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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Boston Scientific Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Natick, Massachusetts
March 26, 2010
Dear Boston Scientific Stockholder:
You are cordially invited to attend Boston Scientific
Corporations Annual Meeting of Stockholders to be held on
Tuesday, May 11, 2010, at 10:00 a.m. Eastern
Time, at the Bank of America Auditorium, 100 Federal Street,
Boston, Massachusetts.
This year you are being asked to:
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elect to the Board of Directors 12 nominees for director;
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ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the 2010
fiscal year; and
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to consider and vote upon such other business as may properly
come before the Annual Meeting or any adjournment or
postponement thereof.
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These matters are more fully described in the accompanying
Notice of Annual Meeting and Proxy Statement. Our Board of
Directors urges you to read the accompanying Proxy Statement and
recommends that you vote FOR all of the director
nominees and the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm. At the meeting, you will be provided with the
opportunity to ask questions.
We are pleased to continue to take advantage of the Securities
and Exchange Commission rule allowing companies to furnish proxy
materials to their stockholders on the Internet. We believe this
e-proxy
process, also known as notice and access, expedites
stockholders receipt of proxy materials, lowers our
printing and mailing costs and reduces the environmental impact
of producing the materials for our Annual Meeting. On or about
March 29, 2010, we will mail to our stockholders of record
and beneficial owners as of Friday, March 12, 2010, the
record date for our Annual Meeting, an Important Notice of
Internet Availability of Proxy Materials (Notice) containing
instructions on how to access our Proxy Statement and Annual
Report on the Internet and also how to vote their shares via the
Internet or by telephone. If you received a Notice by mail you
will not receive printed proxy materials unless you specifically
request them. Both the Notice and this Proxy Statement contain
instructions on how you can request a paper copy of the Proxy
Statement and Annual Report.
The Board of Directors appreciates and encourages stockholder
participation in the Companys affairs. Whether or not you
plan to attend the Annual Meeting, we encourage you to vote your
shares. Accordingly, we request that as soon as possible, you
vote via the Internet or by telephone or, if you have received
printed proxy materials, you vote by telephone or by mailing
your completed proxy card or voter instruction form.
Thank you for your continuing support.
Pete M. Nicholas
Chairman of the Board of Directors
TABLE OF CONTENTS
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
Natick, Massachusetts
March 26, 2010
The Annual Meeting of Stockholders of Boston Scientific
Corporation will be held on Tuesday, May 11, 2010, at
10:00 a.m. Eastern Time, at the Bank of America
Auditorium, 100 Federal Street, Boston, Massachusetts, for the
following purposes:
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(1)
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to elect 12 directors to serve until our 2011 Annual
Meeting of Stockholders;
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(2)
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to ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2010; and
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(3)
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to transact such other business as may properly be considered at
the meeting or any adjournments or postponements thereof.
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Only stockholders who held shares at the close of business on
Friday, March 12, 2010, are entitled to notice of and to
vote at the meeting or any adjournments or postponements thereof.
It is important that your shares be represented and voted at the
Annual Meeting. Whether or not you plan to attend the Annual
Meeting in person, we encourage you to submit your proxy as soon
as possible. For specific instructions, please refer to the
Notice or to the question on Page 3 of this Proxy Statement
entitled How do I vote by proxy?
BOSTON SCIENTIFIC CORPORATION
Timothy A. Pratt
Secretary
One
Boston Scientific Place
Natick, Massachusetts 01760
March 26,
2010
PROXY
STATEMENT
Information
About the Annual Meeting and Voting
The
Annual Meeting
The Annual Meeting of Stockholders of Boston Scientific
Corporation will be held on Tuesday, May 11, 2010, at
10:00 a.m. Eastern Time, at the Bank of America
Auditorium, 100 Federal Street, Boston, Massachusetts. At this
meeting, stockholders will be asked to elect twelve directors
and ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the 2010
fiscal year. Management will also report on our performance
during fiscal year 2009 and will respond to appropriate
questions from stockholders. When used in this Proxy Statement,
the terms we, us, our and
the Company mean Boston Scientific Corporation and
its divisions and subsidiaries.
Why am
I receiving these materials?
Our Board of Directors has made these materials available to you
on the Internet or, upon your request, has delivered or will
deliver printed versions of these materials to you by mail, in
connection with its solicitation of proxies for use at our
Annual Meeting. As a stockholder of record or beneficial owner
of our stock on March 12, 2010, you are invited to attend
the Annual Meeting, and are entitled to and requested to vote on
the items of business described in this Proxy Statement.
Why
did I receive a notice in the mail regarding the Internet
availability of proxy materials instead of a full set of printed
proxy materials?
Pursuant to the rules adopted by the Securities and Exchange
Commission (SEC), we are making this Proxy Statement and our
Annual Report for the year ended December 31, 2009 (the
proxy materials) available to stockholders
electronically via the Internet. All stockholders will be able
to access the proxy materials on the website referred to in the
Important Notice Regarding the Availability of Proxy Materials
(Notice) or request to receive printed copies of the proxy
materials. Instructions on how to access the proxy materials
over the Internet or to request a printed copy may be found in
the Notice and in this Proxy Statement. We believe that this
electronic process will expedite your receipt of the proxy
materials and reduce the cost and environmental impact of
printing proxy materials for our Annual Meeting.
On or about March 29, 2010, we will send all stockholders
of record as of March 12, 2010 a Notice instructing them as
to how to receive their proxy materials via the Internet this
year. The proxy materials will be available on the Internet as
of March 26, 2010.
How
can I electronically access the proxy materials?
Beginning March 29, 2010, you can access the proxy
materials and vote your shares online at
www.proxyvote.com. Our own website
(www.bostonscientific.com) will also direct you to the
proxy materials and website for you to vote online.
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How
can I obtain a full set of printed proxy
materials?
If you prefer to receive paper copies of the proxy materials,
you can still do so. You may request the printed proxy materials
by (i) calling
1-800-579-1639;
(ii) sending an email to sendmaterial@proxyvote.com;
or (iii) logging onto www.proxyvote.com.
Who is
entitled to vote at the Annual Meeting?
Stockholders who held shares of our common stock at the close of
business on Friday, March 12, 2010 are entitled to vote at
the Annual Meeting. Each share of our common stock is entitled
to one vote.
How
many shares are eligible to be voted and how many shares are
required to hold the Annual Meeting?
A quorum is required to hold the meeting and conduct business.
The presence at the Annual Meeting, in person or by proxy, of
stockholders having a majority of our common stock outstanding
as of the close of business on Friday, March 12, 2010, the
record date, will constitute a quorum for purposes of holding
the Annual Meeting. As of March 12, 2010, we had
1,516,097,125 shares of our common stock
outstanding each entitled to one vote at the Annual
Meeting meaning that 758,048,564 shares of
common stock must be represented in person or by proxy to have a
quorum. For purposes of determining whether a quorum exists,
broker non-votes and proxies received but marked
ABSTAIN will be counted.
What
am I voting on?
You are voting on proposals to:
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elect 12 directors to serve until the 2011 Annual Meeting
of Stockholders; and
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ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2010.
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How
does the Board of Directors recommend that I vote?
The Board recommends that you vote:
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FOR the election of each of the 12 director
nominees;
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FOR the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2010;
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How
are votes counted?
In the election of directors, your vote may be cast
FOR all of the nominees or your vote may be
WITHHELD with respect to one or more of the
nominees. For the other proposal, to ratify the appointment of
Ernst & Young LLP as our independent registered
public accounting firm, your vote may be cast FOR or
AGAINST or you may ABSTAIN. If you
ABSTAIN, it has the same effect as a vote
AGAINST. If you sign your proxy card with no further
instructions, your shares will be voted in accordance with the
recommendation of the Board.
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How do
I vote by proxy?
Your vote is very important. Whether or not you plan to attend
the Annual Meeting in person, you may give a proxy to be voted
at the Annual Meeting either:
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via the Internet or by telephone pursuant to the instructions
provided in the Notice; or
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if you received printed proxy materials, by mail or by telephone
pursuant to the instructions provided on the proxy card.
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If you vote by mail, no postage is required if your proxy card
is mailed in the United States.
If you properly vote pursuant to the instructions provided in
the Notice or properly complete and deliver your proxy card
(whether electronically, by mail or by telephone) and our
Inspector of Election receives your instructions in time to vote
at the Annual Meeting, your proxy (one of the
individuals named on your proxy card) will vote your shares as
you have directed. If you sign and return your proxy card but do
not make specific choices, your proxy will vote your shares as
recommended by the Board. If any other matter is properly
presented at the Annual Meeting, including a proposal to
postpone or adjourn the meeting, your proxy will vote your
shares in accordance with his or her discretion. At present, the
Board knows of no other business that is intended to be brought
before or acted upon at the Annual Meeting.
How
many votes are required to approve each proposal?
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Under our By-laws, in an uncontested election such as this, our
directors are elected by plurality vote. That means that for
Proposal 1, the 12 nominees for director named in this Proxy
Statement receiving the most votes from those shares present or
represented at the Annual Meeting will be elected as directors.
Our Majority Voting policy requires any director who receives a
greater number of votes WITHHELD from his or her
election than votes FOR his or her election to
tender his or her resignation from the Board. The Board will
then decide whether to accept the resignation (based on the
recommendation of the Nominating and Governance Committee)
within 90 days following certification of the stockholder
vote, and will disclose its determination and its reasoning
either in a press release or an SEC filing.
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The affirmative vote of a majority of shares participating in
the voting is required to ratify the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2010. You may vote FOR, AGAINST or
ABSTAIN. If you abstain, it will cause
your vote to be counted for the purpose of determining whether a
quorum is present for conducting the Annual Meeting, but your
vote will otherwise have the same effect as a vote
against.
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At present, the Board knows of no matters other than these to be
presented for stockholder action at the Annual Meeting.
What
is the difference between holding shares as a stockholder of
record and as a beneficial owner?
If your shares are registered directly in your name with our
transfer agent, BNY Mellon Shareowner Services, you are
considered, with respect to those shares, the stockholder of
record. As the stockholder of record, you have the
right to grant your proxy directly to us or to vote in person at
the Annual Meeting. If your shares are held by a trustee or in
an account at a brokerage firm, bank, dealer, or other similar
organization, then you are the beneficial owner of your
shares which are held in street name.
If you hold your shares in street name, you received the
Notice or the proxy materials from the trustee or your brokerage
firm, bank, dealer or other similar organization rather than
from us. The organization holding your shares is considered the
stockholder of record for your shares for the purpose of
voting at the Annual Meeting. However, as the beneficial owner
of the shares, you have the right to direct that organization on
how to vote the shares held in your account through your Voting
Instruction Form provided by your broker. If you hold your
shares in street name, follow the instructions on the
Notice or Voting Instruction Form you received in order to
vote your shares.
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What
discretion does my broker have to vote my shares held in
street name?
The New York Stock Exchange (NYSE) rules allow your broker to
vote your shares in its discretion on routine
proposals when it has not received instructions from the
beneficial owner of the shares at least ten days prior to the
Annual Meeting. We believe the ratification of the appointment
of our independent registered public accounting firm is a
routine matter. The election of directors is not considered a
routine matter. If you do not instruct your broker how to vote
your shares, your broker will not be permitted to vote your
shares on the election of directors. This is referred to as a
broker non-vote. Broker non-votes (shares held by
brokers that do not have discretionary authority to vote on the
matter and have not received voting instructions from their
clients) are counted for purposes of determining whether a
quorum is present, but are not counted or deemed to be present
or represented for the purpose of determining whether
stockholders have approved that proposal.
How do
I vote my 401(k) and GESOP shares?
If you participate in the Boston Scientific Corporation 401(k)
Retirement Savings Plan (401(k) Plan) or in our 2006 Global
Employee Stock Ownership Plan (GESOP), you will receive a single
Notice that covers all shares credited to your plan account(s)
and shares that you own of record that are registered in the
same name. If your plan account(s) are registered in different
names, you will receive separate Notices for your record and
plan holdings. You may vote your shares via the Internet by
logging onto www.proxyvote.com or telephone by calling
1-800-690-6903.
Your vote will serve to instruct the trustees and fiduciaries of
our 401(k) Plan and GESOP how to vote any Boston Scientific
shares held in these plans on your behalf. The 401(k) Plan and
GESOP trustees and fiduciaries may vote at their discretion
shares for which timely instructions are not received.
What
happens if I dont specify how I want my shares voted on
one or all of the proposals?
If you are the stockholder of record and you sign, date
and return your proxy and do not mark how you want to vote, your
proxy will be counted as a vote FOR all of the
nominees for directors and FOR the ratification of
our independent registered public accounting firm,
Ernst & Young LLP. If you hold your shares in
street name, please see the discussion on What
discretion does my broker have to vote my shares held in
street name? above.
Can I
change my vote or revoke my proxy after I have already voted or
given my proxy?
Yes. If you are a stockholder of record, you may change
your vote or revoke your proxy at any time before the proxy is
exercised at the Annual Meeting. To change your vote, you may:
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mail a written notice revoking your earlier vote to
Broadridge Financial Solutions, Inc., 51 Mercedes Way,
Edgewood, NY 11717;
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submit to Broadridge a properly completed and signed proxy card
with a later date;
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vote again telephonically or electronically (available until
11:59 p.m. Eastern Time on May 10, 2010); or
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vote in person at the Annual Meeting; however, your attendance
at the Annual Meeting alone will not revoke your proxy.
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Your last dated proxy received or vote cast prior to the Annual
Meeting will be counted.
If you own your shares in street name, please contact
your broker for instructions on changing your vote or revoking
your proxy.
Can I
vote in person at the meeting?
Yes. If you are the stockholder of record of the shares,
you can vote in person by coming to the Annual Meeting and we
will give you a ballot or a new proxy card when you arrive.
However, since a beneficial
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owner is not the stockholder of record, you may not vote
these shares in person at the Annual Meeting, unless you obtain
a legal proxy from the broker, trustee or nominee
that holds your shares, giving you the right to vote the shares
at the Annual Meeting. Please bring the legal proxy with you to
the Annual Meeting. If you plan to attend the Annual Meeting in
person, you must provide proper identification. Please visit our
website, www.bostonscientific.com, for directions to the
Annual Meeting.
Who
will count the votes?
Broadridge Financial Solutions, Inc. has been engaged as our
independent agent to tabulate stockholder votes and act as
Inspector of Election for the meeting.
Is
voting confidential?
Yes. We will treat proxy cards, ballots and voting tabulations
as confidential. Generally, only the Inspector of Election and
certain employees associated with processing proxy cards,
counting the vote or administering the Annual Meeting have
access to these documents.
What
happens if the Annual Meeting is adjourned or
postponed?
Your proxy will still be effective and will be voted at the
rescheduled Annual Meeting. You will still be able to change or
revoke your proxy until it is voted.
Will
any other business be considered or presented at the Annual
Meeting?
Our By-laws provide that a stockholder may present business to
be considered at the Annual Meeting only if proper prior written
notice was received by us. Other than the items of business
described in this Proxy Statement, we are not aware of any other
business to be acted upon at the Annual Meeting. However, if any
other business does properly come before the Annual Meeting, the
persons named as proxies on the enclosed proxy card will have
discretion to vote your shares in accordance with their best
judgment as to the best interests of our stockholders.
How
can I find the results of the Annual Meeting?
Preliminary results will be announced at the Annual Meeting and
final results will be filed with the SEC on a Current Report on
Form 8-K
within four business days after the Annual Meeting. The
Form 8-K
will be available on the SECs website at www.sec.gov
as well as our own website, www.bostonscientific.com
under the Investor Relations section of our website.
Who is
soliciting my vote pursuant to this Proxy
Statement?
Our Board of Directors is soliciting your vote.
Who
pays the cost of this proxy solicitation?
We will pay the costs of this solicitation. Our directors,
officers or other employees may solicit proxies on behalf of the
Board for the most part by mail and via the Internet, but
additional solicitations may be made in person, by electronic
delivery, telephone, facsimile or other media. No additional
compensation will be paid to our directors, officers or other
employees in connection with this solicitation. We may enlist
the assistance of brokerage houses, fiduciaries, custodians and
other third parties in soliciting proxies. We will, upon
request, reimburse brokerage firms and other third parties for
their reasonable expenses incurred for forwarding solicitation
material to beneficial holders of stock. All solicitation
expenses, including costs of preparing, assembling and mailing
proxy material, will be borne by us.
Is
there a list of stockholders entitled to vote at the Annual
Meeting?
A list of stockholders entitled to vote at the Annual Meeting
will be available at the Annual Meeting and for ten days prior
to the Annual Meeting, between the hours of 8:30 a.m. and
5:00 p.m. Eastern Time, at our
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offices at One Boston Scientific Place, Natick, Massachusetts.
If you would like to view the stockholder list, please contact
our Secretary to schedule an appointment by calling
(508) 650-8000
or writing to him at One Boston Scientific Place, Natick, MA
01760-1537.
INTERNET
AVAILABILITY OF PROXY MATERIALS
Under rules adopted by the SEC, we are furnishing proxy
materials to our stockholders primarily via the Internet,
instead of mailing printed copies of those materials to each
stockholder. On or about March 29, 2010, we will mail to
our stockholders (other than those who previously requested
electronic or paper delivery) an Important Notice Regarding the
Availability of Proxy Materials (Notice) containing instructions
on how to access our proxy materials, including our Proxy
Statement and our Annual Report. The Notice also instructs you
on how to vote through the Internet or by telephone.
This process is designed to expedite stockholders receipt
of proxy materials, lower the cost of the Annual Meeting and
help conserve natural resources. However, if you would prefer to
receive printed proxy materials, please follow the instructions
included in the Notice and in this Proxy Statement. If you have
previously elected to receive our proxy materials
electronically, you will continue to receive these materials via
e-mail until
you elect otherwise. If you have previously elected to receive
printed proxy materials, you will continue to receive these
materials in paper format until you elect otherwise.
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PROPOSALS TO
BE VOTED UPON
Proposal 1:
Election of Directors.
Our entire Board of Directors is elected annually by our
stockholders and currently consists of 14 members.
On March 1, 2010, we announced that John E. Pepper and
Senator Warren B. Rudman will retire from our Board at the
Annual Meeting. We are deeply grateful for the enormous
contributions they have each made to our Company, this Board and
our stockholders.
In light of the departures of Mr. Pepper and Senator
Rudman, our Board will consist of 12 members immediately
following the Annual Meeting. The 12 remaining incumbent
directors have been nominated by our Board, upon the
recommendation of our Nominating and Governance Committee, to
stand for election at the Annual Meeting for a one-year term and
to hold office until the 2011 Annual Meeting of Stockholders and
until their successors have been elected and qualified. The
nominees for election at the Annual Meeting are: John E. Abele,
Katharine T. Bartlett, Bruce L. Byrnes, Nelda J. Connors, J.
Raymond Elliott, Marye Anne Fox, Ray J. Groves, Ernest Mario,
N.J. Nicholas, Jr., Pete M. Nicholas, Uwe E. Reinhardt and
John E. Sununu.
Each of the director nominees is willing and able to stand for
election at the Annual Meeting, and we know of no reason why any
of the nominees would be unable to serve as a director. However,
should such a situation arise, the Board may designate a
substitute nominee or, alternatively, reduce the number of
directors to be elected. If a substitute nominee is selected,
the persons named as proxies will vote for that substitute
nominee. Any vacancies not filled at the Annual Meeting may be
filled by the Board.
The biographies of each of the nominees are listed below and
contain information regarding the persons service as a
director, business experience, public company director positions
currently held or held at any time during the last five years,
information regarding involvement in certain legal or
administrative proceedings, if applicable, and the experiences,
qualifications, attributes or skills that caused the Nominating
and Governance Committee and the Board to determine that the
person should serve as a director in light of our business and
structure. Each of the director nominees listed below
exemplifies how our Board values professional experience in
business, education, policy and governmental fields as well as
strong moral character and diversity in terms of viewpoint as
well as age, ethnicity and gender. It is these strong and unique
backgrounds and sets of skills that our Board of Directors
believes provide it, as a whole, with a strong foundation of
technical expertise and a wealth of diverse experience in a wide
variety of areas.
John E.
Abele
Age 73
Director Since 1979
John E. Abele, our co-founder, has been a director of Boston
Scientific since 1979. Mr. Abele was our Treasurer from
1979 to 1992, our Co-Chairman from 1979 to 1995 and our Vice
Chairman and Founder, Office of the Chairman from February 1995
to March 1996. Mr. Abele is also the owner of The
Kingbridge Centre and Institute, a 120-room conference center in
Ontario that provides special services and research to
businesses, academia and government. He was President of
Medi-tech, Inc. from 1970 to 1983, and prior to that served in
sales, technical and general management positions for Advanced
Instruments, Inc. Mr. Abele is the Chairman of the Board of
the F.I.R.S.T. (For Inspiration and Recognition of Science and
Technology) Foundation, a member of the Presidents Council
of Olin College and also a member of numerous not-for-profit
boards. He served on the Board of Color Kinetics Incorporated
from 2005 to 2007. Mr. Abele received a B.A. degree from
Amherst College. Mr. Abeles qualifications to serve
on our Board include his history as our co-founder as well as
his technical expertise and strong commitment to promoting and
advancing innovation in the science and technology fields. These
qualifications provide the Board a unique perspective on the
development of innovative medical technologies relating to our
Companys mission and its corporate business strategy.
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Katharine
T. Bartlett
Age:
63
Director since 2009
Katharine T. Bartlett became a director of Boston Scientific in
August 2009. Ms. Bartlett has been a full-time member of
the Duke University School of Law faculty since 1983 and is the
A. Kenneth Pye Professor of Law at the Duke University School of
Law, where she served as Dean from 2000 to 2007, leading the law
school through a period of major strategic expansion. During
Ms. Bartletts tenure as Dean, the Law School was
recognized by the American Bar Association five times for
excellence in student leadership, leadership education and
public interest programming. In addition, she was honored by
Equal Justice Works in 2006 with its Dean of the Year award for
support of public interest programs for law students, and by
Duke University in 1994 as Scholar/Teacher of the Year. In the
academic year
2007-2008
following her deanship, she was a visiting fellow at NYU School
of Law (Fall 2007) and Columbia Law School (Spring 2008).
Ms. Bartlett was a visiting professor of law at Boston
University School of Law in 1990, and a visiting professor of
law at UCLA Law School from 1985 to 1986. She earned a B.A.
degree from Wheaton College; an M.A. degree from Harvard
University; and a J.D. degree from the Boalt Hall School of Law
at the University of California, Berkeley, where she served as
an editor of the Law Review. Ms. Bartletts
qualifications to serve our Board include her leadership and
management skills in successfully overseeing and expanding the
Duke University School of Law during her tenure as its Dean.
Ms. Bartlett also has a distinguished career in the law and
as a law professor, specializing in gender theory, employment
law, theories of social change and legal education, which are
extremely relevant to our business operations.
Bruce L.
Byrnes
Age:
61
Director since 2009
Bruce L. Byrnes became a director of Boston Scientific in August
2009. Mr. Byrnes is a retired Vice Chairman of the Board
for The Procter & Gamble Company. During his
38-year
career with Procter & Gamble, Mr. Byrnes served
as Vice Chairman of the Board and as President for several
global divisions, including health care. Mr. Byrnes has
been a Director of Cincinnati Bell Inc. since 2003, and served
as a trustee of the Cincinnati Art Museum. He holds a B.A.
degree from Princeton University. Mr. Byrnes
qualifications to serve our Board include his experience in
leading significant business units at Procter & Gamble
with particular expertise in the areas of health care and
consumer brand management, business strategy, financial
reporting, risk management and sales and marketing.
Nelda J.
Connors
Age:
44
Director since 2009
Nelda J. Connors became a director of Boston Scientific in
December 2009. Ms. Connors joined Tyco International as
President of the Electrical and Metal Products division in April
2008. From 2004 to March 2008, she served as Vice President at
Eaton Corporation, holding several positions in operations and
general management both in the United States and in Asia. From
1997 to 2002, Ms. Connors was employed in a number of
executive and management capacities with Ford Motor Company and
Ford of Europe. Prior to working with Ford, Ms. Connors was
employed by Chrysler and Mogami Denki, a Toyota supplier. She
began her career as an engineer with Monsanto Corporation. In
February 2010, Ms. Connors was named by Black
Enterprise magazine as one of the Top 75 Most Powerful
Women. Ms. Connors holds B.S. and M.S. degrees in
mechanical engineering from the University of Dayton.
Ms. Connors qualifications to serve our Board include
her executive leadership skills and her experience in the areas
of operations and financial management, quality, engineering and
business strategy.
8
J.
Raymond Elliott
Age 60
Director since 2009
J. Raymond Elliott became our President, Chief Executive
Officer and director in July 2009. He had previously served as a
non-employee director of our Board from September 2007 to May
2009. Mr. Elliott was the Chairman of Zimmer Holdings, Inc.
until November 2007 and was Chairman, President and Chief
Executive Officer of Zimmer Holdings, Inc. from March 2001 to
May 2007. Mr. Elliott was appointed President of Zimmer,
Inc. in November 1997. Mr. Elliott has more than
35 years of experience in orthopedics, medical devices and
consumer products. He has served as a director on more than 20
business-related boards in the U.S., Canada, Japan and Europe
and has served on six occasions as Chairman. He has served as a
member of the board of directors and chair of the orthopedic
sector of the Advanced Medical Technology Association (AdvaMed)
and was a director of the Indiana Chamber of Commerce, the
American Swiss Foundation and Bausch & Lomb
Corporation. Mr. Elliott has served as the Indiana
representative on the Presidents State Scholars Program
and as a trustee of the Orthopaedic Research and Education
Foundation (OREF). He holds a bachelors degree from the
University of Western Ontario, Canada. Mr. Elliotts
qualifications to serve on our Board include his current
experience as our CEO leading the day to day operations of our
Company. In addition, Mr. Elliotts qualifications
include his prior experience serving our Board from 2007 to
2009, as well as his prior experience as CEO of Zimmer Holdings,
Inc., his extensive domestic and international financial, sales,
management and operating executive experience in the orthopedic,
medical device and consumer products markets. He is particularly
experienced in driving operational excellence within highly
regulated industries.
Marye
Anne Fox, Ph.D.
Age 62
Director since 2001
Marye Anne Fox has been a director of Boston Scientific since
2001. Dr. Fox has been Chancellor of the University of
California, San Diego and Distinguished Professor of
Chemistry since August 2004. Prior to that, she served as
Chancellor of North Carolina State University and Distinguished
University Professor of Chemistry from 1998 to 2004. From 1976
to 1998, she was a member of the faculty at the University of
Texas, where she taught chemistry and held the Waggoner Regents
Chair in Chemistry from 1991 to 1998. She served as the
Universitys Vice President for Research from 1994 to 1998.
Dr. Fox has served as the Co-Chair of the National Academy
of Sciences Government-University-Industry Research
Roundtable and served on President Bushs Council of
Advisors on Science and Technology. She has served as the Vice
Chair of the National Science Board. She also serves on the
boards of a number of other scientific, technological and civic
organizations, and is a member of the boards of directors of Red
Hat Corp., W.R. Grace Co. and the Camille and Henry Dreyfus
Foundation. She has been honored by a wide range of educational
and professional organizations, and she has authored more than
350 publications, including five books. Dr. Fox holds a
B.S. degree in Chemistry from Notre Dame College, an M.S. in
Organic Chemistry from Cleveland State University, and a Ph.D.
in Organic Chemistry from Dartmouth College. Dr. Foxs
qualifications to serve on our Board include her engineering
background and her strong financial and operational experience
leading large, successful educational institutions, as well as
her service as an outside director to several public and private
corporate boards.
Ray J.
Groves
Age 74
Director since 1999
Ray J. Groves has been a director of Boston Scientific since
1999. Effective February 16, 2009, Mr. Groves became
the Ombudsman for Standard & Poors. From 2001 to
2005, Mr. Groves served in various roles at Marsh Inc.,
including President, Chairman and Senior Advisor, and is a
former member of the board of directors of its parent company,
Marsh & McLennan Companies, Inc. He served as Chairman
of Legg Mason Merchant Banking, Inc. from 1995 to 2001.
Mr. Groves served as Chairman and Chief Executive Officer
of
9
Ernst & Young for 17 years until his retirement
in 1994. Mr. Groves currently serves as a member of the
boards of directors of the Colorado Physicians Insurance Company
and Group Ark Insurance Holdings, Ltd. Mr. Groves is a
member of the Council on Foreign Relations. He is a director and
co-Treasurer of Nursing and Home Care, Inc., a member and former
Chair of the board of directors of The Ohio State University
Foundation, a member of the Deans Advisory Council of the
Fisher College of Business and a member of the Board of
Directors of the New York Chapter of the National Association of
Corporate Directors. He served the boards of directors of
Electronic Data Systems Incorporated from 1996 to 2008, The
Gillette Company from 2002 to 2006 and Overstock, Inc. from 2005
to 2007. Mr. Groves is former Chairman of the board of
directors of the American Institute of Certified Public
Accountants, a former member of the Board of Governors of the
American Stock Exchange and the National Association of
Securities Dealers. He is a former member of the Board of
Overseers of The Wharton School of the University of
Pennsylvania and served as the Chairman of its Center for the
Study of the Service Sector. Mr. Groves is an advisory
director of the Metropolitan Opera Association. Mr. Groves
received a B.S. degree from The Ohio State University.
Mr. Groves is a recognized expert in the field of
accounting. His qualifications to serve our Board include not
only his technical expertise but also his prior CEO and
executive management experience, his Board leadership experience
and his current and former service as a member of several public
and private company boards.
Ernest
Mario, Ph.D.
Age 71
Director since 2001
Ernest Mario has been a director of Boston Scientific since 2001
and is currently the Chairman and Chief Executive Officer of
Capnia, Inc. From 2003 to July 2007, Dr. Mario was Chairman
of Reliant Pharmaceuticals. From 2003 to 2006, he was also the
Chief Executive Officer of Reliant Pharmaceuticals. Prior to
joining Reliant Pharmaceuticals in April 2003, he was the
Chairman of IntraBiotics Pharmaceuticals, Inc. from April 2002
to April 2003. Dr. Mario also served as Chairman and Chief
Executive Officer of Apothogen, Inc., a pharmaceutical company,
from January 2002 to April 2002 when Apothogen was acquired by
IntraBiotics. Dr. Mario served as the Chief Executive
Officer of Glaxo Holdings plc from 1989 until March 1993 and as
Deputy Chairman and Chief Executive from January 1992 until
March 1993. From 1993 to 1997, Dr. Mario served as
Co-Chairman and Chief Executive Officer of ALZA Corporation, a
research based pharmaceutical company with leading drug delivery
technologies, and Chairman and Chief Executive Officer from 1997
to 2001 and was a member of the board of directors of Alexza
Pharmaceuticals from 2006 to 2007. Dr. Mario presently
serves on the boards of directors of Maxygen, Inc.,
Pharmaceutical Product Development, Inc., Avid
Radiopharmaceuticals, Inc. and Celgene Corporation. He was a
Trustee of Duke University from 1988 to June 2007 and in July
2007 he retired as Chairman of the Board of the Duke University
Health System which he chaired from its inception in 1996. He is
a past Chairman of the American Foundation for Pharmaceutical
Education and serves as an advisor to the pharmacy schools at
the University of Maryland, the University of Rhode Island and
The Ernest Mario School of Pharmacy at Rutgers University.
Dr. Mario holds a B.S. degree in Pharmacy from Rutgers, and
an M.S. degree and a Ph.D. in Physical Sciences from the
University of Rhode Island. Dr. Marios qualifications
to serve our Board include his strong executive leadership
experience including his experience as an active CEO. In
addition, Dr. Mario has successfully led several
pharmaceutical companies over the last several decades. He has
extensive experience in financial and operations management,
risk oversight, quality and business strategy.
N.J.
Nicholas, Jr.
Age 70
Director since 1994
N.J. Nicholas, Jr. has been a director of Boston Scientific
since 1994 and is a private investor. Previously, he served as
President of Time, Inc. from September 1986 to May 1990 and
Co-Chief Executive Officer of Time Warner, Inc. from May 1990
until February 1992. Mr. Nicholas is a director of Xerox
Corporation and Time Warner Cable, Inc. He has served as a
member of the Presidents Advisory Committee for Trade
Policy and Negotiations and the Presidents Commission on
Environmental Quality. Mr. Nicholas is a Trustee of the
Environmental Defense Fund and a member of the Council of
Foreign Relations. Mr. Nicholas received an
10
A.B. degree from Princeton University and an M.B.A. degree from
Harvard Business School. He is the brother of Pete M. Nicholas,
Chairman of the Board. Mr. N.J. Nicholas
qualifications to serve on our Board include his experience as
President and Co-CEO of Time, Inc. and Time Warner, Inc. He
shares his extensive expertise in the areas of business
strategy, risk oversight and financial management with our Board
which is further complemented by his active participation on
several public and private company boards.
Pete M.
Nicholas
Age 68
Director since 1979
Pete M. Nicholas, our co-founder, has been Chairman of the Board
since 1995. He has been a Director since 1979 and served as our
Chief Executive Officer from 1979 to March 1999 and Co-Chairman
of the Board from 1979 to 1995. Prior to joining Boston
Scientific, he was Corporate Director of Marketing and General
Manager of the Medical Products Division at Millipore
Corporation, a medical device company, and served in various
sales, marketing and general management positions at Eli Lilly
and Company. He is currently Chairman Emeritus of the Board of
Trustees of Duke University. Mr. Nicholas is also a Fellow
of the American Academy of Arts and Sciences and Vice Chairman
of the Trust for that organization. He also serves on several
for profit and not for profit boards including CEOs for
Fundamental Change in Education and the Boys and Girls Club of
Boston. After college, Mr. Nicholas served as an officer in
the U.S. Navy, resigning his commission as lieutenant in
1966. Mr. Nicholas received a B.A. degree from Duke
University, and an M.B.A. degree from The Wharton School of the
University of Pennsylvania. He is the brother of N.J.
Nicholas, Jr., one of our directors. Mr. Nicholas is
uniquely qualified to serve on our Board due to his
institutional knowledge of our Company as its co-founder and
President from 1979 to 1999. Mr. Nicholas has expertise in
the areas of general executive management, business strategy and
risk management and oversight, and is an active participant in
the medical device community.
Uwe E.
Reinhardt, Ph.D.
Age 72
Director since 2002
Uwe E. Reinhardt has been a director of Boston Scientific since
2002. Dr. Reinhardt is the James Madison Professor of
Political Economy and Professor of Economics and Public Affairs
at Princeton University, where he has taught since 1968.
Dr. Reinhardt is a senior associate of the University of
Cambridge, England and serves as a Trustee of the Duke
University Health System, H&Q Healthcare Investors,
H&Q Life Sciences Investors and Hambrecht & Quist
Capital Management LLC. He also served the board of directors of
Triad Hospitals from 2003 to 2007. He is also the Commissioner
of the Kaiser Family Foundation Commission on Medicaid and the
Uninsured and a member of the boards of directors of Amerigroup
Corporation and Legacy Hospital Partners, Inc. During 2007
through 2009, he served as President of the International Health
Economics Association. In October 2009, Dr. Reinhardt was
awarded by Germanys President the Bundesverdienstkreuz
(German Federal Merit Medal) for his work in international
health economics and policy. Dr. Reinhardt received a
Bachelor of Commerce degree from the University of Saskatchewan,
Canada and a Ph.D. in Economics from Yale University.
Dr. Reinhardt is a world renowned health care economist and
recognized voice in the political economy field. In addition to
the insight he provides our Board with respect to matters of
policy generally and his subject matter expertise, he also
brings his financial management expertise to the Board.
John E.
Sununu
Age 45
Director since 2009
John E. Sununu became a director in April 2009. For the past six
years Senator Sununu has served as a U.S. Senator from New
Hampshire. He was a member of the Committees on Banking,
Commerce, Finance and Foreign Relations, and he was appointed
the Congressional Representative to the United Nations General
Assembly. Before his election to the Senate, Senator Sununu
served three terms as a Member of the U.S. House
11
of Representatives from New Hampshires 1st District.
He was Vice Chairman of the Budget Committee and a member of the
Appropriations Committee. During his 12 years in Congress,
he drafted and helped pass several important pieces of
legislation, including the Internet Tax Freedom Act, the
Survivors Benefit Act and the New England Wilderness Act. Prior
to serving in Congress, Senator Sununu served as Chief Financial
Officer for Teletrol Systems, a manufacturer of building control
systems. He serves on the Board of Managers for ConvergEx
Holdings LLC and the Board of Directors of Time Warner Cable,
Inc. He holds B.S. and M.S. degrees in Mechanical Engineering
from the Massachusetts Institute of Technology and an M.B.A.
from Harvard Business School. Senator Sununus
qualifications to serve on our Board include his experience in
government and corporate leadership. Senator Sununu provides
important insights on government relations, public policy and
other matters relevant to our Company due to his extensive
experience in both the public and private industry sectors.
OUR BOARD
RECOMMENDS THAT YOU VOTE FOR ALL 12 OF
THESE NOMINEES FOR DIRECTOR.
12
CORPORATE
GOVERNANCE
Overview
To guide the operation and direction of the Board and its
committees, our Board has established a Corporate Governance
Manual. The Corporate Governance Manual consists of our
Corporate Governance Guidelines, charters for the standing
committees of the Board and our Code of Conduct.
All of our corporate governance materials, including the
Corporate Governance Guidelines, our Code of Conduct and
standing committee charters, are published under Corporate
Governance in the Investor Relations section of our
website at www.bostonscientific.com. These materials are
also available in print free of charge to any stockholder upon
request. Any person who wishes to obtain a copy of any of these
documents may do so by writing to Investor Relations, One Boston
Scientific Place, Natick, MA
01760-1537.
Our Board believes that good corporate governance is fundamental
to the overall success of our business. To that end, our Board
has adopted particular corporate governance practices for our
Company to better align our corporate business strategy with the
current conditions in the markets in which we compete, the
global economy, and the opinions expressed by recognized
corporate governance authorities. Our Board continually reviews
our corporate governance practices, Delaware law, the rules and
listing standards of the New York Stock Exchange (NYSE), SEC and
Internal Revenue Code regulations, as well as best practices
suggested by recognized governance authorities, and modifies our
practices as warranted.
Director
Independence
Our Corporate Governance Guidelines (which are available on our
website at www.bostonscientific.com) require that a
significant majority of the Board be independent. Our common
stock is listed on the NYSE. To be considered independent under
NYSE rules, the Board must affirmatively determine that a
director does not have a direct or indirect material
relationship with the Company. The Board has also established
the following categorical standards, which can be found in our
Corporate Governance Guidelines, to assist it in determining
director independence in accordance with NYSE rules:
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Commercial Relationships. The following
commercial relationships are not considered material
relationships that would impair a directors independence:
(i) if a director of the Company is an executive officer or
an employee of, or an immediate family member of a director is
an executive officer of, another company that does business with
the Company and the annual sales to, or purchases from, the
Company are less than 1% of the annual revenues of such other
company, or (ii) if a director of the Company is an
executive officer of another company which is indebted to the
Company, or to which the Company is indebted, and the total
amount of either companys indebtedness to the other is
less than 2% of the total consolidated assets of the company for
which he or she serves as an executive officer.
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Charitable Relationships. A charitable
relationship will not be considered a material relationship that
would impair a directors independence: if a director, or
an immediate family member of the director, serves as an
executive officer, director or trustee of a charitable
organization, and the Companys discretionary charitable
contributions to that charitable organization in any single
fiscal year are less than 1% (or $500,000, whichever is less) of
that charitable organizations annual consolidated gross
revenues.
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Personal Relationships. The following personal
relationship will not be considered to be a material
relationship that would impair a directors independence:
if a director, or immediate family member of the director,
receives from, or provides to, the Company products or services
in the ordinary course and on substantially the same terms as
those prevailing at the time for comparable products or services
provided to unaffiliated third parties.
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For relationships not within the foregoing guidelines, the
determination of whether the relationship is material, and
therefore whether the director is independent, is made by the
directors who satisfy the foregoing independence guidelines. For
purposes of these guidelines, immediate family
member has the meaning
13
defined in the NYSE rules. The Board monitors its compliance
with NYSE requirements for director independence on an ongoing
basis. In accordance with current NYSE rules and our own
categorical standards of independence, the Board has determined
that the following non-employee director nominees standing for
election at the Annual Meeting are currently deemed
independent and have no direct or indirect material
relationship with Boston Scientific, except as a director and
stockholder: Katharine T. Bartlett, Bruce L. Byrnes, Nelda J.
Connors, Marye Anne Fox, Ray J. Groves, Ernest Mario, Uwe E.
Reinhardt and John E. Sununu. The Board also determined that
John E. Pepper and Warren B. Rudman were independent
and have no direct or indirect material relationship with Boston
Scientific.
In February 2010, the Board determined that John E. Abele
(currently a non-independent director) will become independent
in May 2010 following the Annual Meeting. In making its
independence determination for Mr. Abele, the Board
considered the following specific relationships between the
Company and Mr. Abele:
In May 2005, Mr. Abele, our co-founder, retired as an
employee of the Company. In connection with his retirement:
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Mr. Abele receives an annual payment of $150,000 for life,
and medical coverage under our benefit policies for as long as
he remains a director or director emeritus. We
continue to fund his existing long-term care insurance and
executive life insurance. Mr. Abele continues to have the
use of an office at our Natick headquarters or other Boston
Scientific facilities and secretarial and administrative
support, on an as-needed basis. In addition, during 2009, we
made a charitable donation in the amount of $1 million to a
qualified charitable organization designated by Mr. Abele.
Mr. Abele was not and is not currently an employee,
director or trustee of the organization to which the donation
was made.
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Mr. Abele continues to serve on our Board of Directors and
will receive the non-employee director compensation as discussed
on page 75.
The Board considered the relationships and transactions listed
above and determined that each component satisfies the
requirements for independence under NYSE rules and our own
Corporate Governance Guidelines.
The Board has determined that J. Raymond Elliott, our President
and Chief Executive Officer, is not independent because he is an
employee of our Company; Pete Nicholas is not independent
because of a contemplated transaction between the Company and a
limited liability company of which Mr. Nicholas is the sole
member; and N.J. Nicholas, Jr. is not independent because
he is the brother of Pete Nicholas, who may be a party to a
contemplated transaction with the Company in 2010.
As of March 1, 2010, 10 out of 14 members of the Board are
independent, and following our Annual Meeting, if elected, 9 out
of 12 members of our Board will be independent.
Director
Nomination Process
The Nominating and Governance Committee is responsible for
determining the appropriate skills and characteristics required
of new Board members in the context of the current
make-up of
the Board. In so doing, the Nominating and Governance Committee
considers, with input from the Board, those factors it deems
appropriate, such as independence, experience, strength of
character, judgment, technical skills, diversity, age and the
extent to which the individual would fill a present need on the
Board. The aim is to assemble a Board that is strong in its
collective knowledge and that consists of individuals who bring
a variety of complementary attributes and who, taken together,
have the appropriate skills and experience to oversee the
Companys business. The Nominating and Governance Committee
considers diversity as one of a number of factors in identifying
nominees for director. It does not, however, have a formal
policy in this regard. The Nominating and Governance Committee
views diversity broadly to include diversity of experience,
skills and viewpoint as well as traditional diversity concepts
such as race or gender.
The Nominating and Governance Committee believes that all
director nominees must, at a minimum, meet the general criteria
outlined in our Corporate Governance Guidelines. Generally,
directors should be individuals who have succeeded in their
particular field and who demonstrate integrity, reliability,
knowledge
14
of corporate affairs and an ability to work well with others.
Directors should also satisfy at least one of the following
criteria:
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demonstrated management ability at senior levels in successful
organizations;
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current or recent employment in positions of significant
responsibility and decision making;
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expertise in leading rapidly growing multi-national
organizations; or
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current and prior experience related to anticipated board and
committee responsibilities in other areas of importance to the
Company.
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The Nominating and Governance Committee receives suggestions for
new directors from a number of sources, including Board members
and management. It also may, in its discretion, employ a third
party search firm to assist in identifying candidates for
director.
The Nominating and Governance Committee will also consider
recommendations for Board membership received from stockholders
and other qualified sources. The qualifications of candidates
recommended by stockholders will be reviewed and considered by
the Nominating and Governance Committee with the same degree of
care and consideration as candidates for nomination to the Board
submitted by Board members and our Chief Executive Officer.
The full Board is responsible for final approval of new director
candidates, as well as the nomination of existing directors for
reelection. With respect to existing directors, prior to making
its recommendation to the full Board, the Nominating and
Governance Committee, in consultation with the Chairman of the
Board, reviews each directors continuation on the Board as
a regular part of the annual nominating process.
In July 2009, the Nominating and Governance Committee
recommended, and the Board elected, Katharine T. Bartlett and
Bruce L. Byrnes, to serve as directors on our Board. As part of
the selection process, the Nominating and Governance Committee
looked for candidates with academic leadership and current or
recent executive management experience. Each of
Ms. Bartlett and Mr. Byrnes was initially suggested by
non-management members of our Board. Following their election,
the Nominating and Governance Committee began to search for a
third director with strong operational and leadership skills.
Nelda J. Connors, who was elected to the Board in December 2009,
was referred to the Nominating and Governance Committee by a
third party search firm.
Under the advance notice provisions of our Bylaws, director
nominations and proposals to bring any other business before the
2011 Annual Meeting of Stockholders by our stockholders must be
received by our Secretary at our principal executive offices on
or before November 26, 2010. Director nominations by our
stockholders must also satisfy the other procedures set forth in
the advance notice provision of our Bylaws. Please address your
director recommendation or nomination to our Secretary at Boston
Scientific Corporation, One Boston Scientific Place, Natick, MA
01760-1537.
Code of
Conduct
We maintain a Code of Conduct, which has been approved by our
Board, to ensure that our constituents understand the basic
principles that govern our corporate conduct. The Code of
Conduct applies to all of our directors, employees and officers,
including our Chief Executive Officer and Chief Financial
Officer, and is available on our website at
www.bostonscientific.com. A stockholder may request a
copy of the Code of Conduct by contacting our Secretary at
Boston Scientific Corporation, One Boston Scientific Place,
Natick, MA
01760-1537.
Any waivers or substantive amendments of the Code of Conduct
will be disclosed on our website.
CEO
Succession
In 2009, James R. Tobin, our former President and Chief
Executive Officer, advised the Board of his intention to retire
during the year. While the Nominating and Governance Committee
has the responsibility to identify successors to the CEO, in
early 2009 the Board established a special CEO search committee
15
comprised of non-employee directors to identify and recommend a
successor to Mr. Tobin. The members of the special
committee were: the Chairman of the Nominating and Governance
Committee, Mr. Groves; Dr. Mario; Dr. Reinhardt;
and, as an ex-officio member, the Chairman of the Board,
Mr. Pete Nicholas. The special committee was dissolved upon
the Boards election of Mr. Elliott as our President
and Chief Executive Officer.
Board
Leadership Structure
Our Corporate Governance Guidelines currently require that the
offices of Chief Executive Officer and Chairperson of the Board
will be held by separate individuals, and that the Chairperson
of the Board will not be an executive of the Company. Our
Chairman of the Board is Pete M. Nicholas, our co-founder and
former Chief Executive Officer. Our President and Chief
Executive Officer is J. Raymond Elliott. Mr. Elliott was
appointed to these positions on July 13, 2009, after James
R. Tobin retired from those offices on the same day. The Board
recognizes that its Chairman is currently a non-independent
director and that the independent directors of the Company meet
separately in executive session frequently. The chairperson of
the Nominating and Governance Committee presides at these
executive sessions, and in his absence, the chairperson of the
Audit Committee presides, and in his absence, the chairperson of
the Executive Compensation and Human Resources Committee
presides.
Our Board believes that the separation of these two critical
roles best serves our Company at this time because it allows
Mr. Elliott to focus on establishing his role as Chief
Executive Officer and providing leadership over our day to day
operations while Mr. Nicholas focuses on leadership of the
Board. This structure also provides the Board and management the
benefit of Mr. Nicholas history as co-founder of our
Company and his active participation in our industry. We believe
that this leadership structure enhances the accountability of
the Chief Executive Officer to the Board and strengthens the
Boards overall independence from management.
Risk
Oversight
Our Board oversees an enterprise-wide approach to risk
management, designed to support the achievement of our strategic
and organizational objectives, to improve long-term
organizational performance and enhance shareholder value. A
fundamental part of risk oversight is to understand the risks
our Company faces, the steps management is taking to manage
those risks and to assess managements appetite for risk.
It is managements responsibility to manage risk and bring
to the Boards attention material risks facing our Company.
Our Board receives regular reports from management on matters
relating to strategic and operational initiatives, financial
performance and legal developments which are each integrated
with enterprise-risk exposures. Our Board also approves our
CEOs performance goals for each year. In doing so, the
Board has an opportunity to ensure that the CEOs goals
include responsibility for broad risk management. The
involvement of the full Board in setting our strategic plan is a
key part of its assessment of the risks inherent in our
corporate strategy.
While the Board has the ultimate responsibility for risk
oversight, each committee of the Board also has responsibility
for risk oversight. For example, the Audit Committee focuses on
financial risk, including internal controls, legal, healthcare
provider and compliance risks, and receives an annual risk
assessment report from our internal auditors. The Finance
Committee focuses on risks associated with our strategic
initiatives, current and potential investments, as well as cash,
debt and equity management and our ongoing ability to access
capital markets. In addition, the Finance Committee elevates
certain risks identified by it to the Audit Committee. The
Quality and Compliance Committee assists the Board in fulfilling
its oversight responsibility with respect to the regulatory,
quality and product safety issues that affect us and works
closely with our legal and quality groups. In addition, the
Executive Compensation and Human Resources Committee (the
Compensation Committee) evaluates and sets compensation programs
that encourage decision making predicated upon a level of risk
consistent with our business strategy. The Compensation
Committee also reviews compensation and benefit plans affecting
employees in addition to those applicable to executive officers.
Finally, the Nominating and Governance Committee oversees
governance and succession risk, including Board and CEO
succession and evaluates director skills and qualifications to
appoint particular directors to our standing
16
committees based upon the needs of that committee. Each
committee makes reports regarding risk oversight in their area
of responsibility to the Board at the next regularly scheduled
Board meeting immediately following the committee meeting.
Communications
With the Board
Stockholders and other interested parties who wish to
communicate directly with any member of our Board, or our
non-management directors as a group, may do so by writing to the
Board of Directors, Boston Scientific Corporation,
c/o General
Counsel, One Boston Scientific Place, Natick, MA
01760-1537
or by contacting the non-management directors via email at
non-managementdirectors@bsci.com. In addition, stockholders and
other interested parties may contact the chairperson of each
committee at the following email addresses:
AuditCommittee@bsci.com, FinanceCommittee@bsci.com,
NominatingandGovernanceCommittee@bsci.com,
QualityCommittee@bsci.com, and CompensationCommittee@bsci.com.
The Board has authorized the office of our General Counsel to
review and organize, but not screen, communications from
stockholders
and/or
interested parties and deliver them to the Board. We do screen
commercial solicitations to the Board for appropriateness.
Board
Service Limitation
Without the approval of the Nominating and Governance Committee,
no director may sit on more than four public company boards
(including our Board) and the CEO may not sit on more than one
public company board (in addition to our Board). None of our
current Directors exceed these limitations.
Related
Party Transactions
Our Board has adopted a written related party transaction policy
to monitor transactions, arrangements or relationships in which
the Company and any of the following have an interest:
(a) any person who is or was (since the beginning of fiscal
year 2009, even if they do not presently serve in that role) an
executive officer or director or director nominee; (b) any
person or entity who holds more than a 5% beneficial ownership
of our common stock; (c) any immediate family member of any
of the foregoing; or (d) any entity in which any of the
foregoing persons is employed or is a general partner or
principal or acts in any similar position in which such person
or persons collectively have a 10% or greater beneficial
ownership interest. The policy covers any related party
transaction that meets the minimum threshold for disclosure
under the relevant SEC rules (generally, transactions involving
amounts exceeding $120,000 in which a related person has a
direct or indirect material interest).
Our General Counsel is responsible for identifying any potential
related party transactions and, if he determines that the
existing or proposed transaction constitutes a related party
transaction under the policy, he will provide relevant details
and an analysis of the related party transaction to the Audit
Committee. The General Counsel will provide an annual summary to
the Audit Committee of all transactions or relationships which
he considered under this policy, including those that he
determined do not constitute a related party transaction. If the
General Counsel has an interest in a potential related party
transaction, he will provide all relevant information to our
Chief Executive Officer or his designee, who will review with
counsel to determine whether the proposed transaction is a
related party transaction. The Chief Executive Officer or his
designee will present the information to the Audit Committee
that would otherwise be provided by the General Counsel. The
Audit Committee reviews relevant information concerning any
existing or proposed transaction contemplated by the Company
with an entity that is the subject of a disclosed relationship,
and approves or disapproves the transaction, with or without
conditions or additional protections for the Company. Our
related party transactions policy can be found in our Corporate
Governance Guidelines posted on our website at
www.bostonscientific.com.
17
Certain
transactions:
Several of our directors are affiliated with Duke University.
Ernest Mario was Chairman of the Board of the Duke University
Health System until July 2007. Pete Nicholas received his B.A.
degree from Duke University and is Chairman Emeritus of the
Board of Trustees of Duke University. Uwe Reinhardt is a Trustee
of the Duke University Health System and was a Trustee of Duke
University. Katharine T. Bartlett is the A. Kenneth Pye
Professor at the Duke University School of Law. In addition, the
Board is aware of our relationship with Duke University (at
which Katharine T. Bartlett is a professor), Princeton
University (at which Uwe Reinhardt is a professor) and the
University of California at San Diego (at which Marye Anne
Fox is Chancellor), and in each case, determined that those
relationships fall below our categorical standards for
commercial relationships, were established in the ordinary
course of business on an arms-length basis and are not material
to us, those individuals or those organizations.
18
MEETINGS
AND BOARD COMMITTEES
Board
Meetings
The Board met ten times in fiscal year 2009. Each director
attended at least 75% of the aggregate of the meetings of the
Board and of the committees on which he or she served, with the
exception of Senator Rudman who is not standing for re-election
at the Annual Meeting.
Executive
Sessions
Our independent directors meet in executive sessions without
management directors at most of our regularly scheduled Board
meetings and at such other times as they deem appropriate but,
in any event, at least once annually. The chairperson of the
Nominating and Governance Committee presides at executive
sessions of non-management directors, and in his or her absence,
the chairperson of the Audit Committee will preside, and in his
or her absence, the chairperson of the Executive Compensation
and Human Resources Committee will preside.
Director
Attendance at Board, Board Committee and Annual
Meetings
Directors are expected to prepare for and use reasonable efforts
to participate in all Board meetings and meetings of the
committees on which they serve. The Board and each committee
will meet as frequently as necessary to properly discharge their
responsibilities, provided that the full Board will meet at
least four times per year. Generally, the Board meets in
February, May, July, October and December. In addition,
directors are expected to use reasonable efforts to attend
Annual Meetings of Stockholders. At our 2009 Annual Meeting, 12
out of 15 of our directors were in attendance either in person
or by telephone.
Board of
Directors and Committees of the Board
In 2009, the Board significantly reconstituted its membership
and assessed and reconfigured its committee structure, committee
charters and committee assignments. Our Board has standing
Audit, Executive Compensation and Human Resources, Nominating
and Governance, Finance, and Compliance and Quality Committees.
Our Board also establishes special committees from time to time
to address specific issues or discrete matters as the need or
the desire of the Board arises. The charters of the current
standing committees of the Board are available on our website at
www.bostonscientific.com.
Committee
Independence
All of the members of the Audit Committee, Executive
Compensation and Human Resources Committee, Nominating and
Governance Committee and Compliance and Quality Committee are
independent directors under independence requirements of the
NYSE and the SEC and under our categorical standards of
independence. A significant majority of the members of the
Finance Committee are independent directors.
19
BOARD
COMMITTEE MEMBERSHIP
As of March 1, 2010
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Executive
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Compensation
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Nominating
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Compliance
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and Human
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and
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and
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Audit
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Resources
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Governance
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Finance
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Quality
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Committee
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Committee
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Committee
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Committee
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Committee
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John E. Abele
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Katharine T. Bartlett
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Bruce L. Byrnes
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*
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Nelda J. Connors
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J. Raymond Elliott
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Marye Anne Fox
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*
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Ray J. Groves
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+
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Ernest Mario
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N.J. Nicholas, Jr.
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Pete M. Nicholas
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John E.
Pepper(1)
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*
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Uwe E. Reinhardt
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*
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Warren B.
Rudman(1)
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John E. Sununu
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*
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Committee Member
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Committee Chair
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(1)
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Mr. Pepper and Senator Rudman
will retire from our Board, effective at the conclusion of the
Annual Meeting on May 11, 2010.
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Audit
Committee
Our Audit Committee met 14 times during fiscal year 2009. In
2009, J. Raymond Elliott resigned as Chairman, Marye Anne Fox
rotated off of the Audit Committee and Bruce L. Byrnes was
appointed to the Audit Committee. The Board has determined that
all members of our Audit Committee during 2009, including it
current members, are each non-employee directors, all of whom
meet the independence requirements of the NYSE and the SEC. The
Board has also determined that each of Bruce L. Byrnes, Ernest
Mario and Uwe E. Reinhardt is an audit committee financial
expert as that term is defined in the rules and
regulations of the SEC.
The Audit Committee is governed by a written charter approved by
our Board, which is subject to review on an annual basis. As
outlined in its written charter (which is available on our
website at www.bostonscientific.com), the primary purpose
of the Audit Committee is to provide oversight to our accounting
and financial reporting processes and audits of our financial
statements. The Audit Committee primarily provides assistance to
our Board in the areas of corporate accounting, internal
control, independent audit and reporting practices, and
maintains, by way of regularly scheduled meetings, a direct line
of communication among our directors, management, our internal
auditors and our independent registered public accounting firm.
The Audit Committee appoints our independent registered public
accounting firm, evaluates its qualifications, independence and
performance, and reviews its reports and other services. In
addition, the Audit Committee pre-approves audit, audit-related
and non-audit services performed for us by our independent
registered public accounting firm and has the right to terminate
our independent registered public accounting firm. It is also
responsible for monitoring our adherence to established legal
and regulatory requirements, corporate policies, including our
related party transactions policy, and global compliance
programs and practices. The Audit Committee Report can be found
on page 84 of this Proxy Statement.
20
Executive
Compensation and Human Resources Committee
Our Executive Compensation and Human Resources Committee (the
Compensation Committee) met five times during fiscal
year 2009. The Compensation Committee is, and has been during
2009, comprised of independent directors, as defined by the
NYSE, non-employee directors within the meaning of
Rule 16b-3
promulgated under the Securities Exchange Act of 1934 and
outside directors within the meaning of
Section 162(m) of the Internal Revenue Code (the Code). In
May 2009, John E. Pepper was appointed Chairman of the
Compensation Committee replacing Senator Rudman who stepped down
as Chairman, but still served as a member of the Compensation
Committee. In October 2009, Katharine T. Bartlett was appointed
to the Compensation Committee following her election to the
Board in August 2009. The Board will appoint a Chairperson to
this Committee in May 2010 when Mr. Pepper retires from our
Board. At that time, the Compensation Committee will be
comprised of three members, Katharine T. Bartlett, Ray J. Groves
and Ernest Mario.
As outlined in its written charter (which is available on our
website at www.bostonscientific.com), the Compensation
Committee has the authority, among other things, to:
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determine and approve (and make recommendations to the Board
regarding) our CEOs compensation, based on the performance
evaluation by and recommendations of the Chairman of the Board
and the Nominating and Governance Committee;
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review, oversee and determine the total compensation package for
our other executive officers;
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review and make recommendations to the Board regarding
employment, consulting, retirement, severance and change in
control agreements, indemnification agreements and other
arrangements proposed for our executive officers, including
conducting a periodic review to evaluate these arrangements for
continuing appropriateness;
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review and make recommendations to the Board regarding the
compensation of our directors;
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adopt and periodically review a comprehensive statement of
executive compensation philosophy, strategy and
principles; and
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discuss how the Companys compensation policies and
programs for all of its employees may create incentives that can
affect risk and the management of that risk, as well as whether
the Companys compensation programs are appropriately
aligned with the Companys risk management.
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The Compensation Committee may delegate its authority and duties
to subcommittees or individual members of the Compensation
Committee, as it deems appropriate in accordance with applicable
laws and regulations. The Compensation Committee has delegated
authority to our CEO to make equity grants to new hires who are
not executive officers within predetermined guidelines. These
grants are reviewed by the Compensation Committee at its next
regularly scheduled meeting. Our CEO makes recommendations to
the Compensation Committee regarding the amount and form of
compensation of our executives (other than himself), based upon
their performance for the year and their achievement of the
goals set at the beginning of the year. The Chairman of the
Board and the Nominating and Governance Committee make
recommendations to the Compensation Committee regarding the
amount and form of CEO compensation, based upon his performance
for the year and his achievement of the goals set at the
beginning of the year. The Compensation Committee then approves
the amount and form of CEO compensation in consideration of this
recommendation. On an annual basis, the Compensation Committee
considers, based on input and data from its independent
compensation consultant, whether director compensation is
competitive and meets our needs to attract and retain qualified
and seasoned candidates for director. The Compensation Committee
then makes a recommendation regarding director compensation for
approval by the full Board.
The Compensation Committee may also retain compensation
consultants to assist it in evaluating executive compensation
and may retain counsel, accountants or other advisors, as it
deems appropriate, at the Companys expense. The
Compensation Committee engaged the independent compensation
consulting services of Watson Wyatt in 2009. Watson Wyatt was
engaged to provide advisory services to the Compensation
21
Committee, including a market perspective on executive and
director compensation matters. During 2009, Watson Wyatt
provided the following compensation services to the Compensation
Committee:
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reviewed and recommended the peer group of companies used in
evaluating executive and director compensation;
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collected and analyzed market data on director and executive
compensation;
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reviewed and provided recommendations on our director
compensation arrangements in comparison to market;
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reviewed and provided commentary on our executive compensation
arrangements in comparison to market;
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developed long-term incentive guidelines for our Executive
Committee;
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provided information and commentary on executive and director
compensation trends; and
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reviewed and provided commentary on management proposals
regarding executive pay and proxy disclosures.
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Watson Wyatt attended Compensation Committee meetings throughout
2009. Additional details regarding the services of Watson Wyatt
in 2009 are contained in our Compensation Discussion &
Analysis beginning on page 24.
In 2009, Watson Wyatt and its affiliates did not provide
additional services to the Company totaling at least $120,000.
In January 2010, Watson Wyatt and Towers Perrin merged to
form Towers Watson & Co. In accordance with its
annual review, the Compensation Committee will evaluate the
relationship and the engagement of Towers Watson when its
current engagement terminates in May 2010.
The Compensation Committee Report can be found on page 49
of this Proxy Statement.
Nominating
and Governance Committee
The Nominating and Governance Committee met five times during
fiscal year 2009. The Nominating and Governance Committee is
comprised of non-employee directors, all of whom meet the
independence requirements of the NYSE and the SEC. During 2009,
Dr. Reinhardt rotated off the Nominating and Governance
Committee and Senator Sununu joined the Nominating and
Governance Committee.
As outlined in its written charter (which is available on our
website at www.bostonscientific.com), the Nominating and
Governance Committee has responsibility for recommending
nominees for election and re-election to the Board, ensuring
that Board nominees are qualified and consistent with our needs,
monitoring significant developments in the law and practice of
corporate governance for directors of public companies,
recommending Board committee assignments, reviewing and
recommending Board policies and procedures, monitoring
compliance with our stock ownership guidelines, board service
and political contributions policies, and overseeing the Board
and each committee of the Board in their annual performance
self-evaluations. In addition, the Nominating and Governance
Committee is responsible for recommending to the Board
candidates for Chief Executive Officer, overseeing the annual
assessment of the performance of the Chief Executive Officer and
developing an ongoing succession plan for the Chief Executive
Officer.
The Nominating and Governance Committee is responsible for
reviewing with the Board, on an annual basis, the current size,
structure and composition of the Board as a whole, and whether
we are being well served by the directors taking into account
the following: the directors degree of independence;
business background, including any areas of particular
expertise, such as accounting or related financial management
expertise, marketing or technology; record of service (for
incumbent directors), including attendance record;
22
meeting preparation; overall contribution to the Board;
employment status; gender; ethnicity; age; availability for
service to us; and our anticipated needs.
Finance
Committee
The Finance Committee met four times during fiscal year 2009.
The primary role of the Finance Committee is to provide a forum
within the Board to review our overall financing plans and
long-term strategic objectives, as well as our shorter-term
acquisition and investment strategies and how these shorter-term
activities fit within our overall business objectives. As
outlined in its written charter, the Finance Committee is
charged with providing Board oversight of our strategic planning
and activities, approving strategic transactions for which the
Board has delegated authority, making recommendations to the
Board regarding larger transactions, and evaluating our
financial strategies and policies. The Finance Committee has
responsibility to review periodically with management our
strategic business objectives and the manner in which
transactional activity can contribute to the achievement of
those objectives, and to review with management on a regular
basis contemplated strategic opportunities. The Finance
Committee conducts periodic reviews of completed transactions
for the purposes of assessing the degree of success achieved,
testing the extent to which the projections and other
assumptions relied upon in approving transactions have been
borne out, identifying the factors differentiating more
successful transactions from less successful ones and evaluating
the strategic contributions resulting from these transactions.
The Finance Committee is further charged with conducting
periodic reviews of our cash investments and cash management
policies, debt ratings and global financing objectives and
strategies, including the review and approval of certain
borrowing arrangements, capital expenditures and disposition,
and activities that may impact our existing capital structure.
Compliance
and Quality Committee
The Compliance and Quality Committee met three times during
fiscal year 2009. The primary role of the Compliance and Quality
Committee is to oversee and evaluate our compliance and quality
assurance systems and initiatives, the systems in place to
maintain, and identify deviations from, our compliance and
control standards, and our efforts to meet or exceed our
compliance and quality assurance standards. The Compliance and
Quality Committee reviews and discusses with senior management
the adequacy and effectiveness of our compliance and quality
assurance systems and initiatives, and reviews periodic reports
regarding any deviations from our standards. The Compliance and
Quality Committee also reviews correspondence from any external
quality assurance inspectors, such as the FDA, and discusses
with senior management our responses to those communications. In
addition, the Compliance and Quality Committee monitors, with
senior management, training and education programs for our
employees. The Compliance and Quality Committee recommends to
the Board any actions it deems necessary or appropriate to
improve the effectiveness of our compliance and quality control
systems and initiatives.
Compensation
Committee Interlocks and Insider Participation
The members of our Compensation Committee during 2009 were
Katharine T. Bartlett, Ray J. Groves, Kristina M. Johnson (who
resigned from our Board in March 2009), Ernest Mario, John E.
Pepper and Warren B. Rudman. None of these Compensation
Committee members is or has ever been an officer or employee of
our Company. To our knowledge, there were no other relationships
involving members of the Compensation Committee or our other
directors nor did any directors have a relationship requiring
disclosure as a Related Party Transaction as defined
by the SEC which require disclosure in this Proxy Statement or
otherwise as a Compensation Committee interlock.
23
EXECUTIVE
COMPENSATION
Compensation
Discussion & Analysis
The following discussion and analysis contains statements
regarding individual and Company performance targets and goals.
These targets and goals are disclosed in the limited context of
our compensation programs and should not be understood to be
statements of managements future expectations or estimates
of future results or other guidance. We specifically caution
investors not to apply these statements to other contexts.
Executive
Summary
This Compensation Discussion and Analysis describes all material
elements of our 2009 compensation program for the executive
officers listed in the Summary Compensation Table on
page 50, our Named Executive Officers (NEOs).
Overall, 2009 was a year of change and challenge for Boston
Scientific. We experienced the succession of our Chief Executive
Officer and the realignment of our business priorities.
Meanwhile, the uncertain economic conditions in the global
environment continued to affect us. Our Executive Compensation
and Human Resources Committee of the Board of Directors (the
Compensation Committee), in recognition of the challenges facing
the Company and our leaders, reviewed and implemented
adjustments to existing practices for 2009. In addition, during
2009, the Compensation Committee continued to review and adjust
our 2010 compensation programs throughout the year to account
for our changing business priorities and to better align our
executive officers compensation with the performance of
the Company and
long-term
shareholder value. While some of the actions the Compensation
Committee took in 2009 were not effective until 2010, many of
these adjustments were implemented immediately during the year.
The total annual direct compensation opportunity for our NEOs
consists of base salary, an annual cash incentive target and a
long-term incentive award. Consistent with the financial
performance measures that are important to our stockholders, our
NEOs annual incentive opportunities are based on
achievement of sales, adjusted earnings per share and other
financial health measures (free cash flow or business unit
adjusted operating income). In addition, we seek to more closely
align the interests of our executive officers with our
stockholders through the use of equity awards. As a result, for
2009, on average, 72% of our current NEOs total annual
direct compensation was linked to Company and individual
performance in the form of performance-based cash and long-term
equity awards. Of that 72%, on average, 50% consisted of
long-term equity awards.
Compensation
Philosophy and Objectives
For 2009, our executive compensation philosophy was to provide
our executives with appropriate and competitive individual pay
opportunities with actual pay outcomes heavily influenced by the
attainment of corporate and individual performance objectives.
The objectives of our executive compensation program were to
attract, retain, engage, focus and reward the best available
talent to achieve performance goals aligned with our mission,
quality policy and business goals. Our mission is to improve the
quality of patient care and the productivity of healthcare
delivery through the development and advocacy of less invasive
medical devices and procedures. Our quality policy, applicable
to all employees, is: I improve the quality of patient
care and all things Boston Scientific. The objectives of
our Compensation Committee for 2009 were to:
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simultaneously tie our executives pay to actual Company
performance and align it with the long-term interests of our
stockholders;
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compensate our executive officers in a manner that provided
appropriate incentives for them to improve Company performance;
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retain and engage those executives in a market where they are
presented with other attractive employment
opportunities; and
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maintain an executive compensation structure that encourages
prudent decisions around both taking risks to improve our
performance and avoiding unnecessary and excessive risk that may
harm our Company.
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For 2010, our executive compensation philosophy places emphasis
on improving the alignment of our executive compensation with
the long-term interests of our stockholders, including long-term
Company performance and value creation, by bringing our
compensation program in line with our business strategy and
competitive market. Our top 2010 compensation objectives include:
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improving alignment with the interests of our stockholders and
our competitive environment;
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more appropriately balancing our equity incentive programs to
emphasize long-term results over short-term results;
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driving profitable revenue growth and increasing shareholder
value; and
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placing greater emphasis on team performance.
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Corporate
Performance in 2009
Our business performance in 2009 was challenged by lower than
expected growth in the two largest medical device markets in
which we compete. Nonetheless, our net sales for 2009 increased
to $8.2 billion from $8.1 billion in 2008, on an
as-reported basis. Having set high performance targets for our
NEOs, we did not meet our target financial goals under our
Performance Incentive Plan (PIP) for 2009. As a result, the PIP
funded at 89.8% at the corporate level, not taking into account
individual performance. Further, in December 2008, in light of
the economic challenges and our cost-reduction initiatives, the
Compensation Committee imposed a salary freeze on 2009 base
salaries for certain salaried employees, including all of our
NEOs.
2009 Key
Events
Chief
Executive Officer Succession
On June 22, 2009, our Board of Directors appointed J.
Raymond Elliott as our President, Chief Executive Officer and
member of our Board of Directors, effective as of July 13,
2009, following the retirement of James R. Tobin as our
President, Chief Executive Officer and member of our Board of
Directors. Mr. Elliott was previously a member of our Board
of Directors from September 2007 until May 2009 and commenced
employment with Boston Scientific on June 23, 2009 as a
Senior Advisor. On July 13, 2009, Mr. Tobin
transitioned into the role of Senior Advisor, in which role he
remained until his retirement from the Company on
November 30, 2009.
Business
Strategy
Our business strategy is to lead global markets for
less-invasive medical devices by developing and marketing
innovative products, services and therapies that address unmet
patient needs, provide superior clinical outcomes and
demonstrate proven economic value. The components of our
strategic plan are to strengthen leadership; restructure our
business model to strengthen and position us for long-term
success; create higher-payoff new products; increase our global
sales force; and refocus our business portfolio and expand our
footprint into additional high growth segments. We believe that
the execution of our strategic plan will drive innovation,
accelerate profitable growth and increase shareholder value.
Recent
Executive Compensation Changes
The Compensation Committee reviews the components of our
executive compensation program to determine whether they are
appropriate, properly coordinated, and achieve their intended
purposes. As a result of these reviews, as well as to address
current economic conditions, the Compensation Committee made
adjustments to our 2009 executive compensation programs.
Moreover, for 2010, the Compensation Committee considered our
new compensation philosophy and objectives, leadership and
business strategy, as well as the
25
changing economic and competitive market landscapes, in
approving additional modifications to our executive compensation
program. Recent changes to our executive compensation programs
are detailed below:
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Adapting to economic conditions. In December
2008, the Compensation Committee approved managements
recommendation to defer merit increases on base salaries for
2009 for certain salaried employees, including all executives.
In February 2010, the Compensation Committee reinstated merit
increases for salaried employees, including our executives, to
bring our program in line with our competitive market.
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Enhancing alignment of our executive compensation with the
interests of our stockholders and our competitive
environment. In December 2008, our Board of
Directors modified our Stock Trading Policy to prohibit
executives from hedging the value of Boston Scientific stock. In
December 2009, our Board approved replacing our Retention
Agreements with Change in Control Agreements that eliminate
single-trigger equity acceleration (requiring only a change in
control for acceleration) and impose double-trigger equity
acceleration (requiring both a change in control and termination
without cause or resignation for good reason for acceleration)
for awards going forward. Further, for 2010, the Compensation
Committee has aligned the philosophical positioning for the
three elements of direct compensation to the market median,
which represents a decrease in performance-based cash incentive
payments and annual equity grants.
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Tax
gross-ups. For
2009, the Company eliminated tax
gross-ups on
spousal use of our corporate aircraft in connection with
business activities. Additionally, in October 2009, the
Compensation Committee approved the termination of our Executive
Life Insurance Program that had included tax
gross-ups
and, in December 2009, the Compensation Committee approved the
termination of our former Retention Agreements that provided for
excise tax
gross-ups
for payments upon a change in control.
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Increasing shareholder value and driving profitable revenue
growth. For 2009, our Performance Incentive Plan
(PIP) was amended to align certain executives performance
goals with the divisions that they head. For 2010, our PIP was
further amended to measure and fund targets solely on annual
results (as opposed to the 2009 methodology of quarterly and
annual measurement and funding); modify our business unit
metrics to increase the weight of business unit sales and
adjusted operating income results and replace adjusted earnings
per share with measures related to business unit cash flow
improvements (days sales outstanding and days inventory on
hand); and adjust our funding tables to increase the threshold
performance expectation, reduce funding at threshold performance
and incent performance above goal on the sales measure.
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More appropriately balancing our equity incentive programs to
emphasize long-term results over short-term
results. Beginning in 2010, a greater portion of
our total executive compensation will consist of equity grants,
which are designed to reward long-term performance. Further, our
mix of equity grants is also changing to emphasize long-term
performance. Our targeted equity mix for our executive
officers 2010 annual equity awards is 25%
performance-based shares, 50% options and 25% deferred stock
units.
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Placing greater emphasis on team performance (Company and
business unit performance). For 2010, our PIP
payout methodology was revised to increase emphasis on the team
component (Company and business unit performance) over
individual results by basing 75% of the payout on team results
as funded through Company and business unit performance and the
remaining 25% on a combination of individual and team
performance.
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For more details on, and the modifications to, our base salary,
see Our Elements of Total Executive
Compensation Base Salary on page 33; our
PIP, see Our Elements of Total Executive
Compensation Performance Incentives on
page 34; our equity mix and performance shares, see
Our Elements of Total Executive Compensation
Annual Equity Incentives on page 40; executive life
insurance and corporate aircraft use, see Our Elements of
Total Executive Compensation Elements of Indirect
Pay on page 42; and our change in control
arrangements, see Our Post-Employment and Change in
Control Arrangements Change in Control
Agreements on page 46.
26
In addition, the Compensation Committee approved the
introduction of an All-Employee Stock Option Grant Program to
expand ownership opportunity to most Company employees. Shares
were granted under this program in February 2010. At an
aggregate level, the expense associated with this grant was
funded by decreases in PIP targets for most of our PIP-eligible
employees, including most of our executives. The program extends
the application of our compensation objectives, including
aligning our employees interests with the interests of our
stockholders, driving profitable growth and emphasizing
teamwork, to all of our employees.
2010
Restructuring
We constantly monitor the dynamics of the economy, the
healthcare industry and the markets in which we compete; and we
continue to assess opportunities to improve operational
effectiveness and better alignment of expenses with revenues,
while preserving our ability to make needed investments in
quality, research and development projects, capital and our
people that are essential to our long-term success. As a result,
on February 6, 2010, our Board of Directors approved, and
we committed to, a series of management changes and
restructuring initiatives designed to strengthen and position us
for long-term success. Key activities under the restructuring
initiatives include the integration of our Cardiovascular and
Cardiac Rhythm Management businesses, as well as the
restructuring of certain other businesses and corporate
functions (including the elimination of our Endosurgery group
structure, resulting in two business units: the Endoscopy
division and the Urology and Womens Health division, each
reporting directly to the CEO); the centralization of our
Research & Development organization; the re-alignment
of our international structure; and the reprioritization and
diversification of our product portfolio, in order to drive
innovation, accelerate profitable growth and increase both
accountability and shareholder value. Activities under the
restructuring initiatives will begin in the first quarter of
2010 and are expected to be substantially completed by the end
of 2011.
Who are
our Named Executive Officers?
Our Named Executive Officers, or NEOs, as of December 31,
2009, are J. Raymond Elliott, our President and Chief Executive
Officer; Sam R. Leno, our Executive Vice President, Finance and
Information Systems and Chief Financial Officer; Fredericus A.
Colen, our Executive Vice President and Group President, Cardiac
Rhythm Management (CRM); Stephen F. Moreci, our Senior Vice
President and Group President, Endosurgery; and Timothy A.
Pratt, our Executive Vice President, Secretary and General
Counsel. As part of our 2010 restructuring, Mr. Leno was
promoted to Executive Vice President and Chief Operations
Officer, Mr. Colen was promoted to Executive Vice President
and Chief Technology Officer, Mr. Moreci was promoted to
Senior Vice President, Global Sales Operations and
Mr. Pratt was promoted to Executive Vice President, General
Counsel and Chief Administrative Officer. Further in connection
with our 2010 restructuring, Jeffrey D. Capello was promoted to
Executive Vice President and Chief Financial Officer.
Messrs. Lenos and Capellos promotions were
effective as of March 1, 2010. Because SEC rules require
that we include any individual serving in the role of chief
executive officer at any time in 2009, James R. Tobin, our
former President and Chief Executive Officer, who retired as our
CEO on July 13, 2009, is also included as an NEO.
Additionally, SEC rules require inclusion of a former executive
officer who would have been included but for the fact that the
officer was not serving as an executive officer at the end of
2009. As a result, Lucia L. Quinn, our former Executive Vice
President, Human Resources, is also included as an NEO, due to
payments she is eligible to receive in connection with her
leaving the Company in 2009.
How We
Determine Executive Compensation
Our Compensation Committee, and in certain cases the independent
directors of our Board of Directors, bears principal
responsibility for assessing, determining and approving our
executive compensation and conducts regular reviews of the
executive compensation program. Information about our
Compensation Committee and its composition, processes and
responsibilities can be found on page 21 of this Proxy
Statement under the heading Executive Compensation and
Human Resources Committee. There are three key elements to
our process for setting executive compensation:
(i) performance considerations; (ii) market
referencing; and (iii) CEO and Compensation Committee
judgment.
27
Performance
Considerations
We award our executives compensation and assign them additional
responsibilities as recognition for how well they perform as a
team in achieving our business goals, as well as how well they
achieve their individual goals. Our 2009 Performance Incentive
Plan (PIP) links our executives cash incentive awards to
Company performance targets and individual performance. We
amended our PIP for 2009 to align the performance goals of our
executive officers who lead business units or international
regions with the target performance of the divisions or regions
that they head, while corporate officers continue to be measured
by overall corporate performance targets. Further, our annual
equity award grants are partially based on individual
performance. Our CEO conducts each NEOs annual Performance
Achievement and Development Review (PADR) to determine each
executive officers level of achievement (other than his
own) in relation to both business and individual goals. The PADR
process is designed to guide performance discussions, set an
executives performance objectives and communicate annual
achievement at the individual performance level. At the end of
each year, overall performance is rated on a scale ranging from
needs improvement to outstanding. These
achievement indicators influence the executives
compensation. The Chairman of the Board presents the CEOs
PADR results to the Nominating and Governance Committee for its
evaluation. The CEO presents each NEOs PADR results (other
than his own) to the Compensation Committee for its approval,
and the Chairman of the Nominating and Governance Committee
communicates the CEOs PADR recommendation to the
Compensation Committee for its approval.
Market
Referencing
Peer Comparison. Every year, we also base our
compensation decisions on a review of relevant market
information. The principle of market referencing means that our
compensation and benefits programs are benchmarked and
administered against programs available to employees in
comparable roles at peer companies.
In 2009, the Compensation Committee engaged the services of
Watson Wyatt as its independent third party compensation
consultants to provide advice on executive and director
compensation, including collecting market information. Watson
Wyatt did not perform any work for our executives or management
in 2009 other than as authorized by our Compensation Committee.
The Compensation Committee conducts an annual review of our
compensation consultants performance. Please see the
discussion of the roles of and instructions given to Watson
Wyatt under the heading Executive Compensation and Human
Resources Committee on page 21. Watson Wyatt assisted
in defining a peer group of companies and then collected
relevant market data from these companies to allow the
Compensation Committee to compare our compensation and benefits
levels and program design to those of our peers.
In 2009, Watson Wyatt reviewed our peer comparison group with
the Compensation Committee. Based on this review, we maintained
for 2009 the peer comparison group we utilized in 2008, listed
below. In establishing the peer group, Watson Wyatt assessed
companies publicly traded in the United States and focused on
industry (customer base and product offerings), comparable size
(in relation to revenue, number of employees and market
capitalization), comparable growth, mix and source of revenue
and complexity of business operations.
28
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2009 Peer Group
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Abbott Laboratories
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Baxter International Inc.
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Becton, Dickinson and Company
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Covidien Ltd.
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Hospira, Inc.
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Medtronic, Inc
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St. Jude Medical, Inc.
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Stryker Corporation
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Thermo Fisher Scientific, Inc.
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Zimmer Holdings, Inc.
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In addition to the peer group, Watson Wyatt also utilized
broader market data from the Towers Perrin U.S. CDB General
Industry Executive Database to ascertain the competitiveness of
pay opportunities for certain of our NEOs. This survey data was
utilized where positional peer group data was not available. The
data was representative of a custom cut of comparable firms or
size appropriate broader industry data and included Beckman
Coulter Inc., Hospira Inc., Forest Laboratories Inc., Biogen
Idec Inc., Allergan Inc., Genzyme Corp., Gilead Sciences Inc.,
Diagnostics Inc., Novo-Nordisk A/S, Covidien Ltd., Baxter
International Inc., Medtronic Inc. and Amgen Inc.
Comparable Pay Analytics. Utilizing the peer
group and survey data, Watson Wyatt conducted numerous studies
intended to inform the Compensation Committee as to the
appropriateness and competitiveness of our executive
compensation programs and practices from a market perspective. A
summary of the relevant analysis and reviews performed by Watson
Wyatt follows:
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Analysis/Study
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Overview
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Purpose
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Executive Programs and Trends
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Review of all executive compensation programs, including (but not limited to):
Annual and long-term equity incentive design
Benefits and perquisite programs
Executive severance and change in control arrangements
Executive retirement programs
Stated targeted market position
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Provide the Compensation Committee with a market reference to
evaluate the reasonableness and appropriateness of our executive
compensation programs and understand trends as they develop
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Total Compensation Opportunity
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Assessment of the competitiveness of base salary, target annual
incentives and the grant date fair value of long-term incentive
awards
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Determine the competitiveness and appropriateness of current pay
opportunity in comparison to market data
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Mix of Pay
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Examination of the interplay of compensation elements (base
salary, target annual cash incentives, long-term equity
incentives)
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Determine whether current compensation opportunities align with
market practice and reflect the desired emphasis at the Company
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Long-term Incentive Plan Review
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Review of the aggregate impact of the long-term incentive
program from a share and cost perspective
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Understand the competitiveness of the long-term incentive
program on an aggregate basis
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29
CEO
and Compensation Committee Judgment
The application of CEO (or Chairman of the Board in the case of
the CEO) and Compensation Committee judgment is an important
factor in setting executive pay. We do not employ a purely
formulaic approach to any of our compensation plans. There are
guidelines and funding formulas in place for our equity and
performance incentive plans that are tied to specific financial
and quality results, but there are also individual performance
factors and executive retention considerations that permit
discretion to adjust formula-driven awards. While the maximum
funding levels are set in advance under our PIP, the
Compensation Committee may adjust a maximum funded or formula
incentive award downward, based on an executives
individual contribution and performance. In addition, an
executives compensation may be adjusted to reflect
expansion of responsibilities during the year and other changes
in role and job description.
In addition, while the Compensation Committee is solely
responsible for setting the targets and approving the awards,
the Compensation Committee relies on the judgment of the CEO in
(i) setting executive performance objectives,
(ii) evaluating the actual performance of each executive
(other than the CEO) against those objectives through the PADR
process and (iii) recommending appropriate salary and
incentive awards for each executive (other than the CEO) to the
Compensation Committee. The CEO regularly participates in
Compensation Committee meetings, at the request of the
Compensation Committee, in order to provide background
information and explanations supporting his recommendations.
Risk
Considerations and Internal Pay Analytics
Risk Considerations. The Compensation
Committee also bases its compensation decisions on whether our
executive compensation program is appropriately aligned with
business risk. The Compensation Committee considers the effect
of the elements of our executive compensation programs on
business risk, including mix of total pay and amounts tied to
short and long-term goals, ability of the Compensation Committee
to adjust performance-based awards in its discretion, vesting
schedules of equity awards, maximum payout levels and metrics
used in evaluating Company performance in terms of our cash
incentive plan (including the alignment of certain
executives performance goals with the divisions that they
head). The Compensation Committee also considers our policies on
recovery of incentive awards, executive stock ownership and
holding guidelines, and hedging prohibition. For more details,
please see Recovery of Incentive Awards,
Executive Stock Ownership Guidelines and
Hedging Policy on page 47.
Use of Tally Sheets, Internal Pay Equity and Other
Factors. In making its compensation
determinations, our Compensation Committee also reviews and
analyzes tally sheets, which provide a total of all elements of
compensation for each of our executive officers to help ensure
that the design of our compensation program is consistent with
our compensation philosophy and that the amount of compensation
is within appropriate competitive parameters. In addition, the
Compensation Committee considers the economic value as well as
the retentive value of prior equity grants received by our
executives in determining current or future compensation, and
considers each executives compensation compared to the
compensation of other executives and other employees generally.
In determining the reasonableness of our executives total
compensation, the Compensation Committee reviews not only
individual and Company performance compared to plan, but also
the nature of each element of executive compensation, including
salary, performance incentive bonus, long-term incentive
compensation, prior equity grants, accumulated realized and
unrealized stock option gains and other personal benefits, as
well as the terms of executive severance, retirement and change
in control arrangements.
Chief
Executive Officer Succession
In 2009, the Board established a special CEO search committee
comprised of non-employee directors to identify and retain a
successor to our former President and Chief Executive Officer.
The special committees and Compensation Committees
objectives in setting the compensation for a successor CEO were
to attract and retain a seasoned executive with a proven track
record for success and exceptional experience in both the
medical industry and in driving long-term value creation for
shareholders. The Committees also intended to create a
performance-driven structure sufficient to ensure that the
individual would dedicate himself or herself to the future
success of the Company and its long-term value creation.
30
Effective July 13, 2009, Mr. Elliott was appointed our
President and Chief Executive Officer by our Board of Directors,
following the retirement of Mr. Tobin as our President and
Chief Executive Officer. Mr. Elliott commenced employment
with us on June 23, 2009 as a Senior Advisor. Under the
terms of his offer letter, Mr. Elliott received an
annualized salary of $600,000 for his role as Senior Advisor,
which increased to $1,200,000 on July 13, 2009 as he
commenced his position as our President and Chief Executive
Officer. Mr. Elliott also received a sign-on bonus of
$1,500,000 on July 24, 2009. In addition, on his hire date
of June 23, 2009, Mr. Elliott was granted options to
purchase 3,400,000 shares of our common stock with an
exercise price of $9.51 per share (the closing price of our
common stock on the date of grant), vesting in equal annual
installments over the next four years beginning on the first
anniversary of the date of grant. Mr. Elliott was also
granted 1,000,000 deferred stock units (DSUs), one third of
which will vest on June 23, 2010, the first anniversary of his
hire date, and the remainder of which will vest monthly for two
years thereafter until all of the DSUs have vested.
Additionally, Mr. Elliott was granted an award of 1,250,000
performance-based DSUs which will vest upon the attainment of
predetermined stock prices occurring prior to December 31,
2012 as set forth below, provided that Mr. Elliott remains
employed by the Company. Any performance-based shares that have
not been earned by December 31, 2012 will be forfeited.
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Minimum Share
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Performance Price
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for any 10
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Consecutive
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# of DSUs that
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Trading Days:
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Vest
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$20.00
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250,000
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$22.50
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250,000
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$25.00
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250,000
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$27.50
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250,000
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$30.00
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250,000
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Pursuant to his offer letter, Mr. Elliotts 2009
Performance Incentive Plan (PIP) target was 120% of his 2009
base salary and his award was paid entirely in DSUs (equaling
78,421 DSUs) which were fully vested upon issuance, payable on
the fourth anniversary of issuance and valued at the closing
price of our common stock on February 23, 2010, or $7.75
per share. Mr. Elliotts offer letter provides that in
subsequent years, he will be given the opportunity, in
compliance with applicable regulations, to elect the portion of
his bonus that will be paid in cash and the portion that will be
paid in DSUs. Further pursuant to his offer letter,
Mr. Elliott also received a stock option grant on
February 23, 2010 for 600,000 shares, having an
exercise price of $7.75 per share, the closing price of our
common stock on the date of grant.
Mr. Elliott also received relocation benefits pursuant to
his offer letter and our global relocation programs in
connection with his move to Massachusetts in an amount of
$961,380 ($896,616 of this amount was included in Mr.
Elliotts income, of which $367,120 represents a
gross-up to
cover related tax obligations) and $77,617 for his cost of
living allowance, which was included in his taxable income.
Mr. Elliotts offer letter was prepared in accordance
with the objectives of the special committee and Compensation
Committee in setting our CEOs compensation, as described
above. As a result, Mr. Elliotts base salary and
long-term equity awards (on an annualized basis) were set
competitively at the 75th percentile paid by our peers for
equivalent positions and his target PIP payment (paid entirely
in DSUs for 2009) at the market median, which the
Compensation Committee determined in each case appropriate to
align with its goals. The long-term equity awards
Mr. Elliott received pursuant to his offer letter were
intended to replace three years of annual equity grants and
Mr. Elliotts offer letter provides that no additional
grants of equity-based awards are expected to be made prior to
the third anniversary of his commencement date. Watson Wyatt
advised the Compensation Committee with setting the compensation
in Mr. Elliotts offer letter and assisted in
collecting relevant market data.
For a discussion of Mr. Tobins Transition and
Retirement Agreement, see Our Post-Employment and Change
in Control Arrangements Executive Retirement
on page 44.
31
Our
Elements of Total Executive Compensation
Overview
of Compensation
Our total direct compensation program consists of fixed
compensation elements, such as base salary and benefits, and
variable performance-based elements, such as annual and
long-term incentives. Our fixed compensation elements are
designed to provide a stable source of income and financial
security to our executives. Our variable performance-based
compensation elements are designed to reward performance at
three levels: individual performance, actual Company performance
in terms of long-term value creation and Company performance
compared to business goals with an emphasis on annual goals.
Through these performance incentive awards, we reward the
achievement of short-term goals, such as successful marketing,
manufacturing and sales of products, discipline over our
expenses and other financial measures and the promotion of a
culture of quality, and long-term goals, such as technology
innovation, business growth and stock price appreciation. Our
mix of pay, further described below, is weighted to demonstrate
a focus on long-term over short-term goals. For 2010, long-term
goals have an increased weighting to better align our executive
compensation with that of our competitors and the long-term
interests of our shareholders.
We compensate our executives principally through base salary,
performance-based annual cash incentives and annual equity
awards. This three-part compensation approach enables us to
remain competitive with our industry peers while ensuring that
our executive officers are appropriately incented to deliver
short-term results while creating sustainable long-term
shareholder value. Our Compensation Committee has chosen to make
a significant portion of each executives pay contingent
upon the achievement of certain goals within our strategic plan
and within targeted market positions typically established by
reference to our peer group.
We also provide our executives with indirect pay in the form of
benefits. We believe that offering our executives certain
benefits facilitates the operation of our business, allows them
to better focus their time, attention and capabilities on our
business and assists the Company in recruiting and retaining key
executives. As it does for our other compensation programs, our
Compensation Committee consistently reviews and adjusts these
plans to ensure they are generally consistent with practices
among companies in our peer group, as well as large companies
within broader industry segments.
Each element in the program has a primary role, one or more
objectives and a target market position relative to our peer
group, each as shown in the table below. For 2009, our target
market position was the median for base salary,
75th percentile
for annual cash incentive awards and
60th percentile
for annual equity awards. The target market position is an
overall guideline, but individual compensation pay levels may
vary based on individual performance, internal pay equity
considerations and other factors. For 2009, Watson Wyatt
performed an analysis of our NEOs total direct
compensation and found that overall, our NEOs base
salaries approximated the market median, our NEOs target
annual cash incentive awards approximated the
75th percentile,
and our NEOs equity incentive awards approximated the
60th percentile. For 2010, to further our goal of alignment
with our competitive market, we have moved our philosophical
position to the market median for all three primary elements of
direct compensation.
32
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2009
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2010 Target
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Target Market
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Market
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Element
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Role
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Objective
|
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Position
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Position
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Base Salary
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Provide stable source of income
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Attract and retain talent
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Median
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Median
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Performance Incentive Plan (PIP)
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Reward for annual and quarterly goal achievement
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Focus talent on annual and quarterly goals; reward talent
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75th percentile
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Median
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Annual Equity Incentives
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Reward for long-term business development
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Focus talent on long-term shareholder value creation; retain and
engage talent
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60th percentile
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Median*
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Retirement
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Provide financial protection and security
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Attract and retain talent
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Competitive
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Competitive
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Benefits/Perquisites
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Ensure our executives remain healthy
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Allow talent to focus on being productive leaders
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Competitive
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Competitive
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Severance and Change in Control Protection
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Provide financial protection and security
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Focus talent on continuing business operations
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Competitive
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Competitive
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Annual equity incentives at the
75th percentile
are attainable (based on exceptional performance) to retain key
talent.
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Mix of Pay. Of the three direct compensation
elements, our total executive compensation package as reflected
in the Summary Compensation Table on page 50 is heavily
weighted towards the variable, performance-based elements of our
Performance Incentive Plan (PIP) and annual equity incentives.
For 2009, only 28% of the value of the total annual direct
compensation for our NEOs as a group consisted of fixed
compensation in the form of base salary, while variable (versus
fixed) compensation accounted for the remaining 72% of total
direct compensation. Of that 72%, 50% took the form of stock
options or deferred stock units (DSUs) which are designed to
reward long-term performance and 22% took the form of cash
performance incentive awards, which are designed to reward
quarterly and annual performance. Therefore, a base salary at
the median is designed to attract and retain our executives
while, on average, the 22% of our executives annual
compensation taking the form of performance incentive awards is
tied to actual Company and individual performance through our
PIP funding formulas, and on average, the remaining 50% of our
executives compensation taking the form of stock options
and DSUs is tied to actual long-term performance of the Company
through stock price appreciation and vesting restrictions. For
2009 we felt that this mix was appropriate to align the
interests of our executives and their compensation with business
risk and the long-term interests of our stockholders. For 2010,
we have moved toward an increased weighting on long-term
performance by reducing targeted cash performance incentive
awards and granting proportionally more annual equity awards.
Base
Salary
Overview. In general, the Compensation
Committee targets base salaries at levels consistent with the
median rate paid by our peers for equivalent positions. In
addition, the Compensation Committee considers our annual merit
budget, our performance for the year, current economic
conditions, each executives current and prior year salary
and each executives actual performance compared to the
goals and objectives established for that executive at the
beginning of the year. In December 2008, due to the declining
economic climate, the Compensation Committee decided to defer
merit increases on base salaries for certain salaried employees
including executives, and accordingly, no NEOs base salary
increased in 2009 over 2008. In February 2010, the Compensation
Committee reinstated merit increases on base salaries for 2010
to align our programs with the competitive environment when
combined with other changes made to our executive compensation
programs for 2010 as described in Recent Executive
Compensation Changes on page 25. NEO salaries for
2009 are reported in the Summary Compensation Table on
page 50 under the Salary column.
NEOs (Other than CEO). We generally establish
base salaries for our executive officers (other than the CEO)
based upon the prior years PADR performance reviews
conducted by the CEO and on the CEOs
33
recommendations as presented to the Compensation Committee for
approval or modification. However, because the Compensation
Committee decided in December 2008 to defer merit increases on
base salaries for certain salaried employees, including
executives, the NEOs base salaries did not change from
2008 to 2009. Accordingly, the base salaries for our NEOs (other
than the CEO) for 2009 were as follows:
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2009 Base
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Name
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Salary*
|
|
Sam R. Leno
|
|
$
|
625,000
|
|
Fredericus A. Colen
|
|
$
|
570,000
|
|
Stephen F. Moreci
|
|
$
|
428,000
|
|
Timothy A. Pratt
|
|
$
|
525,000
|
|
Lucia L.
Quinn(1)
|
|
$
|
460,000
|
|
|
|
|
*
|
|
Base salary amounts are rounded to
the nearest thousand.
|
|
(1)
|
|
Ms. Quinn resigned from Boston
Scientific on September 15, 2009.
|
CEO. Mr. Elliott joined the Company as
Senior Advisor on June 23, 2009 and was appointed as our
President and Chief Executive Officer by the Board of Directors
effective July 13, 2009. Pursuant to
Mr. Elliotts offer letter, he was paid an annual base
salary of $600,000 for his role as Senior Advisor until he
commenced as CEO, at which time his annual base salary increased
to $1,200,000. The Compensation Committee believed that the
salary for Mr. Elliotts role as Senior Advisor was
appropriate for the transition period. The Compensation
Committees objective in setting Mr. Elliotts
annual base salary was to engage and retain a seasoned executive
with a proven track record for success and exceptional
experience in both the medical industry and in driving long-term
value creation for shareholders. Therefore, the Compensation
Committee set Mr. Elliotts base salary competitively
at the 75th percentile paid by our peers for equivalent
positions. For further discussion regarding
Mr. Elliotts offer letter, see Chief Executive
Officer Succession on page 30.
Effective July 13, 2009, Mr. Tobin retired as our
President and Chief Executive Officer and continued to be
employed with Boston Scientific in the role of Senior Advisor
until November 30, 2009, for which he continued to be paid
the same base salary pursuant to his Transition and Retirement
Agreement. For more information on Mr. Tobins
retirement payments, please refer to Executive
Retirement on page 44. Because the Compensation
Committee decided to defer merit increases on base salaries for
executives in December 2008, Mr. Tobins base salary
did not change from 2008 to 2009.
Messrs. Tobins and Elliotts annualized base
salaries for 2009 for the role of President and Chief Executive
Officer were as follows:
|
|
|
|
|
|
|
|
|
|
|
2009 Base
|
|
Effective
|
Name
|
|
Salary*
|
|
Date
|
|
J. Raymond
Elliott(1)
|
|
$
|
1,200,000
|
|
|
|
7/13/09
|
|
James R.
Tobin(2)
|
|
$
|
994,000
|
|
|
|
2/26/08
|
|
|
|
|
*
|
|
Base salary amounts are rounded to
the nearest thousand.
|
|
(1)
|
|
Mr. Elliott joined the Company
as Senior Advisor on June 23, 2009 and was appointed as our
President and Chief Executive Officer effective as of
July 13, 2009. For the period from June 23, 2009
through July 13, 2009, he was paid an annual base salary of
$600,000 pursuant to his offer letter.
|
|
(2)
|
|
Mr. Tobin retired as our
President and Chief Executive Officer on July 13, 2009 and
from the Company on November 30, 2009. He was paid the
above base salary through November 30, 2009 pursuant to his
Transition and Retirement Agreement.
|
Performance
Incentives
Overview. Through our 2009 Performance
Incentive Plan (PIP) for all salaried personnel, including NEOs,
we seek to provide pay for performance by linking cash incentive
awards to both Company and individual performance through a
range of award opportunities that depend upon the level of
achievement of annual and quarterly Company and individual
objectives. Beginning in 2009, corporate executive officers are
34
measured against corporate performance targets while executive
officers who lead business units or international regions are
measured against their respective divisional or regional
performance targets. Due to the nature of their positions with
the Company, Messrs. Elliott, Tobin, Leno and Pratt and
Ms. Quinn were measured against corporate goals,
Mr. Colen was measured against our Cardiac Rhythm
Management (CRM) divisions goals and Mr. Moreci was
measured against our Endosurgery divisions goals. Our
corporate goals and each of our business unit goals are funded
separately. Performance targets are set annually and, for 2009,
were measured and funded both annually and quarterly. For 2010,
the corporate and business unit performance goals will be
measured solely annually for all metrics to help align our
practices with those of our competitive environment. Our CEO
also measures individual achievement for an executive officer at
the end of the year by comparing the actual performance of the
executive to the individual goals and objectives established for
the executive at the beginning of or during the year. The
Compensation Committee oversees and reviews the CEOs
recommendations with respect to each executive officers
individual performance. For our CEO, the Chairman of the Board
reviews our CEOs individual performance against our
CEOs established goals and objectives and presents the
results of his review to the Nominating and Governance Committee
for its evaluation. For 2010, the Company performance component
will receive a greater weighting over individual achievement to
place a greater emphasis on rewarding team performance. Amounts
actually awarded under our PIP for 2009 are reflected in the
Summary Compensation Table on page 50 in the Non-Equity
Incentive Plan Compensation column.
Corporate Goals. Corporate executive officers
are measured against adjusted earnings per share (EPS), global
sales and free cash flow. For 2009, the weight of annual
corporate performance for eligible corporate employees,
including our executives, was 55% while the weight of corporate
performance for each calendar quarter was 11.25%. The metrics
were weighted and measured as follows:
|
|
|
|
|
Metric
|
|
Weighting
|
|
Measurement Period
|
|
Adjusted EPS
|
|
50%
|
|
Quarterly and Annually
|
Global Sales
|
|
25%
|
|
Quarterly and Annually
|
Free Cash Flow
|
|
25%
|
|
Annually
|
The Compensation Committee believes that adjusted EPS, sales and
free cash flow goals are appropriate measures to encourage our
corporate executives to achieve superior financial performance
for us with the goal of generating shareholder value. The
Compensation Committee further believes that the weightings for
each metric are appropriate because they emphasize the
Companys top performance priorities.
Business Unit Goals. For 2009, the business
unit executive officers were measured against adjusted EPS and
the sales and adjusted operating income of their respective
divisions. For CRM, global sales and global adjusted operating
income were used and for Endosurgery, global sales and domestic
adjusted operating income were used. For 2009, the weight of
annual business unit performance was 40% while the weight of
business unit performance for each calendar quarter was 15%. The
metrics were weighted and measured as follows:
|
|
|
|
|
Metric
|
|
Weighting
|
|
Measurement Period
|
|
Adjusted EPS
|
|
50%
|
|
Quarterly and Annually
|
Business Unit Sales
|
|
25%
|
|
Quarterly and Annually
|
Business Unit Adjusted Operating Income
|
|
25%
|
|
Quarterly and Annually
|
The Compensation Committee believed that, for 2009, these
metrics and weightings were appropriate to encourage our
business unit executives to achieve financial performance with
the goal of generating shareholder value. For 2010, adjusted EPS
will be replaced as a business unit goal with days sales
outstanding and days inventory on hand to incent cash flow
improvement and the weightings on business unit sales and
adjusted operating income will be increased to emphasize the
business units revised priorities.
Quality Goal. Each executives PIP is
also affected by individual and corporate-wide performance of
quality goals (including lifting of our corporate warning
letter). The Compensation Committee reserves the right to
decrease or eliminate the incentive pool funding (on a quarterly
and/or an
annual basis) based on its
35
determination, within its sole discretion, of the Companys
progress made toward achieving our quality objectives and the
performance of our company-wide quality system. The Compensation
Committee may also adjust an individual executive officers
PIP award downward for individual performance on the quality
goal. For 2009, the Compensation Committee adjusted PIP awards
downward by 2% for executive officers with leadership over
certain of our sites that contributed to our continued corporate
warning letter restrictions in 2009. The Compensation Committee
believes that the corporate quality objective is appropriate in
order to emphasize our commitment to continually improving and
sustaining our quality systems, resolving the issues identified
by the FDA in its corporate warning letter and enhancing
shareholder value.
Definitions of Metrics. For purposes of our
PIP, the sales metrics are calculated at constant currency rates
rather than at actual currency rates in order to take currency
fluctuation out of the incentive measurements. Free cash flow
for PIP purposes equals reported operating cash flow less
capital expenditures and excludes cash flows associated with
certain significant and unusual litigation-, acquisition-,
restructuring- and tax-related items. We do not believe that
these litigation-, acquisition-, restructuring- and tax-related
exclusions are indicative of our on-going operating performance.
Further, for purposes of our PIP, adjusted EPS equals adjusted
net income divided by weighted average shares outstanding for
the performance period. Adjusted net income is defined generally
as GAAP net income excluding goodwill and intangible asset
impairments, acquisition, divestiture and purchased research and
development related charges, restructuring expenses, certain
tax-related items and certain litigation and amortization
expenses. Similarly, for purposes of the PIP, adjusted operating
income is defined generally as GAAP operating income with the
same exclusions as to net income. We believe these limited
exclusions are necessary because we believe adjusted net income
better reflects operating activity. Additionally, we believe
that excluding these expenses facilitates an appropriate
comparison of our current operating performance to our past
operating performance.
Plan Funding Determination. In 2009, we
determined the actual annual funding percentage of our corporate
and business unit funding under our PIP at the end of the year
based on actual results for the year compared to the plan. We
determined the actual quarterly funding percentage for the
corporate and business unit funding under our PIP on a quarterly
basis based on actual results for the quarter compared to the
quarter plan within the annual plan. Funding for each
measurement period increases on a sliding scale (up to a maximum
of 150% of target) as higher levels of sales, adjusted EPS, free
cash flow and adjusted operating income goals were met, as
depicted in the tables below. Annual and quarterly performances
were weighted as described above. The total annual funding for
each of our corporate and business unit funding consists of the
sum of the funding for the annual measurement period and each of
the quarterly measurement periods. For 2010, the funding tables
will be modified to increase the threshold performance
expectation, reduce funding at threshold performance and incent
performance above goal on the sales measure, thereby rewarding
performance above threshold levels at higher rates.
Funding
Scale Tables.
Sales Funding Scale Table. For 2009, the sales
component of our corporate and business unit goals was funded at
the following percentages depending on the percent of the target
level of sales that we achieved. For example, if we achieved 91%
of our sales goals, the PIP would fund at 10% for the sales
metric for the applicable measurement period.
|
|
|
|
|
Performance Level
|
|
Funding Level
|
|
Achievement
|
|
90.9% or below
|
|
0%
|
|
Below Threshold
|
91%
|
|
10%
|
|
Threshold
|
91.1% to 97.9%
|
|
+1.143% funding for every 0.1% performance
|
|
Below Target
|
98%
|
|
90%
|
|
Below Target
|
98.1% to 99.9%
|
|
+0.5% funding for every 0.1% performance
|
|
Below Target
|
100%
|
|
100%
|
|
Target
|
100.1% to 109.9%
|
|
+0.5% funding for every 0.1% performance
|
|
Exceeds Target
|
110% or above
|
|
150%
|
|
Maximum
|
36
Adjusted Earnings per Share, Free Cash Flow and Adjusted
Operating Income Funding Scale Table. For 2009, the
adjusted EPS, free cash flow and adjusted operating income
components of our goals were funded at the following percentages
depending on the percent of the target level that we achieved.
For example, if we achieved 85% of our free cash flow goals, the
PIP would fund at 40% for the free cash flow metric for the
applicable measurement period.
|
|
|
|
|
Performance Level
|
|
Funding Level
|
|
Achievement
|
|
84.9% or below
|
|
0%
|
|
Below Threshold
|
85%
|
|
40%
|
|
Threshold
|
85.1% to 89.9%
|
|
+0.2% funding for every 0.1% performance
|
|
Below Target
|
90.0% to 99.9%
|
|
+0.5% funding for every 0.1% performance
|
|
Below Target
|
100%
|
|
100%
|
|
Target
|
100.1% to 109.9%
|
|
+0.5% funding for every 0.1% performance
|
|
Exceeds Target
|
110% or above
|
|
150%
|
|
Maximum
|
Funding.
Corporate Goals Funding Table. The table below
depicts, for 2009, our annual and quarterly corporate goals, our
actual performance as a percentage of plan and whether that
performance met the threshold, target or maximum levels of our
corporate objectives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Sales
|
|
Adjusted EPS
|
|
Free Cash Flow
|
|
|
|
|
|
Plan
|
|
|
Actual
|
|
|
|
|
|
|
|
Actual
|
|
|
|
|
Plan
|
|
|
Actual
|
|
|
|
|
Total
|
|
|
|
($ in
|
|
|
as a %
|
|
|
Funding
|
|
|
|
|
as a %
|
|
|
|
|
($ in
|
|
|
as a %
|
|
|
Funding
|
|
Corporate
|
|
Period
|
|
Millions)
|
|
|
of Plan
|
|
|
%
|
|
Plan
|
|
|
of Plan
|
|
|
Funding %
|
|
Millions)*
|
|
|
of Plan*
|
|
|
%*
|
|
Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109.0%
|
|
|
|
|
|
|
|
|
|
150.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
|
1,988
|
|
|
|
101.8
|
%
|
|
(above target)
|
|
$
|
0.1697
|
|
|
|
112.9
|
%
|
|
(maximum)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
|
15.2
|
%
|
|
|
|
|
|
|
|
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
100.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
|
|
|
2,063
|
|
|
|
100.0
|
%
|
|
(on target)
|
|
$
|
0.1963
|
|
|
|
100.1
|
%
|
|
(above target)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
58.0%
|
|
|
|
|
|
|
|
|
|
52.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3
|
|
|
2,077
|
|
|
|
95.2
|
%
|
|
(below target)
|
|
$
|
0.2117
|
|
|
|
90.5
|
%
|
|
(below target)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
|
6.1
|
%
|
|
|
|
|
|
|
|
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
|
|
|
2,208
|
|
|
|
90.5
|
%
|
|
(below threshold)
|
|
$
|
0.2677
|
|
|
|
74.6
|
%
|
|
(below threshold)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
75.1%
|
|
|
|
|
|
|
|
|
|
61.0%
|
|
|
|
|
|
|
|
|
|
150.00%
|
|
|
|
|
Annual
|
|
|
8,336
|
|
|
|
96.7
|
%
|
|
(below target)
|
|
$
|
0.8456
|
|
|
|
92.2
|
%
|
|
(below target)
|
|
|
904
|
|
|
|
163.00
|
%
|
|
(maximum)
|
|
|
57.2
|
%
|
Total before Quality Metric Adjustment
|
|
|
89.8
|
%
|
Quality Metric Adjustment
|
|
|
0
|
|
Total
|
|
|
89.8
|
%
|
|
|
|
*
|
|
Free cash flow is measured on an
annual basis only.
|
For example, in the third quarter, our actual sales came in at
95.2% of plan, which on the sales metric funding table above
receives a funding level of 58.0%. Sales had a weighting of
3.75% in the third quarter; or 25% of the quarterly weighting,
which for each individual quarter is 15% because free cash flow
is measured on an annual basis only. 58.0% of 3.75% is 2.18%.
Our adjusted EPS came in at 90.5% of plan for the third quarter,
which on the adjusted EPS metrics funding table above receives a
funding level of 52.5%. Adjusted EPS had a 7.5% weighting in the
third quarter; or 50% of the 15% quarterly weighting. 52.5% of
7.5% is 3.94%. The sum of the Q3 sales (2.18%) and adjusted EPS
(3.94%) funding levels results in a quarterly corporate funding
level for Q3 of 6.1%.
For 2009, our actual annual sales results and actual annual
adjusted EPS results fell below our target levels and our actual
annual free cash flow results exceeded the maximum target level.
The quarterly results for sales were above target in quarter
one, at target in quarter two, between the threshold and target
levels in quarter three and below threshold in quarter four. The
quarterly results for adjusted EPS exceeded our maximum target
level in quarter one, and were above target in quarter two,
between the threshold and target levels in quarter three and
below threshold in quarter four. Further, based on our overall
corporate performance relative to our quality goal in 2009, the
Compensation Committee determined not to adjust the funding
37
downward for most of our executives. As a result, our PIP funded
corporate goals at 89.8% of target for the year (which is the
sum of the annual plus each of the quarterly corporate funding
amounts), before the application of the individual performance
component of the plan.
Business Unit Goals. The Company has not disclosed
the specific targets for business unit performance, as its
business unit plans are highly confidential and not reported
publicly. Disclosing confidential financial information such as
specific business unit-level targets would provide competitors
and third parties with insight into the Companys internal
planning processes which may allow our competitors to predict
certain business strategies and cause us competitive harm.
Business unit targets related to sales and adjusted operating
income are established in support of Company-wide sales and
earnings per share targets based on a range of factors,
including growth outlooks for our product portfolio, the
competitive environment, our internal budgets, external market
economic conditions and market expectations. For example, growth
rates implicit in targets for any one business unit may be above
or below the growth rates targeted for the entire Company, due
to faster or slower growth in relevant product markets or
smaller or larger market shares. These considerations result in
business unit goals that are consistent with Company-wide goals
in their level of difficulty to achieve and probability for
success. Performance targets are set at a level that the CEO
believes is aggressive enough to inspire top performance but
reasonable enough to be realistically achievable. Goals are
established to challenge executives to maximize year-over-year
growth in sales and adjusted operating income but are at the
same time intended to be reasonable in that they can be achieved
by the efficient and diligent execution of operating plans.
Individual Performance Component. At the end
of the year, individual performance is also considered pursuant
to the PADR process described in Performance
Considerations on page 28. An individual performance
component from 0% to 200% is applied as a multiplier at the end
of the year to each executives funded award to obtain the
executives total award. In 2009, each individuals
entire PIP payment was adjusted by individual performance. For
2010, in order to emphasize rewarding teamwork, 75% of an
individuals PIP payout will be based on team results as
funded through Company performance and the remaining 25% on a
combination of individual and Company performance.
Individual Targets. Each executives
incentive award opportunity for the year (the
target) is expressed as a percentage of base salary,
based on the scope of the executives responsibilities. For
2009, the targets of Messrs. Elliott and Tobin, each in his
position as CEO, were 120% of their respective base salaries and
the target for our other NEOs was 75% of his or her base salary.
For 2010, our CEOs target will be 100% of his base salary
and the targets for our other executive officers will range from
45% to 80% of their base salaries based on the specific market
median positioning consistent with the scope of the position.
Actual Awards and Calculation of Awards. An
executive officers total performance incentive payment is
ultimately determined by multiplying the product of the
executive officers December 31, 2009 base salary and
his or her December 31, 2009 incentive target percentage by
the funding percentage of the corporate or business unit aspect
of the PIP and then multiplying the entire result by the
individuals performance percentage (pro-rated for the
number of days the NEO was employed) as illustrated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/09
Base
Salary
|
|
x
|
|
12/31/09
Incentive
Target
Percentage
|
|
x
|
|
Funding*
%
|
|
x
|
|
Proration
for Days
Employed
|
|
x
|
|
Individual
Performance
Percentage
|
|
=
|
|
Performance
Incentive
Award
|
|
|
|
* |
|
Messrs. Elliott, Tobin, Leno,
and Pratt and Ms. Quinn were measured against corporate
goals, Mr. Colen was measured against CRM goals and
Mr. Moreci was measured against Endosurgery goals.
|
Due to Company performance as described above, the corporate
goals aspect of our PIP funded at 89.8%. The CRM and Endosurgery
aspects of our PIP also funded below target due to the
performance of those business units and our adjusted EPS. As a
result, in 2009, performance incentive awards for our NEOs were
below target.
38
NEOs (Other than CEO). Actual performance incentive
awards paid in February 2010 to our NEOs (other than our CEO)
for 2009 performance are set forth in the table below.
|
|
|
|
|
|
|
2009 Actual
|
Name
|
|
Award
|
|
Sam R. Leno
|
|
$
|
420,938
|
|
Fredericus A. Colen
|
|
$
|
202,464
|
|
Stephen F. Moreci
|
|
$
|
283,827
|
|
Timothy A. Pratt
|
|
$
|
353,588
|
|
Lucia L.
Quinn(1)
|
|
$
|
219,965
|
|
|
|
|
(1)
|
|
Ms. Quinn resigned from Boston
Scientific on September 15, 2009.
|
Messrs. Lenos and Pratts performance incentive
awards were consistent with the corporate funding level.
Mr. Colens performance incentive award was below the
corporate funding level because the CRM business unit did not
perform as well against its goals. Mr. Morecis
performance incentive award was substantially similar to the
corporate awards due to the performance of his business unit and
was subject to the 2% quality reduction. Ms. Quinn resigned
from the Company on September 15, 2009, and, pursuant to
her Agreement and Mutual Release of All Claims, based on the
number of days worked in 2009 and the actual final funding of
the plan, was eligible to receive a prorated bonus for her
employment through September 15, 2009 for 100% of her
target incentive percentage, which comprised 75% of her base
annual salary. For further discussion regarding the payments and
benefits due to Ms. Quinn pursuant to her agreement, see
Post-Employment Arrangements on page 45.
CEO. On June 22, 2009, our Board
of Directors appointed J. Raymond Elliott as our President,
Chief Executive Officer and member of our Board of Directors,
effective as of July 13, 2009, following the retirement of
James R. Tobin as our President, Chief Executive Officer and
member of our Board of Directors. Mr. Elliott commenced
employment with Boston Scientific on June 23, 2009 as a
Senior Advisor. On July 13, 2009, Mr. Tobin
transitioned into the role of Senior Advisor, in which role he
remained until his retirement from the Company on
November 30, 2009. Actual performance incentive awards paid
to Messrs. Elliott and Tobin in 2009 are set forth in the
table below.
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2009 Actual
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Name
|
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Award(1)
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J. Raymond Elliott
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$
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607,766
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James R. Tobin
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$
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985,455
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|
|
|
|
(1)
|
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Mr. Elliotts entire PIP
award was granted in the form of deferred stock units (DSUs).
The award equaled 78,421 DSUs which were valued at $7.75 per
share, the closing price of our common stock on
February 23, 2010.
|
Mr. Elliotts primary 2009 performance objectives as
CEO were to achieve a significant level of oversight over all of
our business, develop an executable strategic plan, manage the
transition of the Company to new leadership and develop a plan
to refocus our business for strategic growth.
Mr. Elliotts performance incentive award was prorated
to reflect his commencement as President and Chief Executive
Officer on July 13, 2009. Pursuant to
Mr. Elliotts offer letter, Mr. Elliotts
entire PIP payment was paid in the form of DSUs which were fully
vested upon issuance, are payable on the fourth anniversary of
issuance and are valued at the closing price of our common stock
on February 23, 2010 (the date on which the bonus was
determined by the Compensation Committee) or $7.75 per share.
Mr. Elliotts PIP payment equaled 78,421 DSUs.
Pursuant to his offer letter, Mr. Elliott has the
opportunity, in compliance with applicable regulations, to elect
all or a portion of his Performance Incentive Award to be paid
in DSUs for each subsequent year. For further discussion
regarding equity awards granted and payments and benefits made
under Mr. Elliotts offer letter, see Chief
Executive Officer Succession on page 30.
Pursuant to Mr. Tobins Transition and Retirement
Agreement, Mr. Tobin was eligible to receive a prorated
bonus under the PIP for his employment through November 30,
2009 of up to 120% of his annual base salary. Further pursuant
to his Transition and Retirement Agreement, Mr. Tobin
received a Career Service Award in an amount equal to 250% of
his 2009 base salary less the amount paid to him under our PIP.
Based
39
upon our corporate performance, Mr. Tobins
Performance Incentive Award was $985,455. Accordingly, his
Career Service Award amounted to $1,499,572. For more
information on Mr. Tobins retirement payments, please
refer to Executive Retirement on page 44.
Annual
Equity Incentives
Overview. We intend our broad-based stock
option and deferred stock unit (DSU) award programs to attract,
retain, engage and focus key employees for the long-term. Our
Compensation Committee has determined that annual equity awards
are appropriate to tie our executive compensation to our future
stock price performance. The Compensation Committee approves,
upon management recommendation, equity awards that include
non-qualified stock option and DSU awards to eligible employees
within the organization and across business units in amounts
appropriate for each individuals (i) level of
responsibility, (ii) ability to affect the achievement of
overall corporate objectives, (iii) individual performance
and (iv) individual potential.
Equity Mix. In 2009, we continued our practice
of making equity grants to executives as a mix of stock options
and DSUs. Stock options are effective in promoting shareholder
alignment and in holding executives accountable for generating
shareholder return, while DSUs are a share-efficient means for
retaining top talent and promoting a long-term share owner
perspective. Together, stock options and DSUs enable us to meet
our dual compensation objectives of rewarding long-term goals,
such as strategic growth and business innovation and retaining
top talent even during periods of significant stock price
fluctuation. Further, the Compensation Committee was advised by
Watson Wyatt that granting a mix of equity vehicles to our
executive officers is a market competitive practice within our
peer group. Beginning in 2010, in order to place additional
emphasis on creating long-term shareholder value, the
Compensation Committee also granted performance share awards in
the form of DSUs to executive officers and changed our targeted
mix of equity grants to 25% performance-based share units, 50%
options and 25% DSUs.
We grant stock options with an exercise price equal to the fair
market value based on the closing stock price on the date of
grant, and they typically vest over a period of four years.
Options are exercisable until the tenth anniversary of the date
of grant or until the expiration of various limited time periods
following termination of employment. Executive officers are
prohibited from paying the exercise price for their options with
promissory notes or other payment forms prohibited by the
Sarbanes-Oxley Act of 2002. DSUs represent our commitment to
issue shares to recipients after a vesting period. These awards
typically vest in five equal annual installments beginning with
the first anniversary of the date of grant. The slightly longer
vesting period for DSUs reflects the fact that DSUs have
immediate value upon vesting compared to options which only have
value if our stock price increases. Upon each vesting date, the
vested DSUs are no longer subject to risk of forfeiture and
shares of our common stock are issued to the recipient. We do
not pay dividends on unvested DSUs.
NEOs (Other than CEO). In determining the
amount of our NEOs equity awards for 2009, the
Compensation Committee considered: (i) the NEOs
individual performance rating; (ii) the value of the
NEOs current vested and unvested equity; (iii) the
Companys attempt to target the 60th percentile of its
applicable peer group for 2009 for annual equity incentives
(which has been decreased to the 50th percentile for 2010);
and (iv) the affects of the recent market on economic
long-term incentive values. For 2009, Watson Wyatt developed
market-based equity award ranges for each NEO who was employed
at the time of the grant cycle. These award ranges reflected the
targeted market position for comparable roles among the NEOs.
The CEO was provided this information, along with the value of
each NEOs current vested and unvested equity, as well as
other performance data. The CEO was provided the ability to
differentiate awards within the established guidelines
reflecting performance, potential, current equity position, as
well as other criteria. Award recommendations were provided to
the Compensation Committee for review and approval prior to the
execution of any grants. For 2009, our executive officers were
permitted to choose the form of annual equity grants as either
100% options or 75% options and 25% DSUs. Pursuant to his
election, Mr. Morecis award was comprised of 100%
options, while the remaining NEOs chose a combination of 75%
options and 25% DSUs.
40
The Compensation Committee made annual equity awards to our NEOs
in February 2009 in the following amounts:
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2009
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Name
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Options(1)
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DSUs(1)
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Sam R. Leno
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201,072
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30,120
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Fredericus A. Colen
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100,536
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15,060
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Stephen F.
Moreci(2)
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134,048
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0
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Timothy A. Pratt
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100,536
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15,060
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Lucia L.
Quinn(3)
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120,643
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18,072
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(1)
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2009 stock options and DSUs were
granted as of February 24, 2009; stock options had an
exercise price of $8.30, the closing price of our common stock
on February 24, 2009.
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(2)
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Pursuant to his election,
Mr. Morecis award was comprised of 100% options.
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(3)
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Ms. Quinn resigned from Boston
Scientific on September 15, 2009.
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CEO. Effective July 13, 2009,
Mr. Tobin retired as our President and Chief Executive
Officer and Mr. Elliott was appointed as our President and
Chief Executive Officer by the Board of Directors.
Mr. Elliott joined the Company in the role of Senior
Advisor on June 23, 2009. On February 24, 2009, the
Compensation Committee approved a stock option grant to
Mr. Tobin for 2,000,000 shares at an exercise price of
$8.30 per share (the closing price of our common stock on the
date of grant), the vesting of which was accelerated by the
Compensation Committee pursuant to its authority under the 2003
Long-Term Incentive Plan and in connection with
Mr. Tobins retirement. For further discussion
regarding the payments and benefits due to Mr. Tobin
pursuant to his Transition and Retirement Agreement, see the
Compensation Discussion & Analysis section entitled
Executive Retirement on page 44.
Pursuant to Mr. Elliotts offer letter, on his hire
date of June 23, 2009, Mr. Elliott was granted options
to purchase 3,400,000 shares of our common stock with an
exercise price of $9.51 per share (the closing price of our
common stock on the date of grant), vesting in equal annual
installments over the next four years beginning on the first
anniversary of the date of grant. Mr. Elliott was also
granted 1,000,000 deferred stock units (DSUs), one third of
which will vest on June 23, 2010, the first anniversary of his
hire date, and the remainder of which will vest monthly for two
years thereafter until all of the DSUs have vested.
Additionally, Mr. Elliott was granted an award of 1,250,000
performance-based DSUs which will vest upon the attainment of
predetermined stock prices occurring prior to December 31,
2012, provided that Mr. Elliott remains employed by the
Company. Any performance-based shares that have not been earned
by December 31, 2012 will be forfeited. Further, in
accordance with Mr. Elliotts offer letter, on
February 23, 2010, the Compensation Committee approved a
stock option grant to Mr. Elliott for 600,000 non-qualified
stock options at an exercise price of $7.75 per share (the fair
market value on the date of grant), vesting in equal annual
installments over the next four years. In addition, pursuant to
the terms of his offer letter, Mr. Elliotts 2009 PIP
award was paid entirely in DSUs (equaling 78,421 DSUs) which
were fully vested upon issuance, payable on the fourth
anniversary of issuance and valued at the closing price of our
common stock on February 23, 2010, or $7.75 per share.
Mr. Elliotts offer letter further provides that no
additional grants of equity-based awards are expected to be made
prior to the third anniversary of the commencement date. For
further discussion regarding equity awards granted and payments
and benefits made under Mr. Elliotts offer letter,
see Chief Executive Officer Succession on
page 30.
2010 Performance Unit Program. Our 2010
Performance Unit Program performance share awards were in the
form of DSUs and were granted under our 2003 Long-Term Incentive
Plan. Performance is measured in three annual performance cycles
(from January 1, 2010 through December 31,
2012) comparing our own total shareholder return to the
total shareholder return of the companies in the S&P
Healthcare Industry Index. Total shareholder return is defined
as the change in stock price plus dividends paid over the
average closing stock price for the last 60 days of the
prior calendar year. At the end of the three-year performance
period, final total shareholder return will be calculated using
the simple average of the three annual performance cycles.
Performance share units will be converted into the right to
receive shares after the three year period based on
41
the percentile rank of our total shareholder return compared to
the total shareholder return of the companies in the S&P
Healthcare Industry Index as set forth below. For example, if
our total shareholder return percentile rank is at the
95th percentile,
one performance share unit will be converted into the right to
receive 2.4 shares of common stock.
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Rate of
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Conversion of
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Performance
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|
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Share Units
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Total Shareholder Return Performance Percentile Rank
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into Shares
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100th Percentile
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260%
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95th Percentile
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240%
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80th Percentile
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150%
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55th Percentile
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100%
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30th Percentile
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50%
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Below
30th Percentile
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0%
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Elements
of Indirect Pay
General. Our executives benefits
program, which is available to our NEOs, is intended to provide
financial protection and security for our executives and to
reward them for the total commitment we expect from them in
service to us. Our executives benefits program consists of
three key elements: health and welfare plans based principally
on a preferred provider model with the executives sharing
approximately 20% of the cost; Company-paid life insurance of
three times base salary (up to a $1 million benefit payable
upon death); and a qualified 401(k) retirement plan with a
Company match of up to 6% of base pay. Other elements include
benefits available to all of our employees, including
executives, such as Company-paid disability benefits and the
ability to participate in our Global Employee Stock Ownership
Plan, which entitles our employees to purchase our stock at a
10% discount.
Relocation. We also have an executive officer
tier of our global relocation programs for our executive
officers who are requested by us to move in connection with
their current job and for newly hired employees who will become
executive officers of the Company and who are required to move
in connection with accepting a job with us. The policy covers
reasonable expenses associated with the move and certain
relocation services to minimize the inconvenience of moving. The
policy also includes a cost of living allowance (COLA) for
executives whose cost of living increases at least eight percent
from their previous location of residence, paid as taxable
income over four years in decreasing percentages. The actual
amount of each COLA is determined by an external consulting
firm. In 2009, we paid $961,380 to relocate Mr. Elliott
pursuant to his offer letter and our global relocation programs
in connection with his move to Massachusetts ($896,616 of this
amount was included in Mr. Elliotts income, of which
$367,120 represents a
gross-up to
cover related tax obligations), and $77,617 for his COLA. In
addition, in 2009, we paid $46,771 to relocate Mr. Pratt
($29,253 of this amount represents a
gross-up to
cover related tax obligations) and $22,713 for his COLA, in
connection with his move to Massachusetts in 2008. Finally, we
made COLA payments of $25,446 to Mr. Leno and $9,036 to
Ms. Quinn in connection with their moves to Massachusetts.
In the Compensation Committees 2009 review of executive
compensation, the Compensation Committee retained the practice
of providing tax
gross-ups on
relocation because it applies to all employees and the
Compensation Committee believes it is integral to the
Companys ability to attract and develop employees whose
skill or knowledge enhance the Companys competitive
advantage.
Executive Allowance. Pursuant to our Executive
Allowance Plan, we provide a cash allowance to eligible
executives in lieu of perquisites typically provided by other
companies, such as company cars, health care costs not otherwise
covered or tax planning services, which we do not provide to our
executives. Under this plan, our executive officers receive
$25,000 per year, which is not specifically allocated to any
particular item and they are entitled to spend it in their
discretion.
Executive Life Insurance. In 2009, we made
annual payments to certain executives equal to the premium for
executive life insurance (plus a
gross-up
amount for tax purposes). Two of our NEOs, Messrs. Colen
and
42
Moreci, received these executive life insurance payments (in
lieu of Company-paid life insurance) in 2009. In October 2009,
the Compensation Committee approved the termination of the
program and, as a result, Messrs. Colen and Moreci were
also paid amounts (plus a
gross-up
amount for tax purposes), which in the aggregate, represented
the net present value of all remaining future premiums under
their respective policies. The payments made to
Messrs. Colen and Moreci in 2009 are reflected in the
Summary Compensation Table on page 50 under the column All
Other Compensation.
401(k) Excess Benefit Plan. In connection with
a one-time special contribution we made to our 401(k) Retirement
Savings Plan for the benefit of our employees announced in
September 2004, we adopted in June 2005 an Excess Benefit Plan.
The Excess Benefit Plan is a non-qualified deferred compensation
plan designed to provide specific supplemental benefits to those
employees who would have exceeded the 2004 IRS contribution
limits if the special contribution had been made to their 401(k)
plan accounts. The Excess Benefit Plan was established to accept
the overflow contributions on behalf of those
employees, including our executive officers. Messrs. Colen
and Moreci participate in this plan and Mr. Tobin
participated in this plan prior to his retirement from the
Company. Messrs. Elliott, Leno and Pratt and Ms. Quinn
were not employed by us in 2004 when the 401(k) contribution was
made and so do not participate in this plan.
Airplane Usage. Our CEO is permitted personal
use of our corporate aircraft. Other executive officers are
permitted personal use of the corporate aircraft only with the
prior permission of the CEO. In 2009, the only NEOs who used the
corporate aircraft for personal use were Messrs. Elliott,
Tobin and Leno. Under current IRS rules, we impute income to the
executive officer for an amount based on Standard Industry Fare
Level (SIFL) rates set by the US Department of Transportation.
This imputed income amount is included in an executive
officers earnings at the end of the year and reported as
income to the IRS. The IRS has set limitations on the amount we
can deduct when using the SIFL method to impute income to the
employee for personal use of the corporate aircraft. We
calculate disallowed deductions for tax purposes from December
1st of the previous tax year through November 30th of
the current tax year. In 2009, $65,769 of disallowed deductions
were attributable to Mr. Elliott, $173,667 of disallowed
deductions were attributable to Mr. Tobin and $13,803 of
disallowed deductions were attributable to Mr. Leno, in
each case for his personal use of the aircraft. For 2009, we
changed our policy to prohibit payment of
gross-ups
for spousal use of the aircraft in connection with business
activities. The incremental cost of the personal use of the
aircraft by Messrs. Elliott, Tobin and Leno is reflected in
the Summary Compensation Table on page 50 in the column All
Other Compensation.
Other/Special
Recognition Awards
In addition to the three primary elements of direct compensation
described above, we periodically make special recognition awards
in cash
and/or stock
in recognition of special circumstances. For example, on
July 24, 2009, Mr. Elliott received a sign-on bonus of
$1.5 million and various equity awards in connection with
commencement as our President and Chief Executive Officer as
described in Chief Executive Officer Succession on
page 30, and, on January 23, 2009, Mr. Pratt
received $100,000 as payment of the remainder of a sign-on bonus
pursuant to the terms of his offer letter.
Our
Post-Employment and Change in Control Arrangements
In 2009, the Compensation Committee asked its compensation
consultant to conduct a formal analysis of each of our
post-employment and change in control arrangements (other than
our Consulting Arrangements and our Employee Severance Pay Plan)
for reasonableness and market competitiveness. Watson Wyatt
advised that our Retention Agreements and executive life
insurance program differed from those of our peers but that the
remaining plans as constituted were currently appropriate and
generally competitive in the marketplace. Accordingly, in
December 2009, our Board of Directors approved the termination
of our executives existing Retention Agreements and the
execution of new Change in Control Agreements described in more
detail below. In addition, we terminated our executive life
insurance program that contained
gross-ups
of payments for tax purposes.
43
With respect to the remaining post-employment compensation
arrangements detailed below, the Compensation Committee
determined that they are generally consistent with those
arrangements being offered by our market peers. The Compensation
Committee further reviewed the reasonableness of each individual
element of compensation and of each executives
compensation package as a whole. The Compensation Committee also
considered the non-competition agreements, confidentiality
agreements, non-solicitation agreements and releases of claims,
as applicable, that the Company would receive in exchange from
each executive prior to the receipt of post-employment
termination benefits. As a result, the Compensation Committee
feels the payout amounts under each arrangement are appropriate
to accomplish the stated objective of each arrangement and are
necessary to remain competitive in attracting and retaining
executive talent. The Compensation Committee periodically
reviews these programs given the changing nature of the
competitive landscape.
Executive Retirement. All of our executive
officers, including our NEOs, are eligible to participate in our
Executive Retirement Plan. The Executive Retirement Plan is
intended to provide a clear and consistent approach to managing
executive departures with a standard mutually understood
separation and post employment relationship. The plan provides
retiring executive officers with a lump sum benefit of
2.5 months of salary for each completed year of service, up
to a maximum of 36 months pay. Effective January 1,
2009, the amounts are payable in the first payroll period after
the last day of the six-month period following retirement.
Receipt of payment is conditioned upon the retiring employee
entering into a separation agreement with the Company, which
includes a non-competition provision aimed at protecting the
Company from the transfer of proprietary and business knowledge
to competing companies. To be considered retired under the
Executive Retirement Plan, an employees age plus his or
her years of service with the Company must be at least
65 years (provided that the employee is at least
55 years old and has been with the Company for at least
5 years). Mr. Elliotts offer letter provides
that he will be deemed to have met retirement eligibility under
this Plan upon his termination from employment for any reason
(other than for cause) and assuming a period of employment of at
least three years. In addition, Mr. Lenos offer
letter provides that he will be deemed to have met retirement
eligibility under this plan (i) upon his termination from
employment for any reason (other than for cause) and assuming a
period of employment of at least three years or (ii) upon
his involuntary termination of employment for any reason (other
than for cause) before completing a three year period of
employment. Amounts accrued under this plan are reflected in the
Pension Benefits Table on page 60 and in the Potential
Payments upon Termination or Change in Control Tables beginning
on page 63.
Further, outstanding equity grants awarded under our Long-Term
Incentive Plans become immediately vested and exercisable upon
an executives retirement. Beginning in 2010, all equity
granted to executives will have a double trigger
feature, requiring both a change in control and termination
(without cause or by the executive for good reason) in order to
accelerate vesting.
On July 13, 2009, Mr. Tobin retired as our Chief
Executive Officer and as a member of our Board of Directors, at
which time he became a Senior Advisor to the Company.
Mr. Tobin fully retired from the Company on
November 30, 2009. Due to the unique nature of
Mr. Tobins retirement as CEO and his ongoing critical
duties and responsibilities as Senior Advisor, we entered into a
Transition and Retirement Agreement with Mr. Tobin (the
Agreement). Pursuant to the terms of the Agreement,
Mr. Tobin was paid a base salary at the annual rate of
$994,000 through November 30, 2009. In recognition of
Mr. Tobins contributions to the Company,
Mr. Tobin also received a Career Service Award in an amount
equal to 250% of his then current base salary less his payment
under our 2009 PIP (for which he received a 2009 prorated bonus
of up to 120% of his annual base salary pursuant to the
Agreement). Mr. Tobins 2009 Performance Incentive
Award was prorated through November 30, 2009 and equaled
$985,455. Therefore his Career Service Award amounted to
$1,499,572. In addition, Mr. Tobin received accrued and
unused vacation pay equal to $86,651. Mr. Tobin was also
entitled to participate in all Company employee benefit plans
through the date of his retirement. Mr. Tobin was entitled
to participate in the Executive Allowance Plan until he stepped
down as our Chief Executive Officer on July 13, 2009, and,
in recognition of his contributions as a Senior Advisor to the
Company, we continued to provide him with benefits equivalent to
those under the plan through his retirement on November 30,
2009. Additionally, in recognition of his many years of service,
the Compensation Committee exercised its authority under our
2000 Long-Term Incentive Plan to accelerate the vesting of
125,000 deferred stock units awarded to Mr. Tobin on
February 28, 2006 and under our 2003 Long-Term Incentive
Plan to
44
accelerate the vesting of 2,000,000 non-qualified stock options
awarded to Mr. Tobin on February 26, 2009.
Mr. Tobin was also entitled to reimbursement by us of up to
$40,000 in legal and financial advisor fees incurred in
connection with his retirement. Further, Mr. Tobin was
retirement-eligible under our Executive Retirement Plan when he
stepped down as our Chief Executive Officer on July 13,
2009. In order to recognize his contributions as a Senior
Advisor to the Company through his retirement date of
November 30, 2009, we continued to provide him with
benefits equivalent to the retirement benefits available to
executive officers under the plan. Accordingly, Mr. Tobin
will be paid a lump sum benefit of $2,217,887 in the first
payroll period after the last day of the six-month period
following his retirement, $2,139,195 of which is pursuant to the
plan and $78,692 of which is pursuant to the Agreement. Payment
of this amount was subject to Mr. Tobin entering into a
Release Agreement. A copy of the Transition and Retirement
Agreement was filed with the SEC on a Current Report on
Form 8-K
on June 25, 2009.
Post-Employment Arrangements. On
September 15, 2009, Ms. Quinn resigned from the
Company. At the time of her resignation, she was not yet
eligible to participate in our Executive Retirement Plan. We
entered into an Agreement and Mutual Release of All Claims with
Ms. Quinn, pursuant to which Ms. Quinn continued to
receive bi-weekly payments of her annual base salary of $460,000
through March 12, 2010 and was eligible to receive a 2009
bonus equal to 75% of her annual base salary under our 2009 PIP
for performance of her duties as Executive Vice President of
Human Resources. She received $219,965 under the PIP.
Ms. Quinn also received a lump sum payment equal to six
months of her annual base salary, or $230,000, and accrued
vacation pay equal to $42,462. In addition, in recognition of
Ms. Quinns years of service with the Company, the
Compensation Committee exercised its authority to accelerate the
vesting of 71,566 deferred stock units and 387,087 non-qualified
stock options previously awarded to Ms. Quinn. The
accelerated stock options are exercisable through
September 15, 2010. Ms. Quinns agreement also
stipulates that we will pay for health and welfare benefits for
her for a two year period following her resignation unless she
becomes otherwise eligible for coverage during that time.
Pursuant to her agreement, Ms. Quinn is also entitled to
reimbursement by us of up to $16,250 in legal and financial
planning fees associated with negotiation of her agreement.
Consulting Arrangements. The Executive
Retirement Plan provides our CEO with the discretion to cause
the Company to enter into consulting arrangements with retiring
executives, including our NEOs. The purpose of these consulting
arrangements is to ensure smooth executive transitions,
including prudent transfer of business knowledge as well as day
to day project support, as needed. A consulting arrangement
could provide for up to a $100,000 retainer for up to
50 days of specified consulting services and a $3,000 per
diem fee thereafter for services actually rendered for the first
year and, for future years, a $2,000 per diem fee for all
services actually rendered. In 2009, we did not enter into any
consulting arrangements with any of our NEOs under this Plan.
Long-Term Incentive Plans. Employees,
including our NEOs, are eligible to receive equity awards under
our Long-Term Incentive Plans. Beginning in 2010, all equity
granted to executives will have a double trigger
feature, requiring both a change in control and termination
(without cause or by the executive for good reason) in order to
accelerate vesting. Generally, equity awards granted prior to
2010 to our executive officers, including our NEOs, under these
plans will become immediately vested and exercisable in the
event of a change in control or Covered
Transaction as defined in the Plans. Additionally, under
certain circumstances in the event of a change in
control or Covered Transaction, equity awards
granted under (i) our 1992 Long-Term Incentive Plan prior
to October 31, 2001 will become immediately exercisable and
the value of all outstanding stock options will be cashed out,
(ii) our 1995 Long-Term Incentive Plan prior to
October 31, 2001 will, unless otherwise determined by our
Compensation Committee, become immediately exercisable and
automatically converted into an option or other award of the
surviving entity, (iii) our 2000 Long-Term Incentive Plan
prior to December 2000 will become immediately exercisable
and/or
converted into an option or other award of the surviving entity
and (iv) our Performance Share Plan shall remain
outstanding and shares shall be paid out on a prorated basis
based on the performance period percentile rank. For more
details, please refer to the Potential Payments upon Termination
or Change in Control Tables beginning on page 63.
45
Change in Control Agreements. The possibility
of a change in control and the uncertainty that it may raise
among our key executives as to their continued employment after
or in connection with the change in control may result in the
departure or distraction of our key executives. The purpose of
the Change in Control Agreements is to retain our key executives
and reinforce and encourage their continued attention and
dedication during this potentially critical time, even if they
fear that their position will be terminated after or in
connection with the change in control.
In December 2009, our Board of Directors approved the
termination of our executives existing Retention
Agreements and the execution of new Change in Control Agreements
to bring our change in control arrangements in line with those
of our peers. As consideration for the termination of the
Retention Agreements, our Compensation Committee approved stock
option grants to our executives. Our NEOs executed the new
agreements in February 2010 and, as a result, received stock
option grants with a value of $15,000. The old Retention
Agreements, which were in force at December 31, 2009,
entitled the executive to compensation for excise tax liability
he or she may have incurred by reason of the payments made under
the agreement, allowed acceleration of vesting of equity upon a
change in control (a single trigger feature) and
contained an indefinite term. The new Change in Control
Agreements eliminate the excise tax
gross-ups
and, instead, require a reduction in the amount of the severance
payments if the reduction would result in a greater after-tax
amount. Under the new agreements, vesting of the
executives stock options, restricted stock and deferred
stock units granted in 2010 will require both a change in
control and the termination without cause or resignation of the
executive for good reason within two years after the change in
control (a double trigger feature). The Change in
Control Agreements are limited to a term of three years and the
definition of Good Reason was modified to clarify
the change in executives duties that would trigger a
Good Reason departure.
The remaining terms of the new Change in Control Agreements are
consistent with the former Retention Agreements. Under the
Change in Control Agreements, the executives are entitled to a
lump sum payment of three times the sum of (i) the
executives base salary, (ii) assumed on-plan
incentive bonus (or prior years bonus, if higher), and
(iii) the annual executive allowance ($25,000), if either
the executives employment is terminated by us without
cause or by the executive for good reason, in each event
following a change in control. Cause generally means
willfully engaging in criminal or fraudulent acts or gross
misconduct that is demonstrably and materially injurious to us.
The executive is also entitled to continuation of health and
other welfare benefits for three years. In exchange, the
executive must enter into an agreement containing
confidentiality restrictions and a three-year non-solicitation
obligation and execute a release of the Company. Executives,
including our NEOs, who are eligible to receive payments under
our Change in Control Agreements are not also eligible to
receive payments and benefits under our Executive Retirement
Plan. For more details, please refer to the Potential Payments
upon Termination or Change in Control Tables beginning on
page 63.
Performance Incentive Plan. All of our
salaried employees, including our NEOs, are eligible to
participate in our Performance Incentive Plan (PIP). The purpose
of our PIP is to align the interests of our employees with those
of the Company by providing incentives for the achievement of
key business milestones and individual performance objectives.
Participants generally must be employed by us on December 31 of
the plan year in order to be eligible for their incentive
performance award for that year. However, in the event of
certain involuntary terminations without cause or death,
participants may receive their performance incentive awards for
the year on a prorated basis based on the percentage of the year
the participant was employed by us and eligible to participate.
In addition, participants who retire before the end of the year
but who have otherwise met all plan eligibility requirements and
who, as of the date they retired, had attained the age of 50,
accrued at least five years of service and whose age plus years
of service equals or exceeds 62, may receive their performance
incentive awards for the year on a prorated basis based on the
percentage of the year the participant was employed by us and
eligible to participate.
Employee Severance Pay Plan. All of our
salaried employees are eligible to receive severance payments
and benefits under our Employee Severance Pay Plan in the event
of certain involuntary terminations. Under the Plan, director
level and above exempt employees, including our NEOs, are
eligible for severance payments and benefits (salary and
benefits continuation) equal to one month of severance payments
and benefits per
46
each year of service to the Company (with a minimum benefit of
6 months) up to a maximum of 12 months. Executives,
including our NEOs, who are eligible to receive payments under
our Executive Retirement Plan are not also eligible to receive
payments and benefits under the Employee Severance Pay Plan.
Recovery
of Incentive Awards
Our Compensation Committee has adopted a policy regarding the
recovery or adjustment of Performance Incentive Plan awards in
the event relevant Company performance measures are restated in
a manner that would have reduced the size of a previously
granted award. Effective for compensation awards made on or
after February 20, 2007 (the date the policy was adopted),
to the extent permitted by governing law, the Board will seek
reimbursement of incentive compensation paid to any executive
officer in the event of a restatement of the Companys
financial results that would have reduced the size of a
previously granted award. In that event, we will seek to recover
the amounts of the performance incentive award paid to the
executives which are in excess of the amounts that would have
been awarded based on the restated financial results.
Executive
Stock Ownership Guidelines
Our executive officers are required to have a significant
personal investment in Boston Scientific through their ownership
of our shares. The Board has adopted stock ownership guidelines
for executive officers in the following amounts:
|
|
|
|
|
Chief Executive Officer: 240,000 shares
|
|
|
|
Executive Vice Presidents: 75,000 shares
|
|
|
|
Senior Vice Presidents: 20,000 shares
|
Each executive officer is expected to attain his or her
ownership target within five years after February 20, 2007
(the date the guidelines were adopted) or such individual
becoming an executive officer, whichever is later. All of our
executives either currently meet our executive stock ownership
guidelines or we expect that they will meet these guidelines
within five years after becoming an executive officer. The
Nominating and Governance Committee monitors compliance with
these guidelines on an annual basis.
Hedging
Policy
Our executive officers, including our NEOs, are prohibited from
entering into transactions which hedge the value of
Boston Scientific stock.
Our Tax
Gross-Up
Practices
Historically, the Company has used, from time to time, tax
gross-ups
for executive officers in certain situations. However, for 2009,
the Company eliminated tax
gross-ups
for spousal use of our corporate aircraft in connection with
business activities. Additionally in 2009, the Compensation
Committee approved the termination of our Executive Life
Insurance Program that had included tax
gross-ups
and the replacement of our previous Retention Agreements that
provided for an excise tax
gross-up for
payments upon a change in control. Those actions represent the
elimination of all tax
gross-ups
previously used except that for relocation expenses, which the
Compensation Committee retained because it applies to all
employees and the Compensation Committee believes it is integral
to the Companys ability to attract and develop employees
whose skill or knowledge enhance the Companys competitive
advantage.
Our
Equity Award Grant Practices
With respect to awards made after January 1, 2009, the
Company makes annual equity awards in February, in order to give
the Compensation Committee the benefit of a completed year of
performance prior to making grants. The February meeting
typically falls during the open trading window following the
release of our earnings results. In the event that a February
meeting does not fall within an open window period, the equity
award is granted as of the first business day of the next open
window period. In addition, promotion,
47
special recognition and retention awards are granted on the
first business day of the next open window period following
approval by the Compensation Committee. New hire awards for
non-executive officers are approved by the CEO (pursuant to
applicable equity award guidelines for each job position) under
the authority delegated to him by the Compensation Committee and
are effective on the later of the date of hire or the CEOs
approval. New hire awards for executive officers require
approval of the Compensation Committee. All stock options are
granted with an exercise price equal to the closing price of our
common stock on the date of grant. We have not engaged in the
practice of granting discounted stock options or backdating our
stock options.
Tax and
Accounting Considerations
Tax Considerations. Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to
public companies for compensation over $1 million paid to
the companys chief executive officer and the four other
most highly compensated executive officers. Qualifying
performance-based compensation is not subject to the deduction
limit if certain requirements are met. Generally, we have
structured performance-based components of the compensation paid
to our executive officers in a manner intended to satisfy these
requirements without negatively affecting our overall
compensation strategy. Our 2000 and 2003 Long-Term Incentive
Plans incorporate provisions intended to comply with
Section 162(m) of the Code. Incentive awards under our
Performance Incentive Plan are considered performance-based
awards under our Long-Term Incentive Plans, which are
stockholder approved plans. For this reason, annual performance
incentive amounts paid to our NEOs are not subject to the 162(m)
deduction limit. For 2009, the IRS Section 162(m) limit was
exceeded with respect to Messrs. Elliott and Colen.
Mr. Elliott received total compensation in excess of the
individual $1 million limit equal to $2,085,272, resulting
in an estimated incremental cost of $771,551 attributable to the
lost corporate tax deduction. Mr. Colen received total
compensation in excess of the $1 million limit equal to
$324,436, resulting in an estimated incremental cost of $120,041
attributable to the lost corporate tax deduction.
We have designed our compensation programs and awards to
executive officers to comply with the provisions of
Section 409A of the Internal Revenue Code. For example,
payments made to our executive officers under our Executive
Retirement Plan are payable in the first payroll period after
the last day of the six-month period following the date of the
executive officers retirement. In addition, in February
2006, Mr. Tobin was granted an award of 250,000 deferred
stock units, 125,000 of which were vested on November 30,
2009 (his separation date) pursuant to his Transition and
Retirement Agreement; however, we will not issue shares to
Mr. Tobin until the seventh month following the cessation
of his employment with the Company.
As described above, under our new Change in Control Agreements
that replaced our old Retention Agreements, if a payment to
which an executive is entitled upon a change in control would
constitute a parachute payment under
Section 280G of the Internal Revenue Code, then the payment
would be reduced to prevent an excise tax liability. However,
because our old Retention Agreements were still in place as of
December 31, 2009, Watson Wyatt, compensation consultants,
performed an analysis of the benefits that would become payable
to an executive officer assuming that a change in control
occurred on December 31, 2009. Based on this analysis,
Mr. Pratt would have been assessed an excise tax liability
of $1,451,312 for purposes of Section 280G of the Internal
Revenue Code as a result of payments made and benefits received
under the old Retention Agreement.
48
COMPENSATION
COMMITTEE REPORT
The Executive Compensation and Human Resources Committee of the
Board of Directors (the Compensation Committee) of Boston
Scientific has reviewed and discussed the Compensation
Discussion & Analysis contained in this Proxy
Statement with management and, based on such review and
discussions, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion &
Analysis be included in this Proxy Statement and in the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 for filing with
the SEC.
THE
COMPENSATION COMMITTEE
|
|
|
John E. Pepper, Chairman
Katharine T. Bartlett
Ray J. Groves
|
|
Ernest Mario
Warren B. Rudman
|
49
SUMMARY
COMPENSATION TABLE
The table below summarizes the total compensation paid to or
earned by each of our NEOs for the fiscal years ended
December 31, 2009, December 31, 2008 and
December 31, 2007. For a narrative description of material
factors helpful to an understanding of the information disclosed
in the table below, see the Compensation Discussion &
Analysis beginning on page 24.
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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Change in
|
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|
|
|
|
|
|
|
|
|
|
|
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|
Pension
|
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|
|
|
|
|
|
|
|
|
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|
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|
Value and
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Nonqualified
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
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|
Name and Principal Position
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
as of December 31, 2009
|
|
Year
|
|
($)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)(6)
|
|
($)(7)
|
|
($)
|
|
J. Raymond
Elliott(1)(8)
|
|
|
2009
|
|
|
$
|
598,356
|
|
|
$
|
1,500,000
|
|
|
$
|
14,164,400
|
|
|
$
|
15,232,000
|
|
|
$
|
607,766
|
|
|
$
|
102,276
|
|
|
$
|
1,267,936
|
|
|
$
|
33,472,734
|
|
President & Chief Executive
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Officer
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
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|
Sam R. Leno
|
|
|
2009
|
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|
$
|
625,000
|
|
|
$
|
0
|
|
|
$
|
250,000
|
|
|
$
|
750,000
|
|
|
$
|
420,938
|
|
|
$
|
127,907
|
|
|
$
|
95,877
|
|
|
$
|
2,269,722
|
|
Executive Vice President,
|
|
|
2008
|
|
|
$
|
621,721
|
|
|
$
|
0
|
|
|
$
|
687,500
|
|
|
$
|
2,072,000
|
|
|
$
|
556,875
|
|
|
$
|
110,850
|
|
|
$
|
113,148
|
|
|
$
|
4,162,094
|
|
Finance and Information
|
|
|
2007
|
|
|
$
|
345,205
|
|
|
$
|
0
|
|
|
$
|
7,955,000
|
|
|
$
|
10,935,000
|
|
|
$
|
530,388
|
|
|
$
|
63,920
|
|
|
$
|
893,664
|
|
|
$
|
20,723,177
|
|
Systems and Chief Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
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|
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|
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|
Officer*
|
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|
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|
Fredericus A. Colen
|
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2009
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$
|
570,000
|
|
|
$
|
0
|
|
|
$
|
125,000
|
|
|
$
|
375,000
|
|
|
$
|
202,464
|
|
|
$
|
118,750
|
|
|
$
|
430,124
|
|
|
$
|
1,821,388
|
|
Executive Vice President and
|
|
|
2008
|
|
|
$
|
566,066
|
|
|
$
|
0
|
|
|
$
|
987,500
|
|
|
$
|
2,294,000
|
|
|
$
|
465,548
|
|
|
$
|
228,664
|
|
|
$
|
93,435
|
|
|
$
|
4,635,213
|
|
Group President, Cardiac
|
|
|
2007
|
|
|
$
|
534,632
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
472,101
|
|
|
$
|
197,773
|
|
|
$
|
97,762
|
|
|
$
|
1,302,268
|
|
Rhythm Management*
|
|
|
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|
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|
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|
Stephen F.
Moreci(8)
|
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2009
|
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|
$
|
427,450
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
500,000
|
|
|
$
|
283,827
|
|
|
$
|
0
|
|
|
$
|
402,128
|
|
|
$
|
1,613,405
|
|
Senior Vice President and
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Group President,
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Endosurgery*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy A.
Pratt(8)
|
|
|
2009
|
|
|
$
|
525,000
|
|
|
$
|
100,000
|
|
|
$
|
125,000
|
|
|
$
|
375,000
|
|
|
$
|
353,588
|
|
|
$
|
96,466
|
|
|
$
|
114,867
|
|
|
$
|
1,689,921
|
|
Executive Vice President,
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secretary and General
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counsel*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James R. Tobin**
|
|
|
2009
|
|
|
$
|
909,588
|
|
|
$
|
1,499,572
|
|
|
$
|
0
|
|
|
$
|
7,460,000
|
|
|
$
|
985,455
|
|
|
$
|
190,518
|
|
|
$
|
2,660,698
|
|
|
$
|
13,705,831
|
|
Former President & Chief
|
|
|
2008
|
|
|
$
|
989,572
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
885,664
|
|
|
$
|
260,212
|
|
|
$
|
220,499
|
|
|
$
|
2,355,947
|
|
Executive Officer
|
|
|
2007
|
|
|
$
|
959,805
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
710,867
|
|
|
$
|
262,589
|
|
|
$
|
334,518
|
|
|
$
|
2,267,779
|
|
Lucia L.
Quinn***(8)
|
|
|
2009
|
|
|
$
|
325,151
|
|
|
$
|
0
|
|
|
$
|
150,000
|
|
|
$
|
450,000
|
|
|
$
|
219,965
|
|
|
$
|
0
|
|
|
$
|
604,126
|
|
|
$
|
1,749,242
|
|
Former Executive Vice
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Human Resources
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
As part of our 2010 restructuring,
Mr. Leno was promoted to Executive Vice President and Chief
Operations Officer, Mr. Colen was promoted to Executive
Vice President and Chief Technology Officer, Mr. Moreci was
promoted to Senior Vice President, Global Sales Operations and
Mr. Pratt was promoted to Executive Vice President, General
Counsel and Chief Administrative Officer.
|
|
**
|
|
Mr. Tobin retired from the
Company on November 30, 2009.
|
|
***
|
|
Ms. Quinn resigned from the
Company on September 15, 2009.
|
|
|
|
(1)
|
|
Mr. Elliotts salary
reflects a combination of salaries he earned for two roles with
the Company during 2009. Under the terms of his offer letter,
beginning June 23, 2009, Mr. Elliott received an
annualized salary of $600,000 for his role as Senior Advisor,
which increased to $1,200,000 on July 13, 2009 when he
commenced his position as our President and Chief Executive
Officer. Mr. Elliotts term as a non-employee director
of the Company expired on May 5, 2009 and his compensation
as a non-employee director is not included in this table. Please
see Director Compensation in Fiscal 2009 on
page 76 for a discussion of his compensation as a
non-employee director.
|
|
(2)
|
|
Amounts in this column reflect cash
bonuses paid to our NEOs other than pursuant to our 2009
Performance Incentive Plan (PIP). Mr. Elliott received a
sign-on bonus of $1.5 million on July 24, 2009 in
connection with becoming our President and Chief Executive
Officer. Mr. Pratt received $100,000 in 2009 as payment of
the remainder of a sign-on bonus pursuant to the terms of his
offer letter. Mr. Tobin received a Career Service award of
$1,499,572 pursuant to the terms of his Transition and
Retirement Agreement. For further information regarding
Mr. Elliotts sign-on bonus, see the Compensation
Discussion and Analysis section Chief Executive
|
50
|
|
|
|
|
Officer Succession on
page 30. For further information on Mr. Tobins
Career Service Award, see the Executive Retirement
section of the Compensation Discussion and Analysis on
page 44.
|
|
(3)
|
|
The amount included in the
Stock Awards column represents the grant date fair
value of all deferred stock units granted during 2009. These
values have been determined under generally accepted accounting
principles used to calculate the value of equity awards for
purposes of our financial statements. Mr. Elliotts
award includes an opportunity to receive up to 1,250,000
performance-based deferred stock units, the attainment of which
is based on his continued employment and our stock reaching
certain specified prices prior to December 31, 2012. With
the exception of Mr. Elliotts performance-based
deferred stock unit award, we value deferred stock units based
on the closing trading value of our shares on the date of grant.
We determined the fair value of Mr. Elliotts
performance-based deferred stock unit award assuming that the
highest level of performance conditions will be achieved as part
of a Monte Carlo simulation using the following assumptions:
|
|
|
|
|
Stock price on date of grant
|
|
$
|
9.51
|
Expected volatility
|
|
|
45%
|
Contractual term (in years)
|
|
|
3.5
|
Risk-free rate
|
|
|
1.99%
|
|
|
|
|
|
For a more detailed description of
the assumptions used for purposes of determining grant date fair
value, please see Note N to the Financial Statements
included in our Annual Report on Form
10-K for the
year ended December 31, 2009. Please see Director
Compensation in Fiscal 2009 on page 76 for a
discussion of Mr. Elliotts equity compensation as a
non-employee director. For more information regarding the stock
awards we granted in 2009, please see the Grants of Plan Based
Awards Table on page 54.
|
|
(4)
|
|
The amount included in the
Option Awards column represents the grant date fair
value of all stock options granted during 2009. These values
have been determined under generally accepted accounting
principles used to calculate the value of equity awards for
purposes of our financial statements. For option valuations, we
use the Black-Scholes option-pricing model to calculate the
grant date fair value. We use our historical and implied
volatility as a basis to estimate expected volatility in our
valuation of stock options. We estimate the expected term of our
options using historical exercise and forfeiture data. We use
yield rates on U.S. Treasury securities for a period
approximating the expected term of the award to estimate the
risk-free interest rate in our grant date fair value assessment.
We have assumed an expected dividend yield of zero because we
have not historically paid dividends to our stockholders and
currently do not intend to pay dividends. These assumptions
underlying the Black-Scholes valuation model involve
managements best estimates. For a more detailed
description of the assumptions used for purposes of determining
grant date fair value, please see Note N to the Financial
Statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2009. For more information
regarding the option awards we granted in 2009, please see the
Grants of Plan Based Awards Table on page 54.
|
|
(5)
|
|
Amounts in the Non-Equity
Incentive Plan Compensation column represent payments made
in February 2010 under our PIP to our named executive officers
(NEOs). Other than Mr. Elliotts, our NEOs PIP
awards were made as cash payments. Pursuant to the terms of his
offer letter, Mr. Elliotts PIP award was paid in DSUs
which were fully vested upon grant and payable on the fourth
anniversary of grant. Mr. Elliotts PIP award was
$607,766 and the number of DSUs granted to him (78,421 DSUs)
were valued by using the closing price of our common stock on
the date of grant, February 23, 2010, or $7.75 per share.
For further information on Mr. Elliotts PIP award,
see the Compensation Discussion and Analysis section entitled
Chief Executive Officer Succession beginning on
page 30.
|
|
(6)
|
|
The amounts shown in the
Change in Pension Value and Nonqualified Deferred
Compensation Earnings column reflect the change in the
actuarial present value of the accumulated benefit under our
Executive Retirement Plan for each fiscal year end as compared
to the prior fiscal year end. Mr. Morecis change in
accumulated benefit is $0 because he reached the maximum level
of accumulated benefit in prior years. Please see the Pension
Benefits Table on page 60 for more information regarding
the accrued benefits for each NEO under this plan. Amounts from
the Nonqualified Deferred Compensation Table found on
page 62 are not reflected in this column since the earnings
for our 401(k) Excess Benefit Plan were neither above market nor
preferential.
|
51
|
|
|
(7)
|
|
The amounts shown for 2009 in the
All Other Compensation column are comprised of the
following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Other Life
|
|
|
|
Severance
|
|
|
|
|
Match
|
|
|
|
Personal
|
|
Term
|
|
Life
|
|
Insurance
|
|
|
|
Payments
|
|
|
|
|
(401(k)
|
|
Executive
|
|
Use of
|
|
Life
|
|
Insurance
|
|
Termination
|
|
|
|
Upon
|
|
Total All
|
|
|
Plan)
|
|
Allowance
|
|
Aircraft
|
|
Insurance
|
|
Premium
|
|
Payment
|
|
Relocation
|
|
Termination
|
|
Other
|
Name
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
Compensation
|
|
J. Raymond Elliott
|
|
$
|
14,700
|
|
|
$
|
12,500
|
|
|
$
|
197,906
|
|
|
$
|
3,833
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,038,997
|
|
|
$
|
0
|
|
|
$
|
1,267,936
|
|
Sam R. Leno
|
|
$
|
14,700
|
|
|
$
|
25,000
|
|
|
$
|
22,427
|
|
|
$
|
8,304
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
25,446
|
|
|
$
|
0
|
|
|
$
|
95,877
|
|
Fredericus A. Colen
|
|
$
|
14,700
|
|
|
$
|
25,000
|
|
|
$
|
0
|
|
|
$
|
39
|
|
|
$
|
54,592
|
|
|
$
|
335,793
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
430,124
|
|
Stephen F. Moreci
|
|
$
|
14,700
|
|
|
$
|
25,000
|
|
|
$
|
0
|
|
|
$
|
39
|
|
|
$
|
52,191
|
|
|
$
|
310,198
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
402,128
|
|
Timothy A. Pratt
|
|
$
|
14,700
|
|
|
$
|
25,000
|
|
|
$
|
0
|
|
|
$
|
5,683
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
69,484
|
|
|
$
|
0
|
|
|
$
|
114,867
|
|
James R. Tobin*
|
|
$
|
10,926
|
|
|
$
|
22,917
|
|
|
$
|
267,627
|
|
|
$
|
14,690
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,217,887
|
|
|
$
|
2,660,698
|
(i)
|
Lucia L. Quinn**
|
|
$
|
10,373
|
|
|
$
|
18,750
|
|
|
$
|
0
|
|
|
$
|
5,683
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9,036
|
|
|
$
|
460,000
|
|
|
$
|
604,126
|
(j)
|
|
|
|
*
|
|
Mr. Tobin retired from the
Company on November 30, 2009.
|
|
**
|
|
Ms. Quinn resigned from the
Company on September 15, 2009.
|
|
|
|
(a)
|
|
The amounts shown in this column
represent matching contributions made by the Company for each
NEO under our 401(k) Retirement Savings Plan. All individual and
matching contributions to the 401(k) Retirement Savings Plan are
fully vested upon contribution. The amounts for Mr. Tobin
and Ms. Quinn are prorated as follows: Mr. Tobin
retired from the Company on November 30, 2009 and
Ms. Quinn resigned from the Company on September 15,
2009.
|
|
(b)
|
|
Pursuant to our Executive Allowance
Plan, we provide a cash allowance to eligible executives in lieu
of perquisites typically provided by other companies, such as
company cars, health care costs not otherwise covered, or tax
planning services, which we do not provide to our executives.
Under this plan, our executive officers receive $25,000 per
year, which is not specifically allocated to any particular item
and they are entitled to spend it in their discretion.
Mr. Elliotts amount was prorated because he became an
executive officer on July 13, 2009. Mr. Tobins
amount was prorated because he retired from the Company on
November 30, 2009. He was entitled to participate in the
Plan until he stepped down as our CEO on July 13, 2009 and
in recognition of his contributions as a Senior Advisor to the
Company, we continued to provide him with benefits equivalent to
those under the Plan through his retirement date. Accordingly,
$14,584 was paid to Mr. Tobin pursuant to the Plan and
$8,333 was paid pursuant to his Transition and Retirement
Agreement. Ms. Quinns amount was prorated because she
resigned from the Company on September 15, 2009. For
additional information about our Executive Allowance Plan, see
the Compensation Discussion & Analysis section titled
Executive Allowance on page 42.
|
|
(c)
|
|
The amounts reflected in the
Personal Use of Corporate Aircraft column represent
the incremental costs to us for Messrs. Elliotts,
Lenos and Tobins personal use of our corporate
aircraft. We calculate the incremental cost to us by dividing
the number of miles the corporate aircraft has flown in the year
by the total annual variable operating costs for the corporate
aircraft, including the dead head costs of flying
the aircraft to and from locations for personal use. This dollar
per mile amount is then multiplied by the number of miles flown
for personal use of the aircraft by the executive during the
year. The corporate aircraft is used predominately for business
travel, therefore, we do not include the fixed operating costs,
such as pilot salary, general taxes and insurance, in the
incremental cost calculation. Incremental cost does not include
amounts attributable to the NEO for increased income taxes we
incurred in 2009 as a result of disallowed deductions related to
personal use under IRS rules. For 2009, the reflected amounts
exclude $65,769 of disallowed deduction attributable to
Mr. Elliott, $13,803 of disallowed deduction attributable
to Mr. Leno and $173,667 of disallowed deduction
attributable to Mr. Tobin for personal use of the aircraft
by them and certain family members in 2009.
|
|
(d)
|
|
Amounts in the Term Life
Insurance column include premiums and the imputed income
for term life insurance attributable to Messrs. Elliott,
Leno, Pratt and Tobin and Ms. Quinn and premiums only for
Messrs. Colen and Moreci. For each of Messrs. Leno and
Pratt and Ms. Quinn, the premium paid was $780. For
Mr. Tobin, the premium paid was $720. For Mr. Elliott,
the premium paid was $360. For Messrs. Colen and Moreci,
the premium paid was $39.
|
|
(e)
|
|
Amounts in the Other Life
Insurance Premium column represent amounts paid to
Messrs. Colen and Moreci in 2009 to fund premiums for
universal life insurance and related imputed income. The
|
52
|
|
|
|
|
amounts include a
gross-up
amount to cover related tax obligations: $26,958 for
Mr. Colen and $25,203 for Mr. Moreci.
|
|
(f)
|
|
Amounts in the Other Life
Insurance Termination column represent amounts paid to
Messrs. Colen and Moreci in connection with the termination
of the universal life insurance program in 2009. The amounts
reflected in this column represent the net present value of all
remaining future premiums under Messrs. Colens and
Morecis respective universal life insurance policies. The
amounts include a
gross-up
amount to cover related tax obligations in the amount of
$142,479 for Mr. Colen and $123,972 for Mr. Moreci.
For additional information about the termination of this
insurance program, see the Compensation Discussion &
Analysis section titled Executive Life Insurance on
page 42.
|
|
(g)
|
|
Amounts in the
Relocation column represent relocation costs and a
cost of living allowance paid to Messrs. Elliott and Pratt
pursuant to our global relocation programs and each of their
respective offer letters. The amounts reflected include a
gross-up to
cover related tax obligations: $367,120 for Mr. Elliott and
$29,253 for Mr. Pratt. For Mr. Leno and
Ms. Quinn, amounts in this column represent a cost of
living allowance paid to them in connection with their
respective moves to Massachusetts. For additional information
about our global relocation programs see the Compensation
Discussion & Analysis section titled
Relocation on page 42.
|
|
(h)
|
|
The amounts in the Severance
Payments Upon Termination column represent the payments to
be made to Mr. Tobin in connection with his retirement on
November 30, 2009 pursuant to his Transition and Retirement
Agreement and the aggregate payment to be made to Ms. Quinn
pursuant to her Agreement and Mutual Release of All Claims.
Mr. Tobin was retirement-eligible when he stepped down as
President and CEO on July 13, 2009. In order to recognize
his contributions as a Senior Advisor to the Company through his
retirement date of November 30, 2009, we continued to
provide him with benefits equivalent to the retirement benefits
available to executive officers under the plan. Mr. Tobin
will be paid these amounts in the first payroll period after the
last day of the six-month period following his retirement,
$2,139,195 of which is pursuant to our Executive Retirement Plan
and $78,692 of which is pursuant to his agreement. Pursuant to
the terms of her agreement, Ms. Quinn receives bi-weekly
payments of her annual base salary of $460,000 through
March 12, 2010. Ms. Quinn will also receive a lump sum
payment equal to six months of her annual base salary, or
$230,000, prior to March 12, 2010. For additional
information about Mr. Tobins agreement, see the
Compensation Discussion & Analysis section titled
Executive Retirement on page 44. For additional
information on Ms. Quinns agreement, see the
Compensation Discussion & Analysis section titled
Post-Employment Arrangements on page 45.
|
|
(i)
|
|
Included in this column, among
other items disclosed in columns (a) through (h), is
$86,651 paid to Mr. Tobin for accrued vacation not taken
prior to his retirement on November 30, 2009 and $40,000 to
which Mr. Tobin is entitled as reimbursement by us of
attorneys fees and financial planning expenses associated
with the negotiation of his Transition and Retirement Agreement.
|
|
(j)
|
|
Included in this column, among
other items disclosed in columns (a) through (h), is
$42,462 paid to Ms. Quinn for accrued vacation not taken
prior to her resignation on September 15, 2009, $16,250 to
which Ms. Quinn is entitled as reimbursement by us of
attorneys fees and financial planning expenses associated
with the negotiation of her Agreement and Mutual Release of All
Claims and $41,572 for health and welfare benefits.
|
|
|
|
(8)
|
|
These executive officers were
either not employed by Boston Scientific, in the case of
Messrs. Elliott and Pratt, or not an NEO, in the case of
Mr. Moreci and Ms. Quinn, for each of the three fiscal
years reported in this table. In accordance with SEC rules, we
are reporting data only for the fiscal years in which these
executive officers were NEOs.
|
53
GRANTS OF
PLAN-BASED AWARDS
The table below shows each grant of an award made to an NEO
under any Company incentive plan during the fiscal year ended
December 31, 2009. For a narrative description of material
factors helpful for an understanding of the information in the
table below, see the Compensation Discussion &
Analysis beginning on page 24.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Exercise
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
or Base
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Number of
|
|
Price
|
|
of Stock
|
|
|
|
|
Estimated Future Payouts under
|
|
Estimated Future Payouts under
|
|
of Shares
|
|
Securities
|
|
of
|
|
and
|
|
|
|
|
Non-Equity Incentive Plan
Awards(1)
|
|
Equity Incentive Plan Awards
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)(2)
|
|
(#)(2)
|
|
($/Sh)
|
|
($)
|
|
J. Raymond Elliott
|
|
|
|
|
|
$
|
0
|
|
|
$
|
676,800
|
|
|
$
|
2,030,400
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/23/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
1,250,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,654,400
|
|
|
|
|
6/23/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
$
|
9,510,000
|
|
|
|
|
6/23/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,400,000
|
|
|
$
|
9.51
|
|
|
$
|
15,232,000
|
|
Sam R. Leno
|
|
|
|
|
|
$
|
0
|
|
|
$
|
468,750
|
|
|
$
|
1,406,250
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,120
|
|
|
|
|
|
|
|
|
|
|
$
|
250,000
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,072
|
|
|
$
|
8.30
|
|
|
$
|
750,000
|
|
Fredericus A. Colen
|
|
|
|
|
|
$
|
0
|
|
|
$
|
427,500
|
|
|
$
|
1,282,500
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,060
|
|
|
|
|
|
|
|
|
|
|
$
|
125,000
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,536
|
|
|
$
|
8.30
|
|
|
$
|
375,000
|
|
Stephen F. Moreci
|
|
|
|
|
|
$
|
0
|
|
|
$
|
320,625
|
|
|
$
|
961,875
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,048
|
|
|
$
|
8.30
|
|
|
$
|
500,000
|
|
Timothy A. Pratt
|
|
|
|
|
|
$
|
0
|
|
|
$
|
393,750
|
|
|
$
|
1,181,250
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,060
|
|
|
|
|
|
|
|
|
|
|
$
|
125,000
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,536
|
|
|
$
|
8.30
|
|
|
$
|
375,000
|
|
James R.
Tobin*(4)
|
|
|
|
|
|
$
|
0
|
|
|
$
|
1,091,494
|
|
|
$
|
1,091,494
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,000
|
|
|
$
|
8.30
|
|
|
$
|
7,460,000
|
|
Lucia L.
Quinn(5)**
|
|
|
|
|
|
$
|
0
|
|
|
$
|
244,808
|
|
|
$
|
244,808
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,072
|
|
|
|
|
|
|
|
|
|
|
$
|
150,000
|
|
|
|
|
2/24/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,643
|
|
|
$
|
8.30
|
|
|
$
|
450,000
|
|
|
|
|
*
|
|
Mr. Tobin retired from the
Company on November 30, 2009
|
|
**
|
|
Ms. Quinn resigned from the
Company on September 15, 2009.
|
|
(1)
|
|
The amounts in these columns
reflect threshold, target and maximum payouts under the 2009
Performance Incentive Plan (PIP). The PIP includes a threshold
quality component which must be met in order for the PIP to fund
at all, therefore the threshold is $0. The actual amount earned
by each NEO is reported under the Non-Equity Incentive Plan
Compensation column in the Summary Compensation Table.
Additional information about our PIP and a discussion of how
these amounts are determined is included in the Compensation
Discussion & Analysis beginning on page 24.
|
|
(2)
|
|
The amounts in these columns
reflect the number of deferred stock units (DSUs) and stock
options granted under our 2000 and 2003 Long-Term Incentive
Plans during 2009. These awards are also described in the
Outstanding Equity Awards at Fiscal Year-End Table on
page 56.
|
|
(3)
|
|
On June 23, 2009,
Mr. Elliott was awarded 1,250,000 performance-based DSUs
that will be issued in increments of 250,000 shares on each
of the dates (occurring prior to December 31, 2012) on
which, if Mr. Elliott remains employed by us, our common
stocks average closing price meets the thresholds set
forth below:
|
|
|
|
|
|
|
|
Minimum Performance Price for
|
|
|
any 10 Consecutive Trading Days:
|
|
# of Deferred Stock Units that Vest
|
|
$
|
20.00
|
|
|
|
250,000
|
|
$
|
22.50
|
|
|
|
250,000
|
|
$
|
25.00
|
|
|
|
250,000
|
|
$
|
27.50
|
|
|
|
250,000
|
|
$
|
30.00
|
|
|
|
250,000
|
|
|
|
|
|
|
In applying the foregoing trading
price thresholds, the relevant performance-based deferred stock
units will be earned and settled only on the first occasion on
which the corresponding
ten-day
price target is attained, but if a higher price target is
attained before one or more lower price targets have been
attained, not only the
|
54
|
|
|
|
|
performance-based DSUs
corresponding to such higher target, but also those
corresponding to previously unattained lower targets, will vest
and shares will be issued. None of these performance-based DSUs
had vested as of December 31, 2009.
|
|
(4)
|
|
Mr. Tobin received a prorated
bonus due to his retirement from the Company on
November 30, 2009 pursuant to the terms of his Transition
and Retirement Agreement. For a discussion of the payments and
benefits payable to Mr. Tobin in connection with his
retirement, please see the description in the Compensation
Discussion & Analysis section titled Executive
Retirement on page 44.
|
|
(5)
|
|
Ms. Quinn resigned from the
Company on September 15, 2009 and was entitled to receive a
pro-rated PIP award for 100% of her funded target incentive
percentage, which comprised 75% of her annual base salary. For a
discussion of the payments and benefits payable to
Ms. Quinn in connection with her resignation pursuant to
the terms of her Agreement and Mutual Release of All Claims,
please see the description in the Compensation
Discussion & Analysis section titled
Post-Employment Arrangements on page 45.
|
55
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information with respect to
outstanding unexercised non-qualified stock options, unvested
deferred stock units (DSUs) and other equity incentive awards
for each NEO outstanding as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Payout
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Value of
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Unearned
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
Value of
|
|
Unearned
|
|
Shares,
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
Shares,
|
|
Units or
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
Units
|
|
Other
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Stock
|
|
or Other
|
|
Rights
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Stock
|
|
That
|
|
Rights
|
|
That
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
That Have
|
|
Have Not
|
|
That Have
|
|
Have Not
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Not Vested
|
|
Vested
|
|
Not Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
(#)
|
|
($)(1)
|
|
J. Raymond Elliott
|
|
|
|
|
|
|
3,400,000
|
(2)
|
|
|
|
|
|
$
|
9.51
|
|
|
|
6/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
(3)
|
|
$
|
9,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
(4)
|
|
$
|
2,250,000
|
|
Sam R. Leno
|
|
|
750,000
|
|
|
|
750,000
|
(5)
|
|
|
|
|
|
$
|
15.91
|
|
|
|
6/5/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,187
|
|
|
|
351,563
|
(6)
|
|
|
|
|
|
$
|
12.52
|
|
|
|
2/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,072
|
(7)
|
|
|
|
|
|
$
|
8.30
|
|
|
|
2/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
(8)
|
|
$
|
2,700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,930
|
(9)
|
|
$
|
395,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,120
|
(10)
|
|
$
|
271,080
|
|
|
|
|
|
|
|
|
|
Fredericus A. Colen
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
7.91
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
8.99
|
|
|
|
7/17/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,174
|
|
|
|
|
|
|
|
|
|
|
$
|
12.50
|
|
|
|
12/17/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
$
|
21.26
|
|
|
|
12/9/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
34.79
|
|
|
|
12/11/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
34.29
|
|
|
|
1/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
40,000
|
(11)
|
|
|
|
|
|
$
|
26.89
|
|
|
|
7/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,500
|
|
|
|
32,500
|
(12)
|
|
|
|
|
|
$
|
21.93
|
|
|
|
5/8/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,920
|
|
|
|
191,762
|
(6)
|
|
|
|
|
|
$
|
12.52
|
|
|
|
2/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,353
|
|
|
|
38,352
|
(13)
|
|
|
|
|
|
$
|
12.52
|
|
|
|
2/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,305
|
|
|
|
141,915
|
(14)
|
|
|
|
|
|
$
|
12.00
|
|
|
|
7/29/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,536
|
(7)
|
|
|
|
|
|
$
|
8.30
|
|
|
|
2/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
(15)
|
|
$
|
144,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,750
|
(16)
|
|
$
|
204,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,962
|
(9)
|
|
$
|
215,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,478
|
(17)
|
|
$
|
121,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,333
|
(18)
|
|
$
|
164,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,060
|
(10)
|
|
$
|
135,540
|
|
|
|
|
|
|
|
|
|
Stephen F. Moreci
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
$
|
12.50
|
|
|
|
12/17/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
$
|
21.26
|
|
|
|
12/9/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
34.79
|
|
|
|
12/11/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
34.29
|
|
|
|
1/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
40,000
|
(11)
|
|
|
|
|
|
$
|
26.89
|
|
|
|
7/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,960
|
|
|
|
95,881
|
(6)
|
|
|
|
|
|
$
|
12.52
|
|
|
|
2/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,375
|
|
|
|
35,375
|
(13)
|
|
|
|
|
|
$
|
12.52
|
|
|
|
2/12/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,048
|
(7)
|
|
|
|
|
|
$
|
8.30
|
|
|
|
2/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
(15)
|
|
$
|
144,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,981
|
(9)
|
|
$
|
107,829
|
|
|
|
|
|
|
|
|
|
Timothy A. Pratt
|
|
|
51,440
|
|
|
|
154,321
|
(19)
|
|
|
|
|
|
$
|
13.56
|
|
|
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,536
|
(7)
|
|
|
|
|
|
$
|
8.30
|
|
|
|
2/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,996
|
(20)
|
|
$
|
530,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,060
|
(10)
|
|
$
|
135,540
|
|
|
|
|
|
|
|
|
|
James R. Tobin*
|
|
|
180,000
|
|
|
|
|
|
|
|
|
|
|
$
|
14.16
|
|
|
|
5/9/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,000
|
|
|
|
|
|
|
|
|
|
|
$
|
8.50
|
|
|
|
7/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
$
|
12.50
|
|
|
|
12/17/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
21.78
|
|
|
|
2/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
33.80
|
|
|
|
12/16/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
$
|
34.29
|
|
|
|
1/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
$
|
8.30
|
|
|
|
2/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Payout
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Value of
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Unearned
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
Value of
|
|
Unearned
|
|
Shares,
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
Shares,
|
|
Units or
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
Units
|
|
Other
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Stock
|
|
or Other
|
|
Rights
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Stock
|
|
That
|
|
Rights
|
|
That
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
That Have
|
|
Have Not
|
|
That Have
|
|
Have Not
|
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Not Vested
|
|
Vested
|
|
Not Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
(#)
|
|
($)(1)
|
|
Lucia L. Quinn**
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
32.70
|
|
|
|
9/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
26.89
|
|
|
|
9/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
|
|
|
|
|
$
|
20.60
|
|
|
|
9/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
317,046
|
|
|
|
|
|
|
|
|
|
|
$
|
12.52
|
|
|
|
9/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,643
|
|
|
|
|
|
|
|
|
|
|
$
|
8.30
|
|
|
|
9/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Mr. Tobin retired from the
Company on November 30, 2009.
|
|
**
|
|
Ms. Quinn resigned from the
Company on September 15, 2009.
|
|
(1)
|
|
The amounts reflected in this
column are based on the closing price of our common stock
($9.00) on December 31, 2009, the last business day of
2009, as reported on the New York Stock Exchange.
|
|
(2)
|
|
These non-qualified stock options
were granted on June 23, 2009 and will vest in four equal
annual installments beginning on June 23, 2010.
|
|
(3)
|
|
These restricted DSUs were awarded
on June 23, 2009. The first third of the award
(333,333 shares) will vest on June 23, 2010 and the
remaining two-thirds of the award (666,667 shares) will
vest in 24 approximately equal monthly installments beginning on
July 23, 2010, contingent upon Mr. Elliotts
continued employment with the Company. Vested shares will be
issued on December 31 of the year in which they vested.
|
|
(4)
|
|
On June 23, 2009,
Mr. Elliott was awarded 1,250,000 performance-based DSUs
that will be issued in increments of 250,000 shares on each
of the dates (occurring prior to December 31, 2012) on
which, if Mr. Elliott remains employed by us, our common
stocks average closing price meets the thresholds set
forth below:
|
|
|
|
|
|
|
|
Minimum Performance Price for
|
|
# of Deferred Stock Units that
|
any 10 Consecutive Trading Days:
|
|
Vest
|
|
$
|
20.00
|
|
|
|
250,000
|
|
$
|
22.50
|
|
|
|
250,000
|
|
$
|
25.00
|
|
|
|
250,000
|
|
$
|
27.50
|
|
|
|
250,000
|
|
$
|
30.00
|
|
|
|
250,000
|
|
|
|
|
|
|
In applying the foregoing trading
price thresholds, the relevant performance-based DSUs will be
earned and settled only on the first occasion on which the
corresponding
ten-day
price target is attained, but if a higher price target is
attained before one or more lower price targets have been
attained, not only the performance-based DSUs corresponding to
such higher target, but also those corresponding to previously
unattained lower targets, will be earned and settled. None of
these performance-based DSUs had vested as of December 31,
2009. In accordance with SEC rules, the number of unearned
shares represents the lowest award level which has not yet been
earned. The number of shares in this column reflects the
threshold award level as the minimum performance condition has
not yet been satisfied.
|
|
(5)
|
|
These non-qualified stock options
were granted on June 5, 2007, the remainder of which will
continue to vest in two equal annual installments on the
anniversary of the grant date.
|
|
(6)
|
|
These non-qualified stock options
were granted on February 12, 2008, the remainder of which
will continue to vest in three equal annual installments on the
anniversary of the grant date.
|
|
(7)
|
|
These non-qualified stock options
were granted on February 24, 2009 and will vest in four
equal annual installments beginning on February 24, 2010.
|
|
(8)
|
|
These DSUs were awarded on
June 5, 2007, the remainder of which will continue to vest
in three equal annual installments on the anniversary of the
grant date.
|
57
|
|
|
(9)
|
|
These DSUs were awarded on
February 12, 2008, the remainder of which will continue to
vest in four equal annual installments on the anniversary of the
grant date.
|
|
(10)
|
|
These DSUs were awarded on
February 24, 2009 and will vest in five equal annual
installments beginning on February 24, 2010.
|
|
(11)
|
|
These non-qualified stock options
were granted on July 1, 2005, the remainder of which will
continue to vest in two equal annual installments on the
anniversary of the grant date.
|
|
(12)
|
|
These non-qualified stock options
were granted on May 8, 2006, the remainder of which will
continue to vest in one installment on the anniversary of the
grant date.
|
|
(13)
|
|
These non-qualified stock options
were granted on February 12, 2008, the remainder of which
will continue to vest in one installment on the anniversary of
the grant date.
|
|
(14)
|
|
These non-qualified stock options
were granted on July 29, 2008, the remainder of which will
continue to vest in three equal annual installments on the
anniversary of the grant date.
|
|
(15)
|
|
These DSUs were awarded on
July 1, 2005, the remainder of which will continue to vest
in two equal annual installments on the anniversary of the grant
date.
|
|
(16)
|
|
These DSUs were awarded on
May 8, 2006, the remainder of which will continue to vest
in two equal annual installments on the anniversary of the grant
date.
|
|
(17)
|
|
These DSUs were awarded on
February 12, 2008, the remainder of which will continue to
vest in one installment on the anniversary of the grant date.
|
|
(18)
|
|
These DSUs were awarded on
July 29, 2008, the remainder of which will continue to vest
in four equal annual installments on the anniversary of the
grant date.
|
|
(19)
|
|
These non-qualified stock options
were granted on May 1, 2008, the remainder of which will
continue to vest in three equal annual installments on the
anniversary of the grant date.
|
|
(20)
|
|
These DSUs were awarded on
May 1, 2008, the remainder of which will continue to vest
in four equal annual installments on the anniversary of the
grant date.
|
58
OPTION
EXERCISES AND STOCK VESTED
None of our NEOs exercised stock options during the fiscal year
ended December 31, 2009. The deferred stock units that
vested for our NEOs during the fiscal year ended
December 31, 2009 are set forth in the following table:
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
J. Raymond Elliott
|
|
|
0
|
(2)
|
|
$
|
0
|
(2)
|
Sam R. Leno
|
|
|
110,982
|
|
|
$
|
1,050,642
|
|
Fredericus A. Colen
|
|
|
43,428
|
|
|
$
|
408,257
|
|
Stephen F. Moreci
|
|
|
10,995
|
|
|
$
|
107,236
|
|
Timothy A. Pratt
|
|
|
14,750
|
|
|
$
|
122,720
|
|
James R. Tobin*
|
|
|
125,000
|
(3)
|
|
$
|
1,046,250
|
|
Lucia L. Quinn**
|
|
|
97,714
|
(4)
|
|
$
|
967,734
|
(4)
|
|
|
|
*
|
|
Mr. Tobin retired from the
Company on November 30, 2009.
|
|
**
|
|
Ms. Quinn resigned from the
Company on September 15, 2009.
|
|
(1)
|
|
The amounts shown in this column
represent the number of shares that vested multiplied by the
fair market value of our stock on the date of vesting. Fair
market value is determined as the closing price of our stock as
reported on the New York Stock Exchange.
|
|
(2)
|
|
From 2007 through May 2009,
Mr. Elliott was a non-employee director. Upon his
resignation from the Board in May 2009, he received a
distribution of 18,264 shares of common stock, which
represent restricted stock awarded to him in his capacity as a
non-employee director and which he had deferred under our
Non-Employee Director Deferred Compensation Plan. The value
realized on vesting of these shares was $157,436.
|
|
(3)
|
|
In connection with
Mr. Tobins retirement from the Company on
November 30, 2009, the vesting of 125,000 deferred stock
units was accelerated effective November 30, 2009, the date
of his retirement.
|
|
(4)
|
|
Included in these amounts are
71,566 DSUs for which the vesting was accelerated to
October 19, 2009, the date on which Ms. Quinns
Agreement and Mutual Release of All Claims was approved by our
Board of Directors. The value realized on vesting of these
shares was $727,111.
|
59
PENSION
BENEFITS
All of our executive officers, including our NEOs, are eligible
to participate in our Executive Retirement Plan. The Executive
Retirement Plan is intended to provide a clear and consistent
approach to managing executive retirements with a standard
mutually understood separation and post employment relationship.
The plan provides retiring executive officers with a lump sum
benefit of 2.5 months of salary for each year of service,
up to a maximum of 36 months pay. Effective January 1,
2009, the amounts are payable in the first payroll period after
the last day of the six-month period following retirement.
Receipt of payment is conditioned upon the retiring employee
entering into a separation agreement with us which includes a
non-competition provision aimed at protecting the Company from
the transfer of proprietary and business knowledge to competing
companies. To be considered retired under the
Executive Retirement Plan, an employees age plus his or
her years of service with us must total at least 65 years
(provided that the employee is at least 55 years old and
has been employed by us for at least 5 years).
For retirement-eligible NEOs (Messrs. Colen, Moreci and
Tobin), the present value of accrued benefits is equivalent to
the value of their lump sum benefit determined under the plan
based on the respective NEOs base salary and number of
years of credited service as of December 31, 2009. For
those NEOs not yet eligible for retirement
(Messrs. Elliott, Leno, and Pratt), the amounts reflected
represent their current accrued benefit based on the respective
NEOs salary and years of service as of December 31,
2009, discounted from the earliest retirement eligibility to
December 31, 2009, using a discount rate of 5.50% per
annum. This valuation methodology is consistent with the
methodology we use for financial accounting purposes except that
executives are assumed to remain employed by us until their
earliest retirement age under the plan (or their age on
December 31, if already eligible for retirement). For
financial accounting purposes, the valuation considers the
probability that the executives will achieve retirement age.
Pursuant to the terms of their respective offer letters,
Messrs. Elliott and Leno will be deemed retirement eligible
under the plan after three years of service. Ms. Quinn was
not retirement-eligible when she resigned from the Company on
September 15, 2009.
The table below shows the present value of accumulated benefits
payable to each of our NEOs, including the numbers of years of
service credited to each NEO, under our Executive Retirement
Plan as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
|
|
|
Present Value of
|
|
|
Payments
|
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
During Last
|
|
Name
|
|
Plan Name
|
|
|
Service
(#)(1)
|
|
|
Benefit
($)(2)
|
|
|
Fiscal Year ($)
|
|
|
J. Raymond Elliott
|
|
|
BSC Executive Retirement Plan
|
|
|
|
0.52
|
|
|
$
|
102,276
|
|
|
$
|
0
|
|
Sam R. Leno
|
|
|
BSC Executive Retirement Plan
|
|
|
|
2.58
|
|
|
$
|
295,113
|
|
|
$
|
0
|
|
Fredericus A. Colen
|
|
|
BSC Executive Retirement Plan
|
|
|
|
10.38
|
|
|
$
|
1,232,626
|
|
|
$
|
0
|
|
Stephen F. Moreci
|
|
|
BSC Executive Retirement Plan
|
|
|
|
20.13
|
|
|
$
|
1,282,351
|
|
|
$
|
0
|
|
Timothy A. Pratt
|
|
|
BSC Executive Retirement Plan
|
|
|
|
1.67
|
|
|
$
|
152,828
|
|
|
$
|
0
|
|
James R. Tobin*
|
|
|
BSC Executive Retirement Plan
|
|
|
|
10.71
|
|
|
$
|
0
|
(3)
|
|
$
|
2,139,195
|
(4)
|
Lucia L. Quinn**
|
|
|
BSC Executive Retirement Plan
|
|
|
|
0
|
|
|
$
|
0
|
(5)
|
|
$
|
0
|
|
|
|
|
*
|
|
Mr. Tobin retired from the
Company on November 30, 2009.
|
|
**
|
|
Ms. Quinn was not
retirement-eligible when she resigned from the Company on
September 15, 2009.
|
|
(1)
|
|
The numbers of years of credited
service reflect the NEOs actual years of service with us.
We do not credit additional years of service under the plan.
Rather, the plan provides that the number of years of credited
service is calculated through the NEOs last day worked.
Partially completed years of service are pro-rated based on
calendar days and calculated to the second decimal point.
|
|
(2)
|
|
For retirement-eligible NEOs
(Messrs. Colen, Moreci and Tobin), the amounts reflected in
this column represent the value of their respective accrued
benefit under the plan based on their respective base salary and
number of years of credited service as of December 31,
2009, or in the case of Mr. Tobin, as of November 30,
2009, his retirement date. For NEOs not yet eligible for
retirement under the plan (Messrs. Elliott, Leno and
Pratt), the amounts reflected in this column represent their
respective accrued benefit under the plan based on their
respective salary and number of years
|
60
|
|
|
|
|
of credited service as of
December 31, 2009, discounted from the earliest retirement
eligibility date to December 31, 2009, using a discount
rate of 5.50% per annum.
|
|
(3)
|
|
Mr. Tobin retired from Boston
Scientific on November 30, 2009 and therefore had no
accumulated benefit on December 31, 2009.
|
|
(4)
|
|
Mr. Tobin was
retirement-eligible when he stepped down as President and CEO on
July 13, 2009. In order to recognize his contributions as a
Senior Advisor to the Company through his retirement date of
November 30, 2009, we continued to provide him with
benefits equivalent to the retirement benefits available to
executive officers under the plan. Accordingly, Mr. Tobin
will be paid a lump sum benefit of $2,217,887 in the first
payroll period after the last day of the six-month period
following his retirement, $2,139,195 of which is pursuant to the
plan and $78,692 of which is pursuant to his Transition and
Retirement Agreement. For further discussion of our Executive
Retirement Plan, please see the Compensation
Discussion & Analysis section titled Our
Post-Employment and Change in Control Arrangements
beginning on page 43.
|
|
(5)
|
|
Ms. Quinn resigned from Boston
Scientific on September 15, 2009, and was not eligible for
retirement under the plan at that time. For discussion of the
payment and benefits payable to Ms. Quinn in connection
with her resignation, please see the description of her
agreement in the Compensation Discussion & Analysis
section titled Our Post-Employment and Change in Control
Arrangements on page 43.
|
61
NONQUALIFIED
DEFERRED COMPENSATION
In September 2004, we committed to fund a special one-time
contribution to our 401(k) Retirement Savings Plan for the
benefit of our employees. In June 2005, we adopted a 401(k)
Excess Benefit Plan, a non-qualified deferred compensation plan,
designed to provide specific supplemental benefits to those
employees who would have exceeded the 2004 IRS contribution
limits if the special contribution had been made to their 401(k)
plan accounts. Accordingly, the 401(k) Excess Benefit Plan was
established to accept the overflow contributions on
behalf of participating employees, including our NEOs.
Investment choices under the 401(k) Excess Benefit Plan are
generally identical to our 401(k) Retirement Savings Plan except
that executive officers may not elect to invest in the BSC Stock
Fund or the Vanguard Retirement Savings Trust. The investment
elections are made by each participant and may be changed daily.
Generally, a lump sum cash payment of their respective account
balances under the plan is made to participants determined to be
specified employees, including our NEOs, commencing
no earlier than six months and one day following their
separation from service.
The table below shows aggregate earnings and balances for each
of our NEOs under our 401(k) Excess Benefit Plan as of
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Earnings
|
|
|
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
in Last
|
|
|
Aggregate
|
|
|
Balance at
|
|
|
|
in Last Fiscal
|
|
|
in Last Fiscal
|
|
|
Fiscal
|
|
|
Withdrawals/
|
|
|
Last Fiscal
|
|
Name
|
|
Year ($)
|
|
|
Year ($)
|
|
|
Year
($)(1)
|
|
|
Distributions ($)
|
|
|
Year End
($)(2)
|
|
|
J. Raymond
Elliott(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sam R.
Leno(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fredericus A. Colen
|
|
|
|
|
|
|
|
|
|
$
|
1,237
|
|
|
|
|
|
|
$
|
18,455
|
|
Stephen F. Moreci
|
|
|
|
|
|
|
|
|
|
$
|
224
|
|
|
|
|
|
|
$
|
42,292
|
|
Timothy A.
Pratt(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James R. Tobin*
|
|
|
|
|
|
|
|
|
|
$
|
3,295
|
|
|
|
|
|
|
$
|
15,737
|
|
Lucia L.
Quinn**(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Mr. Tobin retired from the
Company on November 30, 2009.
|
|
**
|
|
Ms. Quinn resigned from the
Company on September 15, 2009.
|
|
(1)
|
|
No portion of the amounts in this
column are included in the Summary Compensation Table under the
Change in Pension Value and Nonqualified Deferred
Compensation Earnings column as the earnings were neither
above-market nor preferential.
|
|
(2)
|
|
No portion of the amounts in this
column were included in the Summary Compensation Table under the
Change in Pension Value and Nonqualified Deferred
Compensation Earnings column for previous years as the
earnings were neither above-market nor preferential.
|
|
(3)
|
|
None of Messrs. Elliott, Leno
or Pratt or Ms. Quinn was employed by us in 2004 when the
one-time 401(k) contribution was made to our 401(k) Excess
Benefit Plan.
|
62
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Executive Retirement Plan. All of our
executive officers, including our NEOs, are eligible to
participate in our Executive Retirement Plan. The Executive
Retirement Plan is intended to provide a clear and consistent
approach to managing executive departures with a standard
mutually-understood separation and post employment relationship.
The Executive Retirement Plan, including the benefits payable to
our executive officers upon retirement under the
plan, are more fully described under the Compensation
Discussion & Analysis section titled Executive
Retirement beginning on page 44. The present value of
amounts accrued under the Executive Retirement Plan at
December 31, 2009 and valuation methodology are reflected
in the Pension Benefits Table and accompanying text on
page 60 and the change in the present value of those
benefits from December 31, 2008 are reflected in the
Summary Compensation Table on page 50 in the column
Change in Pension Value and Nonqualified Deferred
Compensation Earnings.
Consulting Arrangements. The Executive
Retirement Plan provides our CEO with the discretion to cause
the Company to enter into consulting arrangements with retiring
executives, including our NEOs. The purpose of these consulting
arrangements is to ensure smooth executive transitions,
including prudent transfer of business knowledge as well as day
to day project support, as needed. Consulting arrangements,
including benefits payable to our retiring executives under
these arrangements, are more fully described under the
Compensation Discussion & Analysis section titled
Consulting Arrangements on page 45. In 2009, we
did not enter into consulting arrangements with any of our NEOs
under this plan.
Executive Life Insurance. In 2009, we made
annual payments to certain executives equal to the premium for
executive life insurance (plus a
gross-up
amount for tax purposes). Two of our NEOs, Messrs. Colen
and Moreci, received these executive life insurance payments (in
lieu of Company-paid life insurance) in 2009. In October 2009,
the Compensation Committee approved the termination of the
program and, as a result, Messrs. Colen and Moreci were
also paid amounts (plus a
gross-up
amount for tax purposes), which in the aggregate, represented
the net present value of all remaining future premiums under
their respective policies. The payments made to
Messrs. Colen and Moreci in 2009 are reflected in the
Summary Compensation Table on page 50 under the column
All Other Compensation.
Retention Agreements. As of December 31,
2009, our key executives, including our NEOs, had Retention
Agreements with us. The purpose of these Retention Agreements
was to retain our key executives and reinforce and encourage
their continued attention and dedication during periods in which
a change in control is contemplated, even if they fear that
their employment will be terminated after or in connection with
the change in control. In December 2009, our Board of Directors
approved the termination of all of our executives existing
Retention Agreements and the execution of new Change in Control
Agreements, which were executed in February 2010. The former
Retention Agreements and the new Change in Control Agreements,
including the benefits provided under them in the event of
certain involuntary terminations in connection with a change in
control, are more fully described under the Compensation
Discussion & Analysis section titled Change in
Control Agreements on page 46.
Long-Term Incentive Plans. Employees,
including our NEOs, are eligible to receive equity awards under
our Long-Term Incentive Plans. Beginning in 2010, all equity
granted to executives will have a double trigger
feature, requiring both a change in control and termination
(without cause or by the executive for good reason) in order to
accelerate vesting. Generally, equity awards granted prior to
2010 to our executive officers, including our NEOs, under these
plans will become immediately vested and exercisable in the
event of a change in control or Covered
Transaction as defined in the plans. These plans are more
fully described under the Compensation Discussion &
Analysis section titled Long-Term Incentive Plans on
page 45.
Performance Incentive Plan. All of our
salaried employees, including our NEOs, are eligible to
participate in our Performance Incentive Plan (PIP). The purpose
of our PIP is to align the interests of our employees with those
of the Company by providing incentives for the achievement of
key business milestones and individual performance objectives.
Participants generally must be employed by us on December 31 of
the plan year in order to be eligible for their incentive
performance award for that year. However, in the event of
certain involuntary terminations without cause, or
retirement, participants may receive their
performance incentive awards for the year on a prorated basis
based on the percentage of the year the participant was
63
employed by us and eligible to participate. Grants of
performance incentive awards under our PIP are reflected in the
Summary Compensation Table on page 50 in the Non-Equity
Incentive Compensation column.
Employee Severance Pay Plan. All of our
salaried employees are eligible to receive severance payments
and benefits under our Employee Severance Pay Plan in the event
of certain involuntary terminations. Under the plan, director
level and above exempt employees, including our NEOs, are
eligible for severance payments and benefits (salary and
benefits continuation) equal to one month of severance payments
and benefits per each year of service to the Company (with a
minimum benefit of 6 months) up to a maximum of
12 months. Executives, including our NEOs, who are eligible
to receive payments under our Executive Retirement Plan are not
also eligible to receive payments and benefits under the
Employee Severance Pay Plan.
Other Arrangements. On July 13, 2009,
Mr. Tobin retired as our President and Chief Executive
Officer and as a member of our Board of Directors, at which time
he became a Senior Advisor to the Company. Mr. Tobin fully
retired from the Company on November 30, 2009. Due to the
unique nature of Mr. Tobins retirement as President
and CEO and his ongoing critical duties and responsibilities as
Senior Advisor, we entered in a Transition and Retirement
Agreement with Mr. Tobin. Mr. Tobins agreement,
including the benefits payable to Mr. Tobin upon his
retirement, are more fully described under the Compensation
Discussion & Analysis section titled Executive
Retirement beginning on page 44.
On September 15, 2009, Ms. Quinn resigned as our
Executive Vice President of Human Resources. We entered into an
Agreement and Mutual Release of All Claims with Ms. Quinn,
the terms of which are described under the Compensation
Discussion & Analysis section titled
Post-Employment Arrangements beginning on
page 45.
The following tables show potential payments to
Messrs. Elliott, Leno, Colen, Moreci and Pratt under
existing agreements, plans or other arrangements, for various
scenarios involving a change in control or termination of
employment, in each case assuming the termination date was
December 31, 2009 and where applicable, using the closing
market price of our common stock of $9.00 per share on that date
(as reported on the NYSE). The following tables also show
payments due to Mr. Tobin and Ms. Quinn upon their
separation from the Company on November 30, 2009 and
September 15, 2009, respectively.
64
J.
Raymond Elliott
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
Following
|
|
|
|
|
|
|
|
|
|
|
|
|
for
|
|
|
Voluntary
|
|
|
Without
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause(1)
|
|
|
Termination(2)
|
|
|
Cause(3)
|
|
|
Control(4)
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
|
Payments Due Upon Termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,600,000
|
|
|
$
|
3,600,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,030,400
|
|
|
$
|
2,030,400
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pro-rata Target
Bonus(5)
|
|
$
|
0
|
|
|
$
|
676,800
|
|
|
$
|
676,800
|
|
|
$
|
676,800
|
|
|
$
|
676,800
|
|
|
$
|
676,800
|
|
|
$
|
0
|
|
Total Cash Severance
|
|
$
|
0
|
|
|
$
|
676,800
|
|
|
$
|
6,307,200
|
|
|
$
|
6,307,200
|
|
|
$
|
676,800
|
|
|
$
|
676,800
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
Plan(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Health and Welfare
Benefits(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
21,720
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post-Termination Life Insurance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,080
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Allowance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Life
Payment(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Benefits & Perquisites
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
75,000
|
|
|
$
|
97,800
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Stock
Options(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Value of Accelerated Deferred Stock
Units(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9,000,000
|
|
|
$
|
9,000,000
|
|
|
$
|
9,000,000
|
|
|
$
|
9,000,000
|
|
|
$
|
0
|
|
Value of Accelerated Performance
Shares(11)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Total Value of Accelerated Equity Grants
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
9,000,000
|
|
|
$
|
9,000,000
|
|
|
$
|
9,000,000
|
|
|
$
|
9,000,000
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Benefits
|
|
$
|
0
|
|
|
$
|
676,800
|
|
|
$
|
15,382,200
|
|
|
$
|
15,405,000
|
|
|
|
9,676,800
|
|
|
|
9,676,800
|
|
|
|
0
|
|
65
Sam R.
Leno
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
Following
|
|
|
|
|
|
|
|
|
|
|
|
|
for
|
|
|
Voluntary
|
|
|
Without
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause(1)
|
|
|
Termination(2)
|
|
|
Cause(3)
|
|
|
Control(4)
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due Upon Termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,875,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,670,625
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pro-rata Target
Bonus(5)
|
|
$
|
0
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Severance
|
|
$
|
0
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
$
|
4,014,375
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
$
|
468,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
Plan(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
335,938
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Health and Welfare
Benefits(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
38,966
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post-Termination Life Insurance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,340
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Allowance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
75,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Life
Payment(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits & Perquisites
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
335,938
|
|
|
$
|
116,306
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Stock
Options(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
140,750
|
|
|
$
|
140,750
|
|
|
$
|
140,750
|
|
|
$
|
140,750
|
|
|
$
|
0
|
|
Value of Accelerated Deferred Stock
Units(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,366,450
|
|
|
$
|
3,366,450
|
|
|
$
|
3,366,450
|
|
|
$
|
3,366,450
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of Accelerated Equity Grants
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,507,200
|
|
|
$
|
3,507,200
|
|
|
$
|
3,507,200
|
|
|
$
|
3,507,200
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Benefits
|
|
$
|
0
|
|
|
$
|
468,750
|
|
|
$
|
4,311,888
|
|
|
$
|
7,637,881
|
|
|
$
|
3,975,950
|
|
|
$
|
3,975,950
|
|
|
$
|
468,750
|
|
66
Fredericus
A. Colen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
Following
|
|
|
|
|
|
|
|
|
|
|
|
|
for
|
|
|
Voluntary
|
|
|
Without
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause(1)
|
|
|
Termination(2)
|
|
|
Cause(3)
|
|
|
Control(4)
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
|
Payments Due Upon Termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,710,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,396,644
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pro-rata Target
Bonus(5)
|
|
$
|
0
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Severance
|
|
$
|
0
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
$
|
3,534,144
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
$
|
427,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
Plan(6)
|
|
$
|
0
|
|
|
$
|
1,232,625
|
|
|
$
|
1,232,625
|
|
|
$
|
0
|
|
|
$
|
1,232,625
|
|
|
$
|
1,232,625
|
|
|
$
|
1,232,625
|
|
Health and Welfare
Benefits(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
30,012
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post-Termination Life Insurance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
117
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
|
|
Executive Allowance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
75,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
|
|
Executive Life
Payment(8)
|
|
$
|
0
|
|
|
$
|
390,385
|
|
|
$
|
390,385
|
|
|
$
|
390,385
|
|
|
$
|
390,385
|
|
|
$
|
0
|
|
|
$
|
390,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits & Perquisites
|
|
$
|
0
|
|
|
$
|
1,623,010
|
|
|
$
|
1,623,010
|
|
|
$
|
495,514
|
|
|
$
|
1,623,010
|
|
|
$
|
1,232,625
|
|
|
$
|
1,623,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Stock
Options(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
70,375
|
|
|
$
|
70,375
|
|
|
$
|
70,375
|
|
|
$
|
70,375
|
|
Value of Accelerated Deferred Stock
Units(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
986,247
|
|
|
$
|
986,247
|
|
|
$
|
986,247
|
|
|
$
|
986,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of Accelerated Equity Grants
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,056,622
|
|
|
$
|
1,056,622
|
|
|
$
|
1,056,622
|
|
|
$
|
1,056,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Benefits
|
|
$
|
0
|
|
|
$
|
2,050,510
|
|
|
$
|
2,050,510
|
|
|
$
|
5,086,280
|
|
|
$
|
3,107,132
|
|
|
$
|
2,716,747
|
|
|
$
|
3,107,132
|
|
67
Stephen
F. Moreci
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
Following
|
|
|
|
|
|
|
|
|
|
|
|
|
for
|
|
|
Voluntary
|
|
|
Without
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause(1)
|
|
|
Termination(2)
|
|
|
Cause(3)
|
|
|
Control(4)
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
|
Payments Due Upon Termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,282,500
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
961,875
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pro-rata Target
Bonus(5)
|
|
$
|
0
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Severance
|
|
$
|
0
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
$
|
2,565,000
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
$
|
320,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
Plan(6)
|
|
$
|
0
|
|
|
$
|
1,282,500
|
|
|
$
|
1,282,500
|
|
|
$
|
0
|
|
|
$
|
1,282,500
|
|
|
$
|
1,282,500
|
|
|
$
|
1,282,500
|
|
Health and Welfare
Benefits(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
37,947
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post-Termination Life Insurance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
117
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Allowance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
75,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Life
Payment(8)
|
|
$
|
0
|
|
|
$
|
362,389
|
|
|
$
|
362,389
|
|
|
$
|
362,389
|
|
|
$
|
362,389
|
|
|
$
|
0
|
|
|
$
|
362,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits & Perquisites
|
|
$
|
0
|
|
|
$
|
1,644,889
|
|
|
$
|
1,644,889
|
|
|
$
|
475,453
|
|
|
$
|
1,644,889
|
|
|
$
|
1,282,500
|
|
|
$
|
1,644,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Stock
Options(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
93,834
|
|
|
$
|
93,834
|
|
|
$
|
93,834
|
|
|
$
|
93,834
|
|
Value of Accelerated Deferred Stock
Units(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
251,829
|
|
|
$
|
251,829
|
|
|
$
|
251,829
|
|
|
$
|
251,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of Accelerated Equity Grants
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
345,663
|
|
|
$
|
345,663
|
|
|
$
|
345,663
|
|
|
$
|
345,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Benefits
|
|
$
|
0
|
|
|
$
|
1,965,514
|
|
|
$
|
1,965,514
|
|
|
$
|
3,386,116
|
|
|
$
|
2,311,177
|
|
|
$
|
1,948,788
|
|
|
$
|
2,311,177
|
|
68
Timothy
A. Pratt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
Following
|
|
|
|
|
|
|
|
|
|
|
|
|
for
|
|
|
Voluntary
|
|
|
Without
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause(1)
|
|
|
Termination(2)
|
|
|
Cause(3)
|
|
|
Control(4)
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
|
Payments Due Upon Termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,575,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,227,909
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Pro-rata Target
Bonus(5)
|
|
$
|
0
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Severance
|
|
$
|
0
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
$
|
3,196,659
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
Plan(6)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Health and Welfare
Benefits(7)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
51,463
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Post-Termination Life Insurance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,340
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Allowance
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
75,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Executive Life
Payment(8)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits & Perquisites
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
128,803
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,451,312
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Stock
Options(9)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
70,375
|
|
|
$
|
70,375
|
|
|
$
|
70,375
|
|
|
$
|
70,375
|
|
Value of Accelerated Deferred Stock
Units(10)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
666,504
|
|
|
$
|
666,504
|
|
|
$
|
666,504
|
|
|
$
|
666,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of Accelerated Equity Grants
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
736,879
|
|
|
$
|
736,879
|
|
|
$
|
736,879
|
|
|
$
|
736,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Benefits
|
|
$
|
0
|
|
|
$
|
393,750
|
|
|
$
|
393,750
|
|
|
$
|
5,513,653
|
|
|
$
|
1,130,629
|
|
|
$
|
1,130,629
|
|
|
$
|
1,130,629
|
|
69
James R.
Tobin*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
Following
|
|
|
|
|
|
|
|
|
|
|
|
|
for
|
|
|
Voluntary
|
|
|
Without
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause(1)
|
|
|
Termination(2)
|
|
|
Cause(3)
|
|
|
Control(4)
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement*
|
|
|
Payments Due Upon
Termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
909,588
|
|
Bonus
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0
|
|
Pro-rata Target
Bonus(5)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
985,455
|
|
Separation Payment
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Career Service Award
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,499,572
|
(12)
|
Total Cash Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,394,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
Plan(6)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,217,887
|
(13)
|
Service Provider Payments
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
40,000
|
(14)
|
Accrued but Unused Vacation
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
86,651
|
|
Health and Welfare
Benefits(7)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0
|
|
Post-Termination Life Insurance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0
|
|
Executive Allowance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,333
|
|
Executive Life
Payment(8)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits & Perquisites
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,352,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
Gross-Up
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Stock
Options(9)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
140,000
|
|
Value of Accelerated Deferred Stock
Units(10)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,046,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of Accelerated Equity Grants
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,186,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Benefits
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,933,736
|
|
|
|
|
*
|
|
Amounts in this table reflect
payments actually paid or payable to Mr. Tobin upon his
November 30, 2009 retirement from the Company.
|
70
Lucia L.
Quinn**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
Following
|
|
|
|
|
|
|
|
|
|
|
|
|
for
|
|
|
Voluntary
|
|
|
Without
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause(1)
|
|
|
Termination(2)
|
|
|
Cause(3)
|
|
|
Control(4)
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
|
Payments Due Upon Termination:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
325,151
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Bonus
|
|
$
|
|
|
|
$
|
0
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Pro-rata Target
Bonus(5)
|
|
$
|
|
|
|
$
|
219,965
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Separation Payment
|
|
$
|
|
|
|
$
|
460,000
|
(15)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash Severance
|
|
$
|
|
|
|
$
|
1,005,116
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Retirement
Plan(6)
|
|
$
|
|
|
|
$
|
0
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Service Provider Payments
|
|
$
|
|
|
|
$
|
16,250
|
(16)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Accrued but Unused Vacation
|
|
$
|
|
|
|
$
|
42,462
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Outplacement Assistance
|
|
$
|
|
|
|
$
|
50,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Health and Welfare
Benefits(7)
|
|
$
|
|
|
|
$
|
41,572
|
(17)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Post-Termination Life Insurance
|
|
$
|
|
|
|
$
|
5,682
|
(18)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Executive Allowance
|
|
$
|
|
|
|
$
|
0
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Executive Life
Payment(8)
|
|
$
|
|
|
|
$
|
0
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefits & Perquisites
|
|
$
|
|
|
|
$
|
155,966
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
Gross-Up
|
|
$
|
|
|
|
$
|
0
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Stock
Options(9)
|
|
$
|
|
|
|
$
|
224,396
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Value of Accelerated Deferred Stock
Units(10)
|
|
$
|
|
|
|
$
|
727,110
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value of Accelerated Equity Grants
|
|
$
|
|
|
|
$
|
951,506
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Benefits
|
|
$
|
|
|
|
$
|
2,112,588
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
**
|
|
Amounts in this table reflect
payments actually paid or payable to Ms. Quinn upon her
September 15, 2009 resignation from the Company.
|
|
|
|
(1)
|
|
Employees, including NEOs, are not
entitled to any benefits upon termination for cause. All
unvested stock options and deferred stock units, as well as all
vested but unexercised stock options are forfeited as of the
date of termination. For a definition of cause, see the
Compensation Discussion & Analysis section titled
Change in Control Agreements on page 46.
|
|
(2)
|
|
Amounts in this column represent
the total value of all benefits payable upon voluntary
termination by the NEO as of December 31, 2009.
|
|
(3)
|
|
Amounts in this column represent
benefits payable upon involuntary termination by us on
December 31, 2009 (other than termination for cause or in
connection with a change in control). NEOs other than
Mr. Tobin and Ms. Quinn, who are not eligible to
receive payments under our Executive Retirement Plan, are
eligible to receive payments and benefits under our Employee
Severance Pay Plan in the event of certain involuntary
terminations. Our Employee Severance Pay Plan is available
generally to all of our exempt employees in a manner that does
not discriminate in scope, terms or operation in favor of our
executive officers and therefore the payments and benefits
available under this plan are not disclosed in these tables.
Pursuant to the terms of his
|
71
|
|
|
|
|
retention agreement, following
termination by the Company without cause or by Mr. Elliott
for good reason, Mr. Elliott will receive the same benefits
he would receive following a change in control.
|
|
(4)
|
|
Amounts in this column represent
benefits payable under our Retention Agreements following a
termination on December 31, 2009 in connection with a
change in control of the Company. Our Retention Agreements
provide that in a change in control situation, the bonus is
three times the greater of the assumed on-plan bonus for the
then current year or the prior years actual bonus. The
actual 2008 bonuses paid to Messrs. Leno, Colen and Pratt
were greater than their respective assumed on-plan bonuses for
2009 and therefore the amounts in the Bonus row for them are
based on their actual 2008 bonus. For a further description of
our Retention Agreements, see the Compensation
Discussion & Analysis section titled Change in
Control Agreements on page 46.
|
|
(5)
|
|
Amounts in the Pro-rata
Target Bonus row represent the NEOs assumed on-plan
bonus for 2009 under our Performance Incentive Plan (PIP), which
is equal to his or her incentive target amount under the plan.
Under the PIP, an NEO must be employed by the Company on
December 31 of the plan year in order to be eligible to receive
a bonus payment for that year; provided that, in the event of
certain involuntary terminations without cause, death or
retirement, the Pro-rata Target Bonus amount will be paid on a
pro-rated basis through the date of such termination. Pursuant
to the terms of Mr. Elliotts offer letter, his
Pro-rata Target Bonus will not be paid in cash, but rather in
deferred stock units, which will be fully vested upon issuance.
For a further description of our Performance Incentive Plan, see
the Compensation Discussion & Analysis beginning on
page 24.
|
|
(6)
|
|
Amounts in the Executive
Retirement Plan row represent amounts earned under our
Executive Retirement Plan, provided the NEO is eligible for
benefits under the plan. For NEOs other than
Messrs. Elliott and Leno, eligibility means that the sum of
the executive officers age and years of service must equal
65, provided that the NEO is at least 55 years old and has
completed at least five years of service with us. Mr. Pratt
has not yet met the eligibility thresholds for our Executive
Retirement Plan. Mr. Elliotts offer letter provides
that he will be deemed to have met retirement eligibility under
our Executive Retirement Plan upon his termination from
employment for any reason (other than for cause) and assuming a
period of employment of at least three years. Mr. Elliott
has not yet completed three years of service with us. Pursuant
to Mr. Lenos offer letter, he will be eligible under
the plan upon completion of three years of service, generally,
and immediately upon his involuntary termination without cause
or in connection with a change in control. Mr. Leno has not
yet completed three years of service with us. No payments will
be made under the Executive Retirement Plan in the event of a
change in control. For a further description of our Executive
Retirement Plan, Mr. Elliotts offer letter or
Mr. Lenos offer letter, see the Compensation
Discussion & Analysis beginning on page 24.
|
|
(7)
|
|
In determining the value of health
and welfare benefits, we use the assumptions used for financial
reporting purposes under generally accepted accounting
principles.
|
|
(8)
|
|
Amounts in the Executive Life
Payment row represent amounts paid to the NEO in 2009 for
Executive Life Insurance in lieu of Company-paid life insurance,
payments made in connection with the termination of this program
and
gross-up
amounts to cover related tax obligations on each of these
payments. Messrs. Colen and Moreci participated in this
program. The annual premium, the termination payment for each
policy and the amount of
gross-up to
cover related tax obligations are listed in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
Termination
|
|
|
Termination
|
|
|
|
Annual
|
|
|
Premium Tax
|
|
|
Payment
|
|
|
Payment
|
|
Name
|
|
Premium
|
|
|
Gross-Up
|
|
|
Amount
|
|
|
Tax Gross-Up
|
|
|
Fredericus A. Colen
|
|
$
|
27,634
|
|
|
$
|
26,957
|
|
|
$
|
193,315
|
|
|
$
|
142,479
|
|
Stephen F. Moreci
|
|
$
|
26,988
|
|
|
$
|
25,203
|
|
|
$
|
186,226
|
|
|
$
|
123,972
|
|
|
|
|
(9)
|
|
Amounts in the Value of
Accelerated Stock Options row represent the difference
between the number of
in-the-money
unvested stock options held by each NEO multiplied by that
options exercise price and that number of shares
multiplied by $9.00 (the closing price of our common stock on
December 31, 2009 as reported on the NYSE). At
December 31, 2009, only Messrs. Leno, Colen, Moreci
and Pratt had
in-the-money
unvested stock options.
|
|
(10)
|
|
The amounts related to acceleration
of deferred stock units represent the value of the number of
accelerated deferred stock units held by each NEO as of
December 31, 2009, calculated by multiplying the number of
accelerated deferred stock units by $9.00 (the closing price of
our common stock on December 31, 2009) or in the case
of Mr. Tobin by $8.37 (the closing price of our common
stock on November 30, 2009, his retirement date) and in the
case of Ms. Quinn by $10.16 (the closing price of our
common stock on October 19, 2009, the date the Board
approved her Agreement and Mutual Release of All Claims).
|
72
|
|
|
(11)
|
|
On June 23, 2009,
Mr. Elliott was awarded 1,250,000 performance-based
deferred stock units that will be issued in increments of
250,000 shares on each of the dates (occurring prior to
December 31, 2012) on which, if Mr. Elliott
remains employed by us, our common stocks average closing
price meets the thresholds set forth below:
|
|
|
|
|
|
Minimum Performance Price for
|
|
# of Deferred Stock Units that
|
|
any 10 Consecutive Trading Days:
|
|
Vest
|
|
|
$20.00
|
|
|
250,000
|
|
$22.50
|
|
|
250,000
|
|
$25.00
|
|
|
250,000
|
|
$27.50
|
|
|
250,000
|
|
$30.00
|
|
|
250,000
|
|
|
|
|
|
|
In applying the foregoing trading
price thresholds, the relevant performance-based deferred stock
units will be earned and settled only on the first occasion on
which the corresponding
ten-day
price target is attained, but if a higher price target is
attained before one or more lower price targets have been
attained, not only the performance-based deferred stock units
corresponding to such higher target, but also those
corresponding to previously unattained lower targets, will be
earned and settled. None of these performance-based deferred
stock units had vested as of December 31, 2009.
|
|
(12)
|
|
This amount represents a Career
Service award paid to Mr. Tobin pursuant to his Transition
and Retirement Agreement in recognition of his contributions to
the Company over the course of his career and consisting of 250%
of his 2009 salary less his PIP payment. For a further
description of Mr. Tobins Transition and Retirement
Agreement, see the Executive Retirement section of
the Compensation Discussion & Analysis beginning on
page 44.
|
|
(13)
|
|
Mr. Tobin was
retirement-eligible when he stepped down as President and CEO on
July 13, 2009. In order to recognize his contributions as a
Senior Advisor to the Company through his retirement date of
November 30, 2009, we continued to provide him with
benefits equivalent to the retirement benefits available to
executive officers under the plan. Accordingly, Mr. Tobin
will be paid a lump sum benefit of $2,217,887 in the first
payroll period after the last day of the six-month period
following his retirement, $2,139,195 of which is pursuant to the
plan and $78,692 of which is pursuant to his Transition and
Retirement Agreement. For further discussion of our Executive
Retirement Plan, please see the Compensation
Discussion & Analysis section titled Our
Post-Employment and Change in Control Arrangements
beginning on page 43.
|
|
(14)
|
|
This amount represents $40,000 to
which Mr. Tobin is entitled as reimbursement by us of
attorneys fees and financial planning expenses in
connection with the negotiation of his Transition and Retirement
Agreement. For a further description of his Transition and
Retirement Agreement, see the Executive Retirement
section of the Compensation Discussion and Analysis beginning on
page 44.
|
|
(15)
|
|
This amount represents the sum of
the bi-weekly payments of Ms. Quinns annual base
salary of $460,000 from September 16, 2009 though
March 12, 2010 and a lump sum payment equal to six months
of Ms. Quinns annual base salary, or $230,000, paid
pursuant to her Agreement and Mutual Release of All Claims. For
a further description of Ms. Quinns agreement, see
the Post-Employment Arrangements section of the
Compensation Discussion & Analysis beginning on
page 45.
|
|
(16)
|
|
This amount represents $16,250 to
which Ms. Quinn is entitled as reimbursement by us of
attorneys fees and financial planning expenses in
connection with the negotiation of her Agreement and Mutual
Release of All Claims. For a further description of
Ms. Quinns agreement, see the Post-Employment
Arrangements section of the Compensation
Discussion & Analysis beginning on page 45.
|
|
(17)
|
|
This amount represents the cost of
health and welfare benefits that we will provide to
Ms. Quinn pursuant to the terms of her Agreement and Mutual
Release of All Claims. Her agreement stipulates that, provided
that Ms. Quinn does not otherwise become eligible for
health and welfare benefits, we will provide health and welfare
benefits to her for a six month period following her
resignation, or through March 12, 2010, at a potential cost
of up to $11,917; and after March 12, 2010 we will pay her
the equivalent of monthly health and welfare benefit costs for
up to 18 additional months, representing a potential cost of up
to $29,655.
|
|
(18)
|
|
This amount represents the premium
and the imputed income attributable to Ms. Quinn for
post-termination life insurance.
|
73
EQUITY
COMPENSATION PLANS
The following table summarizes information as of
December 31, 2009 relating to our equity compensation plans
pursuant to which grants of options, deferred stock units,
restricted stock grants or other rights to acquire shares may be
granted from time to time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities to Be
|
|
|
Weighted-Average
|
|
|
Future Issuance Under
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Securities
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column(a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security
holders(1)
|
|
|
73,118,109
|
|
|
$
|
9.56
|
(3)
|
|
|
68,675,235
|
|
Equity compensation plans not approved by security
holders(2)
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
Total
|
|
|
73,118,109
|
|
|
$
|
9.56
|
(3)
|
|
|
68,675,235
|
|
|
|
|
(1)
|
|
Amounts include outstanding options
under our 1992, 1995, 2000 and 2003 Long-Term Incentive Plans
and our 1992 Non-Employee Directors Stock Option Plan. The
amount in column (c) includes 9,091,793 shares
available for purchase by our employees under our 2006 Global
Employee Stock Ownership Plan, which are not available for grant
in any other form. Our 1992 Long-Term Incentive and 1992
Non-Employee Directors Stock Option Plans expired on
March 31, 2002, our 1995 Long-Term Incentive Plan expired
on May 9, 2005, and our 2000 Long-Term Incentive Plan
expired on February 28, 2010. As of December 31, 2009,
there were 76,202 shares available for issuance under our
2000 Long-Term Incentive Plan and 59,507,240 shares
available for issuance under our 2003 Long-Term Incentive Plan.
Amounts in column (a) also include 27,890,393 shares
awarded under our 2000 and 2003 Long-Term Incentive Plans in the
form of deferred stock units and restricted stock.
|
|
(2)
|
|
We have acquired a number of
companies over the past several years. From time to time, we
have assumed the acquired companys incentive plan(s),
including the outstanding options and warrants, if any, granted
under those plan(s). No further options may be granted under the
assumed plans beyond those assumed in connection with the
acquisitions. Assumed options that terminate prior to expiration
are not available for re-grant. As of December 31, 2009,
the aggregate number of options outstanding under the assumed
plans totaled 19,484,376. The weighted average exercise price of
these outstanding options is $14.08.
|
|
(3)
|
|
This weighted average exercise
price includes the value of outstanding deferred stock units and
restricted stock.
|
74
DIRECTOR
COMPENSATION
The Executive Compensation and Human Resources Committee (the
Compensation Committee) evaluates the appropriate
level and form of compensation for non-employee directors at
least annually and recommends changes to the Board when
appropriate. Non-employee directors receive a combination of
cash and equity incentive compensation for their service on our
Board. To determine the appropriate level of compensation, the
Compensation Committee relies on the consulting services of
Watson Wyatt and publicly available data describing director
compensation in peer companies. The Compensation Committee also
takes into consideration the significant amount of time and
dedication required by our directors to fulfill their duties on
our Board and Board committees as well as the need to continue
to attract highly qualified candidates to serve on our Board.
The Compensation Committee did not recommend any changes to
director compensation for 2009. Our director compensation is as
follows:
Non-Employee Directors. We compensate our
non-employee directors (other than the Chairman of the Board) as
follows:
|
|
|
|
|
an annual retainer of $75,000;
|
|
|
|
an annual grant of the number of shares of restricted stock
determined by dividing $125,000 by the fair market value of our
stock on the date of grant; and
|
|
|
|
an annual fee of $20,000 for the chair of each of our committees.
|
We grant restricted stock awards to our non-employee directors
at no charge, but they are subject to forfeiture restrictions.
The shares become free from restriction upon the expiration of
each non-employee directors current term of office and are
subject to the terms and conditions of our long-term incentive
plans. The annual restricted stock awards are generally made on
the date of each Annual Meeting, but if a non-employee director
is elected to the Board on a date other than the Annual Meeting,
a restricted stock award is made on the date the director is
first elected to the Board.
Employee Directors. Directors who are also our
employees receive no additional compensation for serving on the
Board or its committees.
Chairman of the Board. Our Chairman of the
Board receives an annual retainer of $210,000 and an annual
grant of the number of shares of restricted stock determined by
dividing $125,000 by the fair market value of our stock at the
close of market on the date of grant.
Other Compensation. In addition, we pay or
reimburse our directors for transportation, hotel, food and
other incidental expenses incurred in connection with their
performance of services for us, including attending Board and
committee meetings and participating in director education
programs. Our corporate aircraft is made available to our
directors for travel to and from our Board meetings. We also
extend directors and officers indemnity insurance
coverage to each of our non-employee directors.
Non-Employee Director Deferred Compensation
Plan. Non-employee directors may, by written
election, defer receipt of all or a portion of the annual cash
retainer, committee chair fees and the restricted stock award
under our Non-Employee Director Deferred Compensation Plan until
a date specified at the time of election or when he or she no
longer serves our Board. Cash amounts deferred can be invested
in common stock equivalents or another investment option in
which we credit the amount deferred plus accrued interest
(compounded annually based upon the Moodys Composite Yield
on Seasoned Corporate Bonds as reported for the month of
September of each calendar year). Cash amounts are only payable
after a directors termination of Board service or on a
Fixed Date Payout as defined in the Plan, and may be paid either
as a lump sum or in installments as specified by the director at
the time of election. Restricted stock is issued to the director
under the Non-Employee Director Deferred Compensation Plan after
a directors termination of Board service.
Director Stock Ownership Guidelines. All of
our directors also are required to have a significant personal
investment in the Company through their ownership of our shares.
Our director stock ownership guidelines provide that each
director should own at least 25,000 shares of our common
stock within three years of his or her joining the Board. For
purposes of satisfying this obligation, restricted stock, stock
75
equivalent units or stock unit deferrals under our Non-Employee
Director Deferred Compensation Plan may be included in the
aggregate number of shares held by a director. All of our
directors either currently meet our director stock ownership
guidelines or we expect that they will meet the guidelines
within three years of becoming a director. The Nominating and
Governance Committee monitors compliance with these guidelines
on an annual basis.
DIRECTOR
COMPENSATION IN FISCAL 2009
The table below summarizes the compensation we paid to our
non-employee directors for the fiscal year ended
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name(1)
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)(6)
|
|
|
($)
|
|
|
John E. Abele
|
|
$
|
75,000
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,176,937
|
|
|
$
|
1,376,937
|
|
Katharine T.
Bartlett(7)
|
|
$
|
36,889
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
161,889
|
|
Ursula M.
Burns(8)
|
|
$
|
36,387
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
161,387
|
|
Bruce L.
Byrnes(9)
|
|
$
|
31,182
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
156,182
|
|
Nelda J.
Connors(10)
|
|
$
|
3,465
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
34
|
|
|
$
|
0
|
|
|
$
|
128,690
|
|
Nancy-Ann
DeParle(11)
|
|
$
|
13,125
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
138,125
|
|
J. Raymond
Elliott(12)
|
|
$
|
32,885
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
32,885
|
|
Joel L.
Fleishman(13)
|
|
$
|
25,961
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
150,961
|
|
Marye Anne Fox
|
|
$
|
75,000
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
1,407
|
|
|
$
|
0
|
|
|
$
|
209,238
|
|
Ray J. Groves
|
|
$
|
95,000
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
220,000
|
|
Kristina M.
Johnson(14)
|
|
$
|
29,052
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
154,052
|
|
Ernest Mario
|
|
$
|
95,000
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
220,000
|
|
N.J. Nicholas, Jr.
|
|
$
|
78,587
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
203,587
|
|
Pete M. Nicholas
|
|
$
|
210,000
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,296,141
|
|
|
$
|
1,631,141
|
|
John E. Pepper
|
|
$
|
88,132
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
167
|
|
|
$
|
0
|
|
|
$
|
214,229
|
|
Uwe E. Reinhardt
|
|
$
|
88,132
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
213,132
|
|
Warren B. Rudman
|
|
$
|
88,847
|
|
|
$
|
125,000
|
|
|
$
|
0
|
|
|
$
|
1,276
|
|
|
$
|
0
|
|
|
$
|
222,224
|
|
John E.
Sununu(15)
|
|
$
|
56,250
|
|
|
$
|
250,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
306,250
|
|
|
|
|
(1)
|
|
Mr. Elliott was a non-employee
director through May 5, 2009 and his compensation for
serving as a non-employee director through that date is
reflected here. On July 13, 2009, Mr. Elliott became
our President and Chief Executive Officer, as well as a
director. Consequently, Mr. Elliott is an employee of the
Company, as well as a director, and therefore, he receives no
additional compensation for serving on our Board. Mr. Tobin
was a director and our President and Chief Executive Officer
through July 13, 2009. Because Mr. Tobin was an
employee, he received no additional compensation for serving on
our Board. Messrs. Elliotts and Tobins
compensation is discussed in our Compensation
Discussion & Analysis beginning on page 24 and in
the Summary Compensation Table beginning on page 50.
|
|
(2)
|
|
The following non-employee
directors elected to defer all or a portion of their 2009 annual
cash retainers in the form of common stock equivalent units in
accordance with our Non-Employee Director Deferred Compensation
Plan:
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
Common Stock
|
Name
|
|
Cash Deferred
|
|
Equivalent Units
|
|
J. Raymond Elliott*
|
|
$
|
32,885
|
|
|
|
4,303
|
|
Ray J. Groves
|
|
$
|
95,000
|
|
|
|
10,690
|
|
John E. Pepper
|
|
$
|
88,132
|
|
|
|
9,790
|
|
|
|
|
*
|
|
Mr. Elliotts term of
service as a non-employee director ended on May 5, 2009.
|
76
|
|
|
|
|
In addition, Ms. Connors and
Senator Rudman elected to defer $3,465 and $88,847,
respectively, of their 2009 cash retainer under the interest
crediting investment option provided under the Non-Employee
Director Deferred Compensation Plan. Ms. Connors was
elected to our Board on December 15, 2009.
|
|
(3)
|
|
Under our director compensation
program, each non-employee director was granted a restricted
stock award on the date of election or re-election to the Board.
Mr. Sununu was granted a restricted stock award for the
number of shares equal to the grant date fair value of $125,000,
or 15,060 shares, on April 23, 2009, the first day of
the open trading window after he joined our Board. Each director
elected at our Annual Meeting of Stockholders on May 5,
2009 was granted a restricted stock award in an amount equal to
the grant date fair value of $125,000, or 14,501 shares.
Each of Ms. Bartlett and Mr. Byrnes was granted a
restricted stock award in an amount equal to the grant date fair
value of $125,000, or 11,343 shares, on August 1,
2009, the date they joined our Board. Ms. Connors was
granted a restricted stock award in an amount equal to the grant
date fair value of $125,000, or 14,108 shares, on
December 15, 2009, the date she joined our Board. The
restricted stock awards vest upon the expiration of each
directors current term of office.
|
|
|
|
The aggregate total number of
outstanding unvested restricted stock awards at
December 31, 2009, all of which will vest on the day of our
Annual Meeting in May 2010, is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Grant Date
|
|
|
Name
|
|
Grant Date
|
|
of Shares
|
|
Fair Value
|
|
Vesting Date
|
|
John E. Abele
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Katharine T. Bartlett
|
|
|
August 1, 2009
|
|
|
|
11,343
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Bruce L. Byrnes
|
|
|
August 1, 2009
|
|
|
|
11,343
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Nelda J. Connors
|
|
|
December 15, 2009
|
|
|
|
14,108
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Marye Anne Fox
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Ray J. Groves
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Ernest Mario
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
N.J. Nicholas, Jr.
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Pete M. Nicholas
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
John E. Pepper
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Uwe Reinhardt
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
Warren B. Rudman
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
John E. Sununu
|
|
|
May 5, 2009
|
|
|
|
14,501
|
|
|
$
|
125,000
|
|
|
|
May 11, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
181,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following directors deferred receipt of these shares
pursuant to and in accordance with the terms of our Non-Employee
Director Deferred Compensation Plan: |
|
|
|
|
|
|
|
Number
|
Name
|
|
of Shares
|
|
Katharine T. Bartlett
|
|
|
11,343
|
|
Nelda J. Connors
|
|
|
14,108
|
|
Ray J. Groves
|
|
|
14,501
|
|
Ernest Mario
|
|
|
14,501
|
|
John E. Pepper
|
|
|
14,501
|
|
Warren B. Rudman
|
|
|
14,501
|
|
77
|
|
|
(4)
|
|
No stock options were granted to
non-employee directors in 2009. The aggregate number of
outstanding, unexercised stock option awards at
December 31, 2009, (all of which are vested) is shown below:
|
|
|
|
|
|
|
|
Outstanding Vested
|
Name
|
|
Stock Options
|
|
John E. Abele
|
|
|
2,000
|
|
Marye Anne Fox
|
|
|
16,000
|
|
Ray J. Groves
|
|
|
24,000
|
|
Ernest Mario
|
|
|
5,333
|
|
N.J. Nicholas, Jr.
|
|
|
9,334
|
|
Pete M. Nicholas
|
|
|
73,000
|
|
John E. Pepper
|
|
|
8,000
|
|
Uwe Reinhardt
|
|
|
12,000
|
|
Warren B. Rudman
|
|
|
24,000
|
|
|
|
|
|
|
Total
|
|
|
173,667
|
|
|
|
|
(5)
|
|
The amounts in this column
represent the above-market portion of 2009 earnings
under the interest crediting investment option available under
the Non-Employee Director Deferred Compensation Plan. The
interest rate used under the plan each year is the
Moodys Composite Yield on Seasoned Corporate
Bonds for the month of September of the preceding year.
For 2009, the interest rate used under the plan was 6.50%, the
Moodys rate on September 2008. Interest on non-qualified
deferred compensation is considered above-market if
the interest rate exceeds 120% of the federal long-term rate,
with compounding at the rate that corresponds most closely to
the rate under the plan, at the time the interest rate or
formula is set. For 2009, the applicable federal long-term
interest rate was 4.58%.
|
|
(6)
|
|
The amounts reflected in this
column include all other compensation earned by the following
directors in fiscal year 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
|
Founders
|
|
Medical
|
|
Long Term
|
|
Charitable
|
|
Life
|
|
Other
|
|
|
Name
|
|
Benefits(a)
|
|
Benefits(a)
|
|
Care(a)
|
|
Donations(a)
|
|
Insurance(c)
|
|
Perquisites(d)
|
|
Total
|
|
Pete M. Nicholas
|
|
$
|
225,000
|
|
|
$
|
12,779
|
|
|
$
|
16,517
|
|
|
$
|
1,000,000
|
(b)
|
|
$
|
6,316
|
|
|
$
|
35,529
|
|
|
$
|
1,296,141
|
|
John E. Abele
|
|
$
|
150,000
|
|
|
$
|
12,779
|
|
|
$
|
11,150
|
|
|
$
|
1,000,000
|
(b)
|
|
$
|
3,008
|
|
|
$
|
0
|
|
|
$
|
1,176,937
|
|
|
|
|
(a)
|
|
The amounts included in these
columns reflect payments due to each of our founders following
their retirement as employees in May 2005.
|
|
(b)
|
|
In connection with their
retirement, we agreed to make a one-time charitable donation in
the name of each of Messrs. Nicholas and Abele of up to
$1,000,000 to qualified charitable organizations to be
designated by each of them. In 2009, we made a $1,000,000
charitable donation on behalf of each of Mr. Pete Nicholas
and Mr. Abele to charitable organizations designated by
each of them.
|
|
(c)
|
|
The amounts in this column
represent the amount paid to Messrs. Nicholas and Abele in
2009 to cover tax-related obligations with respect to Executive
Life Insurance in lieu of the Company-paid life insurance. As
the premiums have already been paid in full, these amounts
solely reflect the tax
gross-up
amounts to cover tax obligations.
|
|
(d)
|
|
Amounts in this column represent
transportation services for Mr. Nicholas.
|
|
|
|
(7)
|
|
Ms. Bartlett joined our Board
on August 1, 2009.
|
|
(8)
|
|
Ms. Burns resigned from our
Board on May 22, 2009.
|
|
(9)
|
|
Mr. Byrnes joined our Board on
August 1, 2009.
|
|
(10)
|
|
Ms. Connors joined our Board
on December 15, 2009.
|
|
(11)
|
|
Ms. DeParle resigned from our
Board on March 4, 2009.
|
|
(12)
|
|
Mr. Elliotts term of
service as a non-employee director ended on May 5, 2009.
Mr. Elliott was appointed a director of the Company on
July 13, 2009 when he was appointed our President and Chief
Executive Officer.
|
|
(13)
|
|
Mr. Fleishman retired from our
Board on May 5, 2009.
|
|
(14)
|
|
Dr. Johnson resigned from our
Board on May 20, 2009.
|
|
(15)
|
|
Mr. Sununu joined our Board on
April 1, 2009.
|
78
In May 2005, Pete Nicholas, our co-founder and Chairman of the
Board, and John Abele, our co-founder, retired as employees of
Boston Scientific. In connection with their retirement:
|
|
|
|
|
Mr. Nicholas receives an annual payment of $225,000 for
life, and medical coverage under our benefit policies for as
long as he remains a director or director emeritus.
We will continue to fund his existing long-term care insurance
and executive life insurance. Mr. Nicholas will continue to
have the use of an office at our Natick headquarters or other
Boston Scientific facilities and secretarial and administrative
support, on an as-needed basis.
|
|
|
|
Mr. Abele receives an annual payment of $150,000 for life,
and medical coverage under our benefit policies for as long as
he remains a director or director emeritus. We will
continue to fund his existing long-term care insurance and
executive life insurance. Mr. Abele will continue to have
the use of an office at our Natick headquarters or other Boston
Scientific facilities and secretarial and administrative
support, on an as-needed basis.
|
Mr. Nicolas continues to serve on our Board of Directors
and will receive the Chairman of the Board compensation as
described above. Mr. Abele continues to serve on our Board
of Directors and will receive the non-employee director
compensation as described above.
79
EXECUTIVE
OFFICERS
Our
Executive Officers as of March 1, 2010
As of March 1, 2010, our executive officers were:
|
|
|
Name
|
|
Title
|
|
J. Raymond Elliott
|
|
Director, President and Chief Executive Officer
|
Brian R. Burns
|
|
Senior Vice President, Global Quality
|
Jeffrey D. Capello
|
|
Executive Vice President and Chief Financial Officer
|
Fredericus A. Colen
|
|
Executive Vice President and Chief Technology Officer
|
Joseph M. Fitzgerald
|
|
Senior Vice President and Division President, Endovascular
|
James L. Gilbert
|
|
Executive Vice President, Strategy and Business Development
|
William H. Kucheman
|
|
Executive Vice President and Group President, Cardiology, Rhythm
& Vascular
|
Jean Fitterer Lance
|
|
Senior Vice President and Chief Compliance Officer
|
Sam R. Leno
|
|
Executive Vice President and Chief Operations Officer
|
Andrew N. Milani II
|
|
Senior Vice President, Human Resources
|
Stephen F. Moreci
|
|
Senior Vice President, Global Sales Operations
|
J. Michael Onuscheck
|
|
Senior Vice President and President, Neuromodulation
|
John B. Pedersen
|
|
Senior Vice President and Division President, Urology and
Womens Health
|
Michael P. Phalen
|
|
Senior Vice President and Division President, Endoscopy
|
Timothy A. Pratt
|
|
Executive Vice President, General Counsel and Chief
Administrative Officer
|
Kenneth J. Pucel
|
|
Executive Vice President, Global Operations
|
Additional
Information About Our Executive Officers
In accordance with SEC rules, biographical information
concerning our executive officers and their ages can be found in
Item 10 under the caption Directors, Executive
Officers and Corporate Governance in our Annual Report on
Form 10-K
for the year ended December 31, 2009 which is incorporated
by reference into this Proxy Statement.
80
STOCK
OWNERSHIP
Stock
Ownership of Our Largest Stockholders
Set forth below are stockholders known by us to beneficially own
more than 5% of our common stock as of February 28, 2010.
As of February 28, 2010, there were
1,516,072,601 shares of our common stock outstanding.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Percent of Shares
|
|
Name and Address
|
|
Beneficially Owned
|
|
|
Outstanding
|
|
|
Paulson & Co. Inc.
|
|
|
9,135,000(1
|
)
|
|
|
6.6
|
%
|
1251 Avenue of the Americas
New York, NY 10020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRIMECAP Management Company
|
|
|
94,993,424(2
|
)
|
|
|
6.29
|
%
|
225 South Lake Avenue, #400
Pasadena, CA 91101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge & Cox
|
|
|
83,180,497(2
|
)
|
|
|
5.5
|
%
|
555 California Street
40th Floor
San Francisco, CA 94104
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As reported to the SEC for the
period ended December 31, 2009 on Schedule 13F.
|
|
(2)
|
|
As reported to the SEC for the
period ended December 31, 2009 on Schedule 13G.
|
Stock
Ownership of Our Directors and Executive Officers
The following table shows, as of February 28, 2010, the
amount of our common stock beneficially owned by:
(1) our directors and director nominees;
(2) our executive officers named in the Summary
Compensation Table; and
(3) all of our directors and executive officers as a group.
Beneficial ownership includes those shares the
reporting person has the power to vote or transfer, stock
options that are currently exercisable or exercisable within
60 days, and deferred stock units that will vest within
60 days. Unless otherwise indicated, the persons named
below have sole voting and investment power over the shares
listed.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Percent of Shares
|
|
Name
|
|
Beneficially Owned
|
|
|
Outstanding
|
|
|
John E.
Abele(1)
|
|
|
24,604,268
|
|
|
|
1.62
|
%
|
Katharine T.
Bartlett(2)
|
|
|
11,343
|
|
|
|
*
|
|
Bruce L.
Byrnes(3)
|
|
|
11,343
|
|
|
|
*
|
|
Nelda J.
Connors(4)
|
|
|
14,108
|
|
|
|
*
|
|
Marye Anne
Fox(5)
|
|
|
70,939
|
|
|
|
*
|
|
Ray J.
Groves(6)
|
|
|
112,792
|
|
|
|
*
|
|
Ernest
Mario(7)
|
|
|
138,858
|
|
|
|
*
|
|
N.J. Nicholas,
Jr.(8)
|
|
|
2,700,316
|
|
|
|
*
|
|
Pete M.
Nicholas(9)
|
|
|
19,774,149
|
|
|
|
1.31
|
%
|
John E.
Pepper(10)
|
|
|
103,025
|
|
|
|
*
|
|
Uwe E.
Reinhardt(11)
|
|
|
75,625
|
|
|
|
*
|
|
Warren B.
Rudman(12)
|
|
|
82,625
|
|
|
|
*
|
|
John E.
Sununu(13)
|
|
|
29,561
|
|
|
|
*
|
|
J. Raymond Elliott
|
|
|
118,264
|
|
|
|
*
|
|
Sam R.
Leno(14)
|
|
|
1,268,130
|
|
|
|
*
|
|
Fredericus A.
Colen(15)
|
|
|
803,405
|
|
|
|
*
|
|
Stephen F.
Moreci(16)
|
|
|
426,591
|
|
|
|
*
|
|
81
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Percent of Shares
|
|
Name
|
|
Beneficially Owned
|
|
|
Outstanding
|
|
|
Timothy A.
Pratt(17)
|
|
|
88,508
|
|
|
|
*
|
|
James R.
Tobin(18)
|
|
|
3,845,315
|
|
|
|
*
|
|
Lucia L.
Quinn(19)
|
|
|
752,338
|
|
|
|
*
|
|
All directors and executive officers as a group
(31 persons)(20)
|
|
|
58,128,247
|
|
|
|
4.38
|
%
|
|
|
|
*
|
|
Reflects beneficial ownership of
less than one percent (1%) of our outstanding common stock.
|
|
(1)
|
|
Mr. Abeles beneficial
ownership includes 3,540,500 shares of common stock held by
a charitable trust of which Mr. Abele shares voting and
investment control, 14,501 shares of restricted stock
granted pursuant to our 2003 Long-Term Incentive Plan, as to
which Mr. Abele has sole voting but not investment control,
351,098 shares of common stock held by a trust of which
Mr. Abele shares voting and investment control,
2,000 shares of common stock subject to exercisable stock
options granted pursuant to our 2003 Long-Term Incentive Plan,
6,666,949 shares held by a limited liability company of
which Mr. Abele holds a 100% membership interest, and
400,000 shares held by Mary S. Abele, Mr. Abeles
spouse, with respect to which Mr. Abele disclaims
beneficial ownership. Mr. Abele maintains credit line
accounts and margin securities accounts at brokerage firms, and
the positions held in such accounts, which may from time to time
include shares of our common stock, are pledged as collateral
security for the repayment of debit balances in the accounts, if
any. As of February 28, 2010, Mr. Abele held directly
or indirectly an aggregate of 20,373,039 shares of our
common stock in these accounts.
|
|
(2)
|
|
Ms. Bartletts beneficial
ownership includes 11,343 shares of restricted stock
granted pursuant to our 2003 Long-Term Incentive Plan and
deferred pursuant to our Non-Employee Director Deferred
Compensation Plan.
|
|
(3)
|
|
Mr. Byrnes beneficial
ownership includes 11,343 shares of restricted stock
granted pursuant to our 2003 Long-Term Incentive Plan, as to
which Mr. Byrnes has sole voting but not investment control.
|
|
(4)
|
|
Ms. Connors beneficial
ownership includes 14,108 shares of restricted stock
granted pursuant to our 2003 Long-Term Incentive Plan and
deferred pursuant to our Non-Employee Director Deferred
Compensation Plan.
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(5)
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Dr. Foxs beneficial
ownership includes 704 shares owned by Dr. Foxs
spouse as to which she disclaims beneficial ownership,
14,501 shares of restricted stock granted pursuant to our
2003 Long-Term Incentive Plan, as to which Dr. Fox has sole
voting but not investment control, 33,124 shares of
restricted stock granted pursuant to our 2000 and 2003 Long-Term
Incentive Plans and deferred pursuant to our Non-Employee
Director Deferred Compensation Plan, and 16,000 shares of
common stock subject to exercisable stock options granted
pursuant to our 1992 Non-Employee Directors Stock Option
Plan and our 2000 and 2003 Long-Term Incentive Plans. It
excludes 13,386 common stock equivalents which Dr. Fox has
deferred under our Non-Employee Director Deferred Compensation
Plan, which will be payable in cash following her retirement
from the Board.
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(6)
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Mr. Groves beneficial
ownership includes 51,625 shares of restricted stock
granted pursuant to our 2000 and 2003 Long-Term Incentive Plans
and deferred pursuant to our Non-Employee Director Deferred
Compensation Plan and 24,000 shares of common stock subject
to exercisable stock options granted pursuant to our 1992
Non-Employee Directors Stock Option Plan and our 2000 and
2003 Long-Term Incentive Plans. It excludes 45,259 common stock
equivalents which Mr. Groves has deferred under our
Non-Employee Director Deferred Compensation Plan, which will be
payable in cash following his retirement from the Board.
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(7)
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Dr. Marios beneficial
ownership includes 20,000 shares of common stock held by a
self-directed IRA, 42,521 shares of restricted stock
granted pursuant to our 2000 and 2003 Long-Term Incentive Plans
and deferred pursuant to our Non-Employee Director Deferred
Compensation Plan, and 5,333 shares of common stock subject
to exercisable stock options granted pursuant to our 2000 and
2003 Long-Term Incentive Plans. It excludes 17,593 common stock
equivalents which Dr. Mario has deferred under our
Non-Employee Director Deferred Compensation Plan, which will be
payable in cash following his retirement from the Board.
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(8)
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N.J. Nicholas, Jr.s
beneficial ownership includes 14,501 shares of restricted
stock granted pursuant to our 2003 Long-Term Incentive Plan, as
to which N.J. Nicholas, Jr. has sole voting but not investment
control, 51,269 shares of common stock held by N. J.
Nicholas, Jr., as sole trustee of a revocable trust, and
2,413,088 shares of stock held by Ruth V. Lilly Nicholas
and N. J. Nicholas, Jr., as trustees of an irrevocable trust for
the benefit of Pete M. Nicholas children and spouse as to
which N. J. Nicholas, Jr. disclaims beneficial ownership and
which shares are held in a margin account, 140,000 shares
held in an IRA, 35,000 shares held in a charitable trust of
which N.J. Nicholas, Jr. is a trustee and to which he disclaims
beneficial ownership and 37,124 shares of restricted stock
granted pursuant to our 2000 and 2003 Long-Term Incentive Plans
and deferred pursuant to our Non-Employee Director Deferred
Compensation Plan, and 9,334 shares of common stock subject
to exercisable stock options granted pursuant to our 2000 and
2003
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Long-Term Incentive Plans. It
excludes an aggregate of 152,000 shares held by Pete M.
Nicholas, Llewellyn Nicholas and Anastasios Parafestas, as
Trustees of five irrevocable trusts for the benefit of N. J.
Nicholas, Jr.s children as to which N. J. Nicholas, Jr.
disclaims beneficial ownership and 36,003 common stock
equivalents which N. J. Nicholas, Jr. has deferred pursuant to
our Non-Employee Director Deferred Compensation Plan, which will
be payable in cash following his retirement from the Board.
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(9)
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Pete M. Nicholas beneficial
ownership includes 9,193,128 shares owned jointly with his
spouse, 10,356,021 shares of common stock held by
Promerica, L.P., a family limited partnership of which Pete M.
Nicholas is general partner and as to which he is deemed to have
beneficial ownership, 14,501 shares of restricted stock,
granted pursuant to our 2003 Long-Term Incentive Plan, as to
which Pete M. Nicholas has sole voting but not investment
control, and 73,000 shares of common stock subject to
exercisable stock options granted pursuant to our 1995 and 2003
Long-Term Incentive Plans. It also includes an aggregate of
152,000 shares held by Pete M. Nicholas, Llewellyn Nicholas
and Anastasios Parafestas, as trustees of five irrevocable
trusts for the benefit of N.J. Nicholas, Jr.s children as
to which Pete M. Nicholas disclaims beneficial ownership. It
excludes 2,413,088 shares of stock held by Ruth V. Lilly
Nicholas and N. J. Nicholas, Jr., as Trustees of an irrevocable
trust for the benefit of Pete M. Nicholas children and
spouse, as to which Pete M. Nicholas disclaims beneficial
ownership and which shares are held in a margin account. Pete M.
Nicholas and Promerica, L.P. maintain margin securities accounts
at brokerage firms, and the positions held in these margin
accounts, which may from time to time include shares of our
common stock, are pledged as collateral security for the
repayment of debit balances in the accounts, if any. As of
February 28, 2010, Pete M. Nicholas and Promerica, L.P.
held 9,178,616 shares and 10,356,021 shares,
respectively, of our common stock in these accounts.
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(10)
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Mr. Peppers beneficial
ownership includes 593 shares of common stock owned by
grantor retained annuity trust as to which he disclaims
beneficial ownership and 35,625 shares of restricted stock
granted pursuant to our 2003 Long-Term Incentive Plan and
deferred pursuant to our Non-Employee Director Deferred
Compensation Plan and 8,000 shares of common stock subject
to exercisable stock options granted pursuant to our 2000 and
2003 Long-Term Incentive Plans. It excludes 21,552 common stock
equivalents which Mr. Pepper has deferred under our
Non-Employee Director Deferred Compensation Plan, which will be
payable in cash following his retirement from the Board.
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(11)
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Dr. Reinhardts
beneficial ownership includes 14,501 shares of restricted
stock granted pursuant to our 2003 Long-Term Incentive Plan, as
to which Dr. Reinhardt has sole voting but not investment
power, 12,000 shares of common stock subject to exercisable
stock options granted pursuant to our 1995, 2000 and 2003
Long-Term Incentive Plans, and 5,000 shares of stock held
by Dr. Reinhardts spouse, as to which he disclaims
beneficial ownership.
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(12)
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Senator Rudmans beneficial
ownership includes 1,000 shares of common stock owned by
Senator Rudmans spouse as to which he disclaims beneficial
ownership, 24,000 shares of common stock subject to
exercisable stock options granted pursuant to our 1995, 2000 and
2003 Long-Term Incentive Plans and 51,625 shares of
restricted stock granted pursuant to our 2000 and 2003 Long-Term
Incentive Plans and deferred pursuant to our Non-Employee
Director Deferred Compensation Plan. It excludes 36,599 common
stock equivalents which Senator Rudman has deferred under our
Non-Employee Director Deferred Compensation Plan, which will be
payable in cash following his retirement from the Board.
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(13)
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Senator Sununus beneficial
ownership includes 14,501 shares of restricted stock
granted pursuant to our 2003 Long-Term Incentive Plan, as to
which Senator Sununu has sole voting but not investment power.
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(14)
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Mr. Lenos beneficial
ownership includes 1,034,642 shares of common stock subject
to exercisable stock options granted pursuant to our 2003
Long-Term Incentive Plan.
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(15)
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Mr. Colens beneficial
ownership includes 737,658 shares of common stock subject
to exercisable stock options granted pursuant to our 2000 and
2003 Long-Term Incentive Plans and 905 shares of common
stock held in Mr. Colens 401(k) account.
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(16)
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Mr. Morecis beneficial
ownership includes 398,182 shares of common stock subject
to exercisable stock options granted pursuant to our 1995, 2000
and 2003 Long-Term Incentive Plans and 7,232 shares of
common stock held in Mr. Morecis 401(k) account.
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(17)
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Mr. Pratts beneficial
ownership includes 76,574 shares of common stock subject to
exercisable stock options granted pursuant to our 2003 Long-Term
Incentive Plan.
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(18)
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Mr. Tobins beneficial
ownership includes 20,315 shares of common stock held in
Mr. Tobins 401(k) account and 3,025,000 shares
of common stock subject to exercisable stock options granted
pursuant to our 2000 and 2003 Long-Term Incentive Plans.
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(19)
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Ms. Quinns beneficial
ownership includes 653,689 shares of common stock subject
to exercisable stock options granted pursuant to our 2003
Long-Term Incentive Plan.
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(20)
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Please refer to footnotes 1 through
19 above. This total includes an aggregate of
8,683,133 shares of common stock subject to exercisable
options granted pursuant to our 1992 Non-Employee
Directors Stock Option Plan and our 1995, 2000 and 2003
Long-Term Incentive Plans and 170,335 shares held in 401(k)
accounts of certain of our executive officers.
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83
AUDIT
COMMITTEE REPORT
The Audit Committee oversees our Companys financial
reporting process on behalf of the Board of Directors and has
other responsibilities as set forth in the Audit Committee
charter, which can be found at www.bostonscientific.com
under the tab Investor Relations and then
Corporate Governance. Management has the primary
responsibility for our Companys financial statements and
reporting process, including the systems of internal controls.
Ernst & Young LLP, our independent registered public
accounting firm for fiscal year 2009, is responsible for
expressing an opinion on the conformity of our Companys
audited financial statements with generally accepted accounting
principles and on our Companys internal control over
financial reporting.
In fulfilling its oversight responsibilities, the Audit
Committee reviewed with management and Ernst & Young
the audited financial statements included in the Boston
Scientific Annual Report on
Form 10-K
for the year ended December 31, 2009, including a
discussion about the quality, not just the acceptability, of our
Companys accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the
financial statements, and Ernst & Youngs
evaluation of the Companys internal control over financial
reporting.
The Audit Committee also discussed with Ernst & Young
the matters that are required to be discussed by Statement on
Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1, AU Section 380), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T.
Ernst & Young has also provided the Audit Committee
the written disclosures and the letter required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent registered public accounting
firms communications with the Audit Committee concerning
independence, and the Audit Committee has discussed with
Ernst & Young that firms independence. The Audit
Committee has concluded that Ernst & Youngs
provision of audit and non-audit services to the Company and its
affiliates is compatible with Ernst & Youngs
independence.
The Audit Committee further discussed with the Companys
internal auditors and Ernst & Young the overall scope
and plans for their respective audits. The Audit Committee meets
at least quarterly with the internal auditors and
Ernst & Young, with and without management present, to
discuss the results of their examinations, their evaluations of
the Companys internal controls, and the overall quality of
the Companys financial reporting.
Based on the reviews and discussions referred to above, 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, 2009 which has been filed
with the Securities and Exchange Commission. The Audit Committee
has also approved the selection of Ernst & Young as
the Companys independent registered public accounting firm
for fiscal year 2010.
This Audit Committee Report does not constitute soliciting
material and should not be deemed filed or incorporated by
reference into any other Boston Scientific filing with the SEC,
except to the extent that Boston Scientific specifically
incorporates this Report by reference into another Company
filing.
THE AUDIT
COMMITTEE
Uwe E. Reinhardt, Chairman
Bruce L. Byrnes
Ernest Mario
84
Proposal 2:
Ratification of Appointment of Independent Registered Public
Accounting Firm.
The Audit Committee of the Board has appointed Ernst &
Young LLP as our independent registered public accounting firm
for the fiscal year ending December 31, 2010. The Audit
Committee is directly responsible for the appointment,
retention, compensation and oversight of the work of our
independent registered public accounting firm (including
resolution of disagreements between management and the
independent registered public accounting firm regarding
financial reporting) for the purpose of preparing or issuing an
audit report or related work. In making its determination
regarding whether to appoint or retain a particular independent
registered public accounting firm, the Audit Committee takes
into account the views of management and our internal auditors,
and will take into account the vote of our stockholders with
respect to the ratification of the selection of our independent
registered public accounting firm.
During 2009, Ernst & Young LLP served as our
independent registered public accounting firm and also provided
certain tax and other audit-related services. Representatives of
Ernst & Young LLP are expected to attend the Annual
Meeting and respond to appropriate questions and, if they
desire, make a statement.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2010
FISCAL YEAR.
Principal
Accountant Fees
The following table presents the aggregate fees billed for
professional services rendered by Ernst & Young LLP
for the fiscal years ended December 31, 2008 and
December 31, 2009.
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Type of Fees
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2008
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2009
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Audit
Fees(1)
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$
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8,072,000
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$
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7,222,000
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Audit-Related
Fees(2)
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$
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415,000
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$
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365,000
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Tax
Fees(3)
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$
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891,000
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$
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417,000
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All Other
Fees(4)
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$
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6,000
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6,000
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Total
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$
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9,384,000
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$
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8,010,000
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(1)
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Audit fees are fees on an accrual
basis for professional services rendered in connection with the
audit of our annual financial statements (including an
assessment of our internal control over financial reporting),
reviews of the condensed financial statements included in
Form 10-Qs,
accounting consultation, statutory filings and registration
statements. Certain audit fees were incurred in connection with
our business divestitures, restructuring initiatives and other
accounting matters.
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(2)
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Audit-related fees are fees for
services related to employee benefit plan audits, accounting
consultation and compliance with regulatory requirements.
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(3)
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Tax fees are fees for tax services
related to tax compliance, tax planning and tax advice.
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(4)
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All other fees are fees for an
online accounting research tool.
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Audit
Committees Pre-Approval Policy
It is the Audit Committees policy to approve in advance
the types and amounts of audit, audit-related, tax and any other
services to be provided by our independent registered public
accounting firm. In situations where it is not possible to
obtain full Audit Committee approval, the Audit Committee has
delegated authority to the Chairman of the Audit Committee to
grant pre-approval of auditing, audit-related, tax and all other
services. Any pre-approved decisions by the Chairman are
required to be reviewed with the Audit Committee at its next
scheduled meeting. The Audit Committee has approved all of
Ernst & Young LLPs services for 2008 and 2009
and, in doing so has considered whether the provision of such
services is compatible with maintaining independence.
85
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and persons
beneficially holding more than 10% of our common stock to file
reports of their ownership of our common stock and any changes
in that ownership with the SEC. Specific due dates for these
reports have been established and we are required to report any
failure to file by these dates during fiscal year 2009. To the
best of our knowledge, all of these filing requirements were
timely satisfied by our directors, executive officers and 10%
stockholders. In making these statements, we have relied upon
the written representations of our directors and executive
officers and copies of their reports that have been filed with
the SEC.
STOCKHOLDER
PROPOSALS
In accordance with
Rule 14a-8
under the Securities Exchange Act of 1934, as amended, and the
advance notice provision of our Bylaws, stockholder proposals
for the 2011 Annual Meeting of Stockholders must be received by
our Secretary at our principal executive office on or before
November 26, 2010. Please address your proposals to our
Secretary at Boston Scientific Corporation, One Boston
Scientific Place, Natick, Massachusetts
01760-1537.
In order to be considered for inclusion in next years
Proxy Statement, proposals must also satisfy the other
procedures set forth in
Rule 14a-8
under the Securities Exchange Act of 1934. Proposals that are
submitted outside of
Rule 14a-8
must also satisfy the other procedures set forth in the advance
notice provision of our Bylaws.
ANNUAL
REPORT TO STOCKHOLDERS AND
FORM 10-K
Our 2009 Annual Report to Stockholders, including financial
statements for the fiscal year ended December 31, 2009,
accompanies this Proxy Statement. The 2009 Annual Report to
Stockholders is also available on our website at
www.bostonscientific.com. Copies of our 2009 Annual
Report on
Form 10-K,
which is on file with the SEC, are available to any stockholder
who submits a request in writing to Investor Relations, Boston
Scientific Corporation, One Boston Scientific Place, Natick, MA
01760-1537.
Copies of any exhibits to the
Form 10-K
are also available upon written request and payment of a fee
covering our reasonable expenses in furnishing the exhibits.
HOUSEHOLDING
Applicable rules permit us and brokerage firms to send one
Notice or Annual Report and Proxy Statement to multiple
stockholders who share the same address under certain
circumstances. This practice is known as householding. If you
hold your shares through a broker, you may have consented to
reducing the number of copies of materials delivered to your
address. In the event that you wish to revoke a householding
consent you previously provided to a broker, you must contact
that broker to revoke your consent. If you are eligible for
householding and you currently receive multiple copies of either
our Notice or our Annual Report and Proxy Statement but you wish
to receive only one copy of each of these documents for your
household, please contact Broadridge Financial Solutions, Inc.
by mail at Householding Department, Broadridge Financial
Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717 or by
telephone at
1-800-542-1061.
If you wish to receive a separate Proxy Statement for the Annual
Meeting or a 2009 Annual Report, you may find these materials on
our website, www.bostonscientific.com, or you may request
printed copies free of charge by contacting Investor Relations,
Boston Scientific Corporation, One Boston Scientific Place,
Natick, MA
01760-1537
or by calling
(508) 650-8555.
OTHER
MATTERS
We do not know of any other matters that may be presented for
consideration at the Annual Meeting. If any other business does
properly come before the Annual Meeting, the persons named as
proxies on the enclosed proxy card, or proxy voting instruction
form, will vote as they deem in the best interests of Boston
Scientific.
86
BOSTON SCIENTIFIC CORPORATION
ONE BOSTON SCIENTIFIC PLACE
NATICK, MA 01760
VOTE
BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions
and for electronic delivery of information up until
11:59 P.M. Eastern Time on May 10, 2010, the day before
the meeting. Have your proxy card in hand when you
access the web site and follow the instructions to
obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our
company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the
Internet. To sign up for electronic delivery, please
follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive
or access proxy materials electronically in future
years.
VOTE
BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on May 10,
2010, the day before the meeting. Have your proxy card
in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to
Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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BOSTON SCIENTIFIC CORPORATION |
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Director Recommendations (THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1,
2 AND 3.) |
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Vote on Directors |
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Withhold |
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1. |
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To elect 12 Director Nominees: |
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1a. |
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John E. Abele
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1b. |
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Katharine T. Bartlett
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Withhold |
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1c. |
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Bruce L. Byrnes
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1j. |
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Pete M. Nicholas
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1d. |
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Nelda J. Connors
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1k. |
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Uwe E. Reinhardt
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1e. |
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J. Raymond Elliott
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1l. |
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John E. Sununu
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1f. |
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Marye Anne Fox
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Abstain |
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1g. |
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Ray J. Groves
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2. |
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To ratify the appointment of Ernst & Young LLP as Boston
Scientific Corporations independent registered public
accounting firm for the 2010 fiscal year.
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1h. |
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Ernest Mario
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1i. |
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N.J. Nicholas, Jr.
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3. |
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To transact such other business as may properly come
before the meeting or any adjournment or postponement
thereof.
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Yes
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No |
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MARK HERE IF YOU PLAN TO ATTEND THE MEETING |
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Sign exactly as your name appears on the Proxy. If the shares are registered in
the names of
two or more persons, each person should sign. Executors, administrators, trustees,
partners,
custodians, guardians, attorneys and corporate officers, please add your full title(s). |
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Signature [PLEASE SIGN WITHIN BOX]
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Signature (Joint Owners)
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Annual Report and Form 10-K are available at www.proxyvote.com.
PROXY
BOSTON SCIENTIFIC CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints TIMOTHY A. PRATT, LAWRENCE J. KNOPF and ANNE M. THOMPSON, and
each of them acting solely, as proxies, with full power of substitution and with all powers the
undersigned would possess if personally present, to represent and vote, as designated hereon, all
of the shares of common stock of Boston Scientific Corporation (the Company), par value $.01 per
share, and if applicable, hereby directs the trustees and fiduciaries of the employee benefit plans
in which the undersigned participates to vote all of the shares of common stock allocated to the
account of the undersigned, which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Bank of America Auditorium, 100 Federal Street,
Boston, Massachusetts on Tuesday, May 11, 2010 at 10:00 A.M. (Eastern Time), and any adjournment or
postponement of the meeting.
THE UNDERSIGNED HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN AND ACKNOWLEDGES RECEIPT OF THE
NOTICE AND PROXY STATEMENT FOR THE ANNUAL MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
(Please sign and date on reverse side and return promptly in the enclosed envelope)