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Reports
50
2 0 0 5 ฀ N O T I C E ฀ O F ฀ A N N U A L ฀ M E E T I N G ฀ A N D ฀ P R O X Y ฀ S T A T E M E N T
nReport฀of฀the฀Executive฀Compensation฀and฀Development฀Committee
ROLE฀OF฀THE฀COMMITTEE฀
The฀Executive฀Compensation฀and฀Development฀Committee,฀as฀of฀December฀31,฀2004,฀was฀made฀up฀of฀five฀members฀of฀the฀Board฀of฀Directors,฀all฀of฀whom฀
are฀independent฀in฀accordance฀with฀the฀Board’s฀Director฀Independence฀Standards,฀which฀standards฀exactly฀reflect฀the฀NYSE’s฀director฀independence฀
standards.฀The฀principal฀functions฀of฀the฀Committee฀include:฀
฀ •฀฀periodically฀reviewing฀and฀approving฀the฀Company’s฀executive฀compensation฀strategy฀and฀principles฀to฀ensure฀that฀they฀are฀aligned฀with฀the฀
Company’s฀business฀strategy฀and฀objectives,฀shareholder฀interests,฀desired฀behaviors฀and฀corporate฀culture;฀
฀ •฀฀periodically฀reviewing฀the฀Company’s฀executive฀compensation฀plans฀to฀ensure฀that฀they฀are฀consistent฀with฀the฀Company’s฀executive฀compensation฀
strategy฀and฀principles;฀
฀ •฀reviewing฀and฀approving฀the฀adoption฀of,฀and฀changes฀to,฀the฀Company’s฀executive฀compensation฀and฀equity-based฀compensation฀plans;฀
฀ •฀overseeing฀the฀administration฀of฀the฀Company’s฀executive฀compensation฀plans;฀
฀ •฀฀annually฀reviewing฀and฀approving฀the฀goals฀and฀objectives฀relevant฀to฀the฀compensation฀of฀the฀CEO,฀evaluating฀the฀CEO’s฀performance฀in฀light฀of฀
these฀goals฀and฀objectives฀and฀setting฀the฀CEO’s฀individual฀elements฀of฀total฀compensation฀based฀on฀this฀evaluation;฀
฀ •฀overseeing฀the฀compensation฀of฀the฀Company’s฀executive฀officers;฀
฀ •฀reviewing฀the฀process฀and฀plans฀for฀the฀assessment฀and฀selection฀of฀candidates฀for฀the฀positions฀of฀CEO฀and฀President;
฀ •฀฀annually฀overseeing฀a฀performance฀evaluation฀of฀the฀Committee,฀which฀includes฀a฀comparison฀of฀the฀performance฀of฀the฀Committee฀with฀the฀
requirements฀in฀its฀charter;฀and฀
฀ •฀periodically฀reviewing฀the฀Company’s฀executive฀staffing฀plan฀for฀meeting฀present฀and฀future฀leadership฀needs.฀
To฀help฀it฀perform฀its฀functions,฀the฀Committee฀makes฀use฀of฀Company฀resources฀and฀regularly฀retains฀the฀services฀of฀external฀independent฀compensation฀
consultants฀retained฀by฀the฀Committee.฀
EXECUTIVE฀COMPENSATION฀PHILOSOPHY฀
The฀Company’s฀overall฀philosophy฀is฀to฀provide฀an฀executive฀compensation฀package฀that฀attracts,฀retains฀and฀motivates฀world-class฀executive฀talent฀to฀
achieve฀the฀Company’s฀short-฀and฀long-term฀business฀goals.฀In฀2004,฀the฀Committee฀engaged฀in฀a฀review฀of฀the฀Company’s฀executive฀compensation฀
strategy฀in฀light฀of฀the฀Company’s฀new฀business฀strategy.฀In฀the฀course฀of฀this฀review,฀the฀Committee฀sought฀the฀advice฀and฀input฀of฀both฀an฀outside฀
compensation฀consultant฀directly฀engaged฀by฀the฀Committee,฀as฀well฀as฀Company฀management.฀As฀a฀result฀of฀this฀review,฀several฀changes฀were฀made฀to฀
the฀executive฀compensation฀goals฀of฀the฀Company.฀฀฀฀
฀ •฀Inspire฀and฀develop฀world-class฀executive฀talent.฀
฀ •฀Attract,฀retain฀and฀motivate฀executives.฀
฀ •฀Calibrate฀realized฀compensation฀to฀achievement฀of฀short-term฀and฀long-term฀objectives.฀
฀ •฀Align฀management฀and฀shareholder฀interests.
฀ •฀Maximize฀the฀financial฀efficiency฀of฀the฀executive฀compensation฀program.฀
฀ •฀Ensure฀high฀standards฀and฀best฀practices.
฀
In฀order฀to฀achieve฀these฀goals,฀the฀Company’s฀executive฀compensation฀strategy฀leverages฀all฀elements฀of฀market-competitive฀total฀compensation฀to฀drive฀
profitable฀growth฀and฀superior฀long-term฀shareholder฀value฀consistent฀with฀the฀Company’s฀values.฀Plan฀design฀and฀performance-based฀differentiation฀
are฀intended฀to฀drive฀extraordinary฀rewards฀for฀outstanding฀performance.฀Consistent฀with฀this฀compensation฀strategy,฀the฀following฀principles฀provide฀a฀
framework฀for฀the฀Company’s฀executive฀compensation฀program:
Revised฀Executive฀฀ ฀
Compensation฀Goals