Quest Diagnostics 2012 Annual Report Download - page 109

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F- 36
Employee Stock Purchase Plan
Under the Company's Employee Stock Purchase Plan (“ESPP”), substantially all employees can elect to have up to
10% of their annual wages withheld to purchase Quest Diagnostics common stock. The purchase price of the stock is 85% of
the market price of the Company's common stock on the last business day of each calendar month. Under the ESPP, the
maximum number of shares of Quest Diagnostics common stock which may be purchased by eligible employees is 5 million.
Approximately 406, 425 and 464 thousand shares of common stock were purchased by eligible employees in 2012, 2011 and
2010, respectively.
Defined Contribution Plans
The Company maintained qualified defined contribution plans covering substantially all of its employees. Prior to
2012, the Company matched employee contributions up to a maximum of 6%. As of January 1, 2012, the maximum Company
matching contribution was reduced from 6% to 5% of eligible employee compensation. The Company's expense for
contributions to its defined contribution plans aggregated $73 million, $82 million and $79 million for 2012, 2011 and 2010,
respectively.
Supplemental Deferred Compensation Plans
The Company has a supplemental deferred compensation plan that is an unfunded, non-qualified plan that provides for
certain management and highly compensated employees to defer up to 50% of their salary in excess of their defined
contribution plan limits and for certain eligible employees, up to 95% of their variable incentive compensation. Prior to 2012,
the Company matched employee contributions up to a maximum of 6%. As of January 1, 2012, the maximum Company
matching contribution was reduced from 6% to 5% of eligible employee compensation. The compensation deferred under this
plan, together with Company matching amounts, are credited with earnings or losses measured by the mirrored rate of return on
investments elected by plan participants. Each plan participant is fully vested in all deferred compensation, Company match
and earnings credited to their account. The Company maintained another unfunded, non-qualified supplemental deferred
compensation plan that was not material. The amounts accrued under the Company's deferred compensation plans were $52
million and $47 million at December 31, 2012 and 2011, respectively. Although the Company is currently contributing all
participant deferrals and matching amounts to trusts, the funds in these trusts, totaling $52 million and $47 million at
December 31, 2012 and 2011, respectively, are general assets of the Company and are subject to any claims of the Company's
creditors.
The Company also offers certain employees the opportunity to participate in a non-qualified deferred compensation
program. Eligible participants are allowed to defer up to 20 thousand dollars of eligible compensation per year. The Company
matches employee contributions equal to 25%, up to a maximum of 5 thousand dollars per plan year. A participant's deferrals,
together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of
investments which are tracked by an administrator. Each participant is fully vested in their deferred compensation and vest in
Company matching contributions over a four-year period at 25% per year. The amounts accrued under this plan were $30
million and $25 million at December 31, 2012 and 2011, respectively. The Company purchases life insurance policies, with the
Company named as beneficiary of the policies, for the purpose of funding the program's liability. The cash surrender value of
such life insurance policies was $25 million and $21 million at December 31, 2012 and 2011, respectively.
For the years ended December 31, 2012, 2011 and 2010, the Company's expense for matching contributions to these
plans were not material.
16. RELATED PARTY TRANSACTIONS
At December 31, 2010, GSK beneficially owned approximately 18% of the outstanding shares of Quest Diagnostics
common stock. On January 31, 2011, the Company agreed to repurchase from SB Holdings Capital Inc., a wholly-owned
subsidiary of GSK, approximately one-half of GSK's ownership interest in the Company, or 15.4 million shares of the
Company's common stock at a purchase price of $54.30 per share for $835 million (the “Repurchase”).
In a separate transaction on January 31, 2011, GSK agreed to sell in an underwritten offering to the public, its
remaining ownership interest in the Company, or 15.4 million shares of the Company's common stock (the “Offering”). The
Company did not sell any shares of common stock in the Offering, which closed on February 4, 2011, and did not receive any
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(dollars in thousands unless otherwise indicated)