As
with the
setting of base salary, the size of awards recommended reflects
the
interplay involved with providing long-term incentive compensation,
valued
at target, at or slightly above the 50th percentile
and maintaining total compensation for each officer, and for all
of the
officers as a group, at the 50th percentile,
as well as a consideration of parity among the officers, individual
circumstances, current dilution rates, and the market run-rate
for equity
grants among the peer group. Based on these considerations and
the
consultant’s valuation, the chief executive officer subjectively
determines an appropriate number of shares or share units to be
recommended to the committee for each
officer.
|
|
•
|
The
committee
reviews the proposed awards with its consultant and then generally
acts in
line with the recommendations.
|
With
respect to
awards to the chief executive officer, the consultant, without input from
the
chief executive officer or other members of management, provides a range
of
potential awards, valued as described above, to the committee, and the
committee, based on the same decision factors, subjectively determines the
size
of the award. Our performance awards in 2007, in combination with our other
long-term incentive (the two-year cash bonus program) were, for the officers
as
a group, less than 10% above the 50th percentile,
and on an individual basis, were in a range between 10% above and 10% below
the
50th percentile.
Differences in the range were primarily a result of the interplay of the
factors, described above, which are involved in setting long-term compensation
for each individual officer.
We
provide
long-term incentive opportunities in the form of equity awards in order to
align
our officers’ interests with those of shareholders, promote exceptional
performance, and retain key executives throughout the vesting periods. Equity
grants constitute a significant element of executive compensation among our
peer
companies, and we believe the competitiveness of our program would suffer
if
such grants were not included.
The
FAS 123R expense associated with performance awards granted in fiscal
year2007 is included in the Stock Awards column of the
Summary Compensation Table.
Theaggregate grant date value of the 2007 awards, in accordance with
FAS 123R, isset forth in the Grants of Plan-Based
Awards Table. Prior equity awards are listed inthe
Outstanding Equity Awards
at Fiscal Year End
Table.
Deferred
Compensation Plan. The executive officers and other key
employees are permitted to request the deferral of their annual and two-year
cash bonus awards, and a portion of their annual salary, under the terms
of our
deferred compensation plan, which is described in the narrative to the
Nonqualified Deferred CompensationTable below.
Deferrals of an executive’s annual and two-year cash bonus into the Energizer
common stock unit fund of the plan receive a 25% Company match, vesting three
years from the date of crediting.
The
plan is a
legacy plan inherited from our former parent that we have retained as a part
of
our compensation program. The 25% Company match is highly valued by our
executives as part of their overall compensation package, as are the tax
deferral benefits of the plan. The investment alternatives offered provide
additional value:
|
•
|
The
Energizer
common stock unit fund, including the 25% Company match, links
the
executives’ personal financial interests to the performance of our common
stock, with no dilutive impact on shareholders because payouts
under the
plan are made in cash. Moreover, the three-year vesting requirements
for
the match provide us with an additional means of retaining
executives.
|
|
•
|
The
25%
Company match has been identified by the committee’s consultant as a
benefit that is greater than similar benefits offered by our peer
group.
However, because of the above advantages of the program, and because
the
aggregate value of our total compensation for 2007, for each officer,
and
for the officers as a group, approximates the 50th percentile
for the peer group, the committee has determined to keep the match
in
place.
|
|
•
|
The
investment options tracking the investment funds in our 401(k)
plan allow
executives to tailor their retirement investments according to
their
individual investment objectives, although executives must retain
their
deferred bonuses in the Energizer common stock unit fund for at
least a
year, and the 25% Company match must remain in that fund until
vested.
|
|
•
|
The
prime
rate fund provides an above-market rate of return. Because its
inclusion
in the plan has not impacted our goal of achieving total compensation
at
the 50th percentile,
the committee has elected to retain the prime rate
fund.
|
The
FAS 123R expense associated with unvested 25% Company match deferrals
duringfiscal year 2007 is included in the Stock Awards column of the
Summary
CompensationTable, and above-market
interest under the prime rate fund, credited to each of thenamed
executive officers during fiscal year 2007, is included in the
Summary Compensation Table
below (and
detailed in footnote 5 to that Table.) Details
ofcontributions and earnings, and year-end balances, in the deferred
compensation planare set forth in the Nonqualified
Deferred Compensation Table and
accompanyingnarrative.
Supplemental
Retirement Plans.
Defined
Benefit
Pension
benefits
under our qualified defined benefit pension plan are based upon an employee’s
five year final average earnings (including wages and bonuses, either paid
or
deferred). Because of IRS limitations on the amount of earnings that can
be
taken into account for such calculation, and on the amount of benefits that
can
actually be paid, we have, like many companies our size, established an unfunded
pension restoration plan, our executive supplemental retirement plan, which,
following retirement, provides a monthly supplement to an executive’s pension
benefit equal to the amount that the executive would have received but for
the
IRS limitations. Executives whose pension benefits under the qualified plan
are
calculated under an account-based formula, also have the option of taking
their
restoration benefit in the form of a lump-sum payment upon
retirement.
Defined
Contribution
We
also offer a
qualified defined contribution 401(k) plan, our savings investment plan,
which
permits all U.S. employees to defer a percentage of their compensation into
the plan until retirement, and receive a Company match on a portion of their
deferrals. The amounts which may be deferred into the qualified plan, as
well as
the amount of company matching contributions, are also both subject to IRS
limitations. As with the defined benefit plan, we have adopted an unfunded
excess 401(k) plan, our executive savings investment plan, under which
executives are permitted to defer any excess contributions and matching payments
not permitted into the qualified savings investment plan.
Value
of the
Plans to Our Compensation Program
The
pension
restoration plan and the excess 401(k) plan are legacy benefits which were
also
offered by our former parent, and the committee believes they are highly
valued
by the executives. The pension restoration plan preserves the full, unreduced
benefit which the executives would otherwise receive under the qualified
plan’s
pension formula, and the excess 401(k) plan offers the opportunity to save
for
retirement, on a tax deferred basis, at the same levels of deferral and company
match that the executives would otherwise receive under the qualified 401(k)
plan without IRS limits.
According
to market
data provided by the committee’s consultant, these types of benefits are
generally offered by our peer group described above, often with enhanced
benefit
formulas (which we do not provide). We believe that not including these programs
would put us at a competitive disadvantage in retaining our key
executives.
Enhanced
Benefits under Separation Agreements
On
a very limited
number of occasions, in connection with separation agreements entered into
with
certain terminating executives, our board has authorized the inclusion of
additional bonus compensation in the calculation of pension restoration plan
benefits, which would not otherwise have been included under the terms of
the
qualified pension plan. Although including this compensation resulted in
greater
benefits under the pension restoration plan, the board, in those cases, believed
the benefit was necessary and appropriate consideration for the separation
agreements. We consider these agreements on a case by case basis, and generally
do not agree to enhance benefits under the pension restoration plan. None
of the
named executive officers has received enhanced pension restoration plan
benefits, and Mr. Lynch did not receive enhanced benefits upon his
retirement during fiscal year 2007.
Future
Review
of Benefit Formulas
Accrued
benefits
under the pension restoration plan have increased over the past several years
and could increase significantly in the future. As indicated above, bonuses
under our annual and two-year bonus program are a component of five-year
final
average pay for purposes of pension benefit calculations under the qualified
retirement plan and the pension restoration plan. Because the bonus program
has
evolved to a performance-based program with significant penalties for failure
to
achieve goals, and significant rewards for achievement of stretch goals,
our
superior financial performance over the last several years has resulted in
higher than average bonuses, and, consequently, significantly expanded
retirement liabilities. (Poor performance, of course, can have the opposite
effect. No bonuses were paid to the executive team in 2001 because of poor
financial results for that year, and pension restoration plan benefits were
significantly negatively impacted during the five-year averaging period.)
Management and the committee continue to review benefit formulas under the
pension restoration plan in light of these issues.
Details
of
pension benefits under the pension restoration plan are set forth in
thePension Benefits Table below, and details
of contributions, earnings, and year-endbalances in the excess 401(k)
plan are set forth in the Nonqualified Deferred
Compensation Table
below.
Severance
and Other Benefits Following a Change of Control.
Unlike
many of our
peers, we have not offered employment agreements to our executives. However,
we
have entered into change of control employment agreements with each of our
executive officers which provide for severance payments equal to three times
annual salary and bonus, and continuation of a number of other benefits in
the
event of the executive’s involuntary termination, or voluntary termination for
any of several specified reasons, within three years following a change of
control. The agreements also provide for a payment of a pro rata annual bonus
immediately upon a change of control, as well as vesting of all equity
awards.
The
agreements also
provide that we will reimburse the officers for any excise taxes, including
income taxes and additional excise taxes on such reimbursement, subject to
reduction of benefits within 10% of the excise tax threshold.
Our
three-year
performance awards granted during fiscal year 2006 and fiscal year 2007 provide
that they will vest in their entirety upon a change of control. However,
the
committee has decided that with respect to the performance awards granted
in
fiscal year 2008 and in future years, only 50% of the total equivalents granted
will vest if the change of control occurs within eighteen months of grant,
and
if the change of control occurs more than eighteen months following grant,
only
the greater of
|
•
|
50%
of total
equivalents granted, or
|
|
•
|
the
number
that would have been granted if actual EPS performance for the
period
between grant and the change of control were achieved at the end
of the
three-year period,
|
will
vest. The
committee based this decision on advice from its consultant that vesting
at
target or actual performance, rather than maximum, upon a change of control,
was
more typical for agreements of this type.
Details
of the
terms of the agreements are set forth below under Potential
PaymentsUpon Termination Or Change of Control
below.
Purpose
of the
Agreements
Because
we do not
otherwise enter into employment agreements with our executive officers, the
change of control employment agreements are designed to provide them with
increased security in the event of a change of control, and allow them to
weigh
alternative future courses for the Company focused on the interests of
shareholders and not their own personal financial interests. Our board of
directors carefully identified the executives and other individuals who have
received agreements as critical to the process of evaluating or negotiating
a
transaction, or in the subsequent integration process. We believe that their
retention throughout a change of control is critical to the success of any
transaction. In evaluating these agreements, the committee considers it
important that:
|
•
|
except
as
noted above, no benefits become payable under an agreement unless
the
executive is involuntarily terminated, or voluntarily terminates
for good
cause; and
|
|
•
|
the
agreements limit the ability of the new management to impose unfavorable,
harsh or unfair conditions of employment in order to motivate the
executive to voluntarily terminate and forfeit severance
benefits.
|
The
committee
annually reviews the terms and aggregate cost of the agreements in light
of
comparative market data provided by its consultant, and has from time to
time in
the last several years initiated limitations on the benefits provided. The
consultant’s advice is based upon regular surveys of Fortune 200 companies
as well as our peer group, and its own internal data and expertise. Based
on
this information, the consultant has advised that severance payments set
at
three times annual base salary and bonus for the executive officers, as well
as
reimbursement of excise taxes, subject to reduction of benefits within ten
percent of the excise tax threshold, is common, and that the aggregate projected
cost of payments under our agreements, as a percent of market capitalization,
is
at the lower end of prevailing practices.
The
aggregate cost
of these agreements to a new controlling entity could be significant, depending,
in particular, upon the value of equity awards vesting at a change of control,
and excise tax calculations—which can vary significantly depending upon the date
of calculation. However, we believe that the retention value provided by
the
agreements outweighs the potential cost given that:
|
•
|
such
protections are common among companies of our size, and allow us
to offer
a competitive compensation package,
|
|
•
|
the
committee’s consultant has advised that the aggregate projected cost of
the agreements is at the lower end of prevailing
practice, and
|
|
•
|
such
costs
will only be triggered if the new controlling entity terminates
the
protected executives, or they terminate for good cause, during
the
protected period.
|
A
description
of the projected cost if a change of control were to have occurred
onthe last day of fiscal year 2007 and all of the named executive
officers wereterminated on that date is provided under
Potential Payments Upon Termination OrChange of
Control below.
Perquisites. We
offer only a limited number of perquisites for our executive officers, and
do
not provide commonly offered perquisites such as company cars and country
club
memberships. Our board of directors has authorized the personal use of our
Company-owned aircraft, for up to 30 flight hours per year, by the chief
executive officer and the chairman and chairman emeritus of the board. The
board
has also authorized those individuals to bring family members and guests
along
on business flights, and has also approved the reimbursement of those
individuals for state and federal income taxes associated with their personal
use of the aircraft and the use by their guests, but not for any taxes on
such
reimbursement. The remaining perquisites or executive benefits consist of
the
executive financial planning program, executive health plan, executive retiree
life plan, executive long-term disability plan, and executive excess liability
plan. These are all legacy programs which were in effect prior to our spin-off.
Because our executives have participated in these programs for a number of
years, and value them highly as a part of their overall compensation package,
we
believe they strengthen our ability to retain them at moderate expense. However,
because of our overall compensation philosophy of focusing on performance-based
compensation, the committee regularly reviews the continuing value of these
programs. At its review in 2006, the committee elected to freeze the executive
health plan for existing participants, and not to offer it to any additional
participants.
The
value of
perquisites provided to the named executive officers during fiscal
year2007 is set forth in the All Other Compensation Column of the
Summary CompensationTable
below,
and detailed in footnotes to that
Table.
Stock
Ownership Requirements
In
October, 2007,
because of the importance of having our executives’ personal financial interests
directly and significantly linked to the interests of shareholders, the
committee approved stock ownership guidelines for our executive officers.
Although historically our officers have maintained stock ownership levels
well
above typical mandatory guidelines, we felt it was advisable to set guidelines
for new officers. The guidelines provide that the chief executive officer
must
maintain ownership of our common stock with a value of at least five times
his
base salary, and the other executive officers must maintain common stock
ownership with a value of at least three times their base salaries. New officers
would be given a period of five years to attain full compliance with the
guidelines.
For
purposes of
these determinations, stock ownership includes shares of our common stock
which
are directly owned or owned by family members residing with the executive,
or by
family trusts, as well as vested options, vested and deferred restricted
stock
equivalents, unvested restricted stock equivalents (other than equivalents
subject to achievement of performance targets), and common stock or stock
equivalents credited to an officer under our savings investment plan, our
excess
401(k) plan, or our deferred compensation plan. At the current time, all
of our
officers are in compliance with the guidelines.
Trading
in
Energizer Stock Derivatives
It
is our policy
that employees and officers may not engage in speculative transactions in
our
securities. Under the policy, an officer should not invest or trade in
market-traded options, engage in short-sales of our securities, or speculate
on
relatively short-term price movements of our common stock.
Deductibility
of Certain Executive Compensation
U.S. tax
laws
set a limit on deductible compensation of $1,000,000 per year per person
for
those executives designated as named executive officers in the proxy statement.
We have mandated or reserved the right to mandate the deferral of certain
bonus
and salary payments to such officers. For fiscal year 2007, voluntary deferrals
of payments under our annual and two-year cash bonus program will effectively
preserve the deductibility of essentially all compensation paid to the named
executive officers. As shareholders have approved the terms of the executive
officer bonus plan, a significant portion of payments to the named executive
officers under our annual and two-year cash bonus program for 2007 were
performance-based and thus deductible. The performance awards granted to
the
named executive officers in 2006 and 2007 are pursuant to the
shareholder-approved 2000 incentive stock plan, and accordingly will also
be
deductible when vested and paid. While it is the general intention of the
committee to meet the requirements for deductibility, the committee may approve
payment of non-deductible compensation from time to time if it believes
particular circumstances warrant it. The committee intends to continue to
review
and monitor its policy with respect to the deductibility of
compensation.
SUMMARY
COMPENSATION TABLE
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
(1)
|
Stock
Awards
(2)
|
Option
Awards
(3)
|
Non-Equity
Incentive
Plan
Comp.
(4)
|
Change
in
Pension
Value
and
Nonqual’d
Deferred
Comp.
Earnings
(5)
|
All
Other
Compensation
(6)
|
Total
($)
|
|
Ward
M.
Klein
|
2007
|
$745,833
|
$0
|
$7,616,242
|
$287,417
|
$1,853,500
|
$1,039,589
|
$226,221
|
$11,768,802
|
|
Chief
Executive Officer
|
|||||||||
|
Daniel
J.
Sescleifer
|
2007
|
$397,500
|
$0
|
$1,462,923
|
$56,074
|
$788,480
|
$191,577
|
$61,615
|
$2,958,169
|
|
Executive
Vice President
and
Chief
Financial Officer
|
|||||||||
|
Joseph
W.
McClanathan
|
2007
|
$449,166
|
$0
|
$2,396,152
|
$91,649
|
$836,880
|
$737,364
|
$68,907
|
$4,580,118
|
|
President &
CEO
Energizer
Household Products
|
|||||||||
|
David
P.
Hatfield
|
2007
|
$342,917
|
$0
|
$1,030,360
|
$38,862
|
$582,060
|
$246,745
|
$103,092
|
$2,344,036
|
|
President &
CEO,
Energizer
Personal Care
|
|||||||||
|
Gayle
G.
Stratmann
|
2007
|
$317,500
|
$0
|
$1,208,515
|
$83,728
|
$426,720
|
$232,145
|
$45,860
|
$2,314,468
|
|
Vice
President and
General
Counsel
|
__________
|
(1)
|
All
awards
under our annual and two-year bonus program are based upon achievement
of
either individual or Company performance measures established at
the
beginning of a performance period. Consequently, the value of all
bonuses
earned during the fiscal year are included in the Non-Equity Incentive
Plan Compensation column of this
table.
|
|
(2)
|
The
amounts
reported in this column reflect the dollar amount, without any
reduction
for risk of forfeiture, recognized in the fiscal year for financial
reporting purposes for stock awards to the listed officers, calculated
in
accordance with the provisions of FAS 123R. Portions of awards
granted over several years are included in this amount. The FAS 123R
value as of the grant date is spread over the number of months
of service
required for the grant to become vested, which may be accelerated
for
retirement eligible officers. Accounting expense is also affected
by the
current probability of meeting or exceeding performance targets
included
in some of the awards, since that is how they are expensed. Assumptions
utilized in the calculation of these amounts are set forth in
“Note 7. Share-Based Payments” of the Notes to Consolidated Financial
Statements of our 2007 Annual
Report.
|
|
(3)
|
The
amounts
reported in this column reflect the dollar amount, without any
reduction
for risk of forfeiture, recognized in the fiscal year for financial
reporting purposes for stock options held by the listed officers,
calculated in accordance with the provisions of FAS 123R. Although no
options were granted during the fiscal year, the amounts reflect
portions
of options granted over the past several years which had not vested
as of
the beginning of the year. The FAS 123R value as of the grant date is
spread over the number of months of service required for the grant
to
become vested. Assumptions utilized in the calculation of these
amounts
are set forth in “Note 7. Share-Based Payments” of the Notes to
Consolidated Financial Statements of our 2007 Annual
Report.
|
|
(4)
|
The
amounts
reported in this column reflect bonuses earned by the named executive
officers during the fiscal year under our annual and two-year cash
bonus
program, which is described in our Compensation Discussion and
Analysis.
These amounts are comprised of
|
|
|
(i)
|
the
annual
individual performance component;
|
|
|
(ii)
|
the
annual
Company performance component; and
|
|
|
(iii)
|
the
two-year
bonus which was created based on fiscal 2006 Company performance
and which
became payable based upon fiscal year 2007
performance.
|
EPS
goals for
fiscal year 2007 (as utilized in (ii) and (iii) above) were increased
as discussed in Compensation Discussion and Analysis—ANNUAL AND TWO-YEAR BONUS
PROGRAM—Adjustment of Goals.
The
specific
amounts earned by each of the named executive officers under (i), (ii) and
(iii) above are as follows:
|
|
•
|
Mr. Klein,
(i) $450,000; (ii) $787,500;
(iii) $616,000
|
|
|
•
|
Mr. Sescleifer,
(i) $192,000; (ii) $336,000;
(iii) $260,480
|
|
|
•
|
Mr. McClanathan,
(i) $216,000; (ii) $378,000;
(iii) $242,880
|
|
|
•
|
Mr. Hatfield,
(i) $168,000; (ii) $294,000;
(iii) $120,060
|
|
|
•
|
Ms. Stratmann,
(i) $72,000; (ii) $201,600;
(iii) $153,120
|
These
amounts do
not reflect any deferral of payment of these amounts, at the officers’
elections, under the terms of our deferred compensation plan which is described
in the narrative to the Nonqualified Deferred Compensation table below. The
annual and two-year bonus program does not provide for earnings on non-equity
incentive plan compensation prior to its payment or deferral under the deferred
compensation plan.
(5) The
amounts reported in this column consist of:
(i) aggregate
changes in the
actuarial present value of accumulated benefits under our retirement plan
and
the supplemental executive retirement plan, our pension restoration plan,
which
are our defined benefit pension plans described in the narrative to the Pension
Benefits table. For the final average earnings formula benefit under the
retirement plan, this amount reflects the difference in the calculated present
value of the benefit during fiscal year 2007. (To the extent that payments
under
the qualified retirement plan exceed limitations imposed by the IRS, the
excess
will be paid under the terms of the non-qualified supplemental executive
retirement plan.)
|
|
•
|
Mr. Klein,
$1,039,087
|
|
|
•
|
Mr. Sescleifer,
$153,135
|
|
|
•
|
Mr. McClanathan,
$722,307
|
|
|
•
|
Mr. Hatfield,
$225,003
|
|
|
•
|
Ms. Stratmann;
$232,145
|
(ii) above-market
interest
(120% of the applicable long-term federal rate) credited to deferrals into
the
prime rate fund of our deferred compensation plan:
|
|
•
|
Mr. Klein,
$502
|
|
|
•
|
Mr. Sescleifer,
$38,442
|
|
|
•
|
Mr. McClanathan,
$15,057
|
|
|
•
|
Mr. Hatfield,
$21,742
|
(6) The
amounts reported in this column with respect to fiscal year 2007 consist
of the
following:
(i) Company
matching contributions or accruals in our savings investment plan and executive
savings investment plan:
|
|
•
|
Mr. Klein,
$39,427
|
|
|
•
|
Mr. Sescleifer,
$37,275
|
|
|
•
|
Mr. McClanathan,
$35,787
|
|
|
•
|
Mr. Hatfield,
$36,577
|
|
|
•
|
Ms. Stratmann,
$14,086
|
These
amounts
include benefits which were accrued by the named executive officers in our
executive savings investment plan in lieu of the pensionplus match account
in
our retirement plan (as described in the narrative to the Pension Benefits
table
below) due to certain limits imposed by the Internal Revenue Code on accruals
in
our retirement plan.
(ii) the
group
life insurance plan—term life insurance premiums paid by us for the first
$40,000 of coverage for each of the named executive officers: $110.
(iii) tax
reimbursements for income taxes associated with personal use of Company-owned
aircraft:
|
|
•
|
Mr. Klein
- $11,296
|
|
|
•
|
Mr. McClanathan
- $787
|
(iv) the
incremental
cost to the Company of the following perquisites provided to the named executive
officers:
Personal
use of
Company aircraft. Ward M. Klein, the chief executive officer,
has been authorized to use Company-owned aircraft for personal travel for
up to
30 flight hours per year, when the aircraft are not being used on business
related trips. He receives tax reimbursements from the Company for income
taxes
associated with such travel, which is shown in (iii) above. Mr. Klein
is also authorized to use the aircraft for travel to meetings of other boards
on
which he may serve. (Please see the narrative to the Director Compensation
Table
for a description of the calculation of the incremental cost of these
flights.)
In
fiscal year
2007, the incremental cost to the Company of Mr. Klein’s personal use of
our aircraft, on a variable cost basis, was $84,563, and the cost of his
usage
for purposes of attending other board meetings was $8,575, for a total of
$93,138, reflecting the assessed charge per flight hour for such use. In
addition, the approximate amount of disallowed federal tax deductions associated
with such use was $31,288.
From
time to time,
officers may be allowed, if space permits, to have family members accompany
them
on business flights on our aircraft, at no aggregate incremental cost to
the
Company. In the discretion of the chief executive officer, they may receive
tax
reimbursements from the Company for income taxes associated with such travel.
Such reimbursements for fiscal year 2007 are indicated in
(iii) above.
Executive
Financial Planning Program. We reimburse the executives for 80%
of the cost of personal financial advisory services, up to certain annual
maximums. During 2007, the following reimbursement payments were
made:
|
|
•
|
Mr. Klein
- $3,680
|
|
|
•
|
Mr. Sescleifer
- $6,612
|
|
|
•
|
Mr. McClanathan
- $12,000
|
|
|
•
|
Ms. Stratmann
- $4,388
|
Executive
Health Plan. We pay the annual premium for each executive for an
executive health insurance policy which generally covers all health care
and
dental expenses to the extent not covered by our medical and dental plans.
The
executives are required to pay for underlying coverage under the medical
and
dental plans at the same rate as all other employees. During 2007, we paid
$12,323 in executive health premiums for each of the named executive
officers.
Executive
Excess Liability Plan. We pay the annual premium for a group
policy providing each executive with personal excess liability coverage in
excess of his or her primary personal liability insurance, the cost of which
is
borne by each executive. During 2007, we paid $1,508 in premiums for
Mr. Klein, and $750 for each of the other named executive
officers.
Retiree
Plans. The named executive officers also are or may become
eligible to participate in the executive long-term disability plan, the
executive retiree life plan, and the executive retiree health plan, upon
their
retirement from Energizer. These plans provide supplemental disability, life
insurance and health benefits, respectively, to eligible executive retirees.
The
long-term disability and the retiree life plans are entirely self-funded
by us,
but we pay an annual premium for all retiree participants in our executive
retiree health plan. Although there was no incremental out-of-pocket cost
to us
under these plans with respect to the named executive officers, we annually
record a FAS 106 expense for changes in the anticipated cost of their
participation in our executive retiree life and retiree health plans. For
fiscal
year 2007, the recorded expense per individual was:
|
|
•
|
Mr. Klein,
$33,451
|
|
|
•
|
Mr. Sescleifer,
$4,545
|
|
|
•
|
Mr. McClanathan,
$7,150
|
|
|
•
|
Mr. Hatfield,
$41,017
|
|
|
•
|
Ms. Stratmann,
$14,203
|
Transportation
and Living Expenses. Mr. Hatfield was named president and
chief executive officer of our Schick-Wilkinson Sword division on April 1,
2007, the offices of which are located in Milford, CT. Because his home and
family are in St. Louis, MO., he regularly commutes to Milford, and his
commuting expenses which are not business-related, as well as meals and lodging
in Milford, are reimbursed by us. For fiscal year 2007, the amount reimbursed
to
him was $12,315.
The
above list of
perquisites does not include any contributions made by our charitable trust
which may have been made at the request of any of the named executive officers.
The trustees of that trust, who are employees of the Company, review requests
for contributions to charitable organizations from employees, officers, and
the
community at large, and, in their sole discretion, authorize contributions
in
accordance with the purposes of the trust. Officers are also eligible to
participate in the charitable trust matching gift program, which is generally
available to U.S. employees. Under this program, the foundation matches
100 percent of charitable donations of a minimum of $25 made to eligible
charities, up to a maximum of $5,000 per year for each individual.
GRANTS
OF
PLAN-BASED AWARDS
Awards
to the named
executive officers, and to other key executives, were made in fiscal year
2007
under three separate plans or programs:
|
•
|
cash
awards
under our annual and two-year cash bonus
program,
|
|
•
|
three-year
performance awards under the terms of our 2000 incentive stock
plan, and
|
|
•
|
Company-matching
deferrals (payable in cash at retirement) under our deferred compensation
plan.
|
Annual
and
Two-Year Bonus Program
Our
annual and
two-year bonus program is designed to promote significant earnings per share
growth each year, and consistent growth from year to year.
Annual
Cash
Bonus. The annual bonus is designed to reward achievement of
both Company and individual performance goals established at the beginning
of
each fiscal year.
Company
Performance Component. For the named executive officers, the
Company performance goals for fiscal year 2007 were based on EPS results
at or
above final results for fiscal year 2006, but increased as discussed in our
Compensation Discussion and Analysis—Adjustment of Goals. The program,
including the specific Company performance goals set at the beginning of
the
fiscal year, is described in our Compensation Discussion and Analysis—ANNUAL AND
TWO-YEAR BONUS PROGRAM. For purposes of this program, our final EPS for fiscal
2007, adjusted as described in Adjustment of Goals, was $5.39, so the
stretch EPS goal of $5.34 was exceeded, and the Company performance component
of
each officer’s annual bonus was equal to 150% of 70% of their individual bonus
targets. The annual bonus payments that would havebeen made to each
officer if the threshold, 10% or stretch EPS goals had beenachieved is
indicated in the Table below, with the actual amounts earned at
stretchindicated in footnote 2.
Individual
Performance Component. The individual performance component of
each officer’s annual bonus was based upon a subjective evaluation of their
performance during the fiscal year, including performance against focal points
established at the beginning of the year. After the end of the year, subjective
ratings from “1” to “5” were assigned to each officer, with a bonus for each
rating, as described in our Compensation Discussion and Analysis—ANNUAL AND
TWO-YEAR BONUS PROGRAM. The annual bonus payments that would have been paid
to each officer for arating between “1” and “3” is indicated in the
Table below, with the actual amountsearned indicated in footnote
3.
Two-Year
Cash
Bonus. The two-year cash bonus program is designed to promote
consistent growth in EPS from year to year, by awarding a bonus opportunity
based on results for year one, payment of which is contingent upon equal
or
better results for year two. The two-year cash bonus, including the formula
for
determining the opportunity and the amount of bonus payments, is described
in
our Compensation Discussion and Analysis—ANNUAL AND TWO-YEAR BONUS PROGRAM.
Under the program, an executive that is awarded a bonus opportunity (assuming
that goals are met) for a particular fiscal year must remain employed by
us
through the end of the following fiscal year in order to be eligible for
a
payment.
The
range of
bonus opportunities for each officer under the two-year bonus
programbeginning October 1, 2006 are indicated in the Table
below—with the Thresholdsub-column indicating the minimal amount
payable (10% EPS goal achieved year one,threshold EPS goal achieved
year two), the Target sub-column indicating the amountpayable if 10%
EPS goal achieved both years, and the Maximum sub-column indicatingthe
maximum amount payable (stretch EPS goal achieved year one, 10% EPS goal
achievedyear two). If the 10% EPS goal is not achieved year one, no
bonus opportunity iscreated, and if the threshold EPS goal is not
achieved year two, no bonus will bepaid.
The
two-year
bonuses which were paid to each of the named executive officers
afterthe end of fiscal year 2007 (for the two-year program beginning
October 1,2005) are set forth in footnote 4 to the Summary
Compensation Table.
Three-Year
Performance Awards
Performance-Linked
Component. At the beginning of fiscal year 2007, performance
restricted stock equivalent awards were granted to each of the named executive
officers under the terms of our 2000 incentive stock plan. These are described
in our Compensation Discussion and Analysis—EQUITY AWARDS. Under the terms of
the awards, each officer was credited with Energizer restricted common stock
equivalents, 75% of which are subject to the achievement of adjusted targets
for
compound EPS growth over the 3-year period commencing October 1, 2006.
(Potential adjustments are also described in our Compensation Discussion
and
Analysis—Adjustment of Goals.) The number of stock equivalents
indicated in the Threshold and Target sub-columns, marked by footnote 4,
in the
Table below, will vest only if the compound annual growth in EPS over that
3-year period is at least 10%. If compound annual growth is in excess of
that
threshold, the number of units vesting will proportionately increase, with
the
maximum number vesting (as indicated in the Maximum sub-column) at a compound
annual growth rate of 15% over that period.
Non-Performance-Linked
Component. The remaining 25% of the equivalents granted (as
indicated in the All Other Stock Awards column below, marked by footnote
5) will vest three years from the date of grant, provided the officer
remains employed with the Company.
The
restricted
stock equivalents granted under the performance awards will also vest in
their
entirety upon death, permanent disability, or involuntary termination, other
than for cause, which is defined as gross misconduct. They will also vest
in
their entirety upon a change in control of the Company which, for purposes
of
the award, occurs when (i) an individual or group acquires more than 50% of
our outstanding common stock, or (ii) the current or continuing directors
no longer constitute a majority of the board of directors.
The
annual
FAS 123R expense recognized in fiscal 2007 in connection with
theseawards is included in the Stock Awards column of the Summary
Compensation Table. Theaggregate grant date value is set forth in the
Grant Date Fair Value of Stock Awardscolumn below.
Deferred
Compensation Plan
Executives
are
permitted to request deferral of a portion of their salary, and cash payments
under our annual and two-year cash bonus program, under the terms of our
deferred compensation plan, which is described in detail in the narrative
to the
Nonqualified Deferred Compensation Table below.
Company
Match. Under the terms of the plan, cash bonuses earned during
fiscal year 2006 but deferred into the Energizer common stock unit fund during
fiscal year 2007 were credited with an additional 25% Company match, which
vests
after three years, provided the deferred bonus is kept in that fund for at
least
a year. Vested Company matches may be transferred to different investment
options at the executive’s discretion. The value of vested units is payable in
cash only upon the executive’s retirement or other termination of employment,
based on the value of our common stock at that time. The units will also
vest in
their entirety upon retirement (which for purposes of this plan means the
commencement of benefits under our retirement plan—which may be prior to
age 55 for officers using the PEP benefit formula), death, permanent
disability, involuntary termination, or a change in control of the Company
(defined, for purposes of this plan, as the time when (i) an individual or
group acquires more than 20% of our common stock, (ii) our continuing
directors no longer constitute a majority of our board, or (iii), a majority
of
the continuing directors approve a declaration that a change of control has
occurred.)
The
amount of
the Company matching deferrals credited to each officer during
fiscalyear 2007 is shown in the All Other Stock Awards column below,
marked by footnote 6,and the grant date value is shown in the Grant
Date Fair Value of Stock Awards columnbelow.
GRANTS
OF
PLAN-BASED AWARDS TABLE
|
Estimated
Future Payouts
Under
Non-Equity
Incentive
Plan Awards
|
Estimated
Future Payouts Under Equity
Incentive
Plan Awards (#)
|
||||||||||
|
Name
|
Type
of Award
|
Grant
Date
|
Date
of
Comp.
Comm.
Action(7)
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
All
Other Stock
Awards:
Number
of
Shares
of
Stock(#)
|
Grant
Date
Fair
Value
of
Stock
Awards(8)
|
|
W.
M.
Klein
|
Bonus:
Two-Year
|
10/9/06(1)
|
$187,500
|
$375,000
|
$750,000
|
||||||
|
Bonus:
Annl.Co.Perf.
|
10/9/06(2)
|
$262,500
|
$525,000
|
$787,500
|
|||||||
|
Bonus:
Annl.Ind.Perf.
|
10/9/06(3)
|
$112,500
|
$281,250
|
$450,000
|
|||||||
|
Perf.Awd.:3Yr.CAGR
|
10/9/06(4)
|
20,000
|
20,000
|
60,000
|
$4,420,800
|
||||||
|
Perf.Awd.:
TimeVest
|
10/9/06(5)
|
20,000
|
$1,473,600
|
||||||||
|
Company
Match
|
11/30/06(6)
|
10/11/05
|
4,812
|
$376,050
|
|||||||
|
D.J.
Sescleifer
|
Bonus:
Two-Year
|
10/9/06(1)
|
$80,000
|
$160,000
|
$320,000
|
||||||
|
Bonus:
Annl.Co.Perf.
|
10/9/06(2)
|
$112,000
|
$224,000
|
$336,000
|
|||||||
|
Bonus:
Annl.Ind.Perf.
|
10/9/06(3)
|
$48,000
|
$120,000
|
$192,000
|
|||||||
|
Perf.Awd.:3Yr.CAGR
|
10/9/06(4)
|
4,000
|
4,000
|
12,000
|
$884,160
|
||||||
|
Perf.Awd.:
TimeVest
|
10/9/06(5)
|
4,000
|
$294,720
|
||||||||
|
Company
Match
|
11/30/06(6)
|
10/11/05
|
996
|
$ 77,892
|
|||||||
|
J.W.
McClanathan
|
Bonus:
Two-Year
|
10/9/06(1)
|
$90,000
|
$180,000
|
$360,000
|
||||||
|
Bonus:
Annl.Co.Perf.
|
10/9/06(2)
|
$126,000
|
$252,000
|
$378,000
|
|||||||
|
Bonus:
Annl.Ind.Perf.
|
10/9/06(3)
|
$54,000
|
$135,000
|
$216,000
|
|||||||
|
Perf.Awd.:3Yr.CAGR
|
10/9/06(4)
|
5,000
|
5,000
|
15,000
|
$1,105,200
|
||||||
|
Perf.Awd.:
TimeVest
|
10/9/06(5)
|
5,000
|
$368,400
|
||||||||
|
Company
Match
|
11/30/06(6)
|
10/11/05
|
1,953
|
$152,604
|
|||||||
|
D.P.
Hatfield
|
Bonus:
Two-Year
|
10/9/06(1)
|
$70,000
|
$140,000
|
$280,000
|
||||||
|
Bonus:
Annl.Co.Perf.
|
10/9/06(2)
|
$98,000
|
$196,000
|
$294,000
|
|||||||
|
Bonus:
Annl.Ind.Perf.
|
10/9/06(3)
|
$42,000
|
$105,000
|
$168,000
|
|||||||
|
Perf.Awd.:3Yr.CAGR
|
10/9/06(4)
|
2,500
|
2,500
|
7,500
|
$552,600
|
||||||
|
Perf.Awd.:
TimeVest
|
10/9/06(5)
|
2,500
|
$184,200
|
||||||||
|
G.G.
Stratmann
|
Bonus:
Two-Year
|
10/9/06(1)
|
$48,000
|
$96,000
|
$192,000
|
||||||
|
Bonus:
Annl.Co.Perf.
|
10/9/06(2)
|
$67,200
|
$134,400
|
$201,600
|
|||||||
|
Bonus:
Annl.Ind.Perf.
|
10/9/06(3)
|
$28,800
|
$72,000
|
$115,200
|
|||||||
|
Perf.Awd.:3Yr.CAGR
|
10/9/06(4)
|
3,000
|
3,000
|
9,000
|
$663,120
|
||||||
|
Perf.Awd.:
TimeVest
|
10/9/06(5)
|
3,000
|
$221,040
|
||||||||
|
Company
Match
|
11/30/06(6)
|
10/11/05
|
1,272
|
$ 77,892
|
|||||||
|
(1)
|
These
amounts
represent the two-year cash bonus opportunities which could have
been
earned under our two-year bonus program during fiscal year 2007.
Because
final fiscal year 2007 EPS results as adjusted exceeded the stretch
EPS
goal for that year, the actual opportunity created under the program
was
equal to 100% of each individual’s target bonus, as shown in the Maximum
column; payment of any portion of that amount, however, is contingent
upon
final EPS results for fiscal year 2008.
|
|
(2)
|
These
amounts
represent the amounts which potentially could have been earned
under the
Company performance component of the annual cash bonus program
for fiscal
year 2007. Based on final 2007 results, the actual amounts earned
are as
follows:
|
|
|
•
|
Mr. Klein,
$787,500
|
|
|
•
|
Mr. Sescleifer,
$336,000
|
|
|
•
|
Mr. McClanathan,
$378,000
|
|
|
•
|
Mr. Hatfield,
$294,000
|
|
|
•
|
Ms. Stratmann,
$201,600
|
|
(3)
|
These
amounts
represent the amounts which potentially could have been earned
under the
individual performance component of the annual cash bonus program
for
fiscal year 2007. The actual amounts earned under this component,
based
upon the subjective rating of each named executive officer as of
the end
of fiscal year 2007, are as
follows:
|
|
|
•
|
Mr. Klein,
$450,000
|
|
|
•
|
Mr. Sescleifer,
$192,000
|
|
|
•
|
Mr. McClanathan,
$216,000
|
|
|
•
|
Mr. Hatfield,
$168,000
|
|
|
•
|
Ms. Stratmann,
$72,000
|
|
(4)
|
Vesting
of
these restricted stock equivalents (the performance-linked component),
awarded under the performance awards granted on October 9, 2006, is
subject to achievement of adjusted targets for compound annual
growth in
EPS over the three-year period commencing September 30,
2006.
|
|
(5)
|
These
common
stock equivalents (the non-performance-linked component), awarded
under
the performance awards granted on October 9, 2006, will vest three
years from the date of grant, if the officer remains employed with
us at
that time.
|
|
(6)
|
These
amounts
represent 25% Company matching deferrals credited during fiscal
year 2007.
They were credited with respect to annual and two-year cash bonuses
earned
during fiscal year 2006 but deferred at the election of the officers
after
the end of that year.
|
|
(7)
|
The
Company
matching deferrals described in footnote (6) were approved
by the Committee at the beginning of the fiscal year, prior to
irrevocable
elections by the officers to defer all or a portion of any bonuses
they
might receive at the end of the year. The actual matching deferrals
were
not credited until after the end of the fiscal year, when the amount
of
such bonuses was actually determined.
|
|
(8)
|
The
aggregate
grant date value of the equity awards for financial reporting purposes
in
accordance with FAS 123R is set forth with respect to each of the
officers in the table above. Assumptions utilized in the valuation
are set
forth in “Note 7. Share-Based Payments” of the Notes to Consolidated
Financial Statements of our 2007 Annual
Report.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
The
following types
of equity awards (listed in the Table below) have been granted to the named
executive officers, and remain unvested as of September 30,
2007.
|
•
|
Non-qualified
stock options granting the right to acquire shares of our common
stock at
an exercise price equal to its closing price on the date of grant.
These
options generally become exercisable at the rate of 20% to 25%
per year
over a four or five year period (as indicated below), and remain
exercisable over the ten-year period following grant. Vesting of
all
options, however, will accelerate upon the death, disability, retirement
on or after age 55, or involuntary termination (other than for cause,
which is defined as gross misconduct) of the officer, and upon
a change of
control of the Company, which is defined as (i) the
acquisition by a person or group of more than 50% of our outstanding
voting securities; or (ii) directors of the Company
immediately before a business combination between the Company and
another
entity, or a proxy contest for the election of directors, ceasing,
as a
result of the combination or contest, to constitute a majority
of the
board. Outstanding option awards are described under Option Awards,
in the
table below.
|
|
•
|
Restricted
stock equivalents vest incrementally over four to nine years (as
indicated
below), and at vesting convert into non-restricted shares of our
common
stock which will then be issued to the officer. (However, if the
officer
elected to defer receipt of such shares, they will not convert
at vesting
and, instead, will not be issued until following the officer’s retirement
or other termination of employment.) Vesting of restricted stock
equivalents will accelerate, however, upon the death, disability,
or
involuntary termination (other than for cause) of the officer,
and upon a
change of control of the Company, which is defined in the same
manner
described for stock options above. However, for the restricted
stock
equivalents vesting in equal increments on May 19, 2009 and
May 19, 2012, as noted below, vesting will also be accelerated upon
the officer’s retirement on or after age 55. Currently only
Mr. McClanathan is retirement eligible. Unvested restricted stock
equivalent awards are included under Stock Awards—Number of Shares or
Units of Stock That Have Not Vested, in the table
below.
|
|
•
|
Three-year
performance awards grant restricted stock equivalents or restricted
stock
equivalent units, the vesting of which is subject to the achievement
of
performance-linked and non-performance-linked conditions, as described
in
our Compensation Discussion and Analysis—EQUITY AWARDS. A description of
the performance awards granted October 9, 2006, and the terms of
their vesting, including accelerated vesting, is set forth in the
narrative to the Grants of Plan-Based Awards table above. Except
as noted
below, the performance awards granted on October 11, 2005 have
similar terms, but the compound growth targets for those three
year awards
utilize a base of $3.82. The maximum equivalents or units which
would vest
under the performance-linked component of these performance awards
are
included below under Stock Awards—Equity Incentive Plan Awards, and the
number of equivalents or units that would vest under the
non-performance-linked component is included under Stock Awards—Number of
Shares or Units of Stock That Have Not Vested, in the table below.
Fewer
equivalents or units will vest for compound growth that is less
than 15%
but at least 10% over the applicable three-year period, and if
growth for
the period is below 10%, no performance-linked equivalents or units
will
vest.
|
|
•
|
Voluntary
deferrals of cash bonuses under our annual and two-year bonus program
into
the Energizer common stock unit fund of our deferred compensation
plan
receive a Company matching deferral of 25%, provided that the voluntary
deferrals are retained in that fund for at least a year. The Company
matching deferrals are also credited to the Energizer common stock
unit
fund, and must remain in that fund until vested, which will occur
three
years from the date of initial crediting, if the officer remains
employed
with us at that time. Company matching deferrals will also vest
upon an
officer’s retirement, involuntary termination, disability or death, and
upon a change of control of the Company. Unvested Company matching
deferrals as of September 30, 2007 are included under Stock
Awards—Number of Shares or Units of Stock That Have Not Vested, in the
table below.
|
Non-qualified
stock
options, restricted stock equivalents, and performance awards granted on
October 9, 2006, have been granted under the terms of our 2000 incentive
stock plan. Performance awards granted on October 11, 2005, as well as
Company matching contributions, have been granted under the terms of our
deferred compensation plan. (Awards under our deferred compensation plan
are
payable exclusively in cash at retirement or other termination of
employment.)
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
|
Option
Awards
|
Stock
Awards
|
|||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested (#)
|
Market
Value
of
Shares or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested ($)
|
|
W.
M.
Klein
|
40,000
|
—
|
$ 17
|
5/7/10
|
79,098(5)
|
$8,768,013
|
135,000(10)
|
$14,964,750
|
|
50,000
|
—
|
$
21.0625
|
11/19/10
|
|||||
|
60,000
|
40,000(1)
|
$ 42.90
|
1/25/14
|
|||||
|
22,500
|
22,500(2)
|
$ 49.18
|
1/13/15
|
|||||
|
D.J.
Sescleifer
|
16,668
|
—
|
$ 30.10
|
9/22/12
|
28,094(6)
|
$3,114,220
|
24,000(11)
|
$2,660,400
|
|
—
|
5,000(3)
|
$ 46.13
|
10/18/14
|
|||||
|
J.
W.
McClanathan
|
50,000
|
—
|
$ 30.10
|
9/22/12
|
34,460(7)
|
$3,819,891
|
34,500(12)
|
$3,824,325
|
|
30,000
|
20,000(1)
|
$ 42.90
|
1/25/14
|
|||||
|
10,000
|
10,000(3)
|
$ 46.13
|
10/18/14
|
|||||
|
D.
P.
Hatfield
|
16,667
|
—
|
$ 30.10
|
9/22/12
|
18,023(8)
|
$1,997,850
|
15,000(13)
|
$1,662,750
|
|
10,000
|
5,000(3)
|
$ 46.13
|
10/18/14
|
|||||
|
G.G.
Stratmann
|
—
|
20,000(4)
|
$ 26.64
|
3/16/13
|
24,597(9)
|
2,726,577
|
20,100(14)
|
$2,228,085
|
|
—
|
5,000(3)
|
$ 46.13
|
10/18/14
|
|||||
|
(1)
|
Vesting
in
equal increments on 1/26/08 and 1/26/09.
|
|
(2)
|
Vesting
in
equal increments on 1/14/08 and 1/14/09.
|
|
(3)
|
Vesting
in
equal increments on 10/19/07 and 10/19/08.
|
|
(4)
|
Vesting
on
3/17/08.
|
|
(5)
|
Of
this total
for Mr. Klein,
|
|
|
• 13,333
restricted stock equivalents will vest in equal increments on 5/19/09
and
5/19/12;
|
|
|
• 11,250
restricted stock equivalents will vest in equal increments on 1/14/08
and
1/14/09;
|
|
|
• 4,703
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2005 will vest on 11/22/08;
|
|
|
• 4,812
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2006 will vest on 11/30/09;
|
|
|
• 25,000
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan (which is the non-performance-linked
component of the performance awards granted 10/11/05) vest in total
on
10/11/08; and
|
|
|
• 20,000
restricted stock equivalents (which is the non-performance-linked
component of the performance awards granted 10/09/06) vest on
10/09/09.
|
|
(6)
|
Of
this total
for Mr. Sescleifer,
|
|
|
• 13,333
restricted stock equivalents will vest in equal increments on 5/19/09
and
5/19/12;
|
|
|
• 2,500
restricted stock equivalents will vest in equal increments on 10/19/07
and
10/19/08;
|
|
|
• 1,073
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2004 will vest on 11/15/07;
|
|
|
• 2,192
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2005 will vest on 11/22/08;
|
|
|
• 996
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2006 will vest on 11/30/09;
|
|
|
• 4,000
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan (which is the non-performance-linked
component of the performance awards granted 10/11/05) vest in total
on
10/11/08; and
|
|
|
• 4,000
restricted stock equivalents (which is the non-performance-linked
component of the performance awards granted 10/09/06) vest on
10/09/09.
|
|
(7)
|
Of
this total
for Mr. McClanathan,
|
|
|
• 13,333
restricted stock equivalents will vest in equal increments on 5/19/09
and
5/19/12;
|
|
|
• 5,000
restricted stock equivalents will vest in equal increments on 10/19/07
and
10/19/08;
|
|
|
• 2,674
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2005 will vest on 11/22/08;
|
|
|
• 1,953
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2006 will vest on 11/30/09;
|
|
|
• 6,500
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan (which is the non-performance-linked
component of the performance awards granted 10/11/05) vest in total
on
10/11/08; and
|
|
|
• 5,000
restricted stock equivalents (which is the non-performance-linked
component of the performance awards granted 10/09/06) vest on
10/09/09.
|
|
(8)
|
Of
this total
for Mr. Hatfield,
|
|
|
• 6,666
restricted stock equivalents will vest in equal increments on 5/19/09
and
5/19/12;
|
|
|
• 2,500
restricted stock equivalents will vest in equal increments on 10/19/07
and
10/19/08;
|
|
|
• 1,993
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2004 will vest on 11/15/07;
|
|
|
• 1,864
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2005 will vest on 11/22/08;
|
|
|
• 2,500
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan (which is the non-performance-linked
component of the performance awards granted 10/11/05) vest in total
on
10/11/08; and
|
|
|
• 2,500
restricted stock equivalents (which is the non-performance-linked
component of the performance awards granted 10/09/06) vest on
10/09/09.
|
|
(9)
|
Of
this total
for Ms. Stratmann,
|
|
|
• 13,333
restricted stock equivalents will vest in equal increments on 5/19/09
and
5/19/12;
|
|
|
• 2,500
restricted stock equivalents will vest in equal increments on 10/19/07
and
10/19/08;
|
|
|
• 792
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2005 will vest on 11/22/08;
|
|
|
• 1,272
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan granted as Company matching deferrals
in
2006 will vest on 11/30/09;
|
|
|
• 3,700
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan (which is the non-performance-linked
component of the performance awards granted 10/11/05) vest in total
on
10/11/08; and
|
|
|
• 3,000
restricted stock equivalents (which is the non-performance-linked
component of the performance awards granted 10/09/06) vest on
10/09/09.
|
|
(10)
|
Of
this total
for Mr. Klein,
|
|
|
• 75,000
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan represent the performance-linked
component of our performance awards granted
10/11/05; and
|
|
|
• 60,000
restricted stock equivalents represent the performance-linked component
of
our performance awards granted 10/09/06.
|
|
(11)
|
Of
this total
for Mr. Sescleifer,
|
|
|
• 12,000
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan represent the performance-linked
component of our performance awards granted
10/11/05; and
|
|
|
• 12,000
restricted stock equivalents represent the performance-linked component
of
our performance awards granted 10/09/06.
|
|
(12)
|
Of
this total
for Mr. McClanathan,
|
|
|
• 19,500
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan represent the performance-linked
component of our performance awards granted
10/11/05; and
|
|
|
• 15,000
restricted stock equivalents represent the performance-linked component
of
our performance awards granted 10/09/06.
|
|
(13)
|
Of
this total
for Mr. Hatfield,
|
|
|
• 7,500
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan represent the performance-linked
component of our performance awards granted
10/11/05; and
|
|
|
• 7,500
restricted stock equivalents represent the performance-linked component
of
our performance awards granted 10/09/06.
|
|
(14)
|
Of
this total
for Ms. Stratmann,
|
|
|
• 11,100
restricted stock equivalent units in the Energizer common stock
unit fund
of our deferred compensation plan represent the performance-linked
component of our performance awards granted
10/11/05; and
|
|
|
• 9,000
restricted stock equivalents represent the performance-linked component
of
our performance awards granted
10/09/06.
|
OPTION
EXERCISES AND STOCK VESTED
|
Option
Awards
|
Stock
Awards
|
|||
|
Number
of Shares
|
Number
of Shares
|
Value
Realized on
|
||
|
Acquired
on Exercise
|
Value
Realized on
|
Acquired
on Vesting
|
Vesting
|
|
|
Name
|
(#)
|
Exercise ($)
|
(#)(1)(2)
|
($)
|
|
W.
M.
Klein
|
60,000
|
$4,287,138
|
5,625
|
$425,419
|
|
D.J.
Sescleifer
|
38,332
|
$1,726,400
|
1,250
|
$
96,438
|
|
J.
W.
McClanathan
|
50,000
|
$3,451,935
|
2,500
|
$192,875
|
|
D.P.
Hatfield
|
0
|
$ 0
|
1,250
|
$
96,438
|
|
G.G.
Stratmann
|
29,167
|
$1,606,282
|
1,250
|
$
96,438
|
|
(1)
|
On
January 14, 2007 (for Mr. Klein) and October 19, 2006 (for
the other officers), 25% of restricted stock equivalents granted
under the
terms of our 2000 incentive stock plan on January 14, 2005, and
October 19, 2004, respectively, vested in accordance with their
terms. Upon vesting, the equivalents converted into shares of our
common
stock which were then issued to the officers free of any restrictions.
If
the officers, however, elected in advance to defer receipt of the
shares
of common stock, conversion will not occur until the officer terminates
employment with us.
|
|
(2)
|
Receipt
of
the following numbers of shares was deferred, at the election of
each
officer, until retirement or other termination of
employment:
|
|
|
• Mr.
Klein - 5,625
|
|
|
• Mr.
Sescleifer - 1,250
|
|
|
• Ms.
Stratmann - 1,250
|
PENSION
BENEFITS
Our
retirement plan
covers essentially all U.S. employees of Energizer Holdings, Inc. after one
year of service. As a qualified plan, the retirement plan is subject to maximum
pay and benefit limits. We also offer a nonqualified, unfunded pension
restoration plan to the executive officers which, following retirement, pays
those amounts which would otherwise be paid under the retirement plan but
for
the Internal Revenue Code maximum pay and benefit limits. It generally provides
the same benefit formulas as the retirement plan, but does so without regard
to
maximum pay and benefit limits. (It does not, however, provide restoration
of an
officer’s pensionplus match account (PPMA) benefit, described below, which is
instead provided under our executive savings investment plan, an unfunded
excess
401(k) plan.) The following are the benefit formulas under the retirement
plan:
Final
Average
Pay
The
traditional
final average pay (FAP) benefit provides 1.5% of five-year average “annual
earnings” multiplied by a participant’s years of service (to a maximum of
40 years), reduced by a Social Security offset. The five-year average is
determined by taking the average of a participant’s five highest consecutive
annual earnings during the ten years prior to the year in which he or she
terminates employment with us. For purposes of the qualified retirement plan
and
the nonqualified pension restoration plan “annual earnings” generally consist of
salary, overtime pay, salary reductions elected by the participant, and bonuses
under our annual and two-year cash bonus program. The FAP benefit is payable
at
the normal retirement date of age 65 as a monthly five-year certain and
life benefit, although there are a number of other optional forms of payment.
The benefit can be received upon early retirement as early as age 55 with
two years of service. The reduction for early benefit commencement is 5%
per
year from age 62 (or 5% per year from age 65 if termination occurs
before age 55). The benefit vests 100% after five years of service.
Mr. Klein, the only one of the named executive officers under the FAP
benefit formula, has not yet met the early retirement requirement of age 55
with two years of service under that formula.
Effective
as of
January 1, 1999, participants in the Ralston Purina Retirement Plan, the
retirement plan’s predecessor (including Messrs. Klein, McClanathan and
Hatfield, and Ms. Stratmann) were required to make a one-time election
between the FAP benefit formula, or the PEP benefit formula described below.
Mr. Klein elected to continue the FAP benefit formula, while the other
officers elected the PEP benefit. The PEP benefit formula is applied for
employees hired after that date, including Mr. Sescleifer.
Pension
Equity
Formula
The
pension equity
(PEP) benefit formula provides a lump sum benefit equal to the sum of
(i) regular pension equity credits multiplied by five-year average annual
earnings and (ii) excess pension equity credits multiplied by five-year
average annual earnings in excess of Social Security covered compensation.
The
regular pension equity credits range from 4% for each of the first five years
of
service to 10% for each year of service above 20. The excess pension equity
credit is 3.5% for each year of service. Instead of a lump sum, the participant
can choose a monthly annuity option from a number of equivalent optional
forms.
The benefit vests 100% after five years of service. There is no early retirement
eligibility associated with the PEP benefit. Each person who is vested may
elect
to receive the benefit upon termination.
PensionPlus
Match Account
The
PPMA is
available to all covered employees, including the named executive officers,
even
before one year of service is completed. The PPMA provides a 325% match in
a
cash balance account under our retirement plan to those participants who
make an
after-tax contribution of 1% of their annual earnings to our savings investment
plan, which is our qualified 401(k) plan. PPMA benefits vest over four years,
at
a rate of 25% per year. PPMA balances are credited with interest at a 30-year
Treasury rate that is reset annually. The PPMA balance is available at
termination as a lump sum or in various equivalent monthly optional forms.
There
is no early retirement eligibility associated with the PPMA benefit. Each
person
who is vested may elect to receive the benefit upon termination.
In
addition to
these primary benefit structures, the retirement plan also provides various
minimum benefits and grandfathered benefits, as well as an offset for benefits
earned under the Union Carbide Company pension plan, which is applicable
to
Mr. McClanathan. (Union Carbide was a former owner of the Energizer battery
business.)
Assumptions
utilized in the valuations set forth in the table below are set forth in
“Note 8. Pension Plans and Other Post-Retirement Benefits” of the Notes to
Consolidated Financial Statements of our 2007 Annual Report.
Policies
re:
Additional Credit Service
We
do not have
specific policies with regard to granting extra years of credited service,
but
we generally have not granted such extra credited service. However, the change
of control employment agreements, described below under POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL, do
provide, for purposes of determining the amounts to be paid under the retirement
plan and the pension restoration plan, that the officers’ respective years of
service with us, and their respective ages, will be deemed increased by three
additional years if they are involuntarily terminated at any time prior to
the
expiration of the protected period of three years under the
agreements.
PENSION
BENEFITS TABLE
|
Number
of
|
||||
|
Years
Credited
|
Present
Value of
|
Payments
During
|
||
|
Service
|
Accumulated
|
Last
Fiscal
Year
|
||
|
Name
|
Plan
Name
|
(#)(1)
|
Benefit
($)(2)
|
($)
|
|
W.
Klein
|
Energizer
Retirement Plan
|
28
|
$626,764
|
$0
|
|
Supplemental
Executive Retirement Plan
|
28
|
$3,334,821
|
$0
|
|
|
D.
Sescleifer
|
Energizer
Retirement Plan
|
6
|
$210,383
|
$0
|
|
Supplemental
Executive Retirement Plan
|
6
|
$296,365
|
$0
|
|
|
J.
McClanathan
|
Energizer
Retirement Plan
|
32
|
$724,303
|
$0
|
|
Supplemental
Executive Retirement Plan
|
32
|
$2,836,847
|
$0
|
|
|
D.
Hatfield
|
Energizer
Retirement Plan
|
21
|
$474,281
|
$0
|
|
Supplemental
Executive Retirement Plan
|
21
|
$789,098
|
$0
|
|
|
G.
Stratmann
|
Energizer
Retirement Plan
|
17
|
$341,283
|
$0
|
|
Supplemental
Executive Retirement Plan
|
17
|
$414,020
|
$0
|
|
(1)
|
The
number of
years of credited service reflect years of actual service with
us. For
Messrs. Klein and Hatfield, and Ms. Stratmann, all but 7 of the
years shown include years of actual service with Ralston Purina
Company,
our former parent.
|
For
Mr. McClanathan, 7 of the years shown were with us, 14 years were with
Ralston Purina Company, and the balance were with Union
Carbide
Company, the former owner of our battery business.
Company, the former owner of our battery business.
(2)
Based on the age benefits are available without reduction.
NON-QUALIFIED
DEFERRED COMPENSATION
We
have adopted
several plans or arrangements that provide for the deferral of compensation
on a
basis that is not tax-qualified.
Deferred
Compensation Plan
Under
the terms of
our deferred compensation plan, an unfunded, nonqualified plan, executives
can
elect to have payment of their annual bonus, and a portion of their base
salary,
deferred until their retirement or other termination of employment, or for
a
shorter, 3-year period (at the executive’s election, in advance). The amounts
deferred under the terms of the plan are credited, at the election of the
executive, into:
|
•
|
the
Energizer
common stock unit fund, a stock equivalent fund, with returns (based
on
appreciation in stock price) during fiscal 2007 of
53.44%,
|
|
•
|
a
prime rate
fund, which credits account balances with above-market interest
at the
prime rate quoted by Morgan Guaranty Trust of New York. (For fiscal
year
2007, the average rate credited under this fund was
8.23%), or
|
|
•
|
21
Vanguard
funds which track the performance of investment funds offered in
our
savings investment plan, a 401(k) plan, with returns during fiscal
2007
ranging from -0.71% to 28.71%.
|
Interest
equivalents are credited on a daily basis to the prime rate fund, and dividends
and other earnings are credited to the Vanguard tracking funds at the time,
and
to the extent, that they are paid with respect to the actual Vanguard funds.
Because no dividends have been paid on our common stock, no dividend equivalents
have been credited to the Energizer common stock unit fund. However, units
in
that fund, and in the Vanguard tracking funds, can appreciate in value as
our
common stock, or the underlying Vanguard funds, appreciate in
value.
Deferrals
of annual
and two-year cash bonuses into the Energizer common stock unit fund during
each
calendar year are increased by a 25% match from the Company (which vests
three
years from the date of crediting, provided the deferred bonus is kept in
that
fund for at least a year). Vesting will also accelerate upon the occurrence
of
the events described in the narrative to the Grants of Plan-Based Awards
table
above. Deferrals and vested Company matches may be transferred to different
investment options at the executive’s discretion. Account balances for
executives who were employed at our former parent, Ralston Purina Company,
prior
to our spin-off in 2000, also generally include amounts credited during that
prior employment. (Ralston assigned liability for such amounts to us in the
spin-off.) Long-term deferrals in the plan may be paid out in a lump sum
in cash
within 60 days following termination, or in five or ten-year increments
commencing the year following termination of employment.
Executive
Savings Investment Plan
Under
the terms of
our executive savings investment plan, our excess 401(k) plan, amounts that
would be contributed, either by an executive or by us on the executive’s behalf,
to our qualified defined contribution plans (the savings investment plan
and the
PPMA) but for limitations imposed by the Internal Revenue Code, are credited
to
the non-qualified executive savings investment plan. Under that plan, executives
may elect to defer their contributions, and Company contributions, in the
form
of stock equivalents under the Energizer common stock unit fund, which tracks
the value of our common stock, or in any of the measurement fund options
which
track the performance of the Vanguard investment funds offered under our
qualified savings investment plan. Deferrals and vested Company contributions
may be transferred to different investment options at the executive’s
discretion. Deferrals in the executive savings investment plan, plus or minus
the net investment return, are paid out in a lump sum, or in five or ten
year
installments, following retirement or other termination of
employment.
Deferred
Equity Awards
The
named executive
officers were given the opportunity to elect, in advance, to defer receipt
of
vested restricted stock equivalent awards which they could be granted in
the
future. These awards, which have been granted under the terms of our 2000
incentive stock plan, provide that upon vesting, the equivalents granted
will
convert into non-restricted shares of our common stock which are then issued
to
the officer. If deferral was elected, the equivalents will not convert into
shares of our common stock until six months after the officer’s termination of
employment with us. In the event that the Company would pay any dividends
on its
shares of common stock, these officers will also be credited with dividend
equivalents with respect to their vested stock equivalents. No other earnings
are credited or paid with respect to these deferrals.
NON-QUALIFIED
DEFERRED COMPENSATION TABLE
|
Executive
|
Registrant
|
Aggregate
|
Aggregate
|
Aggregate
|
||
|
Contributions
in
|
Contributions
in
|
Earnings
in Last
|
Withdrawals/
|
Balance
at Last
|
||
|
Last
FY
|
Last
FY
|
FY
|
Distributions
|
FYE
|
||
|
Name
|
Plan
|
($)(1)
|
($)(2)
|
($)(3)
|
($)
|
($)(4)
|
|
W.
Klein
|
Def’d
Comp.
Plan
|
$1,504,200
|
$376,050
|
$5,848,060
|
$367,380(6)
|
$17,666,597
|
|
Exec.
S.I.P.
|
$84,042
|
$35,427
|
$306,649
|
$ 0
|
$1,585,408
|
|
|
Vested
Stock
Equivs.(5)
|
$425,419
|
$ 0
|
$1,841,580
|
$ 0
|
$5,311,599
|
|
|
Total
|
$2,013,661
|
$411,477
|
$7,996,289
|
$367,380
|
$24,563,604
|
|
|
D.
Sescleifer
|
Def’d
Comp.
Plan
|
$311,568
|
$77,892
|
$1,141,861
|
$ 0
|
$4,530,483
|
|
Exec.
S.I.P.
|
$162,600
|
$35,275
|
$169,540
|
$ 0
|
$1,090,019
|
|
|
Vested
Stock
Equivs.(5)
|
$96,438
|
$ 0
|
$349,780
|
$ 0
|
$1,016,162
|
|
|
Total
|
$570,606
|
$113,167
|
$1,661,181
|
$ 0
|
$6,636,664
|
|
|
J.
McClanathan
|
Def’d
Comp.
Plan
|
$610,416
|
$152,604
|
$2,350,345
|
$ 0
|
$9,624,374
|
|
Exec.
S.I.P.
|
$66,642
|
$31,412
|
$252,070
|
$ 0
|
$1,346,201
|
|
|
Vested
Stock
Equivs.(5)
|
$ 0
|
$ 0
|
$1,424,880
|
$ 0
|
$4,064,537
|
|
|
Total
|
$677,058
|
$184,016
|
$4,027,295
|
$ 0
|
$15,035,112
|
|
|
D.
Hatfield
|
Def’d
Comp.
Plan
|
$ 0
|
$ 0
|
$1,384,902
|
$ 0
|
$5,095,899
|
|
Exec.
S.I.P.
|
$31,804
|
$29,752
|
$30,181
|
$ 0
|
$223,438
|
|
|
Vested
Stock
Equivs.(5)
|
$ 0
|
$ 0
|
$129,559
|
$ 0
|
$369,574
|
|
|
Total
|
$31,804
|
$29,752
|
$1,544,642
|
$ 0
|
$5,688,911
|
|
|
G.
Stratmann
|
Def’d
Comp.
Plan
|
$397,764
|
$99,441
|
$937,128
|
$ 0
|
$2,784,997
|
|
Exec.
S.I.P.
|
$45,587
|
$11,536
|
$119,195
|
$ 0
|
$559,069
|
|
|
Vested
Stock
Equivs.(5)
|
$96,438
|
$ 0
|
$349,780
|
$ 0
|
$1,016,162
|
|
|
Total
|
$539,789
|
$110,977
|
$1,406,103
|
$ 0
|
$4,360,228
|
|
(1)
|
The
officer
contributions to our deferred compensation plan during fiscal year
2007
consist of deferred annual and two-year cash bonuses earned with
respect
to fiscal year 2006.
|
|
|
The
officer
contributions to our executive savings investment plan during fiscal
year
2007 consist of deferred salary for that year, and deferred annual
and
two-year cash bonuses earned with respect to fiscal year
2006.
|
|
|
The
officer
contributions of vested stock equivalents during fiscal year 2007
consist
of vested but deferred restricted stock equivalents granted in
previous
years. The values shown are as of the date of vesting.
|
|
(2)
|
Our
contributions to our deferred compensation plan shown in this column
consist of the 25% Company match on deferrals of fiscal year 2006
annual
and two-year bonuses into the Energizer common stock unit fund
of the
plan. The annual expense associated with unvestedCompany
matching contributions is included in the StockAwards column of
the Summary Compensation Table.
|
|
|
Our
contributions to our executive savings investment plan consist
of Company
contributions which would have otherwise been contributed to the
savings
investment plan and the PPMA but for limitations imposed by the
IRS.
These amounts, in their entirety, are included inthe All
Other Compensation column of the SummaryCompensation
Table.
|
|
(3)
|
Aggregate
earnings shown in this column consist of:
|
|
|
• amounts
credited to each executive under the investment options of each
of the
plans, reflecting actual earnings on investment funds offered
under our savings investment plan, a qualified 401(k)
plan,
|
|
|
• in
the
case of the prime rate option of our deferred compensation plan,
interest
at Morgan Guaranty Trust Company of New York’s prime
rate,
|
|
|
• the
appreciation in value of each of the investment options in the
plans
between September 30, 2006 and September 30, 2007. (As no
dividends have been paid on our common stock, there have been no
earnings
credited for amounts deferred into the Energizer common stock unit
fund of
either of the plans, but the value of the underlying stock has
appreciated
significantly over that period), and
|
|
|
• the
appreciation in value of vested restricted stock equivalents (see
footnote
5 below) between September 30, 2006 and September 30, 2007, or
from the date of vesting and September 30, 2007, for awards vesting
and deferred during the fiscal year. (No actual earnings or dividends
have been credited with respect to these awards.)
|
|
|
The
above-market portion of interest on the prime rateoption (in
excess of 120% of the APR) is set forth inthe column titled
“Change in Pension Value andNonqualified Deferred Compensation
Earnings” of theSummary Compensation Table, and quantified in a
footnoteto that column.
|
|
(4)
|
Of
the
aggregate balances shown in this column, with respect to the deferred
compensation plan the following amounts were previously reported
as
compensation in the Summary Compensation Tables of our proxy statements
for previous annual meetings:
|
|
|
• Mr. Klein
- $8,955,828;
|
|
|
• Mr. Sescleifer
- $2,590,541;
|
|
|
• Mr. McClanathan
- $4,071,211; and
|
|
|
• Mr. Hatfield
- $999,600.
|
|
|
The
balances
in that plan for each of the officers also include amounts deferred
by
them, Company matching deferrals, and earnings thereon, in years
in which
they were not named executive officers and their compensation was
not
included in the Summary Compensation Table, and for Messrs. Klein,
McClanathan and Hatfield, and Ms. Stratmann, include amounts deferred
under the terms of the Ralston Purina Company deferred compensation
plan,
the liabilities of which were assumed by us at the time of our
spin-off.
|
|
|
Of
the
aggregate balances shown in this column, with respect to our executive
savings investment plan the following amounts were previously reported
as
compensation in the Summary Compensation Tables of our proxy statements
for prior years:
|
|
|
• Mr. Klein
- $764,203;
|
|
|
• Mr. Sescleifer
- $423,279;
|
|
|
• Mr. McClanathan
- $423,096; and
|
|
|
• Mr. Hatfield
- $26,543.
|
|
|
The
balances
in that plan for each of the officers also include amounts contributed
by
them, Company matching contributions, and earnings thereon, in
years in
which they were not named executive officers and their compensation
was
not included in the Summary Compensation Table.
|
|
|
Of
the
aggregate balances shown in this column with respect to the vested
stock
equivalents set forth in footnote (5) below, the following
number of equivalents were previously reported as compensation
in the
Summary Compensation Tables of our proxy statements for the years
when the
awards were granted.
|
|
|
• Mr. Klein
- 41,917 equivalents;
|
|
|
• Mr. Sescleifer
- 2,500 equivalents; and
|
|
|
• Mr. McClanathan
- 26,667 equivalents.
|
|
|
The
balances
for each of the officers also include vested but deferred equivalents
granted in years in which they were not named executive officers
and their
compensation was not included in the Summary Compensation
Table.
|
|
(5)
|
The
following
officers elected to defer conversion of the vested restricted stock
equivalents indicated until their termination of employment from
the
Company:
|
|
|
• Mr. Klein
- 47,917 equivalents;
|
|
|
• Mr. Sescleifer
- 9,167 equivalents;
|
|
|
• Mr. McClanathan
- 36,667 equivalents;
|
|
|
• Mr. Hatfield
- 3,334 equivalents; and
|
|
|
• Ms. Stratmann
- 9,167 equivalents.
|
|
|
The
values
shown are as of September 30, 2007.
|
|
(6)
|
The
distribution to Mr. Klein was pursuant to a short-term deferral
election which he made in 2004.
|
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We
have not entered
into general employment agreements with any of our named executive officers,
nor
do we have executive severance plans or programs. However, equity awards
under
our 2000 incentive stock plan, our annual and two-year cash bonus program,
and
our deferred compensation plan, provide for acceleration of vesting of certain
awards in the event of certain terminations of employment (as shown in the
chart
below). In addition, we have entered into change of control employment
agreements with our named executive officers which provide for severance
compensation, acceleration of vesting, tax reimbursement and continuation
of
benefits upon termination of employment following a change of
control.
The
information
below reflects the value of acceleration or incremental compensation which
each
officer would receive upon the termination of his or her employment or upon
a
change in control. Because the value of awards and incremental compensation
depend on several factors, actual amounts can only be determined at the time
of
the event.
The
information is
based on the following assumptions:
|
•
|
the
event of
termination (death, permanent disability, involuntary termination
without
cause, or voluntary termination), or a change of control of the
Company,
occurred on September 30, 2007, the last day of our fiscal
year,
|
|
•
|
the
market
value of our common stock on that date was $110.85 (the actual
closing
price on September 28, 2007, our last trading day before fiscal year
end),
|
|
•
|
each
of the
officers were terminated on that
date, and
|
|
•
|
corporate
and
individual federal tax rates were 35%, Missouri state tax rate
was 6%, and
FICA was 1.45%.
|
The
information
does not reflect benefits that are provided under our plans or arrangements
that
do not discriminate in favor of executive officers and are available generally
to all salaried employees - such as amounts accrued under our savings investment
plan, accumulated and vested benefits under our retirement plans (including
our
pension restoration plan and executive savings investment plan), health,
welfare
and disability benefits, and accrued vacation pay.
The
information
below also does not include amounts under our deferred compensation plan
or
executive savings investment plan that would be paid, or vested stock
equivalents that would be issued, all as described in the Nonqualified Deferred
Compensation Table above, except to the extent that an officer is entitled
to an
accelerated benefit as a result of the termination.
Death,
Disability or Termination of Employment (Other Than Upon a Change of
Control)
Upon
an officer’s
death, permanent disability, involuntary termination other than for cause
(defined as termination for gross misconduct), and, in some cases, retirement,
the following plans or programs provide for acceleration of awards. No awards
are accelerated for voluntary termination of employment before attainment
of
age 55, or for involuntary termination for cause, except as
noted.
|
Involuntary
Termination
|
Death
|
Disability
|
Retirement
After
Age 55
|
Retirement
for
Purposes
of our
Deferred
Comp. Plan
Prior
to 55
|
|
|
Unvested
stock options
|
Accelerated
|
Accelerated
|
Accelerated
|
Accelerated
|
Forfeited
|
|
Restricted
stock equivalent awardgranted
5/19/03
|
Accelerated
|
Accelerated
|
Accelerated
|
Accelerated
|
Forfeited
|
|
Other
restricted stock
equivalentawards
|
Accelerated
|
Accelerated
|
Accelerated
|
Forfeited
|
Forfeited
|
|
Three
year performance awards granted10/11/05 and
10/09/06
|
Accelerated
|
Accelerated
|
Accelerated
|
Forfeited
|
Forfeited
|
|
Unvested
25% Company match
|
Accelerated
|
Accelerated
|
Accelerated
|
Accelerated
|
Accelerated*
|
|
Two-year
bonus opportunity createdafter fiscal year
2007
|
Accelerated
|
Accelerated
|
Accelerated
|
Forfeited
|
Forfeited
|
|
*
|
Accelerated
only for officers with PEP account balances under our retirement
plan. The
match is forfeited for officers using the FAP benefit
formula.
|
Upon
termination of
employment for any reason, vested account balances in our deferred compensation
plan are paid out in cash to the participant in either a lump sum, or over
a
five or ten year period, commencing six months from the date of
termination.
In
the event an
officer’s employment is terminated due to permanent disability, he or she may
also be entitled to benefits under our executive long-term disability plan,
which pays a supplemental benefit equal to 60% of the amount by which the
officer’s previous year’s salary and bonus exceeded $150,000. (Amounts below
that figure are covered by our long term disability plan, available generally
to
salaried U.S. employees.)
Upon
retirement or
death, the officer, or his or her surviving spouse, may also be entitled
to
continued coverage under our executive health plan, which generally covers
medical/dental/vision expenses and deductibles and co-pays not otherwise
covered
by our underlying medical insurance plan. However, in order to qualify for
continued coverage under the executive health plan, the covered person must
pay
for retiree coverage under our underlying medical and dental insurance plans.
Because the cost of such retiree coverage under our medical insurance plan
is
generally significantly higher than other available medical plans, and none
of
our current officers are entitled to any subsidy from us for that coverage
(as
some grandfathered retirees are), it is unknown whether any of the officers
will
elect to obtain retiree coverage from our plan and qualify for additional
coverage under our executive health plan.
Finally,
if the
officer, prior to termination, was enrolled in our voluntary group life
insurance plan, which is available generally to salaried employees in the
U.S.,
with coverage of at least one times earnings, and has attained age 55 with
at least two years of service, or has a combination of age and years of service
equal to at least 80, then the officer would be entitled to life insurance
under
our executive retiree life plan. That plan provides a death benefit in an
amount
equal, on an after-tax basis, to 50% of the officer’s last full year’s salary
and bonus prior to retirement. The officer is responsible for paying the
cost of
coverage under the voluntary group life insurance plan at the retired coverage
level.
The
value of the
following awards which would be accelerated for our named executive officers
upon death, disability, involuntary termination of employment or retirement
as
of September 30, 2007 is shown in the following chart. The value of
accelerated restricted stock equivalents, performance awards and 25% Company
match reflects a stock price of $110.85, and the value of accelerated options
is
the difference between the exercise price and $110.85.
|
Accelerated
Awards
|
|||||
|
|
Restricted
|
|
|||
|
Stock
|
|
Two-Year
|
|
||
|
Equivalents
|
|
Cash
Bonus
|
|||
|
Officer
|
|
and
Three-Year
|
Unvested
25%
|
Opportunity
|
|
|
Termination
|
Stock
|
Performance
|
Company
|
Created
after
|
|
|
Events
|
Options
|
Awards
|
Match
|
FY2007
|
Total
|
|
W.
Klein:
1
|
$4,105,575
|
$22,678,063
|
$1,054,797
|
$750,000
|
$
28,588,435
|
|
W.
Klein:
3
|
—
|
—
|
—
|
—
|
—
|
|
D.
Sescleifer: 1
|
$
323,600
|
$
5,302,325
|
$472,519
|
$320,000
|
$ 6,418,444
|
|
D.
Sescleifer: 3
|
—
|
—
|
$472,519
|
—
|
$ 472,519
|
|
J.
McClanathan: 1
|
$2,006,200
|
$
7,131,350
|
$512,821
|
$360,000
|
$
10,010,371
|
|
J.
McClanathan: 2
|
$2,006,200
|
$
1,478,000
|
$512,821
|
—
|
$ 3,997,021
|
|
D.
Hatfield:
1
|
$
485,400
|
$
3,302,406
|
$427,654
|
$280,000
|
$ 4,495,460
|
|
D.
Hatfield:
3
|
—
|
—
|
$427,654
|
—
|
$ 427,654
|
|
G.
Stratmann:
1
|
$2,007,800
|
$
4,725,905
|
$228,883
|
$192,000
|
$ 7,154,588
|
|
G.
Stratmann:
3
|
—
|
—
|
$228,883
|
—
|
$ 228,883
|
Termination
Events:
|
|
1—
Death, permanent disability or involuntary termination of employment
other
than for cause.
|
|
|
2—
Retirement following attainment of age 55 (Only Mr. McClanathan
had attained age 55 as of September 30,
2007).
|
|
|
3—
Voluntary termination prior to 55. (Such termination would be deemed
to be
retirement under our deferred compensation plan for each of our
officers
with PEP account balances under our retirement plan, other than
Mr. Klein, who uses the FAP benefit
formula.)
|
Change
of
Control of the Company
Our
change of
control employment agreements with each of the named executive officers have
a
term of three years from their effective date (which term is automatically
extended every year for an additional year unless our nominating and executive
compensation committee elects to terminate an agreement at least 90 days
prior to renewal). Each of these agreements provides that the officer will
receive severance compensation in the event of his or her involuntary
termination (including voluntary termination for “good reason”), other than for
cause, within three years following a change in control of the
Company.
“termination
for
cause” means a termination for willful breach of, or failure to perform,
employment duties,
“good
reason” means any of the following:
|
•
|
assignment
of
duties inconsistent with the officer’s
status;
|
|
•
|
reduction
in
the officer’s annual salary;
|
|
•
|
the
failure
of the acquirer to pay any bonus award to which the officer was
otherwise
entitled, or to offer the officer incentive compensation, stock
options or
other benefits or perquisites which are offered to similarly situated
executives of the acquiror;
|
|
•
|
relocation
of
the officer’s primary office to a location greater than 50 miles from
his or her existing office;
|
|
•
|
any
attempt
by the acquirer to terminate the officer’s employment in a manner other
than as expressly permitted by the
agreements; or
|
|
•
|
the
failure
by the acquirer to expressly assume the Company’s obligations under the
agreements.
|
“change
of
control” means:
|
•
|
the
acquisition of 20% or more of the outstanding shares of our common
stock
|
|
•
|
that
time
when our initial directors, or their recommended or appointed successors,
fail to constitute a majority of our
board, or
|
|
•
|
the
approval
by our stockholders of a merger, consolidation, or sale of all
or
substantially all of the assets, of the
Company.
|
Under
the
agreements, upon a change of control, each officer, even if not terminated,
will
receive a pro rata annual bonus (equal to the greater of either target bonus
for
the year in which the change of control occurred, or the actual bonus for
the
preceding year) for the portion of the year occurring prior to a change of
control. In addition, all outstanding equity awards, including options,
restricted stock awards, and the three-year performance awards granted in
2005
and 2006, will vest at maximum value, even if applicable performance targets,
in
the case of the performance awards, are not met. In addition to the agreements,
the terms of our annual and two-year cash bonus program provide that bonus
opportunities created under that program will also vest upon a change of
control.
If
the officer is
terminated, the severance compensation payable under the agreements consists
of:
|
•
|
a
lump sum
payment in an amount equal to three times the officer’s annual base salary
and target bonus (defined as the most recent five-year actual bonus
percentages multiplied by the greater of base salary at either
termination
or change of control);
|
|
•
|
a
pro rata
portion of the officer’s target annual bonus for the year of
termination;
|
|
•
|
the
difference between the officer’s actual benefits under our retirement
plans at the time of termination and what the officer would have
received
if he or she had remained employed for an additional period of
three
years; and
|
|
•
|
the
continuation of other executive health, dental and welfare benefits
for a
period of three years following the officer’s
termination.
|
No
severance
payments under the agreements would be made in the event that an officer’s
termination is voluntary (other than for good reason), is due to death,
disability or normal retirement, or is for cause. For a period of three years
following termination of employment, the officers are each bound by a covenant
not to compete, a non-solicitation covenant, and a covenant of
confidentiality.
In
the event that
it is determined that a “golden parachute” excise tax is due under the Internal
Revenue Code, we will, if total benefits payable to the officer are within
10%
of the threshold for benefits at which the excise tax is triggered, reduce
benefits to the point at which the tax will no longer be due, or, if total
benefits are in excess of 10% of the threshold, reimburse the officer for
the
amount of such tax, including any excise or income taxes associated with
such
reimbursement.
Payments
of cash
would be made in a lump sum no sooner than six months following termination
of
employment, and benefits would be provided for a three-year period following
termination, or if such continuation of benefits would not be possible under
our
benefit programs, the value of such benefits would also be paid in lump sum
no
sooner than six months following termination.
Estimated
Payments and Benefits
Based
on the
assumptions set out above, the following chart sets forth estimated payments
to
our named executive officers upon termination following a change of control.
If
a change of control occurs but their employment is not terminated, the
agreements provide a more limited value, as shown in the second chart below.
The
value of accelerated restricted stock equivalents, performance awards and
25%
Company match reflects a stock price of $110.85 (the closing price of our
common
stock on September 28, 2007), and the value of accelerated options is the
difference between the exercise price and $110.85.
|
Accelerated
or Additional Benefits—Termination following Change of
Control
|
||||||||
|
|
Restricted
|
|
||||||
|
Cash
|
|
Stock
Equivs.
|
||||||
|
Severance
|
|
and
Three-
|
||||||
|
and
Accel’d
|
|
25%
|
Year
|
|||||
|
Two-Year
|
Retirement
|
Company
|
Performance
|
Excise
Tax
|
||||
|
Bonus
|
Benefits
|
Match
|
Options
|
Awards
|
Benefits
|
Gross-Up
|
Total
|
|
|
W.
Klein
|
$6,920,171
|
$2,861,347
|
$1,054,797
|
$4,105,575
|
$22,678,063
|
$94,591
|
$13,003,213
|
$50,717,757
|
|
D.
Sescleifer
|
$3,076,356*
|
$413,834
|
$472,519
|
$323,600
|
$5,302,325
|
$94,591
|
$ 0
|
$9,683,225
|
|
J.
McClanathan
|
$3,895,405
|
$1,478,184
|
$512,821
|
$2,006,200
|
$7,131,350
|
$94,591
|
$4,558,837
|
$19,677,388
|
|
D.
Hatfield
|
$2,688,793*
|
$572,458
|
$427,654
|
$485,400
|
$3,302,406
|
$78,229
|
$ 0
|
$7,554,940
|
|
G.
Stratmann
|
$2,386,474
|
$561,877
|
$228,883
|
$2,007,800
|
$4,725,905
|
$94,591
|
$2,613,932
|
$12,619,462
|
|
*
|
Reduced
below
the threshold for “golden parachute” excise tax, under the terms of the
agreement.
|
For
purposes of the
calculation of the excise tax gross-up in these charts, the ascribed value
of
accelerated vesting and early receipt of stock option gain value is based
on
three components:
|
•
|
Valuation
of
options using the lesser of calculated Black-Scholes value or a
safe
harbor valuation methodology. The assumptions used in the calculation
are
based on assumptions listed in our annual report on Form 10-K for the
year ended September 30, 2006, including volatility of 22.2%, an
expected term of 6 years, a risk-free interest rate of 3.86% and a 0%
dividend yield.
|
|
•
|
Lapse
of
further service portion is equal to the gain at the change of control
date
multiplied by 1% for each full month vesting is
accelerated; and
|
|
•
|
Early
receipt
portion is equal to the difference between the gain at normal vesting
and
the present value of the gain at the time vesting is accelerated,
with
present value based on 120% of the IRS applicable federal
rate.
|
The
ascribed value
of restricted stock equivalents and performance awards was based on the latter
two of the above components, and, for the performance awards, assumption
of a
100% parachute value.
|
Accelerated
Awards Upon a
Change of Control (No Termination of
Employment)
|
|||||
|
Accelerated
|
Restricted
Stock Equivalents
|
Excise
Tax
|
|||
|
Two-Year
Bonus
|
Options
|
and
Performance Awards
|
Gross-Up
|
Total
|
|
|
W.
Klein
|
$750,000
|
$4,105,575
|
$22,678,063
|
$8,298,426
|
$35,832,064
|
|
D.
Sescleifer
|
$320,000
|
$323,600
|
$5,302,325
|
0
|
$5,945,925
|
|
J.
McClanathan
|
$2,241*
|
$2,006,200
|
$7,131,350
|
0
|
$9,139,791
|
|
D.
Hatfield
|
$280,000
|
$485,400
|
$3,302,406
|
0
|
$4,067,806
|
|
G.
Stratmann
|
$192,000
|
$2,007,800
|
$4,725,905
|
0
|
$6,925,705
|
|
*
|
Reduced
below
the threshold for “golden parachute” excise tax, under the terms of the
agreement.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
During
the fiscal
year, our board of directors adopted a written policy regarding the review
and
approval or ratification of transactions involving the Company and our
directors, nominees for directors, executive officers, immediate family members
of these individuals, and shareholders owning five percent or more of our
outstanding common stock, each of whom is referred to as a related party.
The
policy covers any related party transaction, arrangement or relationship
where a
related party has a direct or indirect material interest and the amount involved
exceeds $100,000 in any calendar year. Under the policy, the audit committee
of
the board is responsible for reviewing and approving, or ratifying, the material
terms of any related party transactions. The committee is charged with
determining whether the terms of the transaction are any less favorable than
those generally available from unaffiliated third parties, and determining
the
extent of the related party’s interest in the transaction.
In
adopting the
policy, the board reviewed certain types of related party transactions described
below and determined that they should be deemed to be pre-approved, even
if the
aggregate amount involved might exceed $100,000:
|
•
|
Officer
or
director compensation which would be required to be disclosed under
Item 402 of the SEC’s compensation disclosure requirements, and
expense reimbursements to these individuals in accordance with
our
policy;
|
|
•
|
Transactions
with another company at which a related party serves as an employee,
director, or holder of less than 10% of that company’s outstanding stock,
if the aggregate amount involved does not exceed the greater of
$1 million or 2% of that company’s consolidated gross
revenues;
|
|
•
|
Charitable
contributions to a charitable trust or organization for which a
related
party serves as an employee, officer or director, if the annual
contributions by us do not exceed the greater of $100,000 or 2%
of the
organizations total annual
receipts;
|
|
•
|
Transactions
where all of our shareholders receive proportional benefits, where
the
rates or charges involved are determined by competitive bids, where
the
transaction involves obtaining services from a regulated entity
at rates
fixed by law, or where the transaction involves bank services as
a
depositary of funds, transfer agent or registrar, or similar
services; and
|
|
•
|
Transactions
related to our joint ownership of corporate aircraft, including
reimbursement of expenses associated with ownership or use of the
aircraft, provided that the terms of ownership and reimbursement
were
previously approved by our board of
directors.
|
Our
legal
department is primarily responsible for the development and implementation
of
processes and procedures to obtain information from our directors and executive
officers with respect to related party transactions.
During
fiscal year
2007, there were no transactions with executive officers, directors or their
immediate family members which were in an amount in excess of $120,000, and
in
which any such person had a direct or indirect material interest.
AUDIT
COMMITTEE REPORT
No
portion of this
Audit Committee Report shall be deemed to be incorporated by reference into
any
filing under the Securities Act of 1933, as amended (the “Securities Act”), or
the Exchange Act, through any general statement incorporating by reference
in
its entirety the Proxy Statement in which this report appears, except to
the
extent that the Company specifically incorporates this report or a portion
of it
by reference. In addition, this report shall not be deemed to be filed under
either the Securities Act or the Exchange Act.
The
Audit Committee
of the Company’s Board of Directors consists entirely of non-employee directors
that are independent, as defined by the New York Stock Exchange Listing
Standards and Securities and Exchange Commission regulations for audit committee
membership.
Management
is
responsible for the Company’s internal controls and the financial reporting
process. The independent accountants are responsible for performing an
independent audit of the Company’s consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Committee’s responsibility is to monitor and oversee these
processes.
With
respect to the
Company’s audited financial statements for the Company’s fiscal year ended
September 30, 2007, management of the Company has represented to the
Committee that the financial statements were prepared in accordance with
generally accepted accounting principles and the Committee has reviewed and
discussed those financial statements with management. The Audit Committee
has
also discussed with PricewaterhouseCoopers LLP, the Company’s independent
accountants, the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees) as modified or
supplemented.
The
Audit Committee
has received the written disclosures from PricewaterhouseCoopers LLP required
by
Independence Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees), as
modified or supplemented, and has discussed the independence of
PricewaterhouseCoopers LLP with members of that firm. In doing so, the Committee
considered whether the non-audit services provided by PricewaterhouseCoopers
LLP
were compatible with its independence.
Based
on the review
and discussions referred to above, the Audit Committee recommended to the
Company’s Board of Directors that the audited financial statements for the
fiscal year ended September 30, 2007 be included in the Company’s Annual
Report on Form 10-K for that year.
|
John
R.
Roberts—Chairman
Bill
G.
Armstrong
John
E.
Klein
|
Richard
A.
Liddy
Joe
R.
Micheletto
Pamela
M.
Nicholson
|
NOMINATING
AND EXECUTIVE COMPENSATION COMMITTEE REPORT
The
Nominating and
Executive Compensation Committee of the Company’s Board of Directors consists
entirely of non-employee directors that are independent, as defined in
Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange
Listing Standards. The Committee has reviewed and discussed the Company’s
Compensation Discussion and Analysis with management. Based on these reviews
and
discussions, the Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this proxy statement and in the Company’s
Annual Report on Form 10K for the fiscal year ended September 30,
2007.
|
John
E.
Klein—Chairman
Bill
G.
Armstrong
John
C.
Hunter
Richard
A.
Liddy
|
W.
Patrick
McGinnis
Pamela
M.
Nicholson
John
R.
Roberts
|
DELIVERY
OF
DOCUMENTS
Householding
of Annual Meeting Materials. The Securities and Exchange
Commission has approved a rule permitting the delivery of a single set of
annual
reports and proxy statements to any household at which two or more shareholders
reside, if the shareholders consent. Each shareholder will continue to receive
a
separate proxy card. This procedure, referred to as householding, reduces
the
volume of duplicate information you receive, as well as our expenses. In
order
to take advantage of this opportunity, we have delivered only one proxy
statement and annual report to multiple shareholders who share an address,
unless we received contrary instructions from the impacted shareholders prior
to
the mailing date. If you prefer to receive separate copies of our proxy
statement or annual report, either now or in the future, we will promptly
deliver, upon your written or oral request, a separate copy of the proxy
statement or annual report, as requested, to any shareholder at your address
to
which a single copy was delivered. Notice should be given to the Secretary,
Energizer Holdings, Inc., 533 Maryville University Drive, St. Louis,
Missouri 63141 (Tel. No. (314) 985-2161). If you are currently a
shareholder sharing an address with another shareholder and wish to have
only
one proxy statement and annual report delivered to the household in the future,
please contact us at the same address.
Electronic
Delivery. For next year’s Annual Meeting of Shareholders,
you can help us save significant printing and mailing expenses by consenting
to
access the proxy statement and annual report electronically over the Internet.
If you choose to vote over the Internet, you can indicate your consent to
electronic access to these documents by following the instructions at the
Internet voting website noted on the enclosed proxy card. If you do not choose
to vote over the Internet, or if you are not given the opportunity to consent
to
electronic access over the Internet, but would still like to consent, you
may
contact the Secretary, Energizer Holdings, Inc., 533 Maryville University
Drive,
St. Louis, Missouri 63141 (Tel. No. (314) 985-2161). If you choose to
receive the proxy statement and annual report electronically, then prior
to next
year’s annual meeting you will receive e-mail notification when the proxy
statement and annual report are available for on-line review over the Internet.
Your choice for electronic distribution will remain in effect indefinitely,
unless you revoke your choice by sending written notice of revocation to
the
address noted above. However, if the e-mail notification is returned as
“undeliverable”, a hard copy of the proxy materials and annual report will be
mailed to your last known address.
SHAREHOLDER
PROPOSALS FOR 2009 ANNUAL MEETING
Any
proposals to be
presented at the 2009 Annual Meeting of Shareholders, which is expected to
be
held on January 26, 2009, must be received by the Company, directed to the
attention of the Secretary, no later than July 31, 2008 in order to be
included in the Company’s proxy statement and form of proxy for that meeting.
Upon receipt of any proposal, the Company will determine whether or not to
include the proposal in the proxy statement and proxy in accordance with
regulations governing the solicitation of proxies. The proposal must comply
in
all respects with the rules and regulations of the Securities and Exchange
Commission and the Bylaws of the Company.
In
order for a
shareholder to nominate a candidate for director, under the Company’s Bylaws
timely notice of the nomination must be received by the Company in advance
of
the meeting. Ordinarily, such notice must be received not less than 90, nor
more
than 120, days before the meeting (but if the Company gives less than
90 days’ (1) notice of the meeting or (2) prior public disclosure
of the date of the meeting, then such notice must be received within 7 days
after notice of the meeting is mailed or other public disclosure of the meeting
is made), or prior to October 26, 2008 for the 2009 Annual Meeting. The
notice of nomination must include, as to each person whom the shareholder
proposes to nominate for election, the candidate’s name, age, business and
residential address, and principal occupation for the previous 5 years, the
nominee’s consent to being named as a nominee and to serving on the Board, and
the number of shares of Common Stock beneficially owned by the nominee. To
assist in the evaluation of shareholder-recommended candidates, the Committee
may request that the shareholder provide certain additional information required
to be disclosed in the Company’s proxy statement under Regulation 14A of
the Securities Exchange Act of 1934. The shareholder nominating the candidate
must also include his or her name and address, and the number of shares of
Common Stock beneficially owned.
In
order for a
shareholder to bring other business before a shareholder meeting, timely
notice
must be received by the Company prior to the time described in the preceding
paragraph. Such notice must include a description of the proposed business
and
the reasons therefor, the name and address of the shareholder making the
proposal, and the number of shares of Common Stock beneficially owned. These
requirements are separate from and in addition to the requirements a shareholder
must meet to have a proposal included in the Company’s Proxy
Statement.
In
each case, the
notice must be given to the Secretary of the Company, whose address is 533
Maryville University Drive, St. Louis, Missouri 63141. A copy of the
Company’s bylaws will be provided without charge upon written request to the
Secretary.
By
order of the Board of Directors,
Timothy
L.
Grosch
Secretary
November 29,
2007
2008
ANNUAL MEETING ADMISSION TICKET
ENERGIZER
HOLDINGS, INC.
2008
ANNUAL
MEETING OF SHAREHOLDERS
Monday,
January 28,
2008
3:30
p.m. local
time
Energizer
World
Headquarters
533
Maryville
University Drive
St.
Louis, Missouri
63141
Please
present this
ticket for admittance to the Annual Meeting.
Admittance
will be
based upon availability of seating.
tFOLD
AND DETACH HERE AND READ THE REVERSE
SIDEt
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ENERGIZER
HOLDINGS, INC.
This
Proxy is
Solicited on Behalf of the Board of Directors
for
the Annual
Meeting of Shareholders on January 28, 2008
|
P
R
O
X
Y
|
This
proxy
when properly executed will be voted in the manner directed herein
by the
undersigned Shareholder. If
no
direction is made, this Proxy will be voted “FOR” Item
1.
The
undersigned hereby appoints W.M. Klein and G.G. Stratmann as Proxies,
with
the power of substitution, to represent and to vote, as designated
below,
all the shares of the undersigned held of record on November 19,
2007, at
the Annual Meeting of Shareholders to be held on January 28, 2008
and any
adjournments thereof.
(Important
- to be signed and dated on reverse side)
|
|
This
proxy
covers all Energizer Holdings, Inc. Common Stock you own in any
of the
following ways (provided the registrations are
identical):
|
|
|
|
VOTE
BY TELEPHONE OR INTERNET
QUICK
* * * EASY * * *
IMMEDIATE
|
ENERGIZER
HOLDINGS, INC.
Voting
by telephone or Internet is quick, easy and immediate. As a
stockholder of Energizer Holdings, Inc., you have the option of voting
your
shares electronically through the Internet or on the telephone, eliminating
the
need to return the proxy card. Your electronic vote authorizes the named
proxies
to vote your shares in the same manner as if you marked, signed, dated
and
returned the proxy card. Votes submitted electronically over the Internet
or by
telephone must be received by 7:00 p.m., Eastern Time, on January 27,
2008.
Vote
Your Proxy on the Internet:
Go
to
www.energizer.com.
Have
your proxy
card available when you access the above website. Select “ENR Shareholder Proxy
Voting.” Follow the prompts to vote your shares.
Vote
Your Proxy by Phone:
Call
1
(866) 894-0537.
Use
any touch-tone
telephone to vote your proxy. Have your proxy card available when you
call.
Follow the voting instructions to vote your shares.
PLEASE
DO
NOT RETURN THE PROXY CARD IF YOU ARE
VOTING
ELECTRONICALLY OR BY PHONE
Vote
Your Proxy by mail:
Mark,
sign, and
date your proxy card, then detach it, and return it in the postage-paid
envelope
provided.
tFOLD
AND DETACH HERE AND READ THE REVERSE
SIDEt
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PROXY
|
ENERGIZER
HOLDINGS, INC.
|
COMMON
STOCK
Please
mark x
your
votes
like this
|
|
THE
BOARD OF
DIRECTORS RECOMMENDS A VOTE “FOR”:
|
|
|
1.
Election
of Directors For All For
All
Nominees Withhold Except
o o o
|
|
|
Nominees:
01
Ward M. Klein, 02 Richard A. Liddy, 03 W. Patrick McGinnis,
04 Joe R.
Micheletto.
To
withhold authority to vote for any nominees listed above,
mark the “For
All Except” box and write the name(s) of the nominee(s) from whom you
wish
to withhold authority to vote in the space provided below.
|
Please
be
sure to sign and date this Proxy Card.
IF
YOU
WISH TO VOTE ELECTRONICALLY
PLEASE
READ THE INSTRUCTIONS ABOVE
|
|
|
|
|
Mark
box at
right if you plan to attend the Annual
Meeting
o
on
January
28, 2008.
|
|
|
|
|
|
COMPANY
ID:
PROXY
NUMBER:
ACCOUNT
NUMBER:
|
Signature______________________________________________________Signature_________________________________________________________Date______________________,
2008.
Please
sign exactly as your name(s) appear(s) hereon. When signing as Attorney,
Executor, Trustee, Guardian or Officer of a Corporation, please give
title as
such. For joint accounts, all named holders should sign. If you receive
more
than one proxy card, please sign all cards and return in the accompanying
postage-paid envelopes.
November
29,
2007
Dear
Savings
Investment Plan Participant:
Enclosed
are a
proxy statement, a proxy and an Annual Report for the Annual Meeting of
Shareholders of Energizer Holdings, Inc. to be held on January 28,
2008. The enclosed proxy relates to shares of Energizer Common Stock
of which you are the record holder and to shares of Energizer Common Stock
credited to your account in the Energizer Holdings, Inc. Savings Investment
Plan
(the “Plan”).
The
Trustee of the
Plan will vote all shares of Energizer Common Stock held in the Plan as of
November 19, 2007. Shares credited to your account as of November 12,
2007 will be voted in accordance with your instructions on the enclosed proxy
card. Any credited shares for which no instructions are received by
the Trustee, and any shares in the Plan that were credited between November
13,
2007 and November 19, 2007, will be voted by the Trustee in the same proportion
as the shares for which instructions were received from all participants in
that
Plan.
Please
complete,
sign and date the enclosed proxy. It should be returned, in the
postage-paid envelope provided, to Continental Stock Transfer & Trust
Company, which acts as tabulator. Alternatively, you may vote by
telephone or via Internet. However you decide to vote, in order to
provide the tabulator sufficient time to tabulate the votes, it has been
requested that all proxies be returned, or votes be cast, as promptly as
possible, but no later than January 23, 2008.
You
may also have
received additional proxy statements and proxies relating to other shares of
Energizer Common Stock held by you. These proxies are not duplicates
of the one enclosed and we ask that they also be voted as described in the
instructions enclosed with them.
WARD
M. KLEIN
Chief
Executive Officer
Dear
Shareholder:
Thank
you for
consenting to receive your shareholder materials via the
Internet. This letter provides you the information you will need to
view Energizer Holdings, Inc. annual meeting materials online, vote your
shares
online and print a copy of the materials.
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
The
2008 Annual
Meeting of Shareholders of Energizer Holdings, Inc. will be held at Energizer
World Headquarters, 533 Maryville University Drive, St. Louis, Missouri on
Monday, January 28, 2008 at 3:30 p.m., local time, for the following
purpose:
To
elect four directors to serve three-year terms ending at the Annual Meeting
held
in 2011, or until their respective successors are elected and
qualified.
Shareholders
of
record at the close of business on November 19, 2007, are entitled to notice
of
and to vote at the Annual Meeting.
Holders
of a
majority of the outstanding shares must be present in person or by proxy
in
order for the meeting to be held. Therefore, whether or not you
expect to attend the meeting in person, you are urged to vote your proxy
either
electronically via the Internet or by telephone at 1-866-894-0537. If
you attend the meeting and wish to vote your shares personally, you may do
so by
revoking your proxy at any time prior to the voting thereof. In
addition, you may revoke your proxy at any time before it is voted by written
notice of revocation to the Secretary of the Company or by submitting a
later-dated proxy.
VIEW
ANNUAL
MEETING MATERIALS
To
view the 2007 Annual Report and Proxy Statement, please go to the Website
www.energizer.com, click on About Energizer and then click on Investor
Information. You will then see two direct links - one for the 2007
Proxy Statement and one for the 2007 Annual Report.
VOTE
YOUR
PROXY
To
vote your proxy over the Internet, please go to the Website
www.energizer.com and click on ENR Shareholder Proxy Voting.
To
access and vote your proxy card via the Internet or by phone, you will need
to
enter the following information exactly as it appears:
Company
Number:
$CompanyNumber
Proxy
Number:
$ProxyNumb
Account
Number:
$AccountNbr
Thank
you again for
participating in Energizer Holdings, Inc. electronic distribution
program.