UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
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Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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Compass
Minerals International, Inc.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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Title
of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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Proposed
maximum aggregate value of transaction:
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fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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Previously Paid:
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Schedule or Registration Statement No.:
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COMPASS
MINERALS INTERNATIONAL, INC.
9900
West 109th Street,
Suite 600
Overland
Park, Kansas 66210
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held May 8, 2008
To Our
Stockholders:
We
cordially invite you to attend the 2008 annual meeting of stockholders of
Compass Minerals International, Inc. The meeting will take place at the
Doubletree Hotel Overland Park-Corporate Woods, 10100 College Blvd., Overland
Park, Kansas 66210 on Thursday, May 8, 2008, at 9:00 a.m. We look
forward to your attendance either in person or by proxy.
The
purpose of the meeting is to:
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1.
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Elect
three directors, each for a term of three
years;
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2.
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Ratify
the appointment of Ernst & Young LLP as Compass Minerals’
independent auditors for fiscal year 2008;
and
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3.
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Transact
any other business that may properly come before the meeting and any
postponement or adjournment of the
meeting.
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Only
stockholders of record at the close of business on March 24, 2008 may vote
at the meeting or any postponements or adjournments of the meeting.
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By
order of the Board of Directors,
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Vice
President, Chief Financial Officer,
Secretary
and Treasurer
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April 4,
2008
Please
complete, date, sign and return the accompanying proxy card. The enclosed return
envelope requires no additional postage if mailed in either the United States or
Canada.
Your
vote is very important. Please vote regardless of whether or not you plan to
attend the meeting.
Important
notice regarding the availability of proxy materials for the Annual Meeting to
be held
on
May 8, 2008. The Company’s Proxy Statement and Annual Report to security
holders for
the
fiscal year ended December 31, 2007 is also available at
http://www.proxydocs.com/cmp.
COMPASS
MINERALS INTERNATIONAL, INC.
9900
West 109th Street,
Suite 600
Overland
Park, Kansas 66210
2008
PROXY STATEMENT
Compass
Minerals International, Inc. (“Compass Minerals” or the “Company”) is the
second-leading salt producer in North America and the largest in the United
Kingdom (“U.K.”). In addition, Compass Minerals is North America’s leading
producer of sulfate of potash, which is used in the production of specialty
fertilizers for high-value crops and turf, and magnesium chloride, which is a
premium deicing and dust control agent. The Company operates ten production and
packaging facilities, including the largest rock salt mine in the world in
Goderich, Ontario. The Company produces products for highway and consumer
deicing, water conditioning, food preparation, agriculture and other consumer
and industrial applications. The Company also provides records management
services to businesses throughout the U.K.
The Board
of Directors of Compass Minerals (the “Board of Directors” or “Board”) is
furnishing you this proxy statement in connection with the solicitation of
proxies on its behalf for the 2008 annual meeting of stockholders. The meeting
will take place at the Doubletree Hotel Overland Park-Corporate Woods, 10100
College Blvd., Overland Park, Kansas 66210 on Thursday, May 8, 2008, at
9:00 a.m. At the meeting, stockholders will vote on the election of three
directors and the ratification of the appointment of Ernst &
Young LLP as Compass Minerals’ independent auditors for fiscal year 2008,
and will transact any other business that may properly come before the meeting,
although we know of no other business to be presented.
By
submitting your proxy (by signing and returning the enclosed proxy card), you
authorize Rodney L. Underdown, an officer of Compass Minerals, Perry W. Premdas
and Allan R. Rothwell, directors of Compass Minerals, to represent you and vote
your shares at the meeting in accordance with your instructions. They also may
vote your shares to adjourn the meeting and will be authorized to vote your
shares at any postponements or adjournments of the meeting.
Compass
Minerals’ annual report to stockholders for the year ended December 31,
2007 (including Compass Minerals’ audited annual financial statements) is
provided with this proxy statement. The annual report does not constitute a part
of the proxy solicitation materials and is not incorporated by reference into
this proxy statement.
We are
first sending this proxy statement, form of proxy and accompanying materials to
stockholders on or about April 4, 2008. You may also obtain a copy of these
proxy materials and our annual report to stockholders at
http://www.proxydocs.com/cmp.
YOUR
VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE
PROMPTLY SUBMIT YOUR PROXY IN THE ENCLOSED ENVELOPE.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
What
is the purpose of the annual meeting?
At the
annual meeting, the stockholders will be asked to:
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1.
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Elect
three directors, each for a term of three years;
and
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2.
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Ratify
the appointment of Ernst & Young LLP as Compass Minerals’
independent auditors for fiscal year
2008.
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Stockholders
will also transact any other business that may properly come before the meeting.
Members of Compass Minerals’ management team and a representative of
Ernst & Young LLP, Compass Minerals’ independent auditors for
2007, have been invited to be present at the meeting to respond to appropriate
questions from stockholders.
Who
is entitled to vote?
The
record date for the meeting is March 24, 2008. Only stockholders of record
at the close of business on that date are entitled to vote at the meeting. Each
outstanding share of common stock is entitled to one vote for all matters before
the meeting. At the close of business on the record date, there were 32,394,389
shares of Compass Minerals common stock outstanding.
Am
I entitled to vote if my shares are held in “street name?”
If your
shares are held by a bank or brokerage firm, you are considered the “beneficial
owner” of shares held in “street name.” If your shares are held in street name,
these proxy materials are being forwarded to you by your bank or brokerage firm
(the “record holder”) along with a voting instruction card. As the beneficial
owner, you have the right to direct your record holder how to vote your shares
and the record holder is required to vote your shares in accordance with your
instructions. If you do not give instructions to your bank or brokerage firm, it
will nevertheless be entitled to vote your shares with respect to
“discretionary” items but will not be permitted to vote your shares with respect
to “non-discretionary” items. In the case of a non-discretionary item, your
shares will be considered “broker non-votes” on that proposal.
As the
beneficial owner of shares, you are invited to attend the annual meeting. If you
are a beneficial owner, however, you may not vote your shares in person at the
meeting unless you obtain a proxy form from the record holder of your
shares.
How
many shares must be present to hold the meeting?
A quorum
must be present at the meeting for any business to be conducted. The presence at
the meeting, in person or by proxy, of the holders of a majority of the shares
of common stock outstanding on the record date will constitute a quorum. Proxies
received but marked as abstentions or treated as broker non-votes will be
included in the calculation of the number of shares considered to be present at
the meeting.
Who
may attend the annual meeting?
All
Compass Minerals stockholders as of the record date, March 24, 2008, may
attend the annual meeting.
What
if a quorum is not present at the meeting?
If a
quorum is not present at the scheduled time of the meeting, the stockholders who
are represented may adjourn the meeting until a quorum is present. The time and
place of the adjourned meeting will be announced at the time the adjournment is
taken and no other notice will be given.
What
does it mean if I receive more than one proxy card?
It means
that your shares are held in more than one account at the transfer agent and/or
with banks or brokers. Please vote all of your shares by completing and
returning each proxy card you receive.
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How
do I vote?
If you
properly complete and sign the accompanying proxy card and return it in the
enclosed envelope, it will be voted in accordance with your instructions. The
enclosed envelope requires no additional postage if mailed in either the United
States or Canada.
If your
shares are held in street name, you may be able to vote your shares
electronically by telephone or on the Internet. A large number of banks and
brokerage firms participate in a program provided through Broadridge Financial
Solutions, Inc. that offers telephone and Internet voting options. If your
shares are held in an account at a bank or brokerage firm that participates in
the Broadridge program, you may vote those shares electronically by telephone or
on the Internet by following the instructions on the voting form provided to
you.
If you
are a registered stockholder and attend the meeting, you may deliver your
completed proxy card in person. Additionally, we will pass out written ballots
to registered stockholders who wish to vote in person at the meeting. Beneficial
owners of shares held in street name who wish to vote at the meeting must obtain
a proxy form from their record holder.
Can
I change my vote after I submit my proxy?
Yes, you
may revoke your proxy and change your vote:
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by
signing another proxy form with a later date;
or
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if
you are a registered stockholder, by giving written notice of such
revocation to the Secretary of Compass Minerals prior to or at the meeting
or by voting in person at the
meeting.
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Your
attendance at the meeting itself will not revoke your proxy unless you give
written notice of revocation to the Secretary before your proxy is voted or you
vote in person at the meeting.
Who
will count the votes?
Compass
Minerals’ transfer agent, Computershare Trust Company, N.A., will tabulate and
certify the votes. A representative of the transfer agent will serve as the
inspector of election.
How
does the Board of Directors recommend I vote on the proposals?
Your
Board recommends that you vote:
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FOR
the election of the three nominees to the Board of Directors;
and
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FOR
the ratification of Ernst & Young LLP as Compass Minerals’
independent auditors.
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What
if I do not specify how my shares are to be voted?
If you
submit a proxy, but do not indicate any voting instructions, your shares will be
voted:
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FOR
the election of the three nominees to the Board of Directors;
and
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FOR
the ratification of Ernst & Young LLP as Compass Minerals’
independent auditors.
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Will
any other business be conducted at the meeting?
We know
of no other business that will be presented at the meeting. If any other matter
properly comes before the stockholders for a vote at the meeting, however, the
proxy holders will vote your shares in accordance with their best
judgment.
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How
many votes are required to elect the director nominees?
The
affirmative vote of a plurality of the votes cast at the meeting is required to
elect the three nominees as directors. This means that the three nominees will
be elected if they receive more affirmative votes than any other person. If you
mark “Withhold Authority” with respect to one or more nominees, your shares will
not be voted with respect to the person or persons indicated, although they will
be counted for purposes of determining whether there is a quorum.
What
happens if a nominee is unable to stand for election?
If a
nominee is unable to stand for election, the Board of Directors may either
reduce the number of directors to be elected or select a substitute nominee. If
a substitute nominee is selected, the proxy holders will vote your shares for
the substitute nominee unless you have withheld authority.
How
many votes are required to ratify the appointment of Compass Minerals’
independent auditors?
The
ratification of the appointment of Ernst & Young LLP as Compass
Minerals’ independent auditors requires the affirmative vote of a majority of
the shares entitled to vote, whether present at the meeting in person or by
proxy.
How
will abstentions be treated?
Abstentions
will be treated as shares present for quorum purposes and entitled to vote, so
they will have the same practical effect as votes against a
proposal.
How
will broker non-votes be treated?
Broker
non-votes will be treated as shares present for quorum purposes but not entitled
to vote, so they will not affect the outcome of any proposal.
Where
can I find the voting results of the annual meeting?
We plan
to announce preliminary voting results at the annual meeting and to publish
final results in our Quarterly Report on Form 10-Q for the quarter ending
June 30, 2008, which we intend to file with the Securities and Exchange
Commission (“SEC”) by August 9, 2008.
PROPOSAL
1—ELECTION OF DIRECTORS
Current
Nominees
The Board
of Directors currently consists of eight directors divided into three classes
(Class I, Class II and Class III.) Directors in each class are
elected to serve for three-year terms that expire in successive years. The terms
of the Class II directors will expire at the upcoming annual meeting. The
Board of Directors has nominated Vernon G. Baker, II, Bradley J. Bell and
Richard S. Grant for election as Class II directors for three-year terms
expiring at the annual meeting of stockholders to be held in 2011 and until
their successors are elected and qualified. Vernon G. Baker, II, Bradley J. Bell
and Richard S. Grant currently serve as Class II directors.
Each
nominee has consented to being named in this proxy statement and has agreed to
serve if elected. If a nominee is unable to stand for election, the Board of
Directors may either reduce the number of directors to be elected or select a
substitute nominee. If a substitute nominee is selected, the proxy holders will
vote your shares for the substitute nominee unless you have withheld
authority.
The
affirmative vote of a plurality of the votes cast at the meeting is required to
elect the three nominees as directors. This means that the three nominees will
be elected if they receive more affirmative votes than any other
person.
YOUR
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
ELECTION
OF EACH OF THE THREE NOMINEES.
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The
following table sets forth, with respect to each nominee, his name, age,
principal occupation and employment during the past five years, the year in
which he first became a director of Compass Minerals and directorships held in
other public companies during the past five years.
NOMINEES
FOR ELECTION AS CLASS II DIRECTORS FOR A THREE-YEAR
TERM
EXPIRING AT THE 2011 ANNUAL MEETING
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Director
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Age
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Principal
Occupation and Directorships
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Mr. Vernon
G. Baker, II
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54
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Vernon
G. Baker, II has been a director since May 2005. Mr. Baker is Senior
Vice President and General Counsel for ArvinMeritor, Inc., a global
supplier of motor vehicle systems and components. He joined ArvinMeritor’s
predecessor in interest, Meritor Automotive, Inc., in 1999 as Senior
Vice President, General Counsel and Secretary.
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Mr. Bradley
J. Bell
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Bradley
J. Bell has been a director since December 2003. Mr. Bell has been
Executive Vice President and Chief Financial Officer of Nalco Holding
Company since November 2003. From 1997 to 2003, Mr. Bell served as
Senior Vice President and Chief Financial Officer of Rohm and Haas
Company. Mr. Bell is also a director and chairman of the audit
committee of IDEX Corporation.
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Mr. Richard
S. Grant
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61
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Richard
S. Grant has been a director since April 2004. From January 1998 through
December 2002, Mr. Grant served as Chief Executive Officer of BOC
Process Gas Solutions, a global business providing utilities and services
primarily to the chemical, petrochemical and metals industries.
Concurrently he served as a director of the BOC Group plc and
Chairman of CNC sa, a Mexican joint venture. Mr. Grant is also a
director of BlueLinx Holdings, Inc. and was previously a director of
Distributed Energy Systems
Corporation.
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Continuing
Directors
The terms
of Compass Minerals’ two Class I and three Class III directors expire
at the annual meeting of stockholders in 2010 and 2009, respectively. The
following tables set forth, with respect to Class I and Class III
directors, their names, ages, principal occupations and directorships during the
past five years, the year in which they first became directors of Compass
Minerals, and directorships in other public companies.
CLASS
I DIRECTORS CONTINUING IN OFFICE
WHOSE
TERMS EXPIRE AT THE 2010 ANNUAL MEETING
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Director
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Age
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Principal
Occupation and Directorships
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Dr. Angelo
C. Brisimitzakis
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49
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Angelo
C. Brisimitzakis has been a director since May 2006, when he was appointed
to the Board of Directors and retained as President and CEO of the
Company. Dr. Brisimitzakis was employed from 1998 until 2005 at Great
Lakes Chemical Corporation last serving as Executive Vice President and
General Manager of the flame retardants and performance products division.
Dr. Brisimitzakis joined Great Lakes Chemical Corporation after
fifteen years of service with General Electric.
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Mr. Timothy
R. Snider
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57
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Timothy
R. Snider has been a director since March 2006. Effective April 1,
2008, Mr. Snider will retire as the President and Chief Operating
Officer of Freeport-McMoran Copper and Gold, Inc. Prior to this
position, he was President and Chief Operating Officer of Phelps Dodge
Corporation. Mr. Snider joined Phelps Dodge Corporation in 1970 in
its copper division.
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5
CLASS
III DIRECTORS CONTINUING IN OFFICE
WHOSE
TERMS EXPIRE AT THE 2009 ANNUAL MEETING
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Director
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Age
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Principal
Occupation and Directorships
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Mr. David
J. D’Antoni
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63
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David
J. D’Antoni has been a director since November 2004. In September 2004,
Mr. D’Antoni retired from Ashland, Inc. where he served as
Senior Vice President and Group Operating Officer of APAC and Valvoline
since March 2000. He also served as President of APAC from July 2003 until
January 2004. Mr. D’Antoni is a director of State Auto Financial
Corporation and Omnova Solutions, Inc.
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Mr. Perry
W. Premdas
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55
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Perry
W. Premdas has been a director since December 2004. Mr. Premdas was
the Chief Financial Officer of Celanese AG and a member of board
management from 1999 to 2004. From 1997 to 1998, Mr. Premdas served
as a Senior Executive Vice President and Chief Financial Officer of
Centeon LLC, a joint venture of Hoechst AG and Rhone Poulenc SA.
Mr. Premdas is a director of Balcham Corporation and Ferro
Corporation.
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Mr. Allan
R. Rothwell
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60
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Allan
R. Rothwell has been a director since March 2006. In April of 2006,
Mr. Rothwell retired from Eastman Chemical Company where he served as
Executive Vice President and President of its Voridian Division.
Mr. Rothwell joined Eastman Chemical in 1969 and held various
positions including President, Chemicals Group, Chief Financial Officer
and Vice President, Strategy and Mergers and
Acquisitions.
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INFORMATION
REGARDING BOARD OF DIRECTORS AND COMMITTEES
Director
Independence
As
required by the rules of the New York Stock Exchange (the “NYSE”), the Board of
Directors evaluates the independence of its members at least annually and at
other appropriate times when a change in circumstances could potentially impact
the independence of one or more directors (e.g., in connection with a
change in employment status.)
Under
NYSE rules, a director is independent if the Board of Directors determines that
he currently has no direct or indirect material relationship with the Company,
and for the last three years:
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the
director has not been an employee of the Company, and no member of the
director’s immediate family has served as an executive officer of the
Company;
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neither
the director nor any member of the director’s immediate family has
received more than $100,000 per twelve-month period in direct compensation
from the Company (excluding director or committee fees, pensions or
deferred compensation for prior
service);
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the
director has not been affiliated with or employed by, and no member of the
director’s immediate family has been affiliated with or employed in a
professional capacity by, the Company’s present or former internal or
external auditors;
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neither
the director nor any member of the director’s immediate family has been
employed as an executive officer by any company whose compensation
committee includes an executive officer of the Company;
and
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the
director has not been employed by, and no member of the director’s
immediate family has been an executive officer of any company that makes
payments to or receives payments from the Company for property or services
in amounts exceeding the greater of $1 million or 2% of such
company’s consolidated gross revenues for any fiscal
year.
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In making
this determination, the Board of Directors broadly considers all relevant facts
and circumstances, including:
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the
nature of any relationships with the Company, including personal and
business relationships as well as any relationships with the director’s
employer or any company on whose board the director
serves;
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the
significance of the relationship to the Company, the other organization
and the individual director;
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whether
or not the relationship is solely a business relationship in the ordinary
course of the Company’s and the other organization’s businesses and does
not afford the director any special benefits;
and
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any
commercial, banking, consulting, legal, accounting, charitable and
familial relationships.
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After
considering the standards for independence adopted by the NYSE and the various
other factors described above, the Board of Directors has determined that, in
its judgment, Vernon G. Baker, II, Bradley J. Bell, David J. D’Antoni,
Richard S. Grant, Perry W. Premdas, Allan R. Rothwell and Timothy R. Snider are
independent. In making these determinations, the Board of Directors has
considered all relevant facts and circumstances. The Board of Directors has also
determined that, in its judgment, there are no other relationships, whether
industrial, banking, consulting, legal, accounting, charitable or familial,
which would impair the independence of any of these directors or nominees. Under
NYSE rules, Dr. Brisimitzakis cannot be deemed independent due to his
current position as a Company employee.
None of
the directors, other than Dr. Brisimitzakis, receive any compensation from
the Company other than customary director fees, lead independent director fees
and fees for chairing Board committees.
Meetings
The Board
of Directors held five meetings and took action by unanimous consent twice
during 2007. All of the directors of the Company attended at least
three-quarters of the meetings held by the Board of Directors and the applicable
committees during their tenure in 2007.
Executive
sessions of non-employee directors are held as part of each regularly scheduled
meeting of the Board of Directors. Any non-employee director can request that an
additional executive session be scheduled. During 2007, Richard S. Grant served
as Lead Independent Director, a position to which he was elected by the Board of
Directors. The Lead Independent Director is charged with chairing the executive
sessions of non-employee directors. The Lead Independent Director also acts as a
liaison between the non-employee directors and the Company’s management and
assists the Company’s Chief Executive Officer in establishing agendas for Board
meetings and prioritizing Board activities and other matters pertinent to the
Company and the Board of Directors. The Company has not named a Chairman of the
Board.
Policies
In 2006,
the Board of Directors adopted a policy limiting the number of public company
boards on which a director may serve. Directors are limited to six board
positions, with the Chief Executive Officer of the Company limited to three
board positions (in both cases the total number includes the Board of Directors
of the Company). In 2007, the Board of Directors reviewed its performance and
the performance of individual directors.
Committees
Committees
of the Board of Directors include an Audit Committee, a Compensation Committee,
a Nominating/Corporate Governance Committee, an Environmental, Health and Safety
Committee and an Operating Committee. Committee memberships are as
follows:
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Audit
Committee
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Compensation
Committee
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Nominating/
Corporate
Governance
Committee
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Environmental,
Health
and
Safety
Committee
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Operating
Committee
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Bradley
J. Bell
Chair
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David
J. D’Antoni
Chair
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Richard
S. Grant
Chair
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Vernon
G. Baker, II
Chair
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Angelo
C. Brisimitzakis
Chair
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Richard
S. Grant
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Perry
W. Premdas
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Vernon
G. Baker, II
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Angelo
C. Brisimitzakis
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David
J. D’Antoni
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Perry
W. Premdas
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Allan
R. Rothwell
Timothy
R. Snider
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Allan
R. Rothwell
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David
J. D’Antoni
Timothy
R. Snider
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Richard
S. Grant
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Audit
Committee. The Audit Committee has been established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The Audit Committee held ten meetings in 2007. The Audit Committee is governed
by the Audit Committee Charter, which is available on the Company’s website
(www.compassminerals.com). The Company will furnish a copy of the charter
without charge upon written request to the Company at 9900 West 109th Street,
Suite 600, Overland Park, KS 66210, Attn: Secretary. The functions of the
Audit Committee are described in the Audit Committee Charter and
include:
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overseeing
the work of the Company’s internal accounting and auditing processes and
discussing with management the Company’s processes to manage business and
financial risk, and to ensure compliance with significant applicable
legal, ethical and regulatory
requirements;
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responsibility
for the appointment, compensation, retention and oversight of the
independent registered public accountants engaged to prepare or issue
audit reports on the financial statements of the Company;
and
|
|
|
•
|
responsibility
for overseeing the independent registered public accountants’
qualifications and independence.
|
The Audit
Committee relies on the expertise and knowledge of management, the Company’s
internal auditors, and the independent registered public accountants in carrying
out its oversight responsibilities.
The
Company has adopted a Code of Conduct and Business Ethics for our directors,
officers, and employees, violations of which are required to be reported to the
Audit Committee. The Code of Conduct and Business Ethics is available on the
Company’s website (www.compassminerals.com). The Company will furnish a copy of
the Code of Conduct and Business Ethics without charge upon written request to
the Company at 9900 West 109th Street,
Suite 600, Overland Park, KS 66210, Attn: Secretary.
The Board
of Directors has affirmatively determined that, in its judgment, each member of
the Audit Committee meets the independence requirements for Audit Committee
members as established by the NYSE. The Board of Directors has determined that
Bradley J. Bell and Perry W. Premdas are each an “audit committee financial
expert,” as defined by applicable rules of the SEC. A report of the Audit
Committee is set forth on pages 14 and 15 of this proxy
statement.
Compensation
Committee. The Compensation Committee held five meetings in
2007. The Compensation Committee is governed by the Compensation Committee
Charter which is available on the Compass Minerals website
(www.compassminerals.com). The Company will furnish a copy of the charter
without charge upon written request to the Company at 9900 West 109th Street,
Suite 600, Overland Park, KS 66210, Attn: Secretary. The Compensation
Committee is charged with, among other things:
|
|
•
|
at
least annually, reviewing the compensation philosophy of the
Company;
|
|
|
•
|
at
least annually, reviewing and approving corporate goals and objectives
relating to the compensation of the CEO, evaluating the performance of the
CEO in light of those goals and objectives, and determining and approving
the compensation of the CEO based on such
evaluation;
|
|
|
•
|
at
least annually, reviewing the succession and development plans for the CEO
and all executive officers;
|
|
|
•
|
at
least annually, reviewing and approving all compensation, including
perquisites, for all other executive officers of the Company with a base
salary equal to or greater than
$150,000;
|
|
|
•
|
making
recommendations to the Board of Directors with respect to non-CEO
compensation, incentive-compensation plans, equity-based plans, retirement
plans, and reviewing and approving all officers’ employment agreements and
severance arrangements;
|
|
|
•
|
from
time to time, reviewing the compensation of the Board as compared to other
similarly sized or industry-related
companies;
|
|
|
•
|
preparing
and reviewing an annual report on compensation for inclusion in the
Company’s proxy materials in accordance with applicable rules and
regulations;
|
|
|
•
|
at
least annually, reviewing and evaluating its own performance including its
compliance with its charter and reporting to the Board of
Directors;
|
|
|
•
|
at
least annually reviewing and reassessing its charter;
and
|
|
|
•
|
reviewing
and discussing with management the Company’s Compensation
Discussion & Analysis (“CD&A”) and, based on those
discussions, determining whether to recommend to the Board that the
CD&A be included in the Company’s proxy
statement.
|
8
The Board
of Directors has affirmatively determined that, in its judgment, each member of
the Compensation Committee meets the definition of an independent director as
established by the NYSE. A report of the Compensation Committee is set forth on
page 29 of this proxy statement.
Nominating/Corporate
Governance Committee. The Nominating/Corporate Governance
Committee is governed by the Nominating/Corporate Governance Committee Charter,
which is available on the Company’s website (www.compassminerals.com). The
Company will furnish a copy of the charter without charge upon written request
to the Company at 9900 West 109th Street,
Suite 600, Overland Park, KS 66210, Attn: Secretary. The
Nominating/Corporate Governance Committee held four meetings and took action by
unanimous consent twice during 2007. The functions of the Nominating/Corporate
Governance Committee are described in the Nominating/Corporate Governance
Committee Charter and include:
|
|
•
|
identification
of qualified candidates to become Board
members;
|
|
|
•
|
recommendation
of nominees for election as directors at the next annual meeting of
stockholders (or a special meeting of stockholders at which directors are
to be elected);
|
|
|
•
|
recommendation
of minimum qualifications for
directors;
|
|
|
•
|
selection
of candidates to fill vacancies on the
Board;
|
|
|
•
|
development
of policies and procedures for submissions by stockholders of director
candidates and consideration of those candidates by the
Board;
|
|
|
•
|
development
and recommendation to the Board of a set of corporate governance
guidelines and principles applicable to the
Company;
|
|
|
•
|
oversight
of evaluations of Board, committee and CEO performance;
and
|
|
|
•
|
review
of director independence and related party
transactions.
|
The Board
of Directors has affirmatively determined that, in its judgment, each member of
the Nominating/Corporate Governance Committee meets the definition of an
independent director as established by the NYSE.
Environmental,
Health and Safety Committee. The Environmental, Health and
Safety Committee was established to monitor compliance with environmental,
health and safety initiatives and policies adopted by the Company. The Committee
held four meetings in 2007. Under its charter this Committee is charged
with:
|
|
•
|
education
of Company personnel, contractors and visitors to ensure that
environmental, health and safety standards and procedures are understood
and implemented;
|
|
|
•
|
integration
of environmental, health and safety stewardship into all business
decisions;
|
|
|
•
|
design,
operation and management of facilities to protect the environment and the
health and safety of all personnel;
|
|
|
•
|
allocation
of sufficient human and financial resources to implement and sustain the
environmental, health and safety
programs;
|
|
|
•
|
verification
of compliance through self-assessment measures, statistical measures and
key performance indicators; and
|
|
|
•
|
production
and delivery of products and services to customers that protect the safety
of the end user.
|
Operating
Committee. In addition to the committees described above,
Compass Minerals has established an Operating Committee with limited authority
delegated to it by the Board of Directors. The Operating Committee took action
by unanimous consent three times during 2007.
9
CORPORATE
GOVERNANCE GUIDELINES
Consideration
of Director Nominees; Director Qualifications
The Board
of Directors has adopted Corporate Governance Guidelines, which are available on
the Company’s website (www.compassminerals.com). The Company will furnish a copy
of the guidelines without charge upon written request to the Company at 9900
West 109th Street,
Suite 600, Overland Park, KS 66210, Attn: Secretary. The Corporate
Governance Guidelines set forth, among other things, director qualification
standards. While the selection of qualified directors is a complex, subjective
process that requires consideration of many intangible factors, the Corporate
Governance Guidelines provide that the Nominating/Corporate Governance Committee
and the Board of Directors should take into account the following criteria,
among others, in considering directors and candidates for the
Board:
The
minimum qualifications for a director are: (a) personal integrity;
(b) a degree from an accredited college or university; (c) five years
successful experience in a senior business position; (d) good communication
skills; (e) practical, mature business judgment; (f) experience in
analyzing corporate financial statements; (g) experience and effectiveness
working closely with a team of senior business professionals; and (h) an
understanding of organizational structure and accountability, delegation of
authority, compensation practices and the dynamics of competitive
businesses.
Procedures
for Recommendations by Stockholders
The
Nominating/Corporate Governance Committee will consider director candidates
submitted by stockholders of Compass Minerals. Any stockholder who has
beneficially owned more than 5% of the Company’s common stock for at least one
year wishing to submit a candidate for consideration should send the following
information to the Company at 9900 West 109th Street,
Suite 600, Overland Park, Kansas 66210, Attn: Secretary:
|
|
•
|
the
name and address of the stockholder submitting the candidate as it appears
on the Company’s books, the number and class of shares owned beneficially
and of record by such stockholder and the length of period held and proof
of ownership of such shares;
|
|
|
•
|
name,
age and address of the candidate;
|
|
|
•
|
a
detailed description of, among other things, the candidate’s educational
and employment background, material outside commitments (e.g., current
employment responsibilities, memberships on other boards and committees,
charitable foundations, etc.) and a listing of
the candidate’s qualifications to be a director (specifically in relation
to the Corporate Governance
Guidelines);
|
|
|
•
|
any
information relating to such candidate that is required to be disclosed in
solicitations of proxies for election of directors in an election contest,
or is otherwise required, in each case pursuant to the Securities Exchange
Act of 1934 and rules adopted
thereunder;
|
|
|
•
|
a
description of any arrangements or understandings between the recommending
stockholder and such candidate; and
|
|
|
•
|
a
signed statement from the candidate confirming his or her willingness to
serve on the Board of Directors and to comply with the Company’s Code of
Conduct and Business Ethics, if
elected.
|
The
Secretary of Compass Minerals will promptly forward such materials to the
Nominating/Corporate Governance Committee chair. The Secretary will also
maintain copies of such materials for future reference by that Committee when
filling Board positions.
If a
vacancy arises or the Board decides to expand its membership, the
Nominating/Corporate Governance Committee will seek recommendations of potential
candidates from a variety of sources, including incumbent directors,
stockholders, the Company’s management and third-party search firms. At that
time, the Nominating/Corporate Governance Committee will also consider potential
candidates submitted by stockholders in accordance with the procedures described
above. The Nominating/Corporate Governance Committee then evaluates each
potential candidate’s educational background, employment history, outside
commitments and other relevant factors to determine whether he or she is
potentially qualified to serve on the Board. The Committee seeks to identify and
recruit the best available candidates, and it intends to evaluate qualified
stockholder candidates on the same basis as those submitted by other
sources.
10
After
completing this process, the Nominating/Corporate Governance Committee will
determine whether one or more candidates are sufficiently qualified to warrant
further investigation. If the process yields one or more desirable candidates,
the Committee will rank them by order of preference, depending on their
respective qualifications and Compass Minerals’ needs. The Nominating/Corporate
Governance Committee chair, or another director designated by the
Nominating/Corporate Governance Committee chair, will then contact the desired
candidate(s) to evaluate their potential interest and to set up interviews with
the full Nominating/Corporate Governance Committee. All such interviews are held
in person and include only the candidate and the Nominating/Corporate Governance
Committee members. Based upon interview results, the candidate’s qualifications
and appropriate background checks, the Nominating/Corporate Governance Committee
will then decide whether to recommend the candidate’s nomination to the full
Board.
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
The Board
of Directors has adopted the following procedures for stockholders or other
interested parties to send communications to the Board or individual directors
of the Company.
Individuals
seeking to communicate with the Board of Directors should submit their written
comments to the Company at 9900 West 109th Street,
Suite 600, Overland Park, Kansas 66210, Attn: Secretary. The Company’s
Secretary will forward all such communications (excluding routine advertisements
and business solicitations and communications that the Secretary, in his or her
sole discretion, deems to be a security risk or for harassment purposes) to each
member of the Board of Directors or, if applicable, to the individual
director(s) named in the correspondence.
The
Company reserves the right to screen materials sent to its directors for
potential security risks and/or harassment purposes before forwarding interested
party communications to the Board of Directors. The Company’s Secretary will
determine the appropriate timing for forwarding communications to the directors.
The Secretary will consider each communication to determine whether it should be
forwarded promptly or compiled and sent with other communications and other
Board materials in advance of the next scheduled Board meeting.
If an
interested party seeks to communicate exclusively with the Company’s Lead
Independent Director or the non-management directors, such communication should
be sent directly to the Company’s Secretary who will forward any such
communication directly to the Lead Independent Director or the non-management
directors as specified. The Company’s Secretary will first consult with and
receive the approval of the Lead Independent Director before disclosing or
otherwise discussing the communication with members of management or directors
who are members of management.
Although
the Company does not have a formal policy regarding the attendance by members of
the Board of Directors at the annual meetings of stockholders, it encourages the
members of the Board of Directors to attend. In 2007, six of the seven members
of the Board of Directors then serving on the Board attended the annual meeting
of stockholders.
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit
Committee operates pursuant to a written Charter, which has been approved and
adopted by the Board of Directors and is reviewed and reassessed annually by the
Audit Committee. The Audit Committee Charter is available in the Governance
section of the Company’s website (www.compassminerals.com). For the year that
ended December 31, 2007, and as of the date of the adoption of this report,
the Audit Committee consisted of three directors who met the independence and
experience requirements of the New York Stock Exchange. The Board of Directors
has determined that Mr. Bell and Mr. Premdas are each an “audit
committee financial expert” as defined by the applicable rules of the Securities
and Exchange Commission.
The Audit
Committee reviews Compass Minerals’ financial reporting process on behalf of the
Board of Directors and oversees the entire audit function, including the
selection of independent registered public accountants. Management of the
Company has the primary responsibility for the Company’s financial reporting
process, principles and internal controls, as well as preparation of its
financial statements. The Company’s independent registered public accountants
are responsible for performing an audit of the Company’s financial statements
and expressing an opinion as to the conformity of such financial statements to
accounting principles generally accepted in the United States.
In
fulfilling its responsibilities, the Audit Committee reviewed and discussed with
management the audited financial statements for the year that ended
December 31, 2007, including a discussion of the acceptability and quality
of the accounting principles, the reasonableness of significant accounting
judgments and critical accounting policies and estimates, the clarity of
disclosures in the financial statements and management’s assessment and report
on internal control over financial reporting. The Audit Committee also discussed
with the Chief Executive Officer and Chief Financial Officer their
11
respective
certifications with respect to Compass Minerals’ Annual Report on Form 10-K
for the year that ended December 31, 2007, and discussed with management
its assessment of internal controls over financial reporting.
The Audit
Committee reviewed with the independent registered public accountants, who are
responsible for expressing opinions on: (i) the conformity of those audited
financial statements with generally accepted accounting principles, and
(ii) the effectiveness of internal controls over financial reporting, their
judgments as to the acceptability and quality of Compass Minerals’ accounting
principles and such other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards and under the standards
established by the Public Company Accounting Oversight Board (United States),
including those matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees. In addition, the
Audit Committee has received the written disclosures and the letter from the
independent registered public accountants required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, and
has discussed those disclosures and other matters relating to independence with
the independent registered public accountants.
The Audit
Committee discussed with Compass Minerals’ internal auditors and independent
registered public accountants the overall scope and plans for their respective
audits. The Audit Committee met with the internal auditor and independent
registered public accountants, with and without management present, to discuss
the results of their examinations of Compass Minerals’ internal controls,
including controls over the financial reporting process and the overall quality
of Compass Minerals’ financial reporting.
Members
of the Audit Committee rely, without independent verification, on the
information provided to them and on the representations made by management and
the independent registered public accountants. The Audit Committee members are
not professional accountants or auditors, and their functions are not intended
to duplicate or to certify the activities of management and the independent
registered public accountants, nor can the Audit Committee certify that the
independent registered public accountants are indeed “independent” under
applicable rules. The Audit Committee serves a board-level oversight role in
which it provides advice, counsel and direction to management and the auditors
on the basis of the information it receives, discussions with management and the
auditors, and the experience of the Audit Committee’s members in business,
financial and accounting matters.
In
reliance on the reviews and discussions with management and with the independent
registered public accountants referred to above, and the receipt of an
unqualified opinion from Ernst & Young LLP dated February 21,
2008, regarding the audited financial statements of Compass Minerals for the
year that ended December 31, 2007, as well as the opinion of
Ernst & Young LLP on the effectiveness of internal controls over
financial reporting, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Annual Report on
Form 10-K for the year ended December 31, 2007 for filing with the
Securities and Exchange Commission.
|
Bradley
J. Bell, Chair
Richard
S. Grant
Perry
W. Premdas
|
The
foregoing Report of the Audit Committee of the Board of Directors shall not be
deemed to be soliciting material or be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent Compass Minerals specifically incorporates this information by
reference and shall not otherwise be deemed to be filed with the SEC under such
Acts.
PROPOSAL
2—RATIFICATION OF APPOINTMENT OF
INDEPENDENT
AUDITORS
Appointment
of Auditors
Ernst &
Young LLP (“Ernst & Young”) audited the Company’s annual financial
statements for the year ended December 31, 2007. The Audit Committee has
appointed Ernst & Young to be the Company’s independent auditors for
the fiscal year ending December 31, 2008. The stockholders are asked to
ratify this appointment at the annual meeting. The Company has invited
representatives of Ernst & Young to be present at the annual meeting
and expects that they will attend. If present, these representatives will have
the opportunity to make a statement, if they desire to do so, and will be
available to respond to appropriate questions from the stockholders at the
annual meeting.
12
Auditor
Fees
The
following table shows the fees paid or accrued for audit and other services
provided by Ernst & Young for fiscal 2007 and 2006 (in
millions):
|
2007
|
2006
|
|
|
Audit
Fees(a)
|
$0.9
|
$0.8
|
|
Audit-Related
Fees(b)
|
0.1
|
0.0
|
|
Tax
Fees(c)
|
0.0
|
0.1
|
|
All
Other Fees
|
0.0
|
0.0
|
|
Total
|
$1.0
|
$0.9
|
|
(a)
|
Relates
to services for the annual financial statement audits included in our
Annual Report on Form 10-K, quarterly reviews of the financial
statements included in our Quarterly Reports on Form 10-Q, other
financial statement audits that were required by SEC rules and reviews of
other SEC filings.
|
|
(b)
|
Relates
to audits of pension and retirement
plans.
|
|
(c)
|
Relates
to services for reviews of certain tax filings as well as research and
advice on tax planning matters.
|
The Audit
Committee’s policy is to pre-approve all audit and audit-related services
provided by the independent registered public accountants. The Audit Committee
considers annually for pre-approval a list of specific services and categories
of services for the upcoming or current fiscal year. All non-audit services that
were not included in the pre-approved list are approved by the Audit Committee
individually, in advance, in accordance with our policy. Any service that is not
included in the approved list of services or that does not fit within the
definition or authority limit of a pre-approved service is required to be
presented separately to the Audit Committee for consideration at its next
regular meeting or, if earlier consideration is required, by other means of
communication. The Audit Committee approved all audit and audit-related services
provided by the independent registered public accountants for 2007 and
2006.
Under
Company policy and/or applicable rules and regulations, the independent
registered public accountants are prohibited from providing the following types
of services to the Company: (i) bookkeeping or other services related to
the Company’s accounting records or financial statements; (ii) financial
information systems design and implementation; (iii) appraisal or valuation
services, fairness opinions or contribution-in-kind reports; (iv) actuarial
services; (v) internal audit outsourcing services; (vi) management
functions; (vii) human resources; (viii) broker-dealer, investment
advisor or investment banking services; (ix) legal services; and
(x) expert services unrelated to the audit.
Vote
Required For Ratification
The Audit
Committee was responsible for selecting Compass Minerals’ independent registered
public accountants for fiscal year 2008. Accordingly, stockholder approval is
not required to appoint Ernst & Young as Compass Minerals’ independent
registered public accountants for fiscal year 2008. The Board of Directors
believes, however, that submitting the appointment of Ernst & Young to
the stockholders for ratification is a matter of good corporate governance. If
the stockholders do not ratify the appointment, the Audit Committee will review
its future selection of independent registered public accountants.
The
ratification of the appointment of Ernst & Young as Compass Minerals’
independent registered public accountants requires the affirmative vote of a
majority of the shares present at the meeting in person or by proxy and entitled
to vote.
YOUR
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR”
THE
RATIFICATION OF ERNST & YOUNG AS INDEPENDENT AUDITORS FOR
2008.
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the amount of Compass Minerals’ common stock
beneficially owned by each director, each executive officer named in the Summary
Compensation table on page 30 and all directors and executive officers as a
group and each beneficial owner of more than 5% of the Company’s outstanding
common stock as of March 12, 2008. Unless otherwise indicated, beneficial
ownership is direct and the person indicated has sole voting and investment
power.
13
|
Shares
Beneficially Owned(1)
|
|||
|
Name
and Address of Beneficial Owner
|
Number
|
Percent
|
|
|
Neuberger
Berman, Inc.(2)
605
Third Ave
New
York, NY 10158
|
4,494,449
|
13.90
|
|
|
FMR LLC
(Fidelity)(3)
82
Devonshire Street
Boston,
MA 02109
|
3,507,958
|
10.85
|
|
|
Capital
Research Global Investors(4)
333
South Hope St., 55th Floor
Los
Angeles, CA 90071
|
2,090,760
|
6.50
|
|
|
Vernon
G. Baker, II(5)
|
8,386
|
*
|
|
|
Bradley
J. Bell(5)
|
42,456
|
*
|
|
|
Angelo
C. Brisimitzakis(5)(6)
|
70,313
|
*
|
|
|
Ronald
Bryan(5)(6)
|
41,918
|
*
|
|
|
Keith
E. Clark(5)(6)
|
57,052
|
*
|
|
|
David
J. D’Antoni(5)
|
19,042
|
*
|
|
|
John
S. Fallis(5)(6)
|
229,055
|
*
|
|
|
David
J. Goadby(5)(6)
|
42,916
|
*
|
|
|
Richard
S. Grant(5)(6)
|
42,497
|
*
|
|
|
Perry
W. Premdas(5)
|
9,650
|
*
|
|
|
Allan
R. Rothwell(5)
|
2,764
|
*
|
|
|
Timothy
R. Snider(5)
|
4,951
|
*
|
|
|
Rodney
L. Underdown(5)(6)
|
68,479
|
*
|
|
|
All
directors and executive officers as a group (13
persons)(6)
|
639,479
|
1.97
|
|
|
*
|
Each
having less than 1% of the Company’s total outstanding common
stock.
|
|
(1)
|
For
purposes of this table, information as to the percentage of shares
beneficially owned is calculated based on 32,394,389 shares of common
stock outstanding, except that the ownership percentages shown for owners
of more than 5% of the Company’s common stock are based on the respective
Schedule 13G Information Statements at December 31, 2007. The
amounts and percentages of common stock beneficially owned are reported on
the basis of regulations of the SEC governing the determination of
beneficial ownership of securities. Under SEC rules, a person is deemed to
be a “beneficial owner” of a security if that person has or shares voting
power, which includes the power to vote or direct the voting of such
security, or investment power, which includes the power to dispose of or
to direct the disposition of such security. A person is also deemed to be
a beneficial owner of any securities of which that person has a right to
acquire beneficial ownership within sixty days. Securities that can be so
acquired are deemed to be outstanding for purposes of computing such
person’s ownership percentage, but not for purposes of computing any other
person’s percentage. Under these rules, more than one person may be deemed
beneficial owner of the same securities and a person may be deemed to be a
beneficial owner of securities as to which such person has no economic
interest. Except as otherwise indicated in these footnotes, each of the
beneficial owners has, to our knowledge, sole voting and investment power
with respect to the indicated shares of common
stock.
|
|
(2)
|
Based
on a Schedule 13G Information Statement filed by Neuberger
Berman Inc. on February 12, 2008 for December 31, 2007.
Such Schedule 13G discloses that Neuberger Berman Inc. and
Neuberger Berman, LLC have sole voting power over 38,500 shares of
the Company’s common stock and shared voting power over 3,654,800 shares
of the Company’s common stock, and shared dispositive power over 4,494,449
shares of the Company’s common stock. Neuberger Berman
Management Inc. has shared voting power and shared dispositive power
over 3,654,800 shares of the Company’s common stock. Neuberger Berman
Equity Funds has shared voting power and shared dispositive power over
3,615,300 shares of Company’s common
stock.
|
|
(3)
|
Based
on a Schedule 13G Information Statement filed by FMR LLC (the
successor of FMR Corp.) on February 13, 2008 for December 31,
2007. Such Schedule 13G discloses that FMR LLC has sole voting
power over 223,700 shares and sole dispositive power over 3,507,958 shares
of the Company’s common stock. Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR LLC, is the beneficial
owner of 3,284,258 shares of Company common stock. Each of FMR LLC
and Edward C. Johnson 3d has the sole dispositive power for these
3,284,258 shares. Pyramis Global Advisors, LLC an indirect
wholly-owned subsidiary of FMR LLC is the beneficial owner of 55,000
shares of Company common stock and each of FMR LLC and Edward C.
Johnson 3d has sole
|
14
voting
and dispositive power over these 55,000 shares of common stock. Pyramis Global
Advisors Trust Company, an indirect wholly-owned subsidiary of FMR LLC, is
the beneficial owner of 166,100 shares of Company common stock. Each of FMR Corp
and Edward C. Johnson 3d has the sole dispositive power for these 166,100 shares
of common stock. Fidelity International Limited is the beneficial owner 2,600
shares of Company common stock. Partnerships controlled by members of the family
of Edward C. Johnson 3d or related trusts have the right to vote approximately
47% of the voting stock of Fidelity International Limited.
|
(4)
|
Based
on a Schedule 13G Information Statement filed by Capital Research
Global Investors dated December 31, 2007. Such Schedule 13G
discloses that Capital Research Global Investors (a division of
Capital Research and Management Company) has sole voting power over
2,090,760 shares of the Company’s common stock and sole dispositive power
over 2,090,760 shares of the Company’s common
stock.
|
|
(5)
|
The
address of each of Messrs. V. Baker, II, B. Bell, R. Bryan, K. Clark,
D. D’Antoni, J. Fallis, D. Goadby, R. Grant, P. Premdas, A. Rothwell,
T. Snider, R. Underdown, and Dr. A. Brisimitzakis is c/o Compass
Minerals International, Inc., 9900 W. 109th St., Ste. 600,
Overland Park, Kansas 66210.
|
|
(6)
|
Includes
options that are currently exercisable or become exercisable within sixty
days of March 12, 2008.
|
COMPENSATION
DISCUSSION & ANALYSIS
Introduction
This
Compensation Discussion and Analysis provides information regarding the
compensation paid to our Chief Executive Officer, Chief Financial Officer and
certain other executive officers who were the most highly compensated in fiscal
year 2007. These individuals, referred to as “named executive officers” or
“NEOs,” and their positions as of December 31, 2007, are identified
below.
|
|
•
|
Angelo
C. Brisimitzakis, President and Chief Executive Officer
(“CEO”)
|
|
|
•
|
Rodney
L. Underdown, Vice President and Chief Financial Officer
(“CFO”)
|
|
|
•
|
Ronald
Bryan, Vice President and General Manager, Great Salt Lake Minerals
Corporation and Salt Union Limited.
|
|
|
•
|
Keith
E. Clark, Vice President and General Manager, Consumer and
Industrial
|
|
|
•
|
John
S. Fallis, Vice President and General Manager, North America
Highway
|
|
|
•
|
David
J. Goadby, Vice President, Strategic
Development
|
Our
executive compensation and benefits programs are designed to create stockholder
value by attracting, motivating, developing, and retaining senior executives who
can make significant contributions to the growth and development of our
business. The Compensation Committee of our Board, which we refer to as the
Compensation Committee, has a key role in ensuring that the compensation and
benefits we provide to our executives will provide a basis for the achievement
of our strategic objectives. To accomplish those goals, our executive
compensation plan consists of three principal elements: base salary, annual
incentive bonus and long-term equity incentives.
EXECUTIVE
COMPENSATION OBJECTIVES AND PHILOSOPHY
Compensation
Objectives
The total
compensation program for Compass Minerals’ executives is designed to support the
realization of Compass Minerals’ business objectives and promotion of
stockholder interests. The objectives of Compass Minerals’ compensation program
are as follows:
|
|
•
|
Encourage
superior performance, promote accountability and ensure that executive
interests are aligned with the interests of
stockholders.
|
15
|
|
•
|
Attract,
develop, and retain highly-qualified
people.
|
|
|
•
|
Motivate
and reward employees for the achievement of Compass Minerals’ measures of
success:
|
|
|
•
|
Total
stockholder return, as measured by stock price appreciation and
dividends
|
|
|
•
|
Company
financial and safety performance
|
|
|
•
|
Individual
performance on specific financial, operational, strategic and personal
goals
|
|
|
•
|
Reinforce
and motivate full use of Compass Minerals’ resources to maximize earnings,
cash flow and growth, all within a safe and environmentally responsible
environment.
|
Compensation
Philosophy
To best
achieve these objectives, our compensation program is designed to:
|
|
•
|
Drive
results. The program emphasizes variable, incentive
award opportunities which are payable only if specified goals are achieved
or Compass Minerals’ stock price appreciates. The largest part of the
incentive award for named executive officers is focused on long-term
performance based on Compass Minerals’ return to stockholders. For named
executive officers, Compass Minerals provides annual and long-term
incentive award opportunities which depend on our performance and are
designed to represent the majority of named executive officers’ total
compensation.
|
|
|
•
|
Reward individual
performance. Salary, annual incentive plan awards, and
long-term incentive awards are based on an individual’s job (role and
level), experience, and performance against specified financial,
operational and strategic business goals (as appropriate to the
individual’s position). Also considered are Compass Minerals’ performance,
the desired pay relationships among executive employees, and market
practices.
|
|
|
•
|
Be competitive and encourage
continued service. The pay program design and levels are
set considering the practices of similar companies with which we compete
for talent. All of our long term incentive awards are subject to a
“vesting” schedule which provides an incentive for continued
employment.
|
|
|
•
|
Be cost
effective. Annual incentive awards are earned only as
hurdles are attained as specified goals are
achieved.
|
|
|
•
|
Align interests with
stockholders. Long-term incentive awards are delivered
as equity awards which pay cash dividends quarterly to senior executives.
Executives are required to maintain a minimum level of stock ownership,
which causes executives to manage from an owner’s perspective and align
their financial interest with those of Compass Minerals’
stockholders.
|
|
|
•
|
Encourage health and
safety. Meeting health and safety improvement goals is a
key factor of our Annual Incentive Plan
awards.
|
These
principles have enabled us to deliver stockholder value consistently over time,
and have helped us develop and retain strong executive talent.
HOW
WE DETERMINE COMPENSATION
Independent
Compensation Committee Determines All Executive Compensation
The
Compensation Committee determines all compensation for the named executive
officers. All four Compensation Committee members are independent directors, as
defined by the NYSE listing standards and the applicable tax and securities
rules and regulations. The Compensation Committee’s function is more fully
described in its charter, which is available at www.compassminerals.com under
the Governance section.
16
During
the first quarter of each fiscal year, the Compensation Committee conducts an
evaluation of each named executive officer to determine if any changes in the
officer’s compensation are appropriate based on a market analysis conducted by
an independent compensation consultant and the considerations described below.
The CEO does not participate in the Compensation Committee’s deliberations or
decisions with regard to his compensation. At the Compensation Committee’s
request, however, the CEO reviews with the Compensation Committee the
performance of the other named executive officers, but no other named executive
officer has any input into executive compensation decisions. The Compensation
Committee gives considerable weight to the CEO’s evaluation of the other named
executive officers because of his direct knowledge of each officer’s performance
and contributions. For each officer, the Compensation Committee members utilize
data from the consultant as well as other information, to independently
determine each component of compensation based on their collective assessment of
the officer’s performance as well as Compass Minerals’ overall financial
performance.
The
Role of Compensation Consultants
The
Compensation Committee has selected and directly retained the services of
Frederic W. Cook & Co., Inc. (“F.W. Cook”), an executive
compensation consulting firm. The compensation consultant reports to the
Compensation Committee. No member of the Compensation Committee or any named
executive officer has any affiliation with F.W. Cook. The Compensation Committee
periodically seeks input from F.W. Cook on a range of external market factors,
including evolving compensation trends, status of the current labor market,
appropriate comparison companies and market survey data. F.W. Cook also provides
the Compensation Committee with directional recommendations regarding the design
of Compass Minerals’ compensation programs for its executives. From time to
time, management may use the services of F.W. Cook with the prior approval of
the Compensation Committee.
The
Compensation Committee uses F. W. Cook to obtain comparative executive and
director compensation information benchmarked to specific peer groups that
compete with us in labor and capital markets and that follow similar pay models.
We find that using a consultant for this information, analysis, and guidance is
a cost effective approach for benchmarking executive total
compensation.
The
Role of Peer Groups and Benchmarking
In
setting 2007 compensation and with the assistance of F.W. Cook, the Compensation
Committee identified the group of peer companies listed below that compete with
Compass Minerals in labor markets and that follow similar pay models. Based on
analyses and recommendations of F.W. Cook, the Compensation Committee selected
companies that operated in similar industry groups, with revenues that ranged
between approximately one-third and three times Compass Minerals’ revenues, and
with market capitalizations that ranged between approximately one-fourth and
four times that of Compass Minerals to use for benchmark comparisons. Compass
Minerals’ market capitalization was approximately in the middle of the group to
avoid distortion from size differences:
|
A.
Schulman, Inc.
|
H.B.
Fuller Company
|
|
Alleghany
Corporation
|
LESCO, Inc.
|
|
AMCOL
International Corporation
|
MacDermid,
Incorporated
|
|
Arch
Chemicals, Inc.
|
Minerals
Technologies, Inc.
|
|
CF
Industries Holdings, Inc.
|
OMNOVA
Solutions, Inc.
|
|
Eagle
Materials, Inc.
|
Quaker
Chemical Corporation
|
|
Florida
Rock Industries, Inc.
|
Tredegar
Corporation
|
|
FMC
Corporation
|
UAP
Holdings Corporation
|
With the
guidance of F.W. Cook, the Compensation Committee reviews a summary of
compensation practices of these benchmark peer companies and annually compares
its three principal elements of executive total compensation (base salary,
annual incentive compensation plan and long-term equity incentive plan) with
similar programs at these peer companies to ensure that Compass Minerals’
executive total compensation is within a reasonably competitive
range.
As
further discussed below, the Compensation Committee also considers elements
which include individual factors such as performance, responsibilities and
experience. See
“ELEMENTS OF COMPENSATION.”
Our
executive total compensation program is intended to stand near the median of
total executive compensation programs of our peer companies.
17
ELEMENTS
OF COMPENSATION
The
following discussion generally applies to compensation for all named executive
officers. The three primary components of our compensation program are base
salary, annual incentive bonus program, and long-term equity incentives. We also
offer additional benefits (primarily consisting of a health/welfare plan, a
savings (401(k)) plan and a deferred compensation plan) and perquisites, as
described below.
The
Compensation Committee seeks to reward high performance while recognizing that
uncontrollable events like weather patterns can highly influence actual
financial results in any given year. Therefore, our compensation program
combines a balance of compensation elements. Cash incentives are based on
one-year Annual Incentive Plan award targets and are only paid if goals are
achieved. Long-term incentives are granted in the form of restricted stock units
and stock options, both with dividend equivalent rights. These long term
incentives align management with stockholder interests over multiple
years.
Base
Salary
Base
salary is the fixed element of executive total compensation for services
rendered during the fiscal year. In setting base salaries for fiscal 2007, the
Compensation Committee considered (1) the relationship between competitive
salaries and recruiting and retaining talent, (2) benchmark data,
(3) the experience, knowledge, responsibilities and performance of the
individual named executive officer. The Compensation Committee annually approves
the base salaries for the named executive officers. Both Dr. Brisimitzakis
and Mr. Goadby have employment agreements that address the review of their
base salaries on an annual basis, and Dr. Brisimitzakis’ employment
agreement sets a minimum base salary below which his consent is needed. See “OTHER COMPENSATION
POLICIES AND AGREEMENTS—Employment Contracts.”
Base
salaries for 2007 reflected salary increases in March 2007 (supported by the
factors listed above.) Dr. Brisimitzakis’ salary was based on twelve full
months of employment in 2007, compared to less than seven months of employment
in 2006. Mr. Goadby’s base salary as shown in the Summary Compensation
table was influenced by the strength of the British pound sterling.
Annual
Incentive Compensation Plan
Our
annual incentive compensation plan (“Annual Incentive Plan” or “AIP”),
established under the 2005 Incentive Award Plan approved by our stockholders in
May 2005 (the “2005 Plan”), is a variable performance-based element of executive
compensation for services rendered during the fiscal year which is based on
operational and financial performance factors (based on job description) and by
an environmental, health and safety factor (based on achieving target
improvement goals.) All cash awards under the Annual Incentive Plan (1) are
based on predetermined annual performance related criteria (and are therefore
not considered standard payment for services and are not guaranteed),
(2) are granted at the discretion of the Compensation Committee upon
recommendation of the CEO with input from the Vice President of Human Resources,
and (3) all payments are discretionary and may be evaluated, modified or
revoked at the discretion of the Compensation Committee at any
time.
The
Annual Incentive Plan is designed to ensure that named executive officers are
compensated for achievement based on annual operating performance compared to
pre-established operating performance goals. The Compensation Committee has
discretion to reduce (or increase) incentive compensation based on this
financial comparison as well as other non-financial goals. For 2007, the
Compensation Committee used its discretion to determine whether the CEO achieved
personal goals, and in acting on the recommendation of the CEO, to determine
whether other named executive officers achieved their personal goals. Named
executive officers’ actual achievement of personal goals ranged from 75% to 110%
of target amounts for fiscal 2007. The Annual Incentive Plan provides that in
the event of an accounting restatement reducing the corporate or divisional
financials on which this incentive award was based, Compass Minerals may, at its
sole discretion, require repayment from plan participants of all or any portion
of any incentive awards which were incorrectly stated. In such case, all
participants who receive written notification and request for repayment are
required to comply.
Summary of AIP
Award Process. Generally, the AIP award process involves
(1) setting financial goals based on our annual operating plan,
(2) setting financial Annual Incentive Plan award targets denominated as a
percentage of base salary, (3) setting qualitative and quantitative
personal performance goals, (4) weighting the goals based on individual
corporate responsibility, (5) comparing the Annual Incentive Plan award
targets to results as certified by the CFO and personal performance goal results
to determine any applicable AIP award target adjustments, and
(6) multiplying the resulting overall AIP award by a health and safety
improvement factor.
18
Setting Financial
AIP Targets. The Compensation Committee establishes
performance goals each year based on financial objectives in Compass Minerals’
annual operating plan. This plan is reviewed by the entire Compass Minerals
Board of Directors and reflects consideration of normalized prior year actual
results (normalized to reflect below average winter weather in 2006), the
expected business environment in 2007 and a targeted improvement for fiscal year
2007.
Based on
this annual operating plan, the Compensation Committee established Annual
Incentive Plan targets for EBITDA and Net Operating Cash Flow (as defined below)
as measures of our profitability and cash generating capabilities because these
measures were consistent with the overall philosophy of aligning the interests
of our executives with those of our stockholders. Management’s success in
generating and increasing EBITDA and cash flow in view of our established
markets is considered an important measure of executive performance. The
Compensation Committee also approved using Net Sales Growth (as defined below)
as a performance goal since increasing revenues in excess of rising shipping and
handling costs is also important because underlying sales revenue growth is
essential for sustainable earnings growth.
Goals for
2007 were specified for four key areas, plus an environmental, health and safety
multiplier:
|
|
1.
|
Company
Consolidated and Business Unit Adjusted EBITDA (Adjusted EBITDA is
earnings before interest, taxes, depreciation, depletion and amortization,
other income/expense and other special charges or
income.)
|
|
|
2.
|
Consolidated
and Business-Unit Net Operating Cash Flow (Net Operating Cash Flow is
EBITDA less capital spending, cash interest and cash taxes, less planned
acquisitions and adding or subtracting changes in working capital, other
assets and liabilities excluding
cash.)
|
|
|
3.
|
Consolidated
and Business-Unit Net Sales Growth (Net Sales is gross revenue minus
shipping and handling costs.)
|
|
|
4.
|
Personal
Performance Objectives
|
|
|
5.
|
Environmental
Health and Safety (“EHS”) Incidence Rates (This measure is used as Annual
Incentive Plan multiplier called an “EHS Multiplier”, which we use to
encourage and reward safe operations and which is further discussed below
in “Environmental, Health and Safety
Factor”.)
|
The
Compensation Committee selected the foregoing performance goals because they are
important indicators of increased stockholder value.
Annual Incentive
Plan Award Target Amount. After setting the Company’s
financial performance goals, the Compensation Committee determines the Annual
Incentive Plan award target amount for each named executive officer denominated
as a percentage of base salary. These percentages were determined with input
from F.W. Cook and were generally consistent with median incentive award
percentages for peer companies. For fiscal year 2007, the Annual Incentive Plan
award target amount for Dr. Brisimitzakis was 80% of base salary based on
his employment agreement. For the other named executive officers, the AIP award
target amount was between 40% and 50%. The Compensation Committee set these
percentages near median levels for peer companies to attract and retain
executive talent, while rewarding outstanding financial results, strong
individual performance, and promotion of employee health and
safety.
Personal
Performance Goals. A portion (20%) of each named executive
officer’s Annual Incentive Plan award target amount is based on personal
performance. The Board of Directors establishes CEO personal performance goals
under the Annual Incentive Plan, and the CEO establishes personal performance
goals for other executives.
The goals
are a combination of the current year and longer term business goals, both of
which have an important role in increasing value for our stockholders. Personal
performance objectives are both quantitative and qualitative.
19
Weighting Based
on Responsibilities. As reflected in the two headings of the
following chart, the responsibilities of the named executive officers determine
the weighting of the components under the Annual Incentive Plan. Performance
award targets for “corporate” executive officers (i.e., Chief Executive
Officer, Chief Financial Officer, and Vice President, Strategic Development)
differ from performance award targets for business unit executive officers to
emphasize the executive officer’s responsibility for his business
unit:
|
%
AIP
Weighting
|
CORPORATE EXECUTIVE |
%
AIP
Weighting
|
CORPORATE
EXECUTIVE
|
|
50%
|
Company Consolidated Adjusted EBITDA | 25%
25%
|
Company
Consolidated Adjusted EBITDA
Business-Unit
Adjusted EBITDA
|
|
20%
|
Consolidated Net Operating Cash Flow | 10%
10%
|
Consolidated
Net Operating Cash Flow
Business-Unit
Net Operating Cash Flow
|
|
10%
|
Consolidated Net Sales Growth | 5%
5%
|
Consolidated
Net Sales Growth
Business-Unit
Net Sales Growth
|
|
20%
|
Personal Performance Objectives | 20%
|
Personal
Performance Objectives
|
These
weightings are applied by multiplying the Annual Incentive Plan award target
amount by the goal percentage shown above and then adjusting the result based on
the percentage of the goal achieved (as described in the table
below.)
Financial
Targets. Award levels under the Annual Incentive Plan with
respect to the EBITDA, Net Operating Cash Flow and Net Sales Growth goal
components are based on executive performance as follows:
|
PERCENT
OF GOAL ACHIEVED
|
PERCENT
OF AIP AWARD TARGET PAID
|
|
Less
than or equal to 75%
|
0%
|
|
100%
|
100%
|
|
125%
or greater
|
200%
|
Annual
incentive payments are awarded on a linear sliding scale based on the
achievement of 75% or more of the target goals. The maximum potential award
equals 200% of the target goal.
Environmental,
Health and Safety Factor. The Company and the Compensation
Committee consider success in managing our safety performance as a critical
success factor for all of its executives and therefore uses as a component of
executive total compensation an Environmental Health and Safety multiplier (“EHS
multiplier”) to encourage and reward safe operations. The EHS multiplier is
calculated based on measurable safety goals established by each Business-Unit
and represents an improvement versus best achieved historical performance. The
EHS multiplier is applied on a linear sliding scale to the named executive
officer’s combined Annual Incentive Plan award for all components calculated
above as follows:
|
EHS
RATING ACHIEVED
|
MULTIPLIER
APPLIED
|
|
25%
or more improvement beyond goal
|
1.1
|
|
100%
of goal
|
1.0
|
|
25%
or more shortfall below goal
|
0.9
|
Actual 2007
Annual Incentive Plan Payments. The specific payment amounts
are shown in the Summary Compensation table on page 30. All AIP awards are
approved by the Compensation Committee following its review and approval of plan
objectives and achievement levels as well as individual personal performance
objective achievement.
Our
annual operating plan for 2007 called for Consolidated EBITDA of
$187.5 million, Consolidated Net Operating Cash Flow of $70.2 million
and Consolidated Net Sales Growth of $104.9 million. These amounts were
based on consideration of normalized 2006 actual results (which reflected below
average winter weather), the expected business environment in 2007, and a
targeted improvement for fiscal year 2007 when the annual operating plan was
established. Actual Consolidated EBITDA for 2007 was $184.3 million (93.2%
of the goal), actual Consolidated Net Operating Cash Flow for 2007 was
$66.6 million (79.5% of the goal) and Consolidated Net Sales for 2007 was
$138.2 million (which exceeded the goal by 32%.) Because the Company’s
consolidated EHS rating goals were exceeded by more than 25% for 2007, the EHS
consolidated multiplier was 1.1 for AIP awards for fiscal 2007. These results
are reflected in the final Annual Incentive Payment levels reflected in the
Summary Compensation table below.
20
Long-Term
Equity Incentives
As part
of our market competitive pay package to encourage continued service and
increase stockholder value by aligning executive officers’ interests with
stockholders, we provide long-term equity incentives that are designed to
increase in value the longer an employee continues his or her employment with
Compass Minerals.
In 2007,
the Compensation Committee approved long-term equity incentive awards to named
executive officers under Compass Mineral’s 2005 Plan, approved by stockholders
on August 4, 2005, in two forms: (1) stock options (subject to a
service-based vesting schedule over a four year period) which provide an
incentive to executives to increase stockholder value, and (2) restricted
stock units (full cliff vesting after three years) which provide an incentive to
executives to increase stockholder value and also have a strong
employee-retention effect. The Compensation Committee views an approximately
equal value allocation between options (based on the Black Scholes method) and
restricted stock units as a reasonable mix for achieving management incentive
objectives. In view of the greater per share value of restricted stock units,
executives were awarded fewer restricted stock units than stock options in
fiscal 2007.
To reduce
the risk of improper option grant timing issues, among other reasons, the
Compensation Committee adopted Option Grant Procedures in January 2007. These
Option Grant Procedures address how option grant dates and exercise prices are
determined in different circumstances. These procedures were followed in
granting options in March 2007 for all named executive officers. All options
were granted with an exercise price equal to the closing price of Compass
Minerals common stock on the grant date in accordance with the Option Grant
Procedures.
The
Compensation Committee established a performance hurdle to ensure compliance
with Internal Revenue Code Section 162(m) deductibility. This hurdle was
established within the first sixty days of the new fiscal year and, like the
Annual Incentive Plan financial goals, was derived from Compass Mineral’s annual
business operating plan. See “OTHER COMPENSATION
POLICIES AND AGREEMENTS—Tax and Accounting Considerations.”
The
Compensation Committee, with the guidance of F.W. Cook, has determined that the
payment of dividend equivalents on restricted stock units and stock options
aligns executive officers’ interests with those of stockholders and has
significant employee-retention effects because the executive loses the right to
receive both the award and the future dividends if the executive terminates
employment before the award vests. Dividend equivalents are paid in cash at the
time of, and in an amount equal to, the amount of per share dividends paid to
stockholders and are considered by the Compensation Committee in reviewing an
executive’s total compensation. Dividend equivalents are shown in
footnote 3 to “GRANTS OF PLAN-BASED AWARDS” table below.
OTHER
ELEMENTS OF COMPENSATION
In
addition to the three primary elements of our total compensation program, we
have adopted other compensation elements consistent with the same compensation
philosophy. These additional elements include retirement and deferred
compensation programs, post-termination compensation and
perquisites.
Retirement
and Deferred Compensation Programs
We do not
have defined benefit plans covering our executive officers except for
Mr. Goadby. Effective December 2006 (as provided for in his service
agreement), Mr. Goadby elected to participate in the Salt Union Limited
Defined Contribution Plan (a deferred contribution plan for United Kingdom
employees) and ceased accumulating service benefits attributable to service in
the Salt Union Limited Defined Benefit Plan.
Savings
Plan. The Savings Plan is a qualified benefit plan for
eligible United States employees (including our executive officers) consisting
of three components: 401(k) employee contribution/employer match; profit
sharing; and 1% employer contribution invested in Compass Minerals common stock.
Participants are eligible to participate immediately upon hire. An employee may
contribute from 0% to 60% of base pay into his or her 401(k) account subject to
IRS annual limits on contributions and compensation. The Company partially
matches employee contributions up to 6%. Profit sharing contributions may be
made by Compass Minerals as a percentage of salary based on EBITDA goal
achievement and employee age. In July 2007, we began making an additional
contribution of 1% of base pay to 401(k) accounts which is used to purchase
Compass Minerals common stock for all United States employees, except for
employees who participate in one collective bargaining agreement.
Restoration
Plan. We have also established a Restoration Plan which is a
non-qualified deferred compensation plan, which allows our key United States
employees, including executive officers, to defer a portion of their base
salary
21
and/or
their bonus into a retirement plan through deferrals. Investment returns are
consistent with returns of the investment options available in our qualified
Savings Plan as elected by the employee (except for Compass Minerals stock,
which is not an investment option under the Restoration Plan.) If an executive
participates in the Restoration Plan, his or her accounts are credited with this
elective deferral amount plus an amount equal to the matching and profit sharing
contributions that would have been made under our Savings Plan had IRS
regulations permitted the additional contributions. The amount of our
contributions to the Restoration Plan is included in the Non-Qualified Deferred
Compensation table below.
Perquisites, Life
Insurance and Disability Payments. Pursuant to the terms of
Dr. Brisimitzakis’ employment agreement, we provide him with group life
insurance coverage, payments in the event of disability which results in
termination, and we reimbursed him $2,000 for the purchase of additional life
insurance. We provide all named executive officers with group life insurance
coverage under the standard employee benefit plan. Executive officer perquisites
include supplemental disability income provided in the event of total disability
(a taxable benefit) and on a voluntary basis, and will pay up to $3,000 annually
for an annual executive physical beyond the standard physical available to all
United States employees under our standard healthcare plan.
Post-Termination
Compensation. The Compensation Committee determined that
agreements assuring executive income replacement after a change of control are
important to retain executives and to ensure they remain focused on stockholder
interests in the event a change in control negotiation takes place. Previously,
we entered into Change in Control Severance Agreements with our executive
officers, except Mr. Goadby who has a service agreement. We entered into a
Change in Control Severance Agreement with Dr. Brisimitzakis concurrently
with his employment agreement. Other executive agreements provide for payments
in the event of certain terminations of employment occurring after a change in
control and are consistent with benchmark company information. At the same time
that the executive officers (with the exception of Mr. Goadby) entered into
the Change in Control Severance Agreements, each also entered into a Restrictive
Covenant Agreement limiting solicitation of employees and competition for a
period of two years after the executive’s termination. Mr. Goadby’s service
agreement includes confidentiality, non-competition and non-solicitation
provisions. In the event there is a change of control of our Salt Union Limited
subsidiary, Mr. Goadby will be entitled to terminate the agreement and
receive a payment based on salary and medical insurance payments for twelve
months and any remaining special bonus. The existence of these post-termination
compensation arrangements is considered by the Compensation Committee (with the
guidance of F.W. Cook) in assessing whether overall compensation of the named
executive officers is competitive to the peer group.
OTHER
COMPENSATION POLICIES AND AGREEMENTS
Employment
Contracts
Dr. Brisimitzakis. We
entered into an employment agreement with Dr. Brisimitzakis as of his date
of employment (May 11, 2006) with the approval of the Compensation
Committee. This agreement addresses, among other things, base compensation,
Annual Incentive Plan award payments, and certain post-termination payments. The
Compensation Committee believed it was appropriate to have a written employment
agreement with the CEO and an employment agreement was necessary to induce
Dr. Brisimitzakis to join Compass Minerals.
Mr. Goadby. We
entered into a service agreement with Mr.Goadby, effective November 1,
2006, in connection with his responsibilities as Vice President, Strategic
Development. Mr. Goadby is a resident of the United Kingdom where service
agreements are customary. His agreement provides for base compensation, bonus
payments, retirement plan participation and certain post-termination payments.
The agreement provides for a £75,000 bonus payment in November 2007 and May
2008. The November 2007 payment is reflected on the Summary Compensation table
below.
Executive
Stock Ownership Guidelines
Compass
Minerals has minimum stock ownership guidelines for its senior executives
including its named executive officers, as set forth in the list below. The
Compensation Committee adopted these equity ownership requirements to further
align the interests of its executives with those of its stockholders. The
guidelines are stated as either a dollar value (based on current stock value) or
a fixed number of shares of Compass Minerals common stock, which increase with
job level and are reviewed periodically to ensure relevance. Ownership levels
must be reached within five years from the later of 2005 or the date of
employment.
The
Compensation Committee has adopted (on the recommendation of management) the
following equity ownership requirements for each executive officer. For 2007,
the required equity ownership level was the lesser of the amounts
specified:
22
|
|
•
|
Chief
Executive Officer: Five times annual salary or 100,000 shares of common
stock;
|
|
|
•
|
Executives
Reporting to Chief Executive Officer—Two times annual salary or 24,000
shares of common stock;
|
|
|
•
|
Other
Executives Participating in Compass Mineral’s Long-Term Incentive Plan:
One time annual salary or 4,000 shares of common
stock.
|
Restricted
stock units apply toward these ownership requirements, but outstanding stock
options do not. As of March 12, 2008, all of the named executive officers
had satisfied their ownership requirements.
No
Stock Option Re-Pricing
Our Board
of Directors has adopted a policy specifically prohibiting stock option
re-pricing. The 2005 Plan also precludes option re-pricing without stockholder
approval.
Tax
and Accounting Considerations
Section 162(m)
of the Internal Revenue Code denies a tax deduction to any publicly held
corporation for compensation in excess of $1 million paid in a year to any
individual who, on the last day of that year, is the chief executive officer or
among the CFO and the three other highest-compensated executive officers, unless
such compensation qualifies as performance-based under Section 162(m). It
is our intention to design our short-term incentive compensation plans and our
long-term equity incentives to be deductible under Section 162(m) for the
named executive officers, although individual exceptions may occur. The
Compensation Committee believes that the interests of the stockholders are best
served by not restricting the Compensation Committee’s discretion in developing
compensation programs, even though such programs may result in certain
non-deductible compensation expenses. Compass Minerals believes all such
compensation is deductible for both 2006 and 2007.
REPORT
OF THE COMPENSATION COMMITTEE
OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
We have
reviewed and discussed the foregoing Compensation Discussion and Analysis with
management. Based on our review and discussion, we have recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this
proxy statement.
|
Submitted
by:
|
|
|
David
J. D’Antoni, Chair
Perry
W. Premdas
Allan
R. Rothwell
Timothy
R. Snider
|
The
foregoing Report of the Compensation Committee of the Board of Directors shall
not be deemed to be soliciting material or be incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent Compass Minerals specifically incorporates this
information by reference and shall not otherwise be deemed to be filed with the
SEC under such Acts.
23
SUMMARY
COMPENSATION
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
(1)
|
Option
Awards
($)
(2)
|
Non-Equity
Incentive
Plan
Compensation
($)
(3)
|
Change
in
Pension
Value
and
Non-
qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Angelo
C. Brisimitzakis
President &
Chief Executive Officer
|
2007
2006
|
487,108
286,442
|
0
0
|
369,622
128,917
|
362,800
146,125
|
459,824
0
|
0
0
|
110,331(4)
409,531(5)
|
1,789,685
971,015
|
|
Rodney
L. Underdown
Chief
Financial Officer, Secretary &
Treasurer
|
2007
2006
|
266,773
234,181
|
0
0
|
59,768
29,115
|
52,936
29,540
|
155,050
60,654
|
0
0
|
40,743(4)
33,837(4)
|
575,270
387,327
|
|
David
J. Goadby(6)
Vice
President, Strategic Development
|
2007
2006
|
354,056
241,036
|
150,315
0
|
56,982
29,115
|
41,111
20,055
|
156,572
51,969
|
28,000(7)
196,345(7)
|
20,628(8)
31,297(8)
|
807,664
569,817
|
|
John
S. Fallis
General
Manager & Vice
President
|
2007
2006
|
255,616
247,500
|
0
0
|
82,581
44,529
|
105,550
131,909
|
125,397
62,363
|
0
0
|
48,674(4)
59,081(4)
|
617,818
545,382
|
|
Ronald
Bryan
General
Manager & Vice
President
|
2007
2006
|
238,980
230,906
|
0
0
|
115,863
85,211
|
111,124
87,720
|
98,152
81,209
|
0
0
|
49,050(4)
42,272(4)
|
613,169
527,318
|
|
Keith
E. Clark
General
Manager & Vice
President
|
2007
2006
|
253,513
241,728
|
0
0
|
59,768
29,115
|
52,936
29,540
|
167,441
86,679
|
0
0
|
46,385(4)
43,775(4)
|
580,043
430,837
|
|
(1)
|
Restricted
stock units (“RSUs”) were issued pursuant to 2005 Incentive Award Plan.
RSUs vest after three years, subject to a one year performance hurdle.
This performance hurdle has been satisfied for units issued in 2007 and
2006. The value of the RSUs reflects the Company’s accounting expense for
these awards and does not correspond to the actual value that will be
recognized by the named executives. For valuation information, see
Note 11 to the Consolidated Financial Statements included in the
Annual Report on Form 10-K for the year ended December 31,
2007.
|
|
(2)
|
Options
were granted pursuant to the 2005 Plan. Options are subject to a
service-based vesting schedule. These amounts reflect the Company’s
accounting expense for these awards and do not correspond to the actual
value that will be recognized by the named executives. For valuation
information, see Note 11 to the Consolidated Financial Statements
included in the Annual Report on Form 10-K for the year ended
December 31, 2007.
|
|
(3)
|
Payments
were made pursuant to the Company’s Annual Incentive Plan. Under the AIP,
incentive bonuses were paid to executives based on objectives relating to
overall Company performance, business-unit performance and personal
performance. Weighting of these components was based on the
responsibilities of the executive. For 2006, Dr. Brisimitzakis was
eligible to participate in the AIP but was paid an incentive bonus at the
level guaranteed in his employment
agreement.
|
|
(4)
|
Includes
Company matching contributions and profit sharing contributions to the
Company’s qualified Savings Plan, Company provided life and disability
insurance expense, and contributions to the Company’s Restoration Plan.
Additionally, beginning July 2007, amounts include an additional Company
contribution to the Savings Plan equal to 1% of gross salary which was
applied to purchase shares of Company common stock. See Non-Qualified
Deferred Compensation Table below for additional explanation of the
Company’s Restoration Plan.
|
|
(5)
|
Includes
guaranteed AIP payment pursuant to Dr. Brisimitzakis’ employment
agreement for 2006, reimbursement of relocation expenses, Company-provided
life and disability insurance expense, reimbursement for additional life
insurance (under terms of his employment agreement), and Company matching
and profit sharing contributions to the Company’s Savings Plan and
Restoration Plan as described in more detail under “COMPENSATION
DISCUSSION & ANALYSIS” above.
|
|
(6)
|
Mr. Goadby
is a resident of the United Kingdom. Amounts paid in local currency were
converted to U.S. dollars based on average $/£ exchange rates of 2.0042
and 1.835 for 2007 and 2006, respectively. Mr. Goadby’s 2007 bonus
payment was made pursuant to his service
agreement.
|
24
|
(7)
|
Based
on the change in Mr. Goadby’s accumulated benefit obligation from the
prior year as discussed in more detail in the Pension Benefits
table.
|
|
(8)
|
For
2007, this amount includes a Company contribution to a defined
contribution plan converted to U.S. dollars based on an average $/£
exchange rate of 2.0042. For 2006, this amount includes the value of a car
and fuel allowance, and a Company contribution to a defined contribution
plan converted to U.S. dollars based on average $/£ exchange rate of
1.835.
|
2005
Incentive Award Plan
The 2005
Plan provides the Board and/or Compensation Committee of the Board with the
discretion to provide for the award of incentive stock options, non-qualified
stock options, restricted stock, stock appreciation rights, performance shares,
performance stock units, performance bonuses, dividend equivalents, stock
payments, deferred stock, restricted stock units and/or performance-based awards
to eligible individuals. The Company established the Annual Incentive Plan under
the 2005 Plan. The 2005 Plan is administered by the Compensation Committee, but
it may delegate to a committee of one or more members of the board the authority
to grant or amend awards to participants other than senior executives of the
Company. Notwithstanding the foregoing, the full board administers the 2005 Plan
with respect to awards made to non-employee directors.
Any award
granted under the 2005 Plan other than a stock option or other award in which
the participant pays the intrinsic value of the award shall become vested over a
period of not less than three years (or, in the case of vesting based upon the
attainment of performance goals or other performance-based objectives, over a
period of not less than one year) following the award date. The Compensation
Committee may not accelerate vesting for such full value awards, except in the
event of a change of control or the participant’s death, disability or
retirement.
Performance
awards may be granted pursuant to the 2005 Plan. Performance awards are
performance-based awards within the meaning of Section 162(m) of the
Internal Revenue Code that represent rights to receive a cash payment contingent
upon achieving certain performance goals established by the Compensation
Committee. The maximum amount that may be paid to any participant pursuant to a
Performance Award during any calendar year is $5,000,000. All equity and
non-equity incentive awards granted in 2007 were performance
awards.
2001
Stock Option Plan
Employees,
consultants and directors of the Company and its subsidiaries were eligible to
receive options under the 2001 Stock Option Plan. The Company granted
non-qualified options to purchase common stock to certain management employees,
including the named executive officers then employed in such capacity. The per
share exercise price of many options was $1.40, which was equal to the
recapitalization consideration per share of common stock (as adjusted to reflect
changes in our capital structure following the date of grant). Options issued
after the recapitalization were priced based on the estimated fair market value
of the awards on those dates. Options granted to directors were vested
immediately and options granted to officers and employees generally included a
vesting schedule. For options granted under the 2001 Stock Option Plan following
the Company’s initial public offering, the vesting terms ranged from zero to
three years. The term of the options is eight years and thirty days from the
grant date. All vested options generally expire one year following the
termination of an optionee’s services, subject to certain exceptions. There were
no awards made under the 2001 Stock Option Plan in 2006 and 2007. No additional
awards will be made under the 2001 Stock Option Plan (pursuant to the terms of
the 2005 Plan).
Employment
Agreements
Angelo C.
Brisimitzakis. Dr. Brisimitzakis entered into an
employment agreement on May 11, 2006 to serve as the Company’s President
and Chief Executive Officer and a member of the Board of Directors. This
agreement continues until age 65, unless earlier terminated as provided therein.
Dr. Brisimitzakis is paid a base salary and is eligible for the Company’s
AIP, with a target level of 80% of base salary, except that the 2006 AIP payment
was paid at 45% of his annual base salary, a guaranteed minimum payout. Upon
employment, he was also granted 25,000 restricted stock units and 100,000
non-qualified stock options. The restricted stock units vest three years
following the grant date and the stock options vest 25% per year, starting one
year from the grant date. If Dr. Brisimitzakis is terminated as a result of
disability or without cause or if he resigns for good reason, he will be
entitled to compensation under his employment agreement. The Company entered
into a Change in Control Severance Agreement with Dr. Brisimitzakis
providing for payments in the event of certain terminations of employment
occurring after a change of control. See “POTENTIAL PAYMENTS ON
TERMINATION OR CHANGE IN
25
CONTROL”
table below. The Company also entered into a Restrictive Covenant Agreement,
limiting activities of Dr. Brisimitzakis with respect to solicitation of
employees and competition for a period of two years after
termination.
David J.
Goadby. Mr. Goadby was originally a party to a service
agreement dated as of September 1, 1997 with Salt Union Limited, a
subsidiary of the Company. That service agreement was replaced by a service
agreement effective November 1, 2006 in connection with the change in
Mr. Goadby’s responsibilities to Vice President of Strategic Development,
and provides for his employment through at least May 1, 2008.
Mr. Goadby is paid a base salary and is eligible for employee incentive
bonuses, optional participation in Salt Union Limited’s retirement plans and
special bonus payments on August 1, 2007 and May 1, 2008. The service
agreement includes confidentiality, non-competition and non-solicitation
provisions. In the event there is a change of control of Salt Union Limited,
Mr. Goadby will be entitled to terminate the service agreement and receive
a payment based on salary and medical insurance payments for twelve months and
any remaining special bonus.
Other
agreements with named executive officers are discussed under “POTENTIAL PAYMENTS
ON TERMINATION OR CHANGE OF CONTROL” below.
GRANTS
OF PLAN-BASED AWARDS
|
Estimated
Future Payouts Under
Non-Equity
Incentive Plan Awards
(1)
|
All
Other Stock Awards: Number of Shares of Stock or
|
All
Other Option Awards:
Number
of Securities Underlying
|
Exercise
or
Base
Price
of
Option
|
Grant
Date
Fair
Value
of
Stock
and
Option
|
||||
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Units
(#)
(2)
|
Options
(#)
(2)
|
Awards
($/Sh)
|
Awards
(3)
|
|
Angelo
C. Brisimitzakis
|
3-12-07
|
$0
|
$400,000
|
$880,000
|
16,000
|
48,000
|
$33.44
|
$535,040
$539,040
|
|
Rodney
L. Underdown
|
3-12-07
|
$0
|
$137,500
|
$302,500
|
3,300
|
10,000
|
$33.44
|
$110,352
$112,300
|
|
David
J. Goadby
|
3-12-07
|
$0
|
$141,622
|
$311,568
|
3,000
|
9,000
|
$33.44
|
$100,320
$101,070
|
|
John
S. Fallis
|
3-12-07
|
$0
|
$128,750
|
$283,250
|
3,300
|
10,000
|
$33.44
|
$110,352
$76,100
|
|
Ronald
Bryan
|
3-12-07
|
$0
|
$120,515
|
$265,133
|
3,300
|
10,000
|
$33.44
|
$110,352
$112,300
|
|
Keith
E. Clark
|
3-12-07
|
$0
|
$128,280
|
$282,216
|
3,300
|
10,000
|
$33.44
|
$110,352
$112,300
|
|
(1)
|
Awards
under the Company’s Annual Incentive Plan described in more detail
above.
|
|
(2)
|
Awards
under the Company’s 2005 Plan.
|
|
(3)
|
These
amounts reflect the Company’s accounting expense for these awards and do
not correspond to the actual value that will be recognized by the named
executives. Dividend equivalents are paid with respect to shares subject
to options and RSUs. This participation feature is included in the grant
date fair value of each award. During 2007, Dr. Brisimitzakis
received dividend equivalents of $61,440 and $160,000 related to his 2007
and 2006 grants, respectively; Mr. Underdown received dividend
equivalents of $12,768 and $22,272 related to his 2007 and 2006 grants,
respectively; Mr. Goadby received dividend equivalents of $11,520 and
$22,272 related to his 2007 and 2006 grants, respectively; Mr. Fallis
received dividend equivalents of $12,768 and $34,176 related to his 2007
and 2006 grants, respectively; Mr. Bryan received dividend
equivalents of $12,768, $34,176 and $34,176 related to his 2007, 2006 and
2005 grants, respectively; and Mr. Clark received dividend
equivalents of $12,768 and $22,272 related to his 2007 and 2006 grants,
respectively. See
Note 11 to the Consolidated Financial Statements included in
the Annual Report on Form 10-K for the year ended December 31,
2007 for valuation information.
|
26
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
Option
Awards
|
Stock
Awards
|
|||||
|
Name
and Grant Date
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares or
Units
of Stock That
Have
Not Vested
(#)
|
Market
Value of Shares
or
Units of Stock That
Have
Not Vested
($)
|
|
Angelo
C. Brisimitzakis(1)
3/12/07
5/11/06
|
0
25,000
|
48,000
75,000
|
$33.44
$26.52
|
3/12/14
5/11/13
|
16,000
25,000
|
$656,000
$1,025,000
|
|
Rodney
L. Underdown(1)
3/12/07
1/23/06
|
0
3,500
|
10,000
10,500
|
$33.44
$25.69
|
3/12/14
1/23/13
|
3,300
3,400
|
$135,300
$139,400
|
|
David
J. Goadby(1)
3/12/07
1/23/06
|
0
3,500
|
9,000
10,500
|
$33.44
$25.69
|
3/12/14
1/23/13
|
3,000
3,400
|
$123,000
$139,400
|
|
John
S. Fallis(1)(2)
3/12/07
1/23/06
11/4/04
1/25/02
|
0
5,375
130,000
3,132
|
10,000
16,125
0
0
|
$33.44
$25.69
$23.00
$1.40
|
3/12/14
1/23/13
12/4/12
2/24/10
|
3,300
5,200
0
0
|
$135,300
$213,200
0
0
|
|
Ronald
Bryan(1)(2)
3/12/07
1/23/06
11/16/05
6/30/03
|
0
5,375
10,750
8,628
|
10,000
16,125
10,750
0
|
$33.44
$25.69
$23.47
$5.17
|
3/12/14
1/23/13
11/16/12
7/30/11
|
3,300
5,200
5,200
0
|
$135,300
$213,200
$213,200
0
|
|
Keith
E. Clark(1)
3/12/07
1/23/06
|
0
3,500
|
10,000
10,500
|
$33.44
$25.69
|
3/12/14
1/23/13
|
3,300
3,400
|
$135,300
$139,400
|
|
(1)
|
Awards
in 2007 and 2006 were made pursuant to the 2005 Plan. Option awards vest
25% per year. RSUs vest three years from date of grant and are subject to
a one year performance hurdle which was satisfied for all RSUs awarded in
2007 and 2006.
|
|
(2)
|
Awards
issued prior to 2005 were made pursuant to the Company’s 2001 Stock Option
Plan.
|
OPTIONS
EXERCISES AND STOCK VESTED
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise
($)
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
Value
Realized on Vesting
($)
|
|
Angelo
C. Brisimitzakis
|
0
|
0
|
0
|
0
|
|
Rodney
L. Underdown
|
0
|
0
|
0
|
0
|
|
David
J. Goadby
|
34,927
|
$1,150,251
|
0
|
0
|
|
John
S. Fallis
|
10,000
|
$328,314
|
0
|
0
|
|
Ronald
Bryan
|
0
|
0
|
0
|
0
|
|
Keith
E. Clark
|
0
|
0
|
0
|
0
|
27
2007
PENSION BENEFITS
|
Name
|
Plan
Name
|
Number
of Years Credited Service (#)
|
Present
Value of Accumulated
Benefit
Obligation
($)
|
Payments
During Last Fiscal Year ($)
|
|
Angelo
C. Brisimitzakis
|
—
|
0
|
0
|
0
|
|
Rodney
L. Underdown
|
—
|
0
|
0
|
0
|
|
David
J. Goadby
|
Salt
Union Limited Defined Benefit Pension Plan
|
34
|
$2,363,000
|
0
|
|
John
S. Fallis
|
—
|
0
|
0
|
0
|
|
Ronald
Bryan
|
—
|
0
|
0
|
0
|
|
Keith
E. Clark
|
—
|
0
|
0
|
0
|
Mr. Goadby,
a resident of the U.K., is the only named executive officer covered by a defined
benefit pension plan. This table shows the number of years of service credited
to Mr. Goadby and the present value of accumulated benefits payable to
Mr. Goadby under the Salt Union Limited Defined Benefit Plan determined
using actuarial assumptions consistent with those used in the Company’s
financial statements. (See Note 7 to the
Company’s Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007.)
Mr. Goadby ceased active participation in the plan effective
November 30, 2006 and, for that reason, his number of years of credited
service in the plan is less than his years of service with the Company.
Mr. Goadby began his employment with the Company on September 1, 1972
and has thirty-five years of total employment service. The accumulated benefit
obligation was converted to U.S. dollars using a year-end exchange rate of
1.9838 $/£.
NON-QUALIFIED
DEFERRED COMPENSATION
|
Name
|
Executive
Contributions in Last FY ($)
|
Registrant
Contributions
in
Last
FY (1)
($)
|
Aggregate
Earnings in Last FY
($)
|
Aggregate
Withdrawals/ Distributions
($)
|
Aggregate
Balance at Last FYE
($)
|
|
Angelo
C. Brisimitzakis
|
$95,569
|
$47,544
|
$6,761
|
0
|
$179,817
|
|
Rodney
L. Underdown
|
$5,899
|
$17,683
|
$4,139
|
0
|
$64,603
|
|
David
J. Goadby
|
0
|
0
|
0
|
0
|
0
|
|
John
S. Fallis
|
$86,739
|
$44,794
|
$54,971
|
0
|
$1,050,112
|
|
Ronald
Bryan
|
$10,085
|
$24,347
|
$2,088
|
0
|
$60,411
|
|
Keith
E. Clark
|
$24,392
|
$28,592
|
$48,301
|
0
|
$851,629
|
|
(1)
|
Represents
amounts credited to the employee’s account during 2007 without regard to
the year that the contribution was earned. Registrant contributions shown
above differ from the registrant contributions accrued during 2007 as
reflected in “All Other Compensation” in the Summary Compensation
table.
|
The
Company’s U.S.-based executive officers are eligible to participate in the
Company’s Restoration Plan. The Restoration Plan allows key U.S. employees to
defer a portion of their base salary and/or their non-equity incentive plan
compensation into a retirement plan that provides Company-matching
contributions, profit sharing contributions and investment options consistent
with the Company’s qualified Savings Plan, as elected by the employee. Under the
Restoration Plan, executives may defer compensation in excess of the limits
imposed by Internal Revenue Service regulations and their accounts are credited
with this elective deferral amount plus an amount equal to the matching and
profit sharing contributions that would have been made under the Company’s
Savings Plan but for Internal Revenue Service limits.
28
POTENTIAL
PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
The
Company has entered into agreements providing for payments upon termination or a
change in control with each of the current named executive officers. The
following table shows the potential payments upon an assumed termination on
December 31, 2007 under different circumstances:
|
Name
|
Event
|
Amount(1)
|
|
Angelo
C. Brisimitzakis
|
General
termination of employment as a result of disability(2)
General
termination of employment without cause or for good reason(4)
Qualifying
termination after change in control(6)
|
$317,496(3)
$4,169,927(5)
$4,999,696(7)
|
|
Rodney
L. Underdown
|
Qualifying
termination after change in control(8)
|
$1,329,126(7)
|
|
David
J. Goadby
|
Termination
at executive’s election after change of control(9)
|
$1,124,332(10)
|
|
John S.
Fallis
|
Qualifying
termination after change in control(8)
|
$1,484,507(7)
|
|
Ronald
Bryan
|
Qualifying
termination after change in control(8)
|
$1,814,408(7)
|
|
Keith
E. Clark
|
Qualifying
termination after change in control(8)
|
$1,340,428(7)
|
|
(1)
|
Totals
do not include amounts earned or benefits accumulated due to continued
service by the NEOs through December 31, 2007, including vested stock
options and the Restoration Plan deferred compensation balances, all as
detailed in the preceding tables.
|
|
(2)
|
For
purposes of Dr. Brisimitzakis’ employment agreement, “Disability”
occurs when Dr. Brisimitzakis is unable to perform the essential
functions of his position, with or without reasonable accommodation, for
more than 30 consecutive days after reaching maximum medical
improvement.
|
|
(3)
|
Based
on 60% of then-current base salary for twelve months and entitlement to
participate in then-applicable health care plan (or, if not allowed, then
the Company shall provide such benefits on the same after-tax
basis).
|
|
(4)
|
For
purposes of Dr. Brisimitzakis’ employment agreement, “Cause” means,
in Company’s good faith belief, any of the following: (i) the
conviction of Executive of or plea of guilty or no contest by Executive
to, a felony or misdemeanor involving moral turpitude; (ii) the
indictment of Executive for a felony or misdemeanor under the federal
securities laws; (iii) the willful misconduct or gross negligence by
Executive resulting in material harm to Company or any Company subsidiary;
(iv) fraud, embezzlement, theft, or dishonesty by Executive against
Company or any Company subsidiary, or willful violation by Executive of a
policy or procedure of Company, resulting in any case in material harm to
Company; (v) material breach of any Confidentiality Agreement or
obligation and/or material breach of any Restrictive Covenant Agreement or
similar agreement by and between Executive and Company; or
(vi) material or intentional falsification of any Company record.
Under this agreement, Executive shall have “Good Reason” to terminate this
agreement and his employment in the event of: (i) a material adverse
change in Executive’s duties, in Executive’s reporting structure (except
if Company appoints a non-executive Chairman, in which case Executive
shall not have Good Reason unless such appointment occurs after a Change
in Control, as defined in Executive’s separate Change in Control Severance
Agreement), or in Executive’s responsibilities (as set forth herein or as
the same may be altered from time to time thereafter); (ii) any
reduction in Executive’s Base Salary (as set forth in the agreement or as
the same may be altered from time to time), except as provided in the
agreement; (iii) Company’s relocation of Executive more than fifty
miles from Executive’s primary office location (initially Overland Park,
Kansas) and more than fifty miles from Executive’s principal residence; or
(iv) Company’s sale to an entity that is not publicly traded or that
results in the Company no longer being a publicly traded
entity.
|
|
(5)
|
Based
on two times the Executive’s highest annual Base Salary during the twelve
month period immediately before such termination plus reimbursement, up to
a maximum of eighteen months, for premium payments for any elected COBRA
coverage, plus immediate vesting of all stock options and/or restricted
stock units.
|
|
(6)
|
In
Dr. Brisimitzakis’ Change in Control Severance Agreement, “Qualifying
Termination” means a termination of Executive’s employment during the
Termination Period (i) by Company other than for Cause or
(ii) by Executive for Good Reason. “Termination Period” means a
period of two years after a Change in Control. Both “Cause” and “Good
Reason” are defined in Dr. Brisimitzakis’ employment agreement. (See
note (4) above.)
|
|
(7)
|
Based
on two times the sum of (A) Executive’s highest annual rate of base
salary during the twelve month period immediately before the Date of
Termination plus (B) the higher of (x) Executive’s average AIP
Bonus over the three prior complete fiscal years or (y) Executive’s
annual target AIP bonus for the fiscal year in which the Date of
Termination occurs and the value of continued participation in medical,
dental, accident, disability, and
life
|
29
insurance
benefit plans for two years, and assumes immediate vesting of options and RSUs
pursuant to the applicable award agreements.
|
(8)
|
For
purposes of the Change in Control Severance Agreement, “Qualifying
Termination” means a termination of Executive’s employment during the
Termination Period (i) by Company other than for Cause or
(ii) by Executive for Good Reason. “Termination Period” means a
period of two years after a Change in Control. “Cause” means Executive’s
(i) conviction of, or plea of guilty or nolo contendere to, a felony
or misdemeanor involving moral turpitude, (ii) indictment for a
felony or misdemeanor under the federal securities laws,
(iii) willful misconduct or gross negligence resulting in material
harm to the Company, (iv) willful breach of Executive’s duties or
responsibilities herein or of the separate Restrictive Covenant Agreement
as defined, (v) fraud, embezzlement, theft, or dishonesty against the
Company or any Subsidiary, or (vi) willful violation of a policy or
procedure of the Company resulting in any case in material harm to the
Company. “Good Reason” means, without Executive’s express written consent,
the occurrence of any of the following events within two years after a
Change in Control: a material adverse change in Executive’s duties or
responsibilities as of the Change in Control (or as the same may be
increased from time to time thereafter); provided, however, that Good
Reason shall not be deemed to occur upon a change in Executive’s reporting
structure, upon a change in Executive’s duties or responsibilities that is
a result of the Company no longer being a publicly traded entity and does
not involve any other event set forth in this paragraph, or upon a change
in Executive’s duties or responsibilities that is part of an
across-the-board change in duties or responsibilities of employees at
Executive’s level; any reduction in Executive’s annual base salary or
annual target or maximum bonus opportunity in effect as of the Change in
Control (or as the same may be increased from time to time thereafter);
provided, however, that Good Reason shall not include such a reduction of
less than 10% that is part of an across-the-board reduction applicable to
employees at Executive’s level; Company’s (A) relocation of Executive
more than fifty miles from Executive’s primary office location and more
than fifty miles from Executive’s principal residence as of the Change in
Control or (B) requirement that Executive travel on Company business
to an extent substantially greater than Executive’s travel obligations
immediately before such Change in Control; a reduction of more than 10% in
the aggregate benefits provided to Executive under the Company’s employee
benefit plans, including but not limited to any “top hat” plans designated
for key employees in which Executive is participating as of the Change in
Control; any purported termination of Executive’s employment without
notice; or the failure of the Company to obtain a required assumption
agreement from any successor.
|
|
(9)
|
Mr. Goadby
received a special bonus payment of £75,000 on November 1, 2007, and
is entitled to receive the same amount on May 1, 2008 pursuant to the
terms of his service agreement. Payment on termination after a Change of
Control is reduced to the extent these bonus payments have been
made.
|
|
(10)
|
Based
on Mr. Goadby’s base salary and medical insurance benefit calculated
over a twelve month period plus £75,000 special bonus payments and assumes
immediate vesting of options and RSUs pursuant to the applicable award
agreements.
|
DIRECTOR
COMPENSATION
The table
below summarizes the total compensation earned or paid by the Company to
directors who were not executive officers during 2007.
|
Fees
Earned
Or
Paid
In
Cash
($)(1)
|
Stock
Awards
($)
|
Total
($)
|
|
|
Vernon
G. Baker, II
|
$45,000
|
$50,000
|
$95,000
|
|
Bradley
J. Bell
|
$55,000
|
$50,000
|
$105,000
|
|
David
J. D’Antoni
|
$47,500
|
$50,000
|
$97,500
|
|
Richard
S. Grant
|
$60,000
|
$50,000
|
$110,000
|
|
Perry
W. Premdas
|
$40,000
|
$50,000
|
$90,000
|
|
Allan
R. Rothwell
|
$40,000
|
$50,000
|
$90,000
|
|
Timothy
R. Snider
|
$40,000
|
$50,000
|
$90,000
|
30
|
(1)
|
Includes
amounts deferred under the Directors’ Deferred Compensation
Plan.
|
In 2007,
each non-employee director received (1) an annual cash retainer of $40,000
per year, plus additional amounts for serving as a committee chair or Lead
Independent Director, which amounts may be received either in cash or deferred
into the Directors’ Deferred Compensation Plan at the election of the director;
and (2) an equity award of $50,000 per year, which amount may be deferred
into the Directors’ Deferred Compensation Plan or taken in shares of Company
common stock. Each non-employee member of the Board of Directors is required to
obtain ownership in Company stock (or its equivalent) equal to five times the
annual cash retainer, which amount is to be achieved within five years of
joining the Board of Directors, and maintain at least five times the annual cash
retainer in stock ownership (or its equivalent) while on the Board of
Directors.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
Compensation Committee consists of David J. D’Antoni (chair), Perry W. Premdas,
Allan R. Rothwell and Timothy R. Snider. None of these individuals is or has
ever been an officer or employee of Compass Minerals. During 2007, no executive
officer of Compass Minerals served as a director of any corporation for which
any of these individuals served as an executive officer, and there were no other
Compensation Committee interlocks with the companies with which these
individuals or Compass Minerals’ other directors are affiliated.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires directors and
certain officers of Compass Minerals and persons who own more than 10% of
Compass Minerals’ common stock to file with the SEC initial reports of
beneficial ownership (Form 3) and reports of subsequent changes in their
beneficial ownership (Form 4 or Form 5) of Compass Minerals’ common
stock. Such directors, officers and greater-than-ten-percent stockholders are
required to furnish Compass Minerals with copies of the Section 16(a)
reports they file. The SEC has established specific due dates for these reports,
and Compass Minerals is required to disclose in this proxy statement any late
filings or failures to file.
Based
solely upon a review of the copies of the Section 16(a) reports (and any
amendments thereto) furnished to Compass Minerals and written representations
from certain reporting persons that no additional reports were required, Compass
Minerals believes that its directors, reporting officers and
greater-than-ten-percent stockholders complied with all these filing
requirements for the fiscal year ended December 31, 2007, except as
described below.
|
|
•
|
Form 4
reports were not filed for three transactions as part of an automatic
broker-administered dividend reinvestment program for
Dr. Brisimitzakis. These omissions were corrected by filing a
Form 4 on April 23, 2007;
and
|
|
|
•
|
A
transaction line was inadvertently dropped from the Form 4 filed for
Mr. Premdas on September 14, 2007. An amendment to that
Form 4 was filed on September 20, 2007 including the omitted
line.
|
REVIEW
AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS
The Board
of Directors has adopted a written policy and procedures for review, approval
and monitoring of transactions involving the Company and “related persons”
(directors, director nominees and executive officers or their immediate family
members, or stockholders owning 5% or greater of the Company’s outstanding
stock). The policy covers any related-person transaction that meets or is near
the minimum threshold for disclosure in the proxy statement under the relevant
SEC rules (generally, transactions involving amounts exceeding $120,000 in which
a related person has a direct or indirect material interest).
The
Company’s Nominating/Corporate Governance Committee (the “Governance Committee”)
will review the material facts of all proposed related-party transactions. In
determining whether to approve or ratify a related-party transaction, the
Governance Committee will take into account, among other factors it deems
appropriate, whether the related-party transaction is on terms no less favorable
to the Company than terms generally available to an unaffiliated third party
under the same or similar circumstances and the extent of the related party’s
interest in the transaction. No director shall participate in any discussion,
approval or ratification of any related-party transaction for which he or she is
a related party, except that the director shall provide all material information
concerning the related-party transaction to the Governance Committee. If a
related-party transaction will be ongoing, the Governance Committee may
establish guidelines for the Company’s management to follow in its ongoing
dealings with the related party. Thereafter, the Governance Committee,
on
31
at least
an annual basis, shall review and assess ongoing relationships with the related
party to determine whether they are in compliance with the Governance
Committee’s guidelines and that the related-party transaction remains
appropriate.
OTHER
MATTERS
We know
of no other business that will be presented at the meeting. If any other matter
properly comes before the stockholders for a vote at the meeting, however, the
proxy holders will vote your shares in accordance with their best
judgment.
ADDITIONAL
INFORMATION
Under SEC
rules, we are permitted to deliver a single set of any proxy statement,
information statement, annual report and prospectus to any household at which
two or more stockholders reside if we believe the stockholders are members of
the same family. This process, called householding, allows us to reduce the
number of copies of these materials we must print and mail. Even if householding
is used, each stockholder will continue to receive a separate proxy card or
voting instruction card.
The
Company is not householding this year for those stockholders who hold their
shares directly in their own name. If you share the same last name and address
with another Company stockholder who also holds his or her shares directly and
you would each like to start householding for the Company’s annual reports,
proxy statements, information statements and prospectuses for your respective
accounts, then please contact us at Compass Minerals International, Inc.,
9900 West 109th Street,
Suite 600, Overland Park, Kansas 66210, Attention: Secretary.
This
year, some brokers and nominees who hold Company shares on behalf of
stockholders may be participating in the practice of householding proxy
statements and annual reports for those stockholders. If your household received
a single proxy statement and annual report for this year, but you would like to
receive your own copy, please contact us at Compass Minerals
International, Inc., 9900 West 109th Street,
Suite 600, Overland Park, Kansas 66210, Attention: Secretary, and we will
promptly send you a copy. If a broker or nominee holds Company shares on your
behalf and you share the same last name and address with another stockholder for
whom a broker or nominee holds Company shares, and together both of you would
like to receive only a single set of the Company’s disclosure documents, please
contact your broker or nominee as described in the voting instruction card or
other information you received from your broker or nominee.
If you
consent to householding, your election will remain in effect until you revoke
it. Should you later revoke your consent, you will be sent separate copies of
those documents that are mailed at least 30 days or more after receipt of
your revocation.
ADDITIONAL
FILINGS AND INFORMATION
The
Company’s Forms 10-K, 10-Q, 8-K and all amendments to those reports are
available without charge through the Company’s website as soon as reasonably
practicable after they are electronically filed with, or furnished to, the SEC.
They may be accessed at www.compassminerals.com. Additional copies of the
Company’s annual report to stockholders are available upon a written request to
the Company at Compass Minerals International, Inc., 9900 West 109th Street,
Suite 600, Overland Park, Kansas 66210, Attention: Secretary.
Proxy
Solicitation
Compass
Minerals will bear the entire cost of this proxy solicitation. In addition to
soliciting proxies by this mailing, we expect that our directors, officers and
regularly engaged employees may solicit proxies personally or by mail,
telephone, facsimile or other electronic means, for which solicitation they will
not receive any additional compensation. Compass Minerals will reimburse
brokerage firms, custodians, fiduciaries and other nominees for their
out-of-pocket expenses in forwarding solicitation materials to beneficial owners
upon our request.
Stockholder
Proposals for 2009 Annual Meeting
Any
stockholder who intends to present a proposal at the annual meeting in 2009 must
deliver the proposal to Compass Minerals International, Inc., 9900 West
109th Street,
Suite 600, Overland Park, Kansas 66210, Attention: Secretary
32
|
|
•
|
if
the proposal is submitted for inclusion in our proxy materials for that
meeting pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, not later than December 4,
2008;
|
|
|
•
|
if
the proposal is submitted pursuant to Compass Minerals’ by-laws (in which
case we are not required to include the proposal in our proxy materials),
not later than the close of business on February 8, 2009 nor earlier
than the close of business on January 11, 2009. However, if the
Company advances the date of the annual meeting by more than thirty
(30) days or delays it by more than seventy (70) days, then
notice must be delivered not earlier than the close of business on the one
hundred twentieth (120th) day prior to such annual meeting and not later
than the close of business on the later of the ninetieth (90th) day prior
to such annual meeting or the tenth (10th) day following the day on which
public announcement of the date of such meeting is first made by the
Company.
|
|
By
order of the Board of Directors,
|
|
 |
|
|
Vice
President, Chief Financial Officer,
Secretary
and Treasurer
|
33
|
Using
a black
ink pen, mark your votes with an X
as shown in
this
example. Please do not write outside the designated areas.
|
T
|
Annual
Meeting Proxy Card
PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
A. Proposals — The Board of Directors
recommends a vote FOR the Directors and FOR Proposal 2.
|
1. Election of Directors
|
For Withhold
|
For
Withhold
|
For Withhold
|
||
|
01 - Vernon G. Baker, II
|
£ £
|
02 -
Bradley J. Bell
|
£ £
|
03 - Richard S.
Grant
|
£ £
|
|
For Against
Abstain
|
|
|
2. Ratify the
appointment of Ernst & Young LLP as the Company’s independent auditors
for 2008.
|
£ £ £
|
B.
Non-Voting Items
Change
of Address — Please print your new address below.
|
|
C. Authorized Signatures — This section
must be completed for your vote to be counted. — Date and
Sign
Please
sign exactly as your name or names appear on certificate and mail this proxy
promptly in the enclosed paid envelope. When signing in representative capacity,
insert title and attach papers showing authority unless already on file with the
corporation.
Date
(mm/dd/yyyy) – Please print date
below. Signature
1 - Please keep signature within the
box Signature
2 - Please keep signature within the box
________________________________________ ________________________________________ ________________________________________
PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
Proxy —
COMPASS MINERALS INTERNATIONAL, INC.
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 8, 2008
The
undersigned hereby appoints RODNEY L. UNDERDOWN, PERRY W. PREMDAS, and ALLAN R.
ROTHWELL and each of them, with full power of substitution, proxies of the
undersigned to vote my shares of Common Stock of Compass Minerals International,
Inc., at the Company’s annual meeting of stockholders to be held at the
Doubletree Hotel Overland Park-Corporate Woods, 10100 College Blvd., Overland
Park, Kansas 66210-1462 on Thursday, May 8, 2008, at 9:00 a.m. local time, and
at any postponements or adjournments thereof. Without limiting the authority
granted herein, the above named proxies are expressly authorized to vote as
directed by the undersigned as to those matters set forth on the reverse side
hereof and in their discretion on all other matters that are properly brought
before the annual meeting.
If more
than one of the above named proxies shall be present in person or by
substitution at such meeting or at any postponement or adjournment thereof, the
majority of said proxies so present and voting, either in person or by
substitution, shall exercise all of the powers hereby given. The undersigned
hereby revokes any proxy heretofore given to vote at such meeting.
This proxy when properly executed
will be voted in the manner directed herein by the undersigned. If no
direction is given, this proxy will be voted FOR each of the nominees and FOR
Proposal 2.
(CONTINUED
AND TO BE SIGNED ON THE OTHER SIDE)