def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
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EXCHANGE ACT OF 1934 (Amendment
No. )
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Aggregate number of securities to which transaction applies:
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state how it was determined):
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Check box if any part of the fee is offset as provided by
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Form, Schedule or Registration Statement No.:
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TABLE OF CONTENTS
MKS
INSTRUMENTS, INC.
2 TECH DRIVE, SUITE 201
ANDOVER, MASSACHUSETTS 01810
March 10, 2010
Dear shareholder:
You are cordially invited to attend the 2010 Annual Meeting of
Shareholders of MKS Instruments, Inc. to be held on Monday,
May 3, 2010, at 10:00 a.m. at the Wyndham Boston
Andover Hotel, 123 Old River Road, Andover, Massachusetts 01810.
The enclosed notice of Annual Meeting and proxy statement
describe the business to be transacted at the Annual Meeting and
provide additional information about us that you should know
when voting your shares. The principal business at the Annual
Meeting will be to elect Class II Directors and to ratify
the selection of our independent registered public accounting
firm for fiscal 2010.
Whether or not you plan to attend the Annual Meeting, please
complete, date, sign and return your Proxy Card promptly in the
enclosed envelope, which requires no postage if mailed in the
United States. If you attend the Annual Meeting, you may vote in
person if you wish, even if you have previously returned your
Proxy Card.
On behalf of MKS, I would like to express our appreciation for
your continued interest in our company.
Sincerely,
LEO BERLINGHIERI
Chief Executive Officer and President
MKS
INSTRUMENTS, INC.
2 TECH DRIVE, SUITE 201
ANDOVER, MASSACHUSETTS 01810
NOTICE OF
2010 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2010
To the shareholders:
NOTICE IS HEREBY GIVEN that the 2010 Annual Meeting of
Shareholders of MKS INSTRUMENTS, INC., a Massachusetts
corporation, will be held on Monday, May 3, 2010 at
10:00 a.m. at the Wyndham Boston Andover Hotel, 123 Old
River Road, Andover, Massachusetts 01810. At the meeting,
shareholders will consider and vote on the following matters:
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1.
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To elect three Class II Directors, each for a three-year
term; and
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2.
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To ratify the selection of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the year
ending December 31, 2010.
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The shareholders will also act on any other business as may
properly come before the meeting.
The Board of Directors has fixed the close of business on
March 4, 2010 as the record date for the determination of
shareholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournment or adjournments thereof. Our stock
transfer books will remain open for the purchase and sale of our
Common Stock.
If you would like to attend the Annual Meeting and your shares
are held by a broker, bank or other nominee, you must bring to
the Annual Meeting a letter from the nominee confirming your
beneficial ownership of such shares. In order to vote your
shares at the Annual Meeting, you must obtain from the nominee a
proxy issued in your name. You must also bring a form of
personal identification.
By Order of the Board of Directors,
RICHARD S. CHUTE
Secretary
Andover, Massachusetts
March 10, 2010
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN
PERSON, PLEASE PROMPTLY SIGN, DATE, AND RETURN THE ENCLOSED
PROXY. PROMPTLY SIGNING, DATING AND RETURNING THE PROXY WILL
SAVE US THE EXPENSE AND EXTRA WORK OF ADDITIONAL SOLICITATION.
AN ADDRESSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE. SENDING IN
YOUR PROXY WILL NOT PREVENT YOU FROM VOTING YOUR STOCK AT THE
ANNUAL MEETING IF YOU DESIRE TO DO SO, AS YOUR PROXY IS
REVOCABLE AT YOUR OPTION.
MKS
INSTRUMENTS, INC.
2 TECH DRIVE, SUITE 201
ANDOVER, MASSACHUSETTS 01810
PROXY
STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of MKS
Instruments, Inc., a Massachusetts corporation, for use at the
2010 Annual Meeting of Shareholders to be held on May 3,
2010, at 10:00 a.m. at the Wyndham Boston Andover Hotel,
123 Old River Road, Andover, Massachusetts 01810, and at any
adjournment or postponement thereof (the Annual
Meeting). References in this proxy statement to
we, us, the Company or
MKS refer to MKS Instruments, Inc. and its
consolidated subsidiaries.
All proxies will be voted in accordance with the
shareholders instructions. If no choice is specified in
the proxy, the shares will be voted in favor of the matters set
forth in the accompanying Notice of 2010 Annual Meeting of
Shareholders. Any proxy may be revoked by a shareholder at any
time before its exercise by delivery of written revocation to
the Secretary of MKS. Attendance at the Annual Meeting will not
in itself be deemed to revoke a proxy unless the shareholder
gives affirmative notice at the Annual Meeting that the
shareholder intends to revoke the proxy and vote in person.
VOTING
SECURITIES AND VOTES REQUIRED
At the close of business on March 4, 2010, the record date
for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting, there were issued and outstanding
and entitled to vote 49,545,671 shares of our common stock,
no par value per share (the Common Stock). Each
outstanding share entitles the record holder to one vote on each
matter submitted at the Annual Meeting.
In order to transact business at the Annual Meeting, we must
have a quorum. Under our Amended and Restated By-Laws, the
holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting shall
constitute a quorum for the transaction of business at the
Annual Meeting. Shares of Common Stock present in person or
represented by proxy (including broker non-votes and
shares that abstain or do not vote with respect to a particular
proposal to be voted upon) will be counted for purposes of
determining whether a quorum exists at the Annual Meeting.
The affirmative vote of the holders of a plurality of the shares
of Common Stock voting on the matter is required for the
election of directors. The ratification of
PricewaterhouseCoopers LLP, or PwC, requires the approval of the
holders of a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting and voting on the
matter.
Shares held by shareholders who abstain from voting as to a
particular matter, and broker non-votes, which are
shares held in street name by banks, brokers or
nominees, who indicate on their proxies that they do not have
discretionary authority to vote such shares as to a particular
non-routine matter, including the election of directors, will
not be counted as votes in favor of such matter. Accordingly,
abstentions and broker non-votes will have no effect on the
voting on a matter that requires the affirmative vote of a
certain percentage of the shares voting on the matter. If the
shares you own are held in street name by a bank or brokerage
firm, your bank or brokerage firm, as the record holder of your
shares, is required to vote your shares according to your
instructions. In order to vote your shares, you will need to
follow the directions your bank or brokerage firm provides you.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON MAY 3, 2010.
A copy of (i) our Annual Report to Shareholders for the
year ended December 31, 2009, which contains consolidated
financial statements and other information of interest to
shareholders, (ii) this Notice, (iii) the enclosed
Proxy Statement and (iv) information on how to obtain
directions to be able to attend the meeting and vote in person
can be accessed on our website at
www.mksinstruments.com/AnnualMeetingMaterials or by calling
(800) 227-8766
ext. 5576.
THE NOTICE OF ANNUAL MEETING, THIS PROXY STATEMENT AND OUR
ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31,
2009 ARE BEING MAILED TO SHAREHOLDERS ON OR ABOUT MARCH 17,
2010. A COPY OF OUR ANNUAL REPORT ON
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2009 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, EXCLUDING
EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER
UPON WRITTEN REQUEST TO: INVESTOR RELATIONS DEPARTMENT, MKS
INSTRUMENTS, INC., 2 TECH DRIVE, SUITE 201, ANDOVER, MA
01810. EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST AND
PAYMENT OF AN APPROPRIATE PROCESSING FEE.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect
to the beneficial ownership of Common Stock by (i) each of
our current directors; (ii) the executive officers named in
the Summary Compensation Table below; (iii) each
shareholder known to us to be the beneficial owner of more than
5% of the outstanding shares of Common Stock; and (iv) all
of our directors and executive officers as a group. Unless
otherwise indicated in the footnotes to the table (i) all
information set forth in the table is as of January 31,
2010; and (ii) the address for each of our directors and
executive officers is:
c/o MKS
Instruments, Inc., 2 Tech Drive, Suite 201, Andover,
Massachusetts 01810.
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Percentage of
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Number of Shares
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Common Stock
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Name of Beneficial Owners
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Beneficially Owned(1)
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Beneficially Owned
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Named Executive Officers
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Leo Berlinghieri
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455,534
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(2)
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*
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Ronald C. Weigner
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298,213
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(3)
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*
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Gerald G. Colella
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237,163
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(4)
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*
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John T.C. Lee
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13,186
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(5)
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*
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John A. Smith
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96,428
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(6)
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*
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Directors Not Included Above
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Cristina H. Amon
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10,110
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(7)
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Robert R. Anderson
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74,000
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(8)
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*
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Gregory R. Beecher
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26,400
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(9)
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*
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John R. Bertucci
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3,067,478
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(10)
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6.2
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%
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Richard S. Chute
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66,000
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(11)
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*
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Peter R. Hanley
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2,222
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(12)
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*
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Hans-Jochen Kahl
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10,000
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(13)
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*
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Louis P. Valente
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66,000
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(14)
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*
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Other 5% shareholders
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Dimensional Fund Advisors LP.
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4,026,611
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(15)
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8.1
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%
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Palisades West, Building One
6300 Bee Cave Road
Austin, TX 78756
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Kornitzer Capital Management, Inc.
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4,504,137
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(16)
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9.1
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%
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5240 West 61st Place
Shawnee Mission, KS 66205
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Royce & Associates, LLC
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7,265,630
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(17)
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14.7
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%
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1414 Avenue of the Americas
New York, NY 10019
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Black Rock, Inc.
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4,164,766
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(18)
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8.4
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40 East 52nd Street
New York, NY 10022
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All directors and officers as a group (15 persons)
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4,182,613
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(19)
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8.3
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%
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Represents less than 1% of the outstanding Common Stock. |
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We believe that each shareholder has sole voting and investment
power with respect to the shares listed, except as otherwise
noted. The number of shares beneficially owned by each
shareholder is determined under rules of the SEC, and the
information is not necessarily indicative of ownership for any
other purpose. Under such rules, beneficial ownership includes
any shares as to which the person has sole or shared voting
power or investment power and also any shares that the
individual has the right to acquire within 60 days after
January 31, 2010 through the vesting of restricted stock
units (RSUs) or the exercise of any stock option or |
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other right. The inclusion herein of any shares of Common Stock
deemed beneficially owned does not constitute an admission by
such shareholder of beneficial ownership of those shares of
Common Stock. Shares of Common Stock which an individual or
entity has a right to acquire within the
60-day
period following January 31, 2010 pursuant to the exercise
of options or vesting of RSUs are deemed to be outstanding for
the purpose of computing the percentage ownership of such
individual or entity, but are not deemed to be outstanding for
the purpose of computing the percentage ownership of any other
person or entity shown in the table. |
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Consists of 50,693 shares held directly by
Mr. Berlinghieri and 404,841 shares subject to options
exercisable or RSUs that will vest within 60 days of
January 31, 2010. |
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Consists of 12,086 shares held directly by Mr. Weigner
and 286,127 shares subject to options exercisable or RSUs
that will vest within 60 days of January 31, 2010. |
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Consists of 706 shares held directly by Mr. Colella
and 236,457 shares subject to options exercisable or RSUs
that will vest within 60 days of January 31, 2010. |
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(5) |
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Consists of 2,409 shares held directly by Mr. Lee and
10,777 shares subject to RSUs that will vest within
60 days of January 31, 2010. |
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(6) |
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Consists of options exercisable or RSUs that will vest within
60 days of January 31, 2010. |
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(7) |
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Consists of 9,555 shares directly held by Ms. Amon and
555 shares subject to RSUs that will vest within
60 days of January 31, 2010. |
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Consists of 20,000 shares held directly by
Mr. Anderson and 54,000 shares subject to options
exercisable within 60 days of January 31, 2010. |
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Consists of 6,400 shares held directly by Mr. Beecher
and 20,000 shares subject to options exercisable or RSUs
that will vest within 60 days of January 31, 2010. |
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Consists of 678,257 shares held directly by
Mr. Bertucci, 750,000 shares held indirectly by
Mr. Bertucci in a trust of which Mr. Bertucci is the
sole trustee and 1,639,221 shares held directly by
Mr. Bertuccis wife. |
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(11) |
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Consists of options exercisable or RSUs that will vest within
60 days of January 31, 2010. |
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Consists of 1,666 shares directly held by Mr. Hanley
and 556 shares subject to RSUs that will vest within
60 days of January 31, 2010. |
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Consists of 4,000 shares held directly by Mr. Kahl and
6,000 shares subject to options exercisable within
60 days of January 31, 2010. |
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(14) |
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Consists solely of options exercisable or RSUs that will vest
within 60 days of January 31, 2010. |
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(15) |
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Based on information set forth in Schedule 13G/A filed by
Dimensional Fund Advisors LP on February 10, 2010,
reporting stock ownership as of December 31, 2009, in which
Dimensional Fund Advisors, Inc. disclaims beneficial
ownership of such securities. |
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(16) |
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Based on information set forth in Schedule 13G filed by
Kornitzer Capital Management, Inc. on January 22, 2010,
reporting stock ownership as of December 31, 2009. |
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(17) |
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Based on information set forth in Schedule 13G filed by
Royce & Associates, LLC on behalf of itself and its
affiliates, on January 10, 2010, reporting stock ownership
as of December 31, 2009. |
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(18) |
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Based on information set forth in Schedule 13G filed by
Black Rock, Inc. on January 20, 2010, reporting stock
ownership as of December 31, 2009. |
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(19) |
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Consists of 3,174,389 shares held directly or indirectly by
such persons and 1,008,224 shares subject to options
exercisable or RSUs that will vest within 60 days of
January 31, 2010. |
To our knowledge, there are no voting trusts or similar
arrangements among any of the foregoing persons or entities with
respect to the voting of shares of Common Stock.
3
PROPOSAL ONE
ELECTION
OF DIRECTORS
Our Amended and Restated By-Laws provide for a Board of
Directors that is divided into three classes. The term of the
Class I Directors expires at the 2012 Annual Meeting, the
term of the Class II Directors expires at the 2010 Annual
Meeting and the term of the Class III Directors expires at
the 2011 Annual Meeting. Cristina H. Amon, Richard S. Chute and
Peter R. Hanley are currently proposed for election to serve as
Class II Directors for a term to expire at the 2013 Annual
Meeting. Each nominee has consented to being named herein, and,
if elected, to serve as a director until his or her successor is
duly elected and qualified.
Shares represented by all proxies received by the Board of
Directors and not so marked as to withhold authority to vote for
an individual director will be voted (unless one or more
nominees are unable or unwilling to serve) for the election of
the nominees named below. The Board of Directors expects that
each of the nominees named below will be available for election,
but if any of them is not a candidate at the time the election
occurs, it is intended that such proxies will be voted for the
election of a substitute nominee to be designated by the Board
of Directors.
BOARD
RECOMMENDATION
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE ELECTION
OF CRISTINA H. AMON, RICHARD S. CHUTE AND PETER R. HANLEY TO
SERVE AS CLASS II DIRECTORS IS IN THE BEST INTERESTS OF MKS
AND OUR SHAREHOLDERS AND THEREFORE RECOMMENDS A VOTE
FOR THIS PROPOSAL.
4
DIRECTORS
Set forth below are the names and ages of each member of our
Board of Directors (including those who are nominees for
election as Class II Directors) and the positions and
offices held, principal occupation and business experience
during the past five years, the names of other publicly held
companies of which the individual currently serves, or in the
past five years has served, as a director and the year of
commencement of the term as our director. We have also included
information about each directors specific experience,
qualifications, attributes, or skills that led the Board of
Directors to conclude that he or she should serve as a director
of MKS. Information with respect to the number of shares of
Common Stock beneficially owned by each director, directly or
indirectly, as of January 31, 2010, appears in this proxy
statement under the heading Security Ownership of Certain
Beneficial Owners and Management.
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Class to Which
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Name
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Age
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Position
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Director Belongs
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John R. Bertucci
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69
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Director, Chairman
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III
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*Cristina H.
Amon(2)
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53
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Director
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II
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Robert R.
Anderson(1)(3)
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72
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Director
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III
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Gregory R.
Beecher(1)
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52
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Director
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III
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Leo Berlinghieri
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56
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Director, Chief Executive Officer and President
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*Richard S.
Chute(2)
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71
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Director, Secretary
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II
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*Peter R.
Hanley(3)
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70
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Director
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II
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Hans-Jochen
Kahl(2)
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70
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Director
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Louis P.
Valente(1)(3)
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79
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Director
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Member of Audit Committee |
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(2) |
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Member of Nominating and Corporate Governance Committee |
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(3) |
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Member of Compensation Committee |
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Nominee for election at this meeting |
John R.
Bertucci
Mr. Bertucci has served as our director since 1974, and has
been Chairman of the Board of Directors since November 1995.
Mr. Bertucci served as Executive Chairman from July 2005
until December 2006. In connection with his retirement as
Executive Chairman, Mr. Bertucci was available for
consultation with us for up to ten hours per month until
December 2007. Mr. Bertucci served as our Chief Executive
Officer from November 1995 to July 2005 and served as President
from 1974 to May 1999 and again from November 2001 to April
2004. From 1970 to 1974, he was our Vice President and General
Manager. Mr. Bertucci holds an M.S. in Industrial
Administration and a B.S. in Metallurgical Engineering from
Carnegie Mellon University. Mr. Bertucci has served as a
member of the Board of Trustees of Carnegie Mellon University
since May 2002, serving as Chairman from February 2005 to
February 2007. He has also served as a member of the Executive
Board of The Massachusetts High Technology Council since
February 1999 and also serves as a member of the Board of
Trustees or the Board of Directors of three non-profit
organizations. Mr. Bertuccis over 30 years of
experience working for MKS, including a combined 28 years
as President, gives him a unique and valuable insight into the
challenges and strategies relevant to the semiconductor industry
as a whole, and to our Company in particular.
Cristina
H. Amon
Ms. Amon has served as our director since 2007. She has
served as the Dean, faculty of Applied Science and Engineering,
Alumni Chair Professor of Bioengineering and a member of the
Department of Mechanical and Industrial Engineering at the
University of Toronto since July 2006. Prior to that,
Ms. Amon served at Carnegie Mellon University, as Director
of the Institute for Complex Engineered Systems from September
1999 until July 2006, and was a Raymond Lane Distinguished
Professor, Mechanical Engineering and Biomedical Engineering
5
from September 2001 until July 2006. In her roles at the
University of Toronto and Carnegie Mellon, Ms. Amon has
lead research in micro-fabrication, sustainable energy, thermal
management of electronics and nano-scale transport in silicon
thin films. Ms. Amon has served as Executive Board Member
of the American Society Engineering Education (ASEE),
Engineering Deans Council since 2007, served as the Nominating
Committee Chair for the American Association for the Advancement
of Science (AAAS) from 2006 to 2007, has served as an Executive
Board Member of the American Society of Mechanical Engineers
(ASME), Electronic and Photonic Packaging division since 2001,
served on the External Advisory Board for the Department of
Mechanical and Aerospace Engineering at the University of Texas
since 2001, served on the External Advisory Board for the NSF
CREST Center for Mesoscopic Modeli Simulation at the City
University of New York, The City College from 2001 to 2007, and
has served as the Chair of the Global Engineering Deans Council
(GEDC) since 2008. She has been a member of the National Academy
of Engineering (NAE) and Fellow from 1999 to 2009 and of AAAS,
ASEE, ASME, EIC, IEEE and CAE since 2006. Ms. Amons
extensive engineering background, particularly in
microfabrication, thermal management and silicon thin-films,
provides the Board of Directors with a technical perspective and
insight into the challenges and opportunities we face.
Robert R.
Anderson
Mr. Anderson has served as our director since January 2001.
Mr. Anderson is a private investor. From October 1998 to
April 2000, Mr. Anderson served as CEO of Yield Dynamics,
Inc., a private semiconductor control software company, which
was acquired by MKS in 2007. Mr. Anderson served as CEO of
Silicon Valley Research, Inc., a semiconductor design automation
software company, from December 1996 to August 1998 and as
Chairman from January 1994 to January 2001. Mr. Anderson
was co-founder, Chief Financial Officer and Chief Operating
Officer of KLA Instruments, a supplier of process control and
yield management solutions for the semiconductor and related
nanoelectronics industries, from 1975 through 1994. He was Chief
Financial Officer of Computervision from 1970 through 1975.
Mr. Anderson has served as the President and a director of
a private family foundation since September 2000. He has also
served as a director of Aehr Test Systems, Inc., a manufacturer
of semiconductor test and burn-in equipment, since October 2000,
and currently serves on Aehrs audit and compensation
committees. He has also served as a director of Energetiq
Technology, Inc., a privately held company, since May 2005.
Mr. Anderson served as a director of Yield Dynamics from
October 1998 to December 2003, serving as its Chairman from
October 1998 to October 2000. In addition, he served as a
director of NPL, Inc. from 2000 to January 2005, as a director
of Trikon Technologies from 1998 to December 2005, and a
director of Aviza Technology, Inc. from December 2005 to March
2009. Mr. Anderson has served on over 18 public and private
boards, and has served as CFO, CEO and Chairman of several
public corporations. His extensive business experience,
particularly within the semiconductor industry, provides him
with insight into the challenges we face within the industry. In
addition, his financial acumen is a valued asset in his role as
a member of our Audit Committee.
Gregory
R. Beecher
Mr. Beecher has served as our director since August 2006.
Mr. Beecher has served as CFO of Teradyne, Inc., a
semiconductor and system level test equipment provider, since
2001. He is a certified public accountant, and was an audit
partner with PricewaterhouseCoopers LLP from October 1993 to
March 2001, working with numerous semiconductor equipment and
instrument providers, along with other technology-related
enterprises, and advising on complex accounting issues.
Mr. Beecher served as a director, and Chairman of the Audit
Committee, of MatrixOne, from 2004 through 2006.
Mr. Beecher has an M.S. in accounting.
Mr. Beechers extensive financial background,
including his previous experience at a public accounting firm,
and his current role as CFO of a public corporation, provide
valuable insight to the Board of Directors and the Audit
Committee.
Leo
Berlinghieri
Mr. Berlinghieri has served as our director and as our
Chief Executive Officer and President since July 2005. He
previously served as our President and Chief Operating Officer
from April 2004 to July 2005, and as our Vice President and
Chief Operating Officer from July 2003 until April 2004. From
November 1995 to July 2003, he served as our Vice President,
Global Sales and Service. From 1980 to November 1995, he served
in various
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management positions of MKS, including Manufacturing Manager,
Production and Inventory Control Manager, and Director of
Customer Support Operations. Mr. Berlinghieri has served as
a director of Rudolph Technologies, Inc. since September 2008.
Mr. Berlinghieris over 30 years of experience
within the Company give him particularly deep insight into the
organization, which is extremely valuable to the Board of
Directors.
Richard
S. Chute
Mr. Chute has served as our director since 1974.
Mr. Chute was a member of the law firm of Hill &
Barlow, a Professional Corporation, from 1971 to January 2003,
with an extensive corporate practice, and is currently an
attorney in private practice. Mr. Chute has served as a
director and a member of the Administration and Finance
Committee of Massachusetts Audubon Society, Inc. since October
2004, and has also served as a director and member of the
Nominating Committee of Manomet, Inc. since November 1993. He
has served on over 15 other non-profit and private company
boards. Mr. Chutes vast legal experience provides him
with a unique perspective, which is particularly valuable in
Mr. Chutes current roles as Secretary of the Company
and as Chairman of the Nominating and Corporate Governance
Committee.
Peter R.
Hanley
Mr. Hanley has served as our director since March 2008.
Since December 2009, Mr. Hanley has served as an occasional
litigation support consultant to Novellus Systems, Inc., a
leading developer of semiconductor manufacturing equipment.
Mr. Hanley was engaged as an independent consultant to
Novellus, focusing on customer sales strategies and executive
training from 2008 to 2009. From January 2004 until December
2007, Mr. Hanley served as a part-time employee of
Novellus, engaged primarily in executive training.
Mr. Hanley served as President of Novellus from May 2001 to
December 2003. Prior to that, he served as Novellus
Executive Vice President of Worldwide Sales from June 1992 until
May 2001. Prior to joining Novellus, Mr. Hanley served from
1985 to 1992 at Applied Materials, Inc., a leader in the
semiconductor capital equipment industry, most recently as Group
Vice President of Worldwide Sales and Service and previously as
Vice President and General Manager of their Etch Products
Division. Before joining Applied Materials, Mr. Hanley
served from 1978 to 1984 at Varian Associates, a leader in the
semiconductor capital equipment industry, most recently as Vice
President of Technology and previously as Vice President and
General Manager of their Extrion Ion Implantation Division.
Mr. Hanley has served as a director of Crossing Automation
since January 2010, and has served as a director of a non-profit
organization since 2008. From 2004 to May 2007, Mr. Hanley
served as a director of Thermawave, Inc., a developer of process
control metrology systems used in the manufacture of
semiconductors, which was sold to KLA Tencor.
Mr. Hanleys substantial background in the
semiconductor industry, for more than 25 years, including
senior management roles at Novellus and Applied Materials, two
of MKS largest customers, provides the Board of Directors
with invaluable insights into the industrys sales and
marketing challenges and opportunities.
Hans-Jochen
Kahl
Mr. Kahl has served as our director since January 2001.
From June 1994 through September 1996, Mr. Kahl served as a
consultant to Ebara, a Japanese manufacturer of industrial water
pumps and vacuum process equipment for the semiconductor
industry. Mr. Kahl was employed by Leybold AG, formerly
Leybold-Heraeus GmbH, a leading international manufacturer of
vacuum pumps and other vacuum process equipment for the
semiconductor industry, from July 1983 to March 1992, where he
served as a managing director and was primarily responsible for
sales, marketing and strategic planning. From September 1995 to
November 2000, he was a director of Applied Science and
Technology, Inc. (ASTeX) which was acquired by MKS.
Mr. Kahl has served as a director of Solid State
Management, a privately held manufacturer of high precision
measurement tools since November 1996. Mr. Kahls
widespread experience in the semiconductor industry provides him
with valuable insight into the operational and strategic issues
facing our industry.
Louis P.
Valente
Mr. Valente has served as our director since February 1996.
Mr. Valente has served as Chairman of Palomar Medical
Technologies, Inc., a company which designs, manufactures and
markets cosmetic lasers, since September 1997. He has been a
director of Palomar Medical Technologies, Inc. since February
1997 and was its President and
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Chief Executive Officer from May 1997 to May 2002. From 1968 to
1995, Mr. Valente held numerous positions at Perkin Elmer,
Inc. (formerly EG&G, Inc.), a provider of drug discovery,
research and clinical screening products, services and
technologies for the life science industry. Initially, he was an
Assistant Controller and later Corporate Treasurer, before
becoming Senior Vice President of EG&G, Inc., presiding
over and negotiating acquisitions, mergers and investments.
Mr. Valente has served as a director of Medical Information
Technology, Inc. since 1972. He served as a director of
Surgilight, Inc., from July 2001 to October 2008, and as a
director of Patient Care Technologies, Inc. from 1992 to April
2007. Mr. Valente is a certified public accountant and a
graduate of Bentley University. Mr. Valentes
experience at the helm of a public corporation, in addition to
his extensive acquisition and financial background, offers the
Board of Directors a combination of valuable skill sets.
Agreements
as to Nomination
Mr. Bertucci resigned from his employment with MKS
effective December 31, 2006. Mr. Bertuccis
employment agreement provided that if Mr. Bertucci resigned
from his employment, then, subject to applicable law, our
Amended and Restated By-Laws and articles of organization and
the directors fiduciary duties, the Board of Directors
shall nominate Mr. Bertucci for election as a
Class III director and consider Mr. Bertucci for
appointment as Chairman of the Board of Directors, until such
time as Mr. Bertucci is no longer eligible for nomination
as a director.
CORPORATE
GOVERNANCE
Board
Independence
The Board of Directors has determined that all of the members of
the Board of Directors, other than Mr. Bertucci and
Mr. Berlinghieri, are independent as defined under the
rules of the NASDAQ Stock Market.
In determining Mr. Hanleys independence, the Board of
Directors considered Mr. Hanleys past and current
relationship with Novellus, a significant customer of MKS. The
Board of Directors considered such factors including, but not
limited to, the fact that Mr. Hanley is not a significant
shareholder of Novellus and has not been an executive officer of
Novellus since December 2003, and that Mr. Hanleys
current role and compensation as an occasional consultant to
Novellus does not relate in any way to relationships with that
companys suppliers in general or with us in particular.
Board
Leadership Structure
Since 2005, we have separated the roles of CEO and Chairman of
the Board of Directors in recognition of the differences between
the two roles. The CEO is responsible for setting the strategic
direction for the Company and the day-to-day leadership and
performance of the Company, while the Chairman of the Board of
Directors provides guidance to the CEO, sets the agenda for
Board meetings and presides over meetings of the full Board.
In addition, the Board of Directors has established the position
of Lead Director. Our Corporate Governance Guidelines provide
that during any period in which the Chairman of the Board of
Directors is not an independent director, a Lead Director shall
be elected by and from the independent directors. The primary
role of the Lead Director is to serve as a liaison between the
independent directors and the Chairman of the Board of Directors
and the Chief Executive Officer and to represent the interest of
the independent directors, as appropriate. Louis P. Valente was
elected the first Lead Director in 2008, and was reappointed in
2009. Pursuant to our Corporate Governance Guidelines (which are
posted on our website at www.mksinstruments.com in the Corporate
Governance Section under the Investors tab), the Lead Director
shall, among other matters:
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Have the authority to call meetings of the independent directors.
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Preside at all meetings of the Board of Directors at which the
Chairman of the Board of Directors is not present, including
executive sessions of the independent directors.
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Assure that at least two meetings per year of only the
independent directors are held and chair any such meetings of
the independent directors.
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Facilitate communications and serve as a liaison between the
independent directors and the Chairman of the Board of Directors
and the Chief Executive Officer, provided that any director is
free to communicate directly with the Chairman of the Board of
Directors and with the Chief Executive Officer.
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Work with the Chairman of the Board of Directors and the Chief
Executive Officer in the preparation of the agenda for each
Board of Directors meeting and approve each such agenda.
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Oversee, in conjunction with the Nominating and Corporate
Governance Committee, the annual reviews of the performances of
the members of the Board of Directors.
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If a meeting is held between a major stockholder and a
representative of the independent directors, the Lead Director
shall serve, subject to availability, as such representative of
the independent directors.
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Otherwise consult with the Chairman of the Board of Directors
and the Chief Executive Officer on matters relating to corporate
governance and performance of the Board of Directors.
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Our Board of Directors believes that its leadership structure is
appropriate because it strikes an effective balance between
management and independent leadership participation in the Board
of Directors process.
Boards
Role in Risk Oversight
Management is responsible for the
day-to-day
management of risks the Company faces, while the Board of
Directors, as a whole and through its committees, has the
ultimate responsibility for the oversight of risk management.
Senior management attends quarterly meetings of the Board of
Directors, provides presentations on operations including
significant risks, and is available to address any questions or
concerns raised by the Board of Directors. Additionally, our
three board committees assist the Board of Directors in
fulfilling its oversight responsibilities in certain areas of
risk. Pursuant to its charter, the Audit Committee coordinates
the Board of Directors oversight of the Companys
internal control over financial reporting, disclosure controls
and procedures and code of conduct. Management regularly reports
to the Audit Committee on these areas. The Compensation
Committee assists the Board of Directors in fulfilling its
oversight responsibilities with respect to the management of
risks arising from our compensation policies and programs as
well as succession planning as it relates to our Chief Executive
Officer. The Nominating and Corporate Governance Committee
assists the Board of Directors in fulfilling its oversight
responsibilities with respect to the management of risks
associated with board organization, membership and structure,
succession planning for our directors and corporate governance.
When any of the committees receives a report related to material
risk oversight, the Chairman of the relevant committee reports
on the discussion to the full Board of Directors.
Board of
Director Meetings and Committees of the Board of
Directors
The Board of Directors held four meetings in 2009. Each director
attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of
meetings of all committees of the Board of Directors on which he
or she served. Pursuant to our Corporate Governance Guidelines,
directors are encouraged to attend annual meetings of
shareholders. All of the directors then serving on the Board of
Directors other than Mr. Kahl attended the 2009 Annual
Meeting of Shareholders.
The Board of Directors has established three standing
committees Audit, Compensation and Nominating and
Corporate Governance each of which operates under a
charter that has been approved by the Board of Directors. Each
committees current charter is posted under the Investors
tab on our website, www.mksinstruments.com, under the heading
Corporate Governance.
Audit
Committee
The Audit Committee consists of Messrs. Anderson, Beecher
(Chairman) and Valente. The Audit Committees
responsibilities include:
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appointing, approving the fees of and assessing the independence
of, our independent registered public accounting firm;
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overseeing the work of our independent registered public
accounting firm, including through the receipt and consideration
of certain reports from the independent registered public
accounting firm;
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reviewing and discussing our annual audited financial statements
and related disclosures with management and the independent
registered public accounting firm;
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reviewing our quarterly unaudited financial statements;
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coordinating oversight of our internal control over financial
reporting, disclosure controls and procedures and code of
business conduct and ethics;
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overseeing our internal audit function;
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establishing procedures for the receipt and retention of
accounting related complaints and concerns;
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meeting independently with our internal auditing staff,
independent registered public accounting firm and management;
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reviewing any related party transactions; and
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preparing the Audit Committee report required by SEC rules
(which is included on page 32 of this proxy statement).
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The Audit Committee held five meetings in 2009.
Compensation
Committee
The Compensation Committee consists of Messrs. Anderson
(Chairman), Hanley and Valente. The Compensation
Committees responsibilities include:
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determining the CEOs compensation;
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reviewing and approving, or making recommendations to the Board
of Directors with respect to, the compensation of our other
executive officers;
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CEO succession planning;
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annually reviewing and approving our management incentive bonus
plan;
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reviewing the Compensation Discussion and Analysis required to
be included in the annual proxy statement;
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overseeing and administering our equity incentive plans; and
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reviewing and making recommendations to the Board of Directors
with respect to director compensation.
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The Compensation Committee held three meetings in 2009.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee consists of
Ms. Amon and Messrs. Chute (Chairman) and Kahl. The
Nominating and Corporate Governance Committees
responsibilities include:
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identifying individuals qualified to become members of the Board
of Directors;
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recommending to the Board of Directors the persons to be
nominated for election as directors and to each of the
Boards committees; and
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developing and recommending corporate governance principles to
the Board of Directors.
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The Nominating and Corporate Governance Committee also oversees
the annual self-evaluations of the Board of Directors and each
of the Board of Directors committees. The Nominating and
Corporate Governance Committee held two meetings in 2009.
For information relating to the nomination of directors, see
Director Candidates below.
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Audit
Committee Financial Expert
The Board of Directors has determined that each of the three
members of the Audit Committee is an audit committee
financial expert as defined in Item 407(d)(5) of
Regulation S-K.
Director
Candidates
The Nominating and Corporate Governance Committee recommended to
the Board of Directors that the director nominees be nominated
by the Board of Directors for election as Class II
directors. The process followed by the Nominating and Corporate
Governance Committee to identify and evaluate director
candidates includes requests to Board members and others for
recommendations, meetings from time to time to evaluate
biographical information and background material relating to
potential candidates and interviews of selected candidates by
the Committee members of the Committee and the Board of
Directors.
In considering whether to recommend any particular candidate for
inclusion in the Board of Directors slate of recommended
director nominees, the Nominating and Corporate Governance
Committee applies the criteria attached to the Committees
charter. These criteria include the candidates integrity,
business acumen, knowledge of our business and industry,
experience, diligence, conflicts of interest and the ability to
act in the interests of all shareholders. Nominees should
generally be under the age of 75 at the time of nomination. The
Committee does not assign specific weights to particular
criteria and no particular criterion is a prerequisite for each
prospective nominee. Nominees shall not be discriminated against
on the basis of race, religion, national origin, sex, sexual
orientation, disability or any other basis prescribed by law. In
considering director candidates, the Committee takes into
account the value of diversity on the Board. While the
Nominating and Corporate Governance Committee does not have a
formal policy with respect to diversity, the Board and the
Committee believe that it is essential that the Board members
represent diverse viewpoints. In considering candidates for the
Board, the Nominating and Corporate Governance Committee
considers the entirety of each candidates credentials in
the context of these standards. We believe that the backgrounds
and qualifications of our directors, considered as a group,
should provide a composite mix of experience, knowledge and
abilities that will allow the Board of Directors to fulfill its
responsibilities.
Shareholders may recommend individuals to the Nominating and
Corporate Governance Committee for consideration as potential
director candidates by submitting their names, together with
appropriate biographical information and background materials
and a statement as to whether the shareholder or group of
shareholders making the recommendation has beneficially owned
more than 5% of our Companys Common Stock for at least a
year as of the date such recommendation is made, to the
Nominating and Corporate Governance Committee, in care of
Kathleen F. Burke, Esq., General Counsel, MKS Instruments,
Inc., 2 Tech Drive, Suite 201, Andover, MA 01810. Assuming
that appropriate biographical and background material has been
provided on a timely basis, the Nominating and Corporate
Governance Committee will evaluate shareholder-recommended
candidates by following substantially the same process, and
applying the same criteria, as it does in considering other
candidates.
Shareholders also have the right under our Amended and Restated
By-Laws to directly nominate director candidates, without any
action or recommendation on the part of the Nominating and
Corporate Governance Committee or the Board of Directors, by
following the procedures set forth under the heading
Deadline for Submission of Shareholder Proposals for the
2010 Annual Meeting below.
Communications
from Shareholders
The Board of Directors will give appropriate attention to
written communications that are submitted by shareholders, and
will respond if appropriate. The Chairman of the Nominating and
Corporate Governance Committee, with the assistance of our
General Counsel, is primarily responsible for monitoring
communications from shareholders and for providing copies or
summaries to the other directors as he considers appropriate.
Communications are forwarded to all directors if they relate to
important substantive matters and include suggestions or
comments that the Chairman of the Nominating and Corporate
Governance Committee considers to be important for the directors
to know. In general, communications relating to corporate
governance and long-term corporate strategy are more likely to
be forwarded than communications relating to ordinary business
affairs, personal grievances and matters as to which we tend to
receive repetitive or duplicative communications.
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Shareholders who wish to send communications on any topic to the
Board of Directors should address such communications to the
Board of Directors in care of Kathleen F. Burke, Esq.,
General Counsel, MKS Instruments, Inc., 2 Tech Drive,
Suite 201, Andover, MA 01810.
Code of
Ethics
We have adopted a written code of business conduct and ethics
that applies to all of our directors, officers and employees
(including the principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions), which is posted in the Investors
tab on our website, www.mksinstruments.com, under the heading
Corporate Governance. We intend to disclose any amendments to,
or waivers from, our code of business conduct and ethics on our
website.
Compensation
Committee Interlocks and Insider Participation
In 2009, the Compensation Committee was comprised of
Messrs. Anderson, Hanley and Valente. In addition,
Mr. Kahl served on the Compensation Committee until
May 4, 2009. None of the members of the Compensation
Committee during 2009 were, at any time, officers or employees
of MKS or our subsidiaries, and none of them had any
relationship with us requiring disclosure under Item 404 of
Regulation S-K
under the Securities Exchange Act of 1934, as amended. None of
our executive officers serves, or has served, as a member of the
Board of Directors or Compensation Committee (or other committee
serving an equivalent function) of any other entity which has
one or more executive officers serving as a member of our Board
of Directors or Compensation Committee.
EXECUTIVE
OFFICERS
The following is a brief summary of the background of each of
our current executive officers, other than
Mr. Berlinghieri, whose background is described under the
heading Directors above:
Seth H.
Bagshaw, Vice President and Chief Financial Officer,
Age 50
Mr. Bagshaw has served as our Vice President and Chief
Financial Officer since January 2010. From March 2006 until
January 2010, Mr. Bagshaw served as our Vice President and
Corporate Controller. Prior to joining MKS, Mr. Bagshaw
served as Vice President and Chief Financial Officer of Vette
Corp., an integrated global supplier of thermal management
systems from 2004 until 2006. From 1999 until 2004,
Mr. Bagshaw served as Vice President and Corporate
Controller of Varian Semiconductor Equipment Associates, Inc., a
leading producer of ion implantation equipment used in the
semiconductor manufacturing industry, and from 1998 until 1999,
he served as Vice President and Chief Financial Officer of Palo
Alto Products International, Inc., an industrial design,
engineering and manufacturing company, until its acquisition by
Flextronics International, Ltd. Prior to that, Mr. Bagshaw
held several senior financial management positions at Waters
Corporation, a developer of innovative analytical science
solutions, most recently as Vice President and Chief Financial
Officer of its Asia-Pacific region, and was a Senior Manager at
PricewaterhouseCoopers LLC. Mr. Bagshaw is a Certified
Public Accountant and has a B.S. in Business Administration from
Boston University and an M.B.A. from Cornell University.
Gerald G.
Colella, Vice President, Chief Operating Officer and Acting
Group VP, PRG Products, Age 53
Mr. Colella has served as our Vice President and Chief
Operating Officer since January 2010 and in addition he has
served as Acting Group Vice President, PRG Products since July
2007. Prior to that, Mr. Colella served as our Vice
President and Chief Business Officer since April 2005. From
October 1997 to April 2005, he served as our Vice President,
Global Business and Service Operations, from March 1996 to
October 1997, he served as our Director of Materials Planning
and Logistics, and from 1994 to 1996, he served as our Materials
Planning and Logistics Manager. Mr. Colella joined MKS in
1983. He holds an M.B.A. from Southern New Hampshire University,
as well as a B.A. in Secondary Education from the University of
Massachusetts.
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John T.C.
Lee, Group Vice President, CIT Products, Age 47
Dr. Lee has served as our Group Vice President, CIT
Products since October 2007. Prior to joining us, Dr. Lee
served as the Managing Director of Factory Technology and
Projects within the Solar Business Group at Applied Materials,
Inc., a global leader in nanomanufacturing and technology
solutions, from February 2007 until October 2007. From 2002
until 2007, he served as General Manager of the Cleans Product
Group and the Maydan Technology Center at Applied Materials.
Prior to Applied Materials, Dr. Lee served from 1997 until
2002 as the Research Director of the Silicon Fabrication
Research Department at Lucent Technologies, a voice, data and
video communications provider, and from 1991 until 1997 as a
Member of Technical Staff in the Plasma Processing Research
Group within Bell Labs. Dr. Lee holds a Ph.D. in Chemical
Engineering from the Massachusetts Institute of Technology.
John A.
Smith, Vice President and Chief Technology Officer,
Age 59
Dr. Smith has served as our Vice President and Chief
Technology Officer since January 2005. From December 2002 to
January 2005, Dr. Smith served as Vice President of
Technology and General Manager of the Instruments and Control
Systems Product Group, which comprises Pressure Measurement and
Control, Materials Delivery, Gas Composition and Analysis, and
Control and Information Technology products. Prior to this
position, Dr. Smith served as Vice President and General
Manager of Materials Delivery Products and Advanced Process
Control, from February 2002 to December 2002. From July 1994
until February 2002, he was Managing Director of MKS
Instruments, U.K. Ltd. Dr. Smith has a Ph.D. in electronic
engineering from the University of Manchester, U.K.
William
D. Stewart, Group Vice President, Vacuum Products and PFM&C
Products, Age 65
Mr. Stewart has served as our Group Vice President, Vacuum
Products and PFM&C Products since January 2009. From 1997
to January 2009, he was Vice President and General Manager,
Vacuum Products Group and from 1986 to 1997, he was President of
HPS Products, which we acquired in 1986. Mr. Stewart
co-founded HPS in 1976. Mr. Stewart has an M.B.A. from
Northwestern University and a B.S. in Business Administration
from the University of Colorado. Mr. Stewart also serves on
the Board of Directors of the Janus Funds.
Ronald C.
Weigner, Vice President of Finance and Treasurer,
Age 64
Mr. Weigner has served as our Vice President of Finance
since January 2010, and has served as our Treasurer since
February 2009. From November 1995 to December 2009, he served as
our Vice President and Chief Financial Officer. From September
1993 until November 1995, he served as Vice President and
Corporate Controller, and from 1980 to 1993, he served as
Corporate Controller. Mr. Weigner is a certified public
accountant and has a B.S. in Business Administration from Boston
University.
Our executive officers are appointed by the Board of Directors
on an annual basis and serve until their successors are duly
appointed and qualified. There are no family relationships among
any of our executive officers or directors.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Compensation
Philosophy and Objectives
The primary objective of our executive compensation program is
to attract, retain and motivate the critical talent that is
required to execute our business strategy and lead us to achieve
our long-term growth and earnings goals. This section summarizes
our compensation philosophy and objectives relating to our
principal executive officer, principal financial officer, and
each of the three other most highly compensated executive
officers (collectively, the Named Executive
Officers).
As addressed in greater detail below, as part of our effort to
reduce costs during the recent economic slowdown, beginning in
2008 and continuing into the first half of 2009, the
Compensation Committee temporarily reduced the
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salaries of our Named Executive Officers from their respective
2008 levels. Similarly, in 2009, the Compensation Committee
decreased the number of shares typically subject to the Named
Executive Officers annual equity grants and did not
implement a Management Incentive Bonus Plan for Named Executive
Officers. In addition, Named Executive Officers shared in
corporate-wide cost-saving measures such as mandatory corporate
shut-downs, and the temporary cessation of employee stock
purchase plans and 401(k) corporate matches. It is the
Companys philosophy that during severe downturns, the
Companys executive officers should share in the corporate
belt-tightening. On October 29, 2009, with signs of some
recovery in the semiconductor industry, the temporary salary
reductions of the Named Executive Officers were lifted, and
salaries were returned to their original 2008 levels,
retroactive to July 1, 2009.
Our executive compensation program is guided by the following
principles:
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Offer compensation programs that are competitive with programs
at companies of similar size and in a similar industry.
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Reward individual initiative, leadership and achievement.
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Provide short-term annual performance bonus incentives for
management to meet or exceed our earnings goals.
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Provide long-term equity incentive compensation, such as stock
options, restricted stock and restricted stock units, or RSUs,
to encourage management to focus on shareholder return.
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Emphasize our
pay-for-performance
philosophy.
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The Companys executive compensation program is designed to
provide an overall compensation package that is competitive, on
a
position-by-position
basis, when benchmarked against that of comparable companies,
while factoring in an executives individual performance,
tenure and potential with the Company. The differentiation in
compensation among the executive officers reflects the relative
value that the market places on these positions, as well as each
individuals performance, tenure and potential with the
Company. Our goal is to use executive compensation programs to
closely align the interests of our management with the interests
of shareholders so that our management has incentives to achieve
short-term performance goals while building long-term value for
our shareholders. We will review our executive compensation
programs from time to time in order to determine their
competitiveness, and to take into account factors that are
unique to us.
Elements
of Compensation
The following summarizes the compensation elements for our Named
Executive Officers. We benchmark each of the various
compensation elements, including salary, short-term incentives,
and long-term incentives, to the median levels for the
individual position in the market. In considering the
compensation of an executive relative to the market level, we
look qualitatively at the individuals overall performance,
tenure and potential with the Company. Currently, not taking
into account the temporary salary reductions in effect, all of
our Named Executive Officers are paid in the range of, or
slightly below the range of, their competitive market.
Base
Salary
Base salaries are designed to provide executives with a level of
predictability and stability with respect to a portion of their
total compensation package. In establishing base salaries for
executive officers, the Compensation Committee considers the
executives responsibilities, performance, historical
salary levels, internal equity among executives and the base
salaries of executives at comparable companies and, with respect
to salaries other than that of the Chief Executive Officer, the
Chief Executive Officers recommendations. As part of our
effort to reduce costs during the recent economic slowdown, the
Compensation Committee temporarily reduced the salaries of our
Named Executive Officers through the first half of 2009. In
August 2008, the base salary of Mr. Berlinghieri, our
President and Chief Executive Officer, was temporarily decreased
by 10% and the base salaries of the other Named Executive
Officers were decreased by 5%. In January 2009, the Compensation
Committee further reduced the base salary of
Mr. Berlinghieri, resulting in an aggregate reduction of
20% from its original 2008 level, and further reduced the
salaries of the other Named Executive Officers, resulting in an
aggregate reduction of 10% from their
14
respective original 2008 levels. The Compensation Committee
sought to make the temporary reductions reasonable in light of
the economic circumstances, in order to align Named Executive
Officers incentives with the interests of shareholders,
while not sacrificing the retentive value of the overall
long-term compensation package. On October 19, 2009, the
temporary reductions were lifted, and salaries were returned to
their original 2008 levels, retroactive to July 1, 2009.
Short-term
Incentives
Our Management Incentive Bonus Plan provides a short-term
incentive to reward management for reaching our overall earnings
goals and those of certain product groups and to reinforce our
pay-for-performance
philosophy. We believe that our bonus plan provides significant
incentive to the executive officers to exceed our financial
goals. Because of the unique market conditions in 2009 caused by
the global economic crisis, we elected not to implement our
Management Incentive Bonus Plan in 2009. However, in typical
years, each executive would be eligible for an annual
performance bonus calculated based on a specified target
percentage of base salary, called an Individual Incentive
Target. In 2008, the Individual Incentive Targets were
100% of base salary for Mr. Berlinghieri, 65% of base
salary for Mr. Colella, 55% of base salary for Mr. Lee
and 50% of base salary for Messrs. Smith and Weigner. The
maximum bonus payout possible was 200% of this Individual
Incentive Target and the minimum payout was zero, with
incremental pay-outs for performance between these levels. For
Named Executive Officers other than Mr. Lee, annual
performance bonuses were based solely upon achievement of
specific corporate pro-forma, pre-tax earning goals. In 2008,
participants would not receive any portion of their
corporate-based bonus if the Companys operating income
after bonus and before tax was $80,000,000 or less, and
participants would receive the maximum amount of their
corporate-based bonus if such pro-forma operating income was
$227,666,000 or more.
Historically, for executives who headed up a product group, a
portion of the bonus would be tied to product group targets. For
example, for Mr. Lee, who is the Vice President of a
product group, 70% of his 2008 bonus was based on the
achievement of the corporate objective, while 30% was based on
the achievement of annual earnings goals for his product group.
Achievement of the product group based portion of the bonus has
fluctuated significantly in the years since these incentives
were first initiated. In 2010, the Company decided to eliminate
the product group target portion of the bonus for executives
focusing solely on the corporate objective, which the Company
believes eliminates complexity and more closely aligns all
executives interests with those of the shareholders.
The corporate element of the bonus plan formula is calculated as
follows:
Base Salary x Individual Incentive Target x Corporate
Performance Multiplier
The Corporate Performance Multiplier in 2008 and in
2010 ranged from 0% for achievement below the specified minimum
corporate goal, up to 200% for achievement of the maximum
corporate goal. Accordingly, the maximum payout possible for
each executive was 200% of his Individual Incentive Target and
the minimum payout was zero, with incremental payouts for
performance between these levels.
For 2008, the most recent year that we had an active Management
Incentive Bonus Plan, the minimum threshold targets were not
achieved and we paid no bonus to the Named Executive Officers.
Since institution of the Management Incentive Bonus plan,
achievement has varied widely, from no payment to the full 200%.
The average achievement of the plan from its institution in 1997
through 2008 is approximately 65%. While the Company endeavors
to set reasonable, but challenging targets for the plan each
year, consistent achievement is particularly challenging in the
semiconductor industry, which is subject to wide, and often
unpredictable demand shifts.
Long-Term
Incentive Compensation
We provide executives with long-term incentive compensation, in
the form of stock options, restricted stock and RSUs in order to:
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Align executives interests with those of the shareholders
by allowing executives to share in appreciation in the value of
our Common Stock.
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15
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Balance the short-term focus of annual short-term incentive
compensation with a longer term reward for appreciating our
value.
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Retain executives because equity-based compensation vests over
time.
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Prior to 2006, we issued primarily stock options. In 2006, we
issued restricted stock and in 2007, we began to issue RSUs. We
believe that RSUs are attractive because they help ensure
executives interests are aligned with shareholders in both
a rising and a declining stock market. We believe RSUs are
preferable to options, which have a relatively high accounting
cost as compared to their potential value to the executive and
preferable to restricted stock, which gives the executive voting
rights prior to full vesting. The Named Executive Officers
receive at least half of their total equity grant value in the
form of performance-based RSUs and the remainder in the form of
time-based RSUs, to further our
pay-for-performance
philosophy. Typically, the performance objectives for our equity
grants relate to corporate operating income objectives. However,
in 2009, due to the unusual economic conditions, our performance
objectives related to achievement of 2009 corporate cash
break-even levels to motivate executives to control costs during
the downturn. Our RSUs vest in equal annual installments over
three years, subject to achievement of the performance goal with
respect to the performance-based portion.
When establishing equity grant levels, the Compensation
Committee considers general corporate performance and material
economic conditions, comparable company grants to comparable
executives, executive seniority and experience, the dilutive
impact of the grants, previous grant history for each executive,
vesting schedules of outstanding equity-based grants, the
current stock price and individual contributions to our
financial, operational and strategic objectives and, with
respect to grants made to individuals other than the Chief
Executive Officer, the Chief Executive Officers
recommendations.
It is our practice to make an initial equity-based grant to all
executives at the time they commence employment, in an amount
that is consistent with those granted to executive officers in
the industry at similar levels of seniority. In addition, we
typically make an annual grant of equity-based compensation to
executives during the first fiscal quarter of each year.
Discretionary equity-based grants may be made throughout the
year to provide an incentive to achieve a specific goal or to
reward a significant achievement.
Retirement
Benefits
Pursuant to employment agreements, we provide supplemental
retirement benefits to certain executives, including
Messrs. Berlinghieri, Colella, Smith and Weigner. These
supplemental benefits are designed to reward long service with
us and to serve as a significant incentive for these executives
to remain with us. In addition, these benefits are designed to
provide for supplemental retirement benefits for executives that
are not available under our company-wide employee benefit plans
due to regulatory limitations on benefit accruals.
In addition, we also provide retiree medical benefits to
Messrs. Berlinghieri, Colella and Weigner, and their
respective spouses, for their lifetimes, upon meeting specified
criteria. This benefit was designed to retain these executives
over the long-term from the time that the benefit is first
granted to the executive because it is contingent upon the
executive maintaining his employment with us until age 62,
with specified exceptions.
Perquisites
We offer certain perquisites to the Named Executive Officers to
allow executives to focus on corporate strategy and enhancing
shareholder value, to provide competitive pay packages and, in
certain circumstances, to entertain customers. Examples of these
perquisites are car payments, health cost reimbursements and
club memberships.
Severance
and
Change-in-Control
Provisions
We have entered into employment agreements with each of the
Named Executive Officers (other than Mr. Lee, who is a
California resident), providing for certain severance provisions
and benefits associated with various termination scenarios and
restricting the officers ability to compete with us during
and following the termination of employment. In addition,
restricted stock agreements and RSU agreements with the Named
Executive Officers provide for certain vesting acceleration in
the event of a
change-in-control.
The severance and
change-in-control
provisions are designed to be competitive in the marketplace, to
provide security for Named Executive Officers in
16
the event that we are acquired and his respective position is
impacted and to provide an incentive for the executive to stay
with the Company through such a change in control event. They
are also intended to protect us from competitive harm by
compensating the Named Executive Officers for agreeing to
substantial non-compete provisions after termination.
Compensation
Consultant; Market Comparison
The Company engages a compensation consultant to serve as an
independent advisor to the Compensation Committee regarding
compensation for the Board of Directors and our executives. In
recent years, the Compensation Committee has periodically
engaged Radford Surveys and Consulting, or Radford, as its
consultant. The Compensation Committee utilizes the consultant
in three ways:
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to provide the Company with occasional consultation regarding
compensation compliance and strategies;
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to provide annual benchmarking compensation data; and
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to conduct, from time to time, formal competitive compensation
analysis for the Compensation Committee regarding each
executive, on a
position-by-position
basis, and the Board of Directors.
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In 2009, the Compensation Committee engaged Radford to conduct a
formal competitive analysis of our compensation for the Board of
Directors, and also used data from Radfords standard
subscription services for its executive compensation analysis.
Role
of Company Executives
The Chief Executive Officer reviews the performance of all of
the other executive officers with the Compensation Committee and
makes recommendations relating to executive compensation of such
executives. Management develops proposed goals for review and
approval by the Compensation Committee for the annual
performance bonus and performance-based equity, develops
proposals relating to potential changes in compensation programs
for review and approval by the Compensation Committee and
provides the Compensation Committee and advisors with
information necessary to evaluate and implement compensation
proposals and programs.
Impact of
Accounting and Tax on the Form of Compensation
Impact of
Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally disallows a tax deduction to public companies
for certain compensation in excess of $1.0 million per
person paid to such companys chief executive officer and
other executive officers whose compensation is required to be
reported to shareholders pursuant to the Securities Exchange Act
of 1934, as amended, by reason of being among the four most
highly paid executive officers. Certain compensation, including
qualified performance-based compensation, will not be subject to
the deduction limit if certain requirements are met. The
Compensation Committee reviews the potential effect of
Section 162(m) periodically and generally seeks to
structure the compensation granted to its executive officers in
a manner that is intended to avoid disallowance of deductions
under Section 162(m). However, because neither our 2004
Stock Incentive Plan (other than with respect to stock options)
nor our Management Incentive Bonus Plan is designed to qualify
as performance-based compensation under Section 162(m), it
is possible that a portion of any bonus payable to, or
compensation arising under equity awards (other than stock
options) granted to, the Chief Executive Officer and certain
other executives will not be deductible for federal income tax
purposes. The Compensation Committee reserves the right to use
its judgment to authorize compensation payments which may be in
excess of the Section 162(m) limit when the Committee
believes such payments are appropriate, after taking into
consideration changing business conditions or the officers
performance, and are in the best interests of the shareholders.
17
Impact of
ASC 718
The Compensation Committee has considered the impact of the
Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 718
(formerly SFAS 123R), on our use of equity incentives as a
key retention tool. Because of the significant cost associated
with options under ASC 718 as compared to the potential value
delivered, the Compensation Committee elected to grant more
efficient equity instruments instead of stock options.
Accordingly, it granted to executives restricted stock in 2006
and RSUs beginning in 2007. The Compensation Committee will
regularly review its choice of equity instruments taking into
account both tax and accounting considerations.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management. Based on such review and discussions, the
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in
this proxy statement on Schedule 14A.
Respectfully submitted,
Robert R. Anderson, Chairman
Peter R. Hanley
Louis P. Valente
The Compensation Committee Report shall not be deemed
incorporated by reference by any general statement incorporating
this proxy statement into any filing under the Securities Act of
1933, as amended, or under the Securities Exchange Act of 1934,
as amended, except to the extent that we specifically
incorporate this information by reference, and shall not
otherwise be deemed filed under such Acts.
Summary
Compensation Table
The following table sets forth the aggregate amounts of
compensation earned by our Named Executive Officers in the years
ended December 31, 2009, 2008 and 2007.
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Change in
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Pension Value
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and
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Nonqualified
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Non Equity
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Deferred
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Salary
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Bonus
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Stock
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Incentive Plan
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Compensation
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All Other
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Name and Principal Position
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Year
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($)
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($)(1)
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Awards($)(2)
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Compensation ($)(3)
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Earnings($)(4)
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Compensation($)(5)
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Total ($)
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Leo Berlinghieri,
CEO & President
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2009
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$
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497,389
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$
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6,115
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$
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592,386
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$
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0
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$
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209,185
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$
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42,645
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$
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1,347,721
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2008
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$
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511,967
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$
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0
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$
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1,028,862
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$
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0
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$
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766,886
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$
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30,114
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$
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2,337,829
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2007
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$
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483,654
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$
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0
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$
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829,500
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$
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270,266
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$
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1,499,711
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$
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26,032
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$
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3,109,163
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Ronald C. Weigner,
VP of Finance & Treasurer(6)
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2009
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$
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271,839
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$
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3,178
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$
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113,484
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$
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0
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$
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92,781
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$
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30,912
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$
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512,195
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2008
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$
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270,325
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$
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0
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$
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197,100
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$
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0
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$
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442,527
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$
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34,374
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$
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944,326
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2007
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$
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262,504
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$
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0
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$
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237,000
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$
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66,009
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$
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355,926
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$
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35,238
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$
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956,677
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Gerald G. Colella,
VP, COO and Acting
Group VP, PRG Products
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2009
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$
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360,807
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$
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4,212
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$
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198,597
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$
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0
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$
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127,881
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$
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44,628
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$
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736,125
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2008
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$
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358,826
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$
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0
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$
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344,925
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$
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0
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$
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459,074
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$
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45,913
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$
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1,208,738
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2007
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$
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349,038
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$
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0
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$
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415,140
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$
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117,025
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$
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632,818
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$
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43,742
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$
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1,557,763
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John T.C. Lee,
Group VP, CIT Products(7)
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2009
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$
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253,228
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$
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3,173
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$
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141,855
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$
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0
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$
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0
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$
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41,834
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$
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440,090
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John A. Smith,
VP and Chief Technology Officer
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2009
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$
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288,199
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$
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3,404
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$
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113,484
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$
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3,400
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$
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152,743
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$
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36,756
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$
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597,986
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2008
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$
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290,083
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$
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0
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$
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197,100
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$
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0
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$
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(171,110
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$
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38,412
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$
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354,485
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2007
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$
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284,450
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$
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0
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$
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237,000
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$
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79,475
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$
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145,953
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$
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31,631
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$
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778,509
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18
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(1) |
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Amounts listed in 2009 represent a cash bonus equal to
approximately three days pay, which was made to all U.S.
employees in December 2009. |
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(2) |
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Represents the grant date fair value for each restricted stock
unit granted to the executive officer during the covered year,
calculated in accordance with FASB ASC Topic 718 (formerly
FAS 123R). The assumptions used in determining the grant
date fair values of awards are set forth in the notes to our
consolidated financial statements, which are included in our
Annual Report on
Form 10-K
filed with the SEC on February 26, 2010. |
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(3) |
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In 2009, due to the global economic crisis, we did not implement
our Management Incentive Bonus Plan. The amount shown for
Mr. Smith in 2009 represents a reward related to the
issuance of a patent. Amounts shown for 2007 and 2008 reflect
compensation under the Management Incentive Bonus Plan earned
for the year indicated, which was paid in the following year.
For 2007 and 2008, each executive was eligible for an annual
performance bonus calculated based on a specified target
percentage of base salary, called an Individual Incentive
Target. The maximum bonus payout possible was 200% of this
Individual Incentive Target and the minimum payout was zero,
with incremental pay-outs for performance between these levels.
Annual performance bonuses were paid out upon achievement of
specific corporate pro forma pre-tax EPS goals. The Individual
Incentive Targets for the Named Executives Officers in 2008
were: Mr. Berlinghieri 100%;
Mr. Weigner 50%; Mr. Colella
65% and Mr. Smith 50%. For 2008, we paid no
bonus under the Management Incentive Bonus Plan. In 2007 the
targets for the Named Executive Officers were:
Mr. Berlinghieri 100%,
Mr. Weigner 45%, Mr. Colella
60% and Mr. Smith 50%. For 2007, we paid a
bonus of 55.88% of Individual Incentive Targets to the Named
Executive Officers. |
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(4) |
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For supplement retirement benefits, this reflects the actuarial
increase in present value for each year indicated, from the
prior fiscal year. For deferred compensation, this reflects the
theoretical change in assets from the prior fiscal year. The
employment agreements for each Messrs. Berlinghieri,
Weigner and Colella provide for supplemental retirement
benefits. The employment agreement for Mr. Smith provides
for a deferred compensation program. |
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(5) |
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For Mr. Berlinghieri, with respect to 2009, this amount was
comprised of $14,879 for payments for car, $5,570 for golf club
membership and $22,196 for company paid health and life
insurances. With respect to 2008, this amount was comprised of
$5,784 for payments for car, $5,200 for golf club membership and
$19,130 for company paid health and life insurances. With
respect to 2007, this amount was comprised of $3,291 for
payments for car, $5,200 for golf club membership and $17,541
for company paid health and life insurances. For
Mr. Weigner, with respect to 2009, this amount was
comprised of $12,216 for payments for car, $16,470 for company
paid health and life insurances and $2,226 for 401(k) matching
contributions. With respect to 2008, this amount was comprised
of $13,477 for payments for car, $13,997 for company paid health
and life insurances and $6,900 for 401(k) matching
contributions. With respect to 2007, this amount was comprised
of $13,822 for payments for car, $14,666 for company paid health
and life insurances and $6,750 for 401(k) matching
contributions. For Mr. Colella, with respect to 2009, this
amount was comprised of $12,372 for payments for car, $5,570 for
golf club membership, $22,621 for company paid health and life
insurances and $4,066 for 401(k) matching contributions. With
respect to 2008, this amount was comprised of $13,264 for
payments for car, $5,200 for golf club membership, $20,549 for
company paid health and life insurances and $6,900 for 401(k)
matching contributions. With respect to 2007, this amount was
comprised of $13,518 for payments for car, $5,200 for golf club
membership, $18,274 for company paid health and life insurances
and $6,750 for 401(k) matching contributions. For Mr. Lee,
with respect to 2009, this amount was comprised of $16,466 for
payments for car, $4,550 for golf club membership, $18,814 for
company paid health and life insurances and $2,005 for 401(k)
matching contributions. For Mr. Smith, with respect to
2009, this amount was comprised of $13,182 for payments for car,
$5,570 for golf club membership, $17,048 for company paid health
and life insurances and $956 for 401(k) matching contributions.
With respect to 2008, this amount was comprised of $10,719 for
payments for car, $3,268 for golf club membership, $18,203 for
company paid health and life insurances and $6,222 for 401(k)
matching contributions. With respect to 2007, this amount was
comprised of $10,749 for payments for car, $3,268 for golf club
membership, $10,864 for company paid health and life insurances
and $6,750 for 401(k) matching contributions. |
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(6) |
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Mr. Weigner served as our Vice President and Chief
Financial Officer until December 31, 2009. |
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(7) |
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In 2007 and 2008, Mr. Lee was not a named executive
officer under the applicable rules of the Securities and
Exchange Commission, and accordingly, compensation is not
included with respect to such years for Mr. Lee in this
table. |
Grants of
Plan-Based Awards in Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Equity Incentive
|
|
|
Number of
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan
Awards(2)
|
|
|
Plan Awards(3)
|
|
|
Shares of
|
|
|
Fair Value of
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock or
|
|
|
Stock
|
|
Name
|
|
Date(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
Units (#)(4)
|
|
|
Awards($)(5)
|
|
|
Leo Berlinghieri
|
|
|
03/16/09
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
10,962
|
|
|
|
18,270
|
|
|
|
25,578
|
|
|
|
18,270
|
|
|
$
|
592,386
|
|
Ronald C. Weigner
|
|
|
03/16/09
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
2,100
|
|
|
|
3,500
|
|
|
|
4,900
|
|
|
|
3,500
|
|
|
$
|
113,484
|
|
Gerald G. Colella
|
|
|
03/16/09
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
3,675
|
|
|
|
6,125
|
|
|
|
8,575
|
|
|
|
6,125
|
|
|
$
|
198,597
|
|
John T.C. Lee
|
|
|
03/16/09
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
2,625
|
|
|
|
4,375
|
|
|
|
6,125
|
|
|
|
4,375
|
|
|
$
|
141,855
|
|
John A. Smith
|
|
|
03/16/09
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
2,100
|
|
|
|
3,500
|
|
|
|
4,900
|
|
|
|
3,500
|
|
|
$
|
113,484
|
|
|
|
|
(1) |
|
This column shows the date of grant for all equity awards
granted in 2009. |
|
(2) |
|
We did not implement a Management Incentive Bonus Plan with
respect to 2009. |
|
(3) |
|
The RSUs vest in equal annual installments over three years,
subject to achievement of performance criteria. |
|
(4) |
|
Vests in equal installments over three years. |
|
(5) |
|
Reflects the grant date fair value of RSUs. The fair value was
$13.51 per share for RSUs awarded on March 16, 2009. |
Outstanding
Equity Awards at 2009 Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(2)
|
|
|
Option Awards(1)
|
|
|
|
Market
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
Number
|
|
Value of
|
|
Equity Incentive
|
|
Plan
|
|
|
Number of
|
|
|
|
|
|
of Shares or Units
|
|
Shares or
|
|
Plan
|
|
Awards: Market or
|
|
|
Securities
|
|
|
|
|
|
of Stock
|
|
Units of
|
|
Awards: Number
|
|
Payout Value of
|
|
|
Underlying
|
|
|
|
|
|
That
|
|
Stock
|
|
of Unearned
|
|
Unearned Shares,
|
|
|
Unexercised
|
|
Option
|
|
|
|
Have
|
|
That Have
|
|
Shares, Units or
|
|
Units or Other
|
|
|
Options
|
|
Exercise
|
|
Option
|
|
Not
|
|
Not
|
|
Other Rights That
|
|
Rights That Have
|
|
|
Exercisable
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested(3)
|
|
Have Not Vested
|
|
Not Vested(3)
|
Name
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Leo Berlinghieri
|
|
|
11,000
|
|
|
$
|
32.00
|
|
|
|
01/04/10
|
|
|
|
4,376
|
(4)
|
|
$
|
76,142
|
|
|
|
25,578
|
(6)
|
|
$
|
445,057
|
|
|
|
|
30,000
|
|
|
$
|
17.25
|
|
|
|
03/21/11
|
|
|
|
3,908
|
(4)
|
|
$
|
67,999
|
|
|
|
|
|
|
|
|
|
|
|
|
880
|
|
|
$
|
20.02
|
|
|
|
10/15/11
|
|
|
|
17,400
|
(5)
|
|
$
|
302,760
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
$
|
24.50
|
|
|
|
11/14/11
|
|
|
|
12,075
|
(5)
|
|
$
|
210,105
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
23.50
|
|
|
|
01/30/12
|
|
|
|
18,270
|
(6)
|
|
$
|
317,898
|
|
|
|
|
|
|
|
|
|
|
|
|
466
|
|
|
$
|
18.44
|
|
|
|
06/24/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
16.88
|
|
|
|
11/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
482
|
|
|
$
|
12.97
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
17.60
|
|
|
|
07/01/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375
|
|
|
$
|
17.60
|
|
|
|
07/01/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
$
|
27.11
|
|
|
|
11/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$
|
29.93
|
|
|
|
01/05/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
$
|
14.72
|
|
|
|
07/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald C. Weigner
|
|
|
30,000
|
|
|
$
|
17.25
|
|
|
|
03/21/11
|
|
|
|
1,667
|
(4)
|
|
$
|
29,006
|
|
|
|
4,900
|
(6)
|
|
$
|
85,260
|
|
|
|
|
950
|
|
|
$
|
20.02
|
|
|
|
10/15/11
|
|
|
|
1,489
|
(4)
|
|
$
|
25,909
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
$
|
24.50
|
|
|
|
11/14/11
|
|
|
|
3,334
|
(5)
|
|
$
|
58,012
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
23.50
|
|
|
|
01/30/12
|
|
|
|
2,314
|
(5)
|
|
$
|
40,264
|
|
|
|
|
|
|
|
|
|
|
|
|
503
|
|
|
$
|
18.44
|
|
|
|
06/24/12
|
|
|
|
3,500
|
(6)
|
|
$
|
60,900
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
16.88
|
|
|
|
11/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
503
|
|
|
$
|
12.97
|
|
|
|
02/07/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
392
|
|
|
$
|
17.60
|
|
|
|
07/01/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
$
|
27.11
|
|
|
|
11/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
$
|
29.93
|
|
|
|
01/05/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
14.72
|
|
|
|
07/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards(2)
|
|
|
Option Awards(1)
|
|
|
|
Market
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
Number
|
|
Value of
|
|
Equity Incentive
|
|
Plan
|
|
|
Number of
|
|
|
|
|
|
of Shares or Units
|
|
Shares or
|
|
Plan
|
|
Awards: Market or
|
|
|
Securities
|
|
|
|
|
|
of Stock
|
|
Units of
|
|
Awards: Number
|
|
Payout Value of
|
|
|
Underlying
|
|
|
|
|
|
That
|
|
Stock
|
|
of Unearned
|
|
Unearned Shares,
|
|
|
Unexercised
|
|
Option
|
|
|
|
Have
|
|
That Have
|
|
Shares, Units or
|
|
Units or Other
|
|
|
Options
|
|
Exercise
|
|
Option
|
|
Not
|
|
Not
|
|
Other Rights That
|
|
Rights That Have
|
|
|
Exercisable
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested(3)
|
|
Have Not Vested
|
|
Not Vested(3)
|
Name
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Gerald G. Colella
|
|
|
11,000
|
|
|
$
|
32.00
|
|
|
|
01/04/10
|
|
|
|
2,500
|
(4)
|
|
$
|
43,500
|
|
|
|
8,575
|
(6)
|
|
$
|
149,205
|
|
|
|
|
30,000
|
|
|
$
|
17.25
|
|
|
|
03/21/11
|
|
|
|
2,233
|
(4)
|
|
$
|
38,854
|
|
|
|
|
|
|
|
|
|
|
|
|
823
|
|
|
$
|
20.02
|
|
|
|
10/15/11
|
|
|
|
1,000
|
(7)
|
|
$
|
17,400
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
$
|
24.50
|
|
|
|
11/14/11
|
|
|
|
5,834
|
(5)
|
|
$
|
101,512
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
$
|
23.50
|
|
|
|
01/30/12
|
|
|
|
4,048
|
(5)
|
|
$
|
70,435
|
|
|
|
|
|
|
|
|
|
|
|
|
436
|
|
|
$
|
18.44
|
|
|
|
06/24/12
|
|
|
|
6,125
|
(6)
|
|
$
|
106,575
|
|
|
|
|
|
|
|
|
|
|
|
|
375
|
|
|
$
|
18.12
|
|
|
|
05/29/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
|
|
$
|
27.11
|
|
|
|
11/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250
|
|
|
$
|
26.86
|
|
|
|
12/03/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
$
|
29.93
|
|
|
|
01/05/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John T.C. Lee
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
7,500
|
(8)
|
|
$
|
130,500
|
|
|
|
6,125
|
(6)
|
|
$
|
106,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(8)
|
|
$
|
130,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,167
|
(5)
|
|
$
|
72,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,891
|
(5)
|
|
$
|
50,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,375
|
(6)
|
|
$
|
76,125
|
|
|
|
|
|
|
|
|
|
John A. Smith
|
|
|
7,500
|
|
|
$
|
32.00
|
|
|
|
01/04/10
|
|
|
|
1,667
|
(4)
|
|
$
|
29,006
|
|
|
|
4,900
|
(6)
|
|
$
|
85,260
|
|
|
|
|
55,000
|
|
|
$
|
24.75
|
|
|
|
11/19/11
|
|
|
|
1,489
|
(4)
|
|
$
|
25,909
|
|
|
|
|
|
|
|
|
|
|
|
|
461
|
|
|
$
|
18.44
|
|
|
|
06/24/12
|
|
|
|
3,334
|
(5)
|
|
$
|
58,012
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
$
|
27.11
|
|
|
|
11/11/13
|
|
|
|
2,314
|
(5)
|
|
$
|
40,264
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
$
|
29.93
|
|
|
|
01/05/14
|
|
|
|
3,500
|
(6)
|
|
$
|
60,900
|
|
|
|
|
|
|
|
|
|
|
|
|
2,188
|
|
|
$
|
14.72
|
|
|
|
07/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Stock options listed above have a
10-year term
and vested
1/4
on the one year anniversary of the date of grant, and thereafter
in equal quarterly installments over the next three years. All
options listed are fully vested. The grant date for each option
is the date on or about 10 years prior to the respective
date listed under the heading Option Expiration Date. |
|
(2) |
|
Except as set forth in footnote 8, RSUs vest in equal annual
installments over 3 years. RSUs listed in Equity
Incentive Plan Awards columns were also subject to
achievement of performance criteria as of December 31, 2009. |
|
(3) |
|
Reflects the values as calculated based on the closing price of
our common stock on December 31, 2009 of $17.40 per share. |
|
(4) |
|
Grant date is March 1, 2007. |
|
(5) |
|
Grant date is March 10, 2008. |
|
(6) |
|
Grant date is March 16, 2009. |
|
(7) |
|
Grant date is September 17, 2007. |
|
(8) |
|
Grant date is October 8, 2007. 7,500 of these RSUs vest in
four equal annual installments beginning the first anniversary
of the date of grant and the other 7,500 vest in four equal
annual installments beginning March 1, 2009. |
21
Option
Exercises and Stock Vested in Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized
|
|
Number of Shares
|
|
Value Realized on
|
|
|
Acquired on Exercise
|
|
Upon Exercise
|
|
Acquired on Vesting
|
|
Vesting(1)
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Leo Berlinghieri
|
|
|
0
|
|
|
|
|
|
|
|
50,781
|
|
|
$
|
708,207
|
|
Ronald C. Weigner
|
|
|
0
|
|
|
|
|
|
|
|
15,978
|
|
|
$
|
230,825
|
|
Gerald G. Colella
|
|
|
0
|
|
|
|
|
|
|
|
24,673
|
|
|
$
|
359,284
|
|
John T.C. Lee
|
|
|
0
|
|
|
|
|
|
|
|
11,029
|
|
|
$
|
159,456
|
|
John A. Smith
|
|
|
0
|
|
|
|
|
|
|
|
15,978
|
|
|
$
|
230,825
|
|
|
|
|
(1) |
|
Value realized represents the fair market value of the shares at
the time of vesting. |
Equity
Compensation Plan Information
The following table provides information about the securities
authorized for issuance under MKS equity compensation
plans as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
remaining
|
|
|
|
Number of securities
|
|
|
|
|
|
available for future
|
|
|
|
to be issued upon
|
|
|
Weighted-average
|
|
|
issuance under equity
|
|
|
|
exercise of outstanding
|
|
|
exercise price of
|
|
|
compensation plans
|
|
|
|
options,
|
|
|
outstanding options,
|
|
|
(excluding securities
|
|
Plan Category
|
|
warrants and rights
|
|
|
warrants and rights
|
|
|
reflected in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
4,096,705
|
|
|
$
|
13.30
|
|
|
|
12,116,731
|
(1)(2)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,096,705
|
|
|
$
|
13.30
|
|
|
|
12,116,731
|
(1)(2)
|
|
|
|
(1) |
|
Securities available for future issuance under the 2004 Stock
Incentive Plan increase on January 1 of each year by 5% of the
issued and outstanding shares as of December 31 of the prior
year up to the amount authorized by the shareholders. |
|
(2) |
|
Includes 697,263 shares issuable under the Companys
Third Restated Employee Stock Purchase Plan and
271,455 shares issuable under the Companys Second
Restated International Employee Stock Purchase Plan as of
December 31, 2009. |
Pension
Benefits
Pursuant to employment agreements, we provide supplemental
retirement benefits to certain executives including
Messrs. Berlinghieri, Weigner and Colella. These
supplemental benefits are designed to reward long-term service
with us and to serve as a significant incentive for these
executives to remain with us. In addition, these benefits are
designed to provide for supplemental retirement benefits for
executives that are not available under our company-wide
employee benefits due to regulatory limitations on benefit
accruals.
The benefits vest upon (a) the employee reaching both
(i) specified ages and (ii) 25 years of service
with us, in each case while employed with us, or (b) upon
the employees earlier death, disability, termination
without cause (as defined in the employment agreements) or a
qualifying termination in connection with a
change-in-control
(as defined in the agreement), and are forfeited in the event of
termination for cause. When vested, the benefits provide for a
lump sum payment of an aggregate amount calculated in accordance
with actuarial tables, payable not sooner than six months after
the date of termination (except in the case of death or
disability). These benefits are not subject to any deduction for
social security or other offset amounts. Final average
compensation is equal to the average of the respective
officers three highest years of compensation (salary plus
bonus) during the 10 years prior to the officers
retirement (or other qualifying termination).
22
Subject to the years of service qualifications,
Mr. Berlinghieris benefits will vest 80%, 90% and
100% upon retirement at the ages of 60, 61 and 62, respectively;
Mr. Weigners benefits have vested 90% and will vest
100% upon retirement at the age of 65; and
Mr. Colellas benefits will vest 80%, 90% and 100%
upon retirement at the ages of 60, 61 and 62, respectively.
The table below summarizes the present value as of
December 31, 2009 of the accumulated benefits of our Named
Executive Officers under their Supplemental Pension arrangements.
PENSION
BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
Present Value of
|
|
Payments During
|
|
|
|
|
Credited Service
|
|
Accumulated Benefit
|
|
the Last Fiscal Year
|
Name
|
|
Plan Name
|
|
(#)(1)
|
|
($)(2)
|
|
($)
|
|
Leo Berlinghieri
|
|
Supplemental Retirement Benefits under Employment Agreement
|
|
25
|
|
$4,852,654
|
|
$
|
0
|
|
Ronald C. Weigner
|
|
Supplemental Retirement Benefits under Employment Agreement
|
|
25
|
|
$2,812,768
|
|
$
|
0
|
|
Gerald G. Colella
|
|
Supplemental Retirement Benefits under Employment Agreement
|
|
25
|
|
$2,651,145
|
|
$
|
0
|
|
John T.C. Lee
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
John A. Smith
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
|
|
|
(1) |
|
Maximum number of years credited is 25. |
|
(2) |
|
Present value of accumulated benefit is calculated using the
same assumptions we used for financial reporting purposes. The
calculations use a discount rate of 5.5%, a maturity value rate
of 3.75% and salary increases of 4.5% per annum and the 1994
Group Annuity Reserve Mortality Table. As of December 31,
2009, Mr. Weigner was vested 90% and
Messrs. Berlinghieri and Colella were vested 0% in the
amounts set forth above. |
Nonqualified
Deferred Compensation
We have provided supplemental defined contribution retirement
benefits to Mr. Smith. We contribute an annual amount equal
to 15% of Mr. Smiths salary and bonus, and may elect
to contribute additional amounts in our sole discretion. These
amounts are placed into hypothetical investment instruments in
accordance with Mr. Smiths instruction. These
benefits will vest 80%, 90% and 100% upon Mr. Smith
retiring at age 63, 64 and 65, respectively. When vested,
the benefits provide for a lump sum payment subject to a six
month waiting period for the initial payment. Mr. Smith may
also elect to defer up to 25% of his base salary and up to 100%
of his bonus annually, until a time specified by Mr. Smith.
These benefits are not subject to any deduction for social
security or other offset amounts.
NONQUALIFIED
DEFERRED COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
Contributions in
|
|
Contributions in
|
|
Earnings in
|
|
Withdrawals /
|
|
Balance at
|
|
|
Last FY
|
|
Last FY
|
|
Last FY
|
|
Distributions
|
|
Last FYE
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Leo Berlinghieri
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Ronald C. Weigner
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Gerald G. Colella
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
John T.C. Lee
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
John A. Smith
|
|
$
|
0
|
|
|
$
|
44,250
|
|
|
$
|
108,493
|
|
|
$
|
0
|
|
|
$
|
545,808
|
|
23
Potential
Payments Upon Termination of Employment or
Change-in-Control
This section (including the following tables) summarizes each
Named Executive Officers estimated payments and other
benefits that would be received by the Named Executive Officer
or his estate if his employment had terminated on
December 31, 2009, under the circumstances set forth below.
For purposes of the following description of such benefits,
cause means conviction for the commission of a
felony, willful failure to perform his responsibilities to the
Company, or willful misconduct. Good reason means
voluntary separation from service within 90 days following
(i) a material diminution in positions, duties and
responsibilities from those described in his employment
agreement (ii) a reduction in his base salary (other than
as part of a general salary reduction program affecting senior
executives) (iii) a material reduction in the aggregate
value of his pension and welfare benefits from those in effect
prior to the change in control (other than as proportionate to
the reductions applicable to other senior executives pursuant to
a cost-saving plan that includes all senior executives),
(iv) a material breach of any provision of the employment
agreement by the Company, (v) the Companys requiring
the executive to be based at a location causing a one way
commute in excess of 60 miles from his primary residence.
Mr. Berlinghieri
Mr. Berlinghieris employment and equity agreements
provide for the following:
|
|
|
|
|
If Mr. Berlinghieris employment is terminated by us
(other than for failure or refusal to perform his obligations,
commitment of acts not in our interest, commission of a felony
or willful misconduct), he will receive salary for
12 months after the date of such termination. He will also
receive company paid medical, dental, life and vision insurance
for 12 months.
|
|
|
|
If Mr. Berlinghieris employment is terminated by us
without cause or by Mr. Berlinghieri for good reason,
within two years after a
change-in-control,
and certain other criteria are met, Mr. Berlinghieri will
be entitled to:
|
|
|
|
|
|
salary and bonus for 36 months paid in a lump sum and
grossed-up
for applicable state and federal taxes;
|
|
|
|
paid medical, dental, life and vision insurance for
36 months;
|
|
|
|
full vesting of restricted stock and RSUs.
|
|
|
|
|
|
In the event that any payment to Mr. Berlinghieri under his
employment agreement would subject him to any excise taxes
imposed under Code Section 4999, Mr. Berlinghieri
shall receive a
gross-up
payment for such amounts.
|
|
|
|
We provide supplemental retirement benefits to
Mr. Berlinghieri, as described under the heading Pension
Benefits above.
|
|
|
|
We provide Mr. Berlinghieri with retiree medical benefits
for life, in the event he retires by at least age 62, which
requires that he pay an annual contribution of $1,500 and a
decreasing percentage of the costs until he reaches age 65.
|
During the term of Mr. Berlinghieris employment and
for a period of one year thereafter (or two years, if employment
was terminated by Mr. Berlinghieri other than for good
reason), Mr. Berlinghieri may not:
|
|
|
|
|
engage in any competitive business or activity;
|
|
|
|
work for or become a partner with any of our employees, officers
or agents; or
|
|
|
|
have any financial interest in or be a director, officer, 1%
shareholder, partner, employee or consultant to any of our
competitors.
|
For a period of two years after termination of employment,
Mr. Berlinghieri may not:
|
|
|
|
|
solicit any customer to become a customer, distributor or
supplier of any other person or entity or to cease doing
business with us; or
|
24
|
|
|
|
|
solicit or hire any of our employees or agents to terminate such
persons employment or engagement with us or to work for a
third party.
|
Other
Named Executive Officers
All of the other Named Executive Officers employment terms
are month to month, with termination upon death, disability, or
at our election if the employee fails to perform his duties or
commits any act not in our best interest. Messrs. Colella,
Smith and Weigner are entitled to the following benefits under
their agreements:
|
|
|
|
|
severance equal to one-half of their base salary in the event
that they are terminated without cause; and
|
|
|
|
six months continuation of specified health benefits at our cost.
|
In the event that any payment to Messrs. Colella or Weigner
under their respective employment agreements would subject them
to any excise taxes imposed under Code Section 4999, such
executive shall receive
gross-up
payments for such amounts. Messrs. Colella and Weigner, and
their respective spouses, shall also receive retiree medical
benefits for life, in the event such executive retires by at
least age 62. The executive pays an annual contribution of
$1,500 and a decreasing percentage of the costs until he reaches
age 65.
We provide supplemental retirement benefits to
Messrs. Colella and Weigner, as described under the heading
Pension Benefits above, and supplemental defined contribution
retirement benefits to Mr. Smith as described under the
heading Nonqualified Deferred Compensation above.
The employment agreements of Messrs. Colella, Smith and
Weigner contain non-competition provisions. The provisions
provide that such employees may not, during the term of their
employment and for the period of one year after termination of
employment (or, in the case of Messr. Weigner, two years if
employment was terminated by him other than for good reason):
|
|
|
|
|
engage in any competitive business or activity;
|
|
|
|
work for, employ, become a partner with, or cause to be
employed, any of our employees, officers or agents;
|
|
|
|
give, sell or lease any competitive services or goods to any of
our customers; or
|
|
|
|
have any material financial interest in or be a director,
officer, partner, employee or consultant to or exceed specified
shareholding limitations in, any of our competitors.
|
Each of Messrs. Colella, Lee, Smith and Weigner are subject
to non-solicitation restrictions. During the term of employment
and for a period of one year after termination of employment
(two years for Mr. Weigner), Messrs. Colella, Smith
and Weigner may not:
|
|
|
|
|
Solicit any customer to become a customer, distributor or
supplier of any other person or entity or to cease doing
business with us; or
|
|
|
|
solicit or hire any of our employees or agents to terminate such
persons employment or engagement with us or to work for a
third party.
|
During the term of employment and for one year after the
termination of employment, Mr. Lee may not solicit or hire
any of our employees or agents to terminate such persons
employment or engagement with us or to work for a third party.
Each Named Executive Officers RSUs provide for 100%
acceleration of vesting of all shares if the executive is
terminated without cause or resigns with good reason within
24 months of a
change-in-control,
as defined in the agreement, and with respect to those RSUs
granted in 2008 and later, also provide for 100% acceleration of
vesting upon retirement. Retirement, in this context, means a
voluntary termination of employment by the executive after he is
at least age sixty (60) and has a combination of years of
age plus Years of Service (full years of employment since the
executives original hire date with the Company or one of
its subsidiaries) with the Company equal to seventy (70) or
more. RSUs typically vest in three equal annual installments,
and at least half are generally subject to performance criteria.
25
Mr. Lee, who resides in California, is employed at will and
he does not have any provision for specific benefits upon
termination. The value of the acceleration of vesting with
respect to Mr. Lee, who is not included in the following
tables, would have been $566,509 upon Mr. Lees death,
disability or termination after a
change-in-control
as described above, had it occurred on December 31, 2009.
Potential
Payments Upon Termination or
Change-in-Control
Leo Berlinghieri
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross up of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I.R.C. Golden
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
State and
|
|
|
|
Parachute excise
|
|
|
|
|
|
|
Management
|
|
Value of
|
|
|
|
Federal Income
|
|
Acceleration of
|
|
tax resulting
|
|
|
Termination
|
|
|
|
Incentive
|
|
Accelerated
|
|
Benefits
|
|
Tax Gross-up on
|
|
Pension
|
|
from Change-in-
|
|
|
Circumstance
|
|
Base Salary
|
|
Bonus
|
|
Unvested Equity
|
|
Continuation(1)
|
|
Cash Severance
|
|
Benefits(2)
|
|
Control(3)
|
|
Total
|
|
Involuntary Without Cause Termination
|
|
$530,000
(1x salary)
|
|
N/A
|
|
N/A
|
|
$121,475
|
|
N/A
|
|
$4,852,654
|
|
|
N/A
|
|
|
$
|
5,504,129
|
|
Retirement(4)
|
|
N/A
|
|
N/A
|
|
$0
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
|
$
|
0
|
|
Death(5)
|
|
$530,000
(1x salary)
|
|
N/A
|
|
$1,419,962
|
|
N/A
|
|
N/A
|
|
$2,426,327
|
|
|
N/A
|
|
|
$
|
4,376,289
|
|
Disability(5)
|
|
N/A
|
|
N/A
|
|
$1,419,962
|
|
$120,779
|
|
N/A
|
|
$4,852,654
|
|
|
N/A
|
|
|
$
|
6,393,395
|
|
Within 24 Months Following a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company Without Cause
or Executive Resignation for Good Reason(6),(7),(8)
|
|
$1,590,000
(3x salary)
|
|
$0
(3x bonus)
|
|
$1,419,962
|
|
$122,867
|
|
$1,070,865
|
|
$4,852,654
|
|
$
|
0
|
|
|
$
|
9,056,348
|
|
Between 24 Months and 36 Months Following a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company Without
Cause(7)
|
|
$530,000
(1x salary)
|
|
N/A
|
|
N/A
|
|
$122,867
|
|
$356,955
|
|
$4,852,654
|
|
$
|
0
|
|
|
$
|
5,862,476
|
|
Executive Resignation for
Good Reason(7)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
$122,867
|
|
$0
|
|
$4,852,654
|
|
$
|
0
|
|
|
$
|
4,975,521
|
|
|
|
|
(1) |
|
Reflects (a) our cost for continuation of life insurance,
medical, dental and vision coverage for 12 months following
involuntary termination without cause or termination by
Mr. Berlinghieri for good reason or upon termination within
36 months after a
change-in-control,
and (b) the estimated present value of retiree medical
benefits assuming the separation occurred on December 31,
2009. |
|
(2) |
|
This amount represents the present value of the accelerated
amount of the accumulated benefit under the Supplemental
Retirement Benefit. See also the description under Pension
Benefits above. |
|
(3) |
|
For purposes of assessing whether Mr. Berlinghieri would be
liable for a Section 4999 excise tax on parachute payments
(and in turn entitled to a
gross-up
from us), the calculations assume that if Mr. Berlinghieri
was terminated within 24 months of a
change-in-control,
the vesting on his options would be accelerated (which the Board
of Directors may determine at its discretion). |
|
(4) |
|
RSUs granted since 2008 provide for acceleration upon retirement
(as defined therein). Because he was not 60 as of
December 31, 2009, Mr. Berlinghieri did not qualify
for such acceleration at that time. |
|
(5) |
|
Upon death and disability, RSUs fully vest. The stated value
assumes the death or disability occurred on December 31,
2009. |
|
(6) |
|
100% of the unvested RSUs vest. For purposes of determining the
value of the acceleration of unvested options, the calculations
assume that Mr. Berlinghieri was terminated on
December 31, 2009 following the
change-in-control
and the vesting on his options was accelerated by the Board of
Directors (which the Board of Directors may determine at its
discretion). |
|
(7) |
|
We have agreed to reimburse Mr. Berlinghieri for any state
and federal income taxes associated with the severance payment,
as well as any excise taxes due under Section 4999
applicable to parachute payments. |
|
(8) |
|
To be eligible for retiree medical benefits, the termination
only needs to occur within 36 months of the
change-in-control. |
26
Potential
Payments Upon Termination or
Change-in-Control
Ronald C. Weigner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross up
|
|
|
|
|
|
|
|
|
|
|
|
|
of I.R.C.
|
|
|
|
|
|
|
|
|
|
|
|
|
Golden
|
|
|
|
|
|
|
|
|
|
|
|
|
Parachute
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
excise tax
|
|
|
|
|
Cash Severance
|
|
Accelerated
|
|
|
|
Acceleration
|
|
resulting from
|
|
|
Termination
|
|
Base
|
|
Unvested
|
|
Benefits
|
|
of Pension
|
|
Change-in-
|
|
|
Circumstance:
|
|
Salary
|
|
Equity
|
|
Continuation(1)
|
|
Benefits(2)
|
|
Control(3)
|
|
Total
|
|
Involuntary Without Cause Termination
|
|
$137,500
(0.5x salary)
|
|
N/A
|
|
$342,259
|
|
$
|
281,277
|
|
|
N/A
|
|
$
|
761,036
|
|
Retirement(4)
|
|
N/A
|
|
$244,435
|
|
$339,060
|
|
|
N/A
|
|
|
N/A
|
|
$
|
583,495
|
|
Death(5)
|
|
N/A
|
|
$299,350
|
|
$204,559
|
|
$
|
140,638
|
|
|
N/A
|
|
$
|
644,547
|
|
Disability(5)
|
|
N/A
|
|
$299,350
|
|
$342,060
|
|
$
|
281,277
|
|
|
N/A
|
|
$
|
922,687
|
|
Within 24 Months Following a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company Without
Cause(6),(7),(8)
|
|
$137,500
(0.5x salary)
|
|
$299,350
|
|
$342,259
|
|
$
|
281,277
|
|
|
$0
|
|
$
|
1,060,386
|
|
Executive Resignation for Good
Reason(6),(7),(8)
|
|
N/A
|
|
$299,350
|
|
$342,259
|
|
$
|
281,277
|
|
|
$0
|
|
$
|
922,886
|
|
Between 24 Months and 36 Months Following a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company Without
Cause(7)
|
|
$137,500
(0.5x salary)
|
|
N/A
|
|
$342,259
|
|
$
|
281,277
|
|
|
$0
|
|
$
|
761,036
|
|
Executive Resignation for Good Reason(7)
|
|
N/A
|
|
N/A
|
|
$342,259
|
|
$
|
281,277
|
|
|
$0
|
|
$
|
623,536
|
|
|
|
|
(1) |
|
Benefits Continuation reflects (a) our cost for
continuation of life insurance, dental and vision coverage for
6 months, and (b) the estimated present value of the
retiree medical benefits assuming the separation occurred on
December 31, 2009. |
|
(2) |
|
This amount represents the present value of the accelerated
amount of the accumulated benefit under the Supplemental
Retirement Benefit. See section above titled Pension Benefits
for the present value of accumulated benefit under the
Supplemental Retirement Benefit. |
|
(3) |
|
For purposes of assessing whether Mr. Weigner would be
liable for a Section 4999 excise tax on parachute payments
(and in turn entitled to a
gross-up
from us), the calculations assume that if Mr. Weigner was
terminated within 24 months of a
change-in-control,
the vesting on his options would be accelerated (which the Board
of Directors may determine at its discretion). |
|
(4) |
|
RSUs granted since 2008 provide for acceleration on retirement
(as defined therein). The stated value assumes the retirement
occurred on December 31, 2009. |
|
(5) |
|
Upon death and disability, RSUs fully vest. The stated value
assumes the death or disability occurred on December 31,
2009. |
|
(6) |
|
100% of the unvested RSUs vest. For purposes of determining the
value of the acceleration of unvested options, the calculations
assume that Mr. Weigner was terminated on December 31,
2009 following the
change-in-control
and the vesting on his options was accelerated by the Board of
Directors (which the Board of Directors may determine at its
discretion). |
|
(7) |
|
Upon a
change-in-control,
Mr. Weigner may be subject to certain excise taxes under
Section 4999 applicable to parachute payments. We have agreed to
reimburse Mr. Weigner for those excise taxes as well as any
income and excise taxes payable by Mr. Weigner as a result
of any reimbursement for the Section 4999 excise taxes. Had
Mr. Weigner been terminated following a
change-in-control
on December 31, 2009, there would not have been an excise
tax liability due. |
|
(8) |
|
To be eligible for retiree medical benefits, the termination
only needs to occur within 36 months of the
change-in-control. |
27
Potential
Payments Upon Termination or
Change-in-Control
Gerald G. Colella
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross up of I.R.C.
|
|
|
|
|
|
|
|
|
|
|
|
|
Golden Parachute
|
|
|
|
|
Cash Severance
|
|
Value of
|
|
|
|
|
|
excise tax
|
|
|
Termination
|
|
Base
|
|
Accelerated
|
|
Benefits
|
|
Acceleration of
|
|
resulting from
|
|
|
Circumstance:
|
|
Salary
|
|
Unvested Equity
|
|
Continuation(1)
|
|
Pension Benefits(2)
|
|
Change-in-Control(3)
|
|
Total
|
|
Involuntary Without Cause Termination
|
|
$182,500
(0.5x salary)
|
|
N/A
|
|
$249,041
|
|
$
|
2,651,145
|
|
|
N/A
|
|
$
|
3,082,686
|
|
Retirement(4)
|
|
N/A
|
|
$0
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
$
|
0
|
|
Death(5)
|
|
N/A
|
|
$527,481
|
|
$129,707
|
|
$
|
1,325,572
|
|
|
N/A
|
|
$
|
1,982,760
|
|
Disability(5)
|
|
N/A
|
|
$527,481
|
|
$248,777
|
|
$
|
2,651,145
|
|
|
N/A
|
|
$
|
3,427,403
|
|
Within 24 Months Following a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company Without
Cause(6),(7),(8)
|
|
$182,500
(0.5x salary)
|
|
$527,481
|
|
$249,041
|
|
$
|
2,651,145
|
|
|
$0
|
|
$
|
3,610,167
|
|
Executive Resignation with Good
Reason(6),(7),(8)
|
|
N/A
|
|
$527,481
|
|
$249,041
|
|
$
|
2,651,145
|
|
|
$0
|
|
$
|
3,427,667
|
|
Between 24 Months and 36 Months Following a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company Without
Cause(7)
|
|
$182,500
(0.5x salary)
|
|
N/A
|
|
$249,041
|
|
$
|
2,651,145
|
|
|
$0
|
|
$
|
3,082,686
|
|
Executive Resignation for Good Reason(7)
|
|
N/A
|
|
N/A
|
|
$249,041
|
|
$
|
2,651,145
|
|
|
$0
|
|
$
|
2,900,186
|
|
|
|
|
(1) |
|
Reflects (a) our cost for continuation of life insurance,
medical, dental and vision coverage for 6 months, and
(b) the estimated present value of retiree medical benefits
assuming the termination occurred on December 31, 2009. |
|
(2) |
|
This amount represents the present value of the accelerated
amount of the accumulated benefit under the Supplemental
Retirement Benefit. See also the description under Pension
Benefits above. |
|
(3) |
|
For purposes of assessing whether Mr. Colella would be
liable for a Section 4999 excise tax on parachute payments
(and in turn entitled to a
gross-up
from us), the calculations assume that if Mr. Colella was
terminated within 24 months of a
change-in-control,
the vesting on his options would be accelerated (which the Board
of Directors may determine at its discretion). |
|
(4) |
|
RSUs granted since 2008 provide for acceleration upon retirement
(as defined therein). Because Mr. Colella was not 60 as of
December 31, 2009, Mr. Colella did not qualify for
such acceleration at that time. |
|
(5) |
|
Upon death and disability, RSUs fully vest. The stated value
assumes the death or disability occurred on December 31,
2009. |
|
(6) |
|
100% of the unvested RSUs vest. For purposes of determining the
value of the acceleration of unvested options, the calculations
assume that Mr. Colella was terminated on December 31,
2009 following the
change-in-control
and the vesting on his options was accelerated by the Board of
Directors (which the Board of Directors may determine at its
discretion). |
|
(7) |
|
Upon a
change-in-control,
Mr. Colella may be subject to certain excise taxes under
Section 4999 applicable to parachute payments. We have agreed to
reimburse Mr. Colella for those excise taxes as well as any
income and excise taxes payable by Mr. Colella as a result
of any reimbursement for the Section 4999 excise taxes. Had
Mr. Colella been terminated following a
change-in-control
on December 31, 2009, there would not have been an excise
tax liability due. |
|
(8) |
|
To be eligible for retiree medical benefits, the termination
only needs to occur within 36 months of the
change-in-control. |
28
Potential
Payments Upon Termination or
Change-in-Control
John A. Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
Termination
|
|
Cash Severance
|
|
Unvested
|
|
Benefits
|
|
|
Circumstance:
|
|
Base Salary
|
|
Equity
|
|
Continuation(1)
|
|
Total(2)
|
|
Involuntary Without Cause Termination
|
|
$
|
147,500
(0.5x salary
|
)
|
|
|
N/A
|
|
|
$
|
9,701
|
|
|
$
|
157,201
|
|
Retirement(3)
|
|
|
N/A
|
|
|
$
|
0
|
|
|
|
N/A
|
|
|
$
|
0
|
|
Death or Disability(4)
|
|
|
N/A
|
|
|
$
|
299,350
|
|
|
|
N/A
|
|
|
$
|
299,350
|
|
Within 24 Months of a
Change-in-Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the Company Without
Cause(5)
|
|
$
|
147,500
(0.5x salary
|
)
|
|
$
|
299,350
|
|
|
$
|
9,701
|
|
|
$
|
456,551
|
|
Executive Resignation with Good Reason
|
|
|
N/A
|
|
|
$
|
299,350
|
|
|
|
N/A
|
|
|
$
|
299,350
|
|
|
|
|
(1) |
|
Benefits continuation reflects our cost for continuation of life
insurance, medical, dental and vision coverage for 6 months. |
|
(2) |
|
The total does not include the present value of the accumulated
benefit of deferred compensation. See the Nonqualified Deferred
Compensation table for this information. |
|
(3) |
|
RSUs granted since 2008 provide for acceleration upon retirement
(as defined therein). Because Mr. Smith was not 60 as of
December 31, 2009, Mr. Smith did not qualify for such
acceleration at that time. |
|
(4) |
|
Upon death and disability, RSUs fully vest. The stated value
assumes the death or disability occurred on December 31,
2009. |
|
(5) |
|
100% of the unvested RSUs vest. For purposes of determining the
value of accelerated unvested options, the calculations assume
that Mr. Smith was terminated on December 31, 2009
following the
change-in-control
and the vesting of his options was accelerated by the Board of
Directors (which the Board of Directors may determine at its
discretion). |
29
DIRECTOR
COMPENSATION
Cash
Compensation
The following table summarizes cash compensation payable by MKS
to non-employee directors effective as of December 31,
2009. Effective as of August 25, 2008, as part of our
efforts to reduce costs during the recent economic downturn, the
cash compensation payable to non-employee directors was
temporarily reduced by 10% with respect to John R. Bertucci,
Chairman of the Board, and by 5% with respect to other
non-employee directors. In addition, effective as of
January 20, 2009, cash compensation to non-employee
directors was further temporarily reduced so that the aggregate
effect of both reductions was a reduction of 20% to John R.
Bertucci and 10% to other non-employee directors. On
October 19, 2009, these temporary reductions were lifted,
and cash compensation levels for non-employee directors were
returned to their original 2008 levels, retroactive to
July 1, 2009.
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
Attendance Fee
|
|
|
Retainer(1)
|
|
per Meeting(1)
|
|
Chairman
|
|
$
|
75,000
|
|
|
$
|
2,000
|
|
Board Members other than Chairman
|
|
$
|
32,000
|
|
|
$
|
2,000
|
|
Lead Director
|
|
$
|
16,000
|
|
|
|
N/A
|
|
Audit Committee Chairman
|
|
$
|
12,000
|
|
|
$
|
1,500
|
|
Other Audit Committee Members
|
|
|
N/A
|
|
|
$
|
1,500
|
|
Compensation Committee Chairman
|
|
$
|
10,000
|
|
|
$
|
1,500
|
|
Other Compensation Committee Members
|
|
|
N/A
|
|
|
$
|
1,500
|
|
Nominating & Corporate Governance Committee Chairman
|
|
$
|
6,000
|
|
|
$
|
1,500
|
|
Other Nominating & Corporate Governance Committee
Members
|
|
|
N/A
|
|
|
$
|
1,500
|
|
|
|
|
(1) |
|
Amounts in effect as of December 31, 2009. Excludes impact
of temporary reductions in effect during parts of 2009. |
Equity
Compensation
Non-employee directors participate in our 2004 Stock Incentive
Plan, which is administered by the Compensation Committee.
Effective as of February 8, 2010, non-employee directors
receive automatic grants of RSUs as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Type of Award
|
|
Date of Award
|
|
RSUs(1)
|
|
Vesting Schedule
|
|
Initial Award
|
|
Date of initial election to Board
|
|
|
7,500
|
|
|
Vests in 12 equal quarterly installments over a three year period
|
Annual(2)
|
|
Date of each Annual Meeting of Shareholders
|
|
|
6,000
|
|
|
Fully vests on the day prior to the first annual meeting of
shareholders following the date of grant (or if no such meeting
is held within 13 months after the date of grant, on the
13 month anniversary of the date of grant)
|
|
|
|
(1) |
|
In 2009, the Initial Grant for non-employee directors was 6,666
RSUs and the Annual Grant was 4,000 RSUs. |
|
(2) |
|
Non-employee directors are eligible to receive annual awards if
the non-employee director has been in office for at least six
months prior to the date of the respective annual meeting of
shareholders. |
Mr. Bertucci
Mr. Bertucci resigned from his employment as our Executive
Chairman effective December 31, 2006. At that time, he
remained a Class III director and became non-executive
Chairman of the Board. Pursuant to the terms of his employment
agreement, Mr. Bertucci receives retiree medical benefits
for life for himself and his spouse, which had
30
a net present value of $246,740 as of December 31, 2009,
and which require that he make an annual contribution toward the
benefit of $1,500. Mr. Bertucci also receives a car
allowance for life, which had a net present value of $164,945 as
of December 31, 2009.
The following table summarizes compensation paid to non-employee
directors in 2009. Mr. Berlinghieri is excluded from the
table because he is an executive officer, and his compensation
is set forth in the Executive Compensation section above, under
the heading Summary Compensation Table for 2009.
Director
Compensation Table for 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Paid in
|
|
Stock
|
|
All Other
|
|
|
|
|
Cash
|
|
Awards
|
|
Compensation
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
Cristina H. Amon
|
|
$
|
40,935
|
|
|
$
|
63,200
|
|
|
$
|
0
|
|
|
$
|
104,135
|
|
Robert R. Anderson
|
|
$
|
55,769
|
|
|
$
|
63,200
|
|
|
$
|
0
|
|
|
$
|
118,969
|
|
Gregory R. Beecher
|
|
$
|
56,566
|
|
|
$
|
63,200
|
|
|
$
|
0
|
|
|
$
|
119,766
|
|
John R. Bertucci
|
|
$
|
75,096
|
|
|
$
|
63,200
|
|
|
$
|
33,408
|
(3)
|
|
$
|
171,704
|
|
Richard S. Chute
|
|
$
|
46,651
|
|
|
$
|
63,200
|
|
|
$
|
0
|
|
|
$
|
109,851
|
|
Peter R. Hanley
|
|
$
|
42,285
|
|
|
$
|
63,200
|
|
|
$
|
0
|
|
|
$
|
105,485
|
|
Hans-Jochen Kahl
|
|
$
|
43,635
|
|
|
$
|
63,200
|
|
|
$
|
0
|
|
|
$
|
106,835
|
|
Louis P. Valente
|
|
$
|
67,669
|
|
|
$
|
63,200
|
|
|
$
|
0
|
|
|
$
|
130,869
|
|
|
|
|
(1) |
|
Reflects the impact of temporary reductions to cash
compensation, which reductions were in effect during parts of
2009, as described more fully under Cash
Compensation above. |
|
(2) |
|
Represents the grant date fair value for each RSU granted during
the year, calculated in accordance with FASB ASC Topic 718
(formerly FAS 123R). The assumptions used in determining
the grant date fair values of these awards are set forth in the
notes to our consolidated financial statements, which are
included in our Annual Report on
Form 10-K
filed with the SEC. |
|
(3) |
|
Mr. Bertucci receives retiree medical benefits for life for
himself and his spouse under his previous employment agreement,
which requires that he make an annual contribution toward the
benefit of $1,500. The Company paid $13,544 for this benefit in
2009. Mr. Bertucci also receives a car allowance for life,
for which the Company paid $19,864 in 2009. |
Transactions
with Related Persons
Mr. Stewart, our Group Vice President of Vacuum Products
and PFM&C Products, shares a household with our Director of
Operations, Vacuum Products Group, who in 2009 received from MKS
approximately $185,000 in salary, a bonus of $2,200 and an RSU
grant for 2,600 shares of our Common Stock (with aggregate
grant date value of approximately $35,000).
Our written Code of Business Conduct and Ethics sets forth the
general principle that our directors, officers and employees
should refrain from engaging in any activity having a personal
interest that presents a conflict of interest. The Code
prohibits certain specified activities, and also prohibits
directors, officers and employees from engaging in any other
activity that may reasonably be expected to give rise to a
conflict of interest or to adversely affect the interests of
MKS. The Code provides that all employees are responsible to
disclose any material transaction or relation that reasonably
could be expected to give rise to a material conflict of
interest to the Chief Financial Officer and officers and
directors must report such transactions to the Board of
Directors, who shall be responsible for determining whether such
transaction or relationship constitutes a material conflict of
interest. In addition, pursuant to its written charter, the
Audit Committee must review all related party
transactions (defined as transactions required to be
disclosed pursuant to Item 404 of
Regulation S-K)
on an ongoing basis. Accordingly, any relationship that arises
at any time that constitutes, or could in the future constitute,
a related party transaction will be reported to the
Audit Committee for its review. Additionally, directors and
officers are required to submit annual certifications as to
whether they are involved in any related party
transaction and the Audit Committee reviews any such
activities annually.
31
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of our Board of Directors has reviewed our
audited financial statements for the year ended
December 31, 2009 and discussed them with our management.
The Audit Committee has also received from, and discussed with,
PwC, our registered public accounting firm, various
communications that our registered public accounting firm is
required to provide to the Audit Committee, including the
matters required to be discussed by the Statement on Auditing
Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1, AU section 380), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received the written disclosures and the
letter from our registered public accounting firm required by
Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussions
with Audit Committees), as adopted by the Public Company
Accounting Oversight Board in Rule 3600T, and has discussed
with our registered public accounting firm their independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to our Board of Directors that the audited
financial statements be included in our Annual Report on
Form 10-K
for the year ended December 31, 2009.
By the Audit Committee of the Board of Directors of MKS
Instruments, Inc.
Gregory R. Beecher, Chairman
Robert R. Anderson
Louis P. Valente
32
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires executive officers, directors and shareholders
who beneficially own more than ten percent (10%) of the our
stock to file initial reports of ownership on Form 3 and
reports of changes in ownership on Form 4 with the SEC and
any national securities exchange on which our securities are
registered. Executive officers, directors and greater than ten
percent (10%) beneficial owners are required by the SECs
regulations to furnish us with copies of all Section 16(a)
forms they file.
Based solely on a review of the copies of such forms, and
amendments thereto, furnished to us and written representations
from the executive officers and directors, pursuant to
Item 405 of
Regulation S-K,
we believe that all Section 16(a) filing requirements
applicable to our executive officers, directors and greater than
ten percent (10%) shareholders were complied with, except that
(i) each of the following named executive officers
inadvertently under-reported the number of shares subject to
RSUs granted to them on March 16, 2009 by the following
amounts: Mr. Berlinghieri, 7,308 shares;
Mr. Weigner, 1,400 shares; Mr. Colella,
2,450 shares; Mr. Lee, 1,750 shares and
Mr. Smith, 1,400 shares; (ii) Mr. Bertucci
filed a late report with respect to the September 18, 2009
sale of 40,000 shares and (iii) Mr. Beecher filed
a late report with respect to the May 4, 2009 acquisition
of 4,000 shares.
PROPOSAL TWO
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
On February 2, 2010, the Audit Committee appointed PwC as
the Companys independent registered public accounting firm
for the fiscal year ending December 31, 2010. PwC was our
independent registered public accounting firm for the fiscal
year ended December 31, 2009.
Representatives of PwC are expected to be present at the Annual
Meeting and will have the opportunity to make a statement if
they so desire and will be available to respond to appropriate
questions from shareholders. In the event that the ratification
of the appointment of PwC as our independent registered public
accounting firm is not obtained at the Annual Meeting, the Board
of Directors will reconsider its appointment.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO
RATIFY THE APPOINTMENT OF PWC AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31,
2010 IS IN THE BEST INTERESTS OF MKS AND OUR SHAREHOLDERS AND
THEREFORE RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER
MATTERS
The Board of Directors does not know of any other matters which
may come before the meeting. However, if any other matters are
properly presented to the meeting, it is the intention of the
persons named in the accompanying proxy to vote, or otherwise
act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by us. In
addition to solicitations by mail, our directors, officers and
regular employees, without additional remuneration, may solicit
proxies by telephone and personal interviews and we reserve the
right to retain outside agencies for the purpose of soliciting
proxies. Brokers, custodians and fiduciaries will be requested
to forward proxy soliciting material to the owners of stock held
in their names, and we will reimburse them for their reasonable
out-of-pocket
expenses incurred in connection with the distribution of proxy
materials.
33
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
For the years ended December 31, 2009 and 2008, aggregate
fees for professional services rendered by our independent
registered public accounting firm, PwC, in the following
categories were as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
1,600,000
|
|
|
$
|
1,707,454
|
|
Audit-Related Fees
|
|
|
|
|
|
|
|
|
Tax Fees
|
|
|
320,000
|
|
|
|
306,100
|
|
All Other Fees
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,921,500
|
|
|
$
|
2,015,054
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees
Audit Fees for the years ended December 31, 2009 and 2008
were for professional services provided for the audit of our
consolidated financial statements and of our internal control
over financial reporting, statutory and subsidiary audits,
consents and assistance with review of documents filed with the
SEC.
Tax
Fees
Tax Fees for the year ended December 31, 2009 and 2008 were
for services related to tax compliance, including the
preparation of tax returns; and tax planning and tax advice,
including assistance with foreign operations.
All Other
Fees
All Other Fees for the year ended December 31, 2009 and
2008 were for research software.
In 2009 and 2008, all Audit Fees, Audit-Related Fees, Tax Fees
and All Other Fees were pre-approved pursuant to the Audit
Committee pre-approval requirements, described below.
Pre-Approval
Policy and Procedures
The Audit Committees charter sets forth their obligations
relating to the approval of all audit and non-audit services
that are to be performed by our independent registered public
accounting firm. The charter provides that we will not engage
our independent registered public accounting firm to provide
audit or non-audit services unless the service is pre-approved
by the Audit Committee. In addition, we will not engage any
other accounting firm to provide audit services unless such
services are pre-approved by the Audit Committee.
In connection with the foregoing, the Audit Committee may
approve specific services in advance. In addition, from time to
time, the Audit Committee may pre-approve specified types of
services that are expected to be provided to us by our
independent registered public accounting firm during the next
12 months. Any such pre-approval of types of services is
detailed as to the particular service or type of service to be
provided and is also generally subject to a maximum dollar
amount.
The Audit Committee has also delegated to the Chairman of the
Audit Committee the authority to approve any audit or non-audit
services to be provided to us by our independent registered
public accounting firm. Any approval of services by the Chairman
of the Audit Committee pursuant to this delegated authority is
reported on at the next meeting of the Audit Committee.
The Audit Committee has considered and determined that the
provision of the non-audit services noted in the foregoing table
is compatible with maintaining PwCs independence.
34
DEADLINE
FOR SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 2011 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2011
Annual Meeting of Shareholders must be received by us at our
principal office in Andover, Massachusetts not later than
November 11, 2010, for inclusion in the proxy statement for
that meeting.
In addition, our Amended and Restated By-Laws (which are on file
with the SEC) require that we be given advance notice of matters
that shareholders wish to present for action at an Annual
Meeting of Shareholders (other than matters included in
MKSs proxy statement in accordance with
Rule 14a-8
of the Securities Exchange Act of 1934, as amended). The
required written notice must be delivered to our Secretary at
our principal offices at least 60 days prior to the Annual
Meeting, but no more than 90 days prior to such meeting or
it will be considered untimely. However, if less than
40 days notice of the Annual Meeting is provided to the
shareholders, the written notice of the shareholder must be
received by our Secretary no later than 10 days after the
notice of the Annual Meeting was mailed or publicly disclosed.
The advance notice provisions of our Amended and Restated
By-Laws contain the requirements of the written notice of
shareholders and supersede the notice requirement contained in
Rule 14a-4(c)(1)
under the Securities Exchange Act of 1934, as amended.
IMPORTANT
NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS
Some banks, brokers and other nominee record holders are
currently householding proxy statements and annual
reports. This means that only one copy of our proxy statement or
annual report may have been sent to multiple shareholders in
your household. We will promptly deliver a separate copy of
either document to you if you call or write us at the following
address or phone number: MKS Instruments, Inc., 2 Tech Drive,
Suite 201, Andover, Massachusetts 01810, Attn: Investor
Relations or
(800) 227-8766
ext. 5576. You may also access our proxy statement and
related materials at
www.mksinstruments.com/AnnualMeetingMaterials. If you want to
receive separate copies of the annual report and proxy statement
in the future, or if you are receiving multiple copies and would
like to receive only one copy for your household, you should
contact your bank, broker, or other nominee record holder, or
you may contact us at the above address and phone number.
By Order of the Board of Directors,
RICHARD S. CHUTE
Secretary
March 10, 2010
THE BOARD OF DIRECTORS ENCOURAGES SHAREHOLDERS TO ATTEND THE
ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL GREATLY FACILITATE
ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. SHAREHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR
STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
35
Appendix A
Form of Proxy Card
ANNUAL MEETING OF SHAREHOLDERS OF
MKS INSTRUMENTS, INC.
MAY 3, 2010
Please detach and mail in the envelope provided.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual
Repot, Notice & Proxy Statement is/are available at www.proxyvote.com.
MKS INSTRUMENTS, INC.
Annual Meeting of Shareholders
May 3, 2010 10:00 AM
This proxy is solicited by the Board of Directors
This proxy, when properly executed, will be voted as directed on the reverse side, or, if no
contrary direction is indicated, will be voted FOR the election of three (3) nominees listed on the
reverse side as Class II Directors of the Company, and FOR proposal 2 and as said proxies deem
advisable on such matters as may properly come before the meeting.
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
The undersigned shareholder of MKS Instruments, Inc., a Massachusetts corporation (the Company),
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
each dated March 10, 2010, and hereby appoints Leo Berlinghieri, Richard S. Chute and Kathleen F.
Burke, and each of them acting singly, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the undersigned at the
2010 Annual Meeting of Shareholders of the Company to be held on May 3, 2010, at 10:00 a.m. at the
Wyndham Boston Andover Hotel, 123 Old River Road, Andover, MA 01810, and at any adjournment(s)
thereof, and to vote all shares of Common Stock which the undersigned would be entitled to vote if
then and there personally present, on the matters set forth on the reverse side, and, in their
discretion, upon any other matters which may properly come before the meeting.
Continued and to be signed on reverse side
[MKS Logo]
MKS Instruments, Inc.
2 TECH DRIVE
SUITE 201
ANDOVER, MA 01810
VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you access the web site and follow the instructions to obtain your records and to
create an electronic voting instruction form.
Electronic Delivery of Future PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can
consent to receiving all future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above
to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
VOTE BY PHONE 1-800-690-6903
Use any touch-tone telephone to transmit your voting instruction up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you call and
then following the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
KEEP THIS PORTION FOR YOUR RECORDS |
|
|
|
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Board of Directors recommends that you vote FOR the following:
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees: |
|
|
|
|
|
|
|
|
|
|
01 Cristina H. Amon
|
|
|
|
02 Richard S. Chute
|
|
|
|
03 Peter R. Hanley |
|
|
o FOR ALL |
|
|
|
o WITHHOLD ALL |
|
|
|
o FOR ALL EXCEPT |
To withhold authority to vote for any individual nominee(s), mark For All Except and write the
number(s) of the nominee(s) on the line below.
The Board of Directors recommends you vote FOR the following proposal(s):
2. |
|
To ratify the selection of PricewaterhouseCoopers LLP as the Companys independent auditors
for the year ending December 31, 2010. |
|
|
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
o
|
|
o
|
|
o |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or partnership, please sign full corporate or
partnership name, by authorized officer.
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|