UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
oPreliminary Proxy Statement
oConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
xDefinitive Proxy Statement
oDefinitive Additional Materials
oSoliciting Material Pursuant to §240.14a-12
King Pharmaceuticals, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
xNo fee required.
oFee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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King Pharmaceuticals,® Inc. 501 Fifth Street Bristol, TN 37620 |
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elect three Class III directors to serve until the 2010 annual meeting of shareholders; |
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approve a Third Amended and Restated Charter providing for the annual election of directors and incorporating amendments to the Second Amended and Restated Charter previously approved by shareholders; |
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ratify the appointment of PricewaterhouseCoopers LLP as the companys independent registered public accounting firm for the fiscal year ending December 31, 2007; and |
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consider and act upon any other matters which properly come before the annual meeting or any adjournment of the meeting. |
Page |
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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i | |||||
INFORMATION ABOUT THE ANNUAL MEETING |
1 | |||||
CORPORATE GOVERNANCE |
4 | |||||
INFORMATION ABOUT THE BOARD OF DIRECTORS
|
4 | |||||
Members of
the Board |
4 | |||||
Role of the
Board |
6 | |||||
Board
Structure |
6 | |||||
Independent
Directors |
6 | |||||
2006 Board
Meetings |
6 | |||||
Board
Committees |
6 | |||||
Non-Management Directors |
8 | |||||
CODE OF CONDUCT AND ETHICS |
8 | |||||
COMMUNICATION WITH THE BOARD OF DIRECTORS
|
9 | |||||
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
|
9 | |||||
Review of
Related Party Transactions |
9 | |||||
Transactions
with Related Parties |
9 | |||||
REPORT OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS |
10 | |||||
KING STOCK OWNERSHIP |
12 | |||||
COMPENSATION DISCUSSION AND ANALYSIS |
14 | |||||
Overview of
Our Compensation Program |
14 | |||||
Our 2006
Compensation Program |
15 | |||||
Severance and
Change of Control Benefits |
26 | |||||
Share
Ownership Guidelines |
26 | |||||
Timing of
Committee Meetings and Grants; Option Pricing |
26 | |||||
Tax and
Accounting Implications |
26 | |||||
REPORT OF THE COMPENSATION AND HUMAN
RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS
|
27 | |||||
EXECUTIVE AND DIRECTOR COMPENSATION TABLES |
28 | |||||
Summary
Compensation Table |
28 | |||||
2006 Grants
of Plan Based Awards |
30 | |||||
2006
Outstanding Equity Awards at Fiscal Year End |
31 | |||||
2006 Option
Exercises and Stock Vested |
32 | |||||
Pension
Benefits |
32 | |||||
2006
Nonqualified Deferred Compensation |
32 | |||||
Post-Termination Payments |
32 | |||||
2006 Director
Compensation |
43 | |||||
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION |
44 | |||||
EXECUTIVE OFFICERS |
44 | |||||
SECTION 16(a) Beneficial Ownership Reporting Compliance |
45 | |||||
PROPOSAL 1 ELECTION OF DIRECTORS |
46 | |||||
PROPOSAL 2 APPROVAL OF THE THIRD AMENDED
AND RESTATED CHARTER TO PROVIDE FOR THE
ANNUAL ELECTION OF DIRECTORS |
47 | |||||
PROPOSAL 3 RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM |
49 | |||||
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF
AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
49 | |||||
OTHER MATTERS |
50 | |||||
APPENDIX A PROPOSED THIRD AMENDED AND
RESTATED CHARTER |
51 |
1. |
Election of Directors. To elect three Class III directors to serve until the 2010 annual meeting of shareholders or until their successors have been duly elected and qualified. |
2. |
Approval of a Third Amended and Restated Charter. To approve a Third Amended and Restated Charter providing for the annual election of directors and incorporating amendments to the Second Amended and Restated Charter previously approved by shareholders. |
3. |
Ratification of Independent Registered Public Accounting Firm. To ratify the appointment of PricewaterhouseCoopers LLP as the companys independent registered public accounting firm for the fiscal year ending December 31, 2007. |
4. |
Other Business. To transact such other business as may properly come before the meeting or any adjournment of the meeting. |
1. |
Election of Directors. To elect three Class III directors to serve until the 2010 annual meeting of shareholders or until their successors have been duly elected and qualified. |
2. |
Approval of a Third Amended and Restated Charter. To approve a Third Amended and Restated Charter providing for the annual election of directors and incorporating amendments to the Second Amended and Restated Charter previously approved by shareholders. |
3. |
Ratification of Independent Registered Public Accounting Firm. To ratify the appointment of PricewaterhouseCoopers LLP as the companys independent registered public accounting firm for the fiscal year ending December 31, 2007. |
4. |
Other Business. To transact such other business as may properly come before the meeting or any adjournment of the meeting. |
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For the election of all of its nominees for director, |
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For the approval of the Third Amended and Restated Charter, and |
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For the ratification of the appointment of PricewaterhouseCoopers LLP as the companys independent registered public accounting firm for the fiscal year ending December 31, 2007. |
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submitting another proxy in writing, by telephone or via the Internet as of a more recent date than that of the proxy first given, |
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attending the annual meeting, where you can revoke your proxy and vote in person, or |
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sending written notice of revocation to our Secretary, James W. Elrod, at 501 Fifth Street, Bristol, Tennessee 37620. |
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the director nominees will be elected by a plurality of the votes cast in person or by proxy at the meeting, |
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approval of the Third Amended and Restated Charter will require the affirmative votes of at least 80% of the outstanding shares of common stock, |
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ratification of the appointment of the independent registered public accounting firm will require that the affirmative votes of the shares of common stock present or represented by proxy at the meeting exceed the opposing votes, and |
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approval of other matters submitted to the shareholders will require that the affirmative votes of the shares of common stock present or represented by proxy at the meeting exceed the opposing votes. |
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Character and integrity. |
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Educational background. |
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Business or professional experience, including experience with financial statements, financial reporting, internal controls, executive compensation, corporate governance, employee benefits, manufacturing and regulatory issues or other relevant areas of experience. |
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Familiarity with the principal operations of publicly-traded United States companies. |
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Current or prior relationships with King Pharmaceuticals, Inc. or any of its subsidiaries. |
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The correlation between the candidates experience and the Committees evaluation of present and future needs of the Board. |
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by sending correspondence to the attention of the General Counsel, King Pharmaceuticals, Inc., 501 Fifth Street, Bristol, Tennessee 37620; |
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by sending email to Board@kingpharm.com; or |
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by calling (888) 440-5464 and leaving a voicemail message. |
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the transaction must be fair to King, |
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the material facts of the transaction and the directors or officers interest must be disclosed or known to the Board of Directors, |
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the Board of Directors must authorize, approve, or ratify the transaction, and |
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if the transaction requires the approval of shareholders, the material facts of the transaction and directors or officers interest must be disclosed or known to the shareholders entitled to vote, and the shareholders authorize, approve, or ratify the transaction. |
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exercising sole authority to retain, compensate, terminate and oversee the work of our independent registered public accounting firm, |
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pre-approving audit, audit-related and permitted non-audit services rendered by our independent registered public accounting firm, |
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reviewing and discussing with management and the independent registered public accounting firm the annual audited financial statements and quarterly unaudited financial statements, and determining whether to recommend to the Board that the audited financial statements be included in our Annual Report on Form 10-K, |
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discussing earnings press releases, as well as financial information and earnings guidance provided to analysts or rating agencies, and reviewing such information, to the extent reasonably practicable, prior to its release or distribution, |
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reviewing and approving the written charter and annual work plans of the Compliance Office and the results of internal audits, |
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receiving reports from the Corporate Compliance Officer of any allegation regarding accounting, internal controls or auditing matters or any other substantial compliance issue, |
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establishing and maintaining hiring policies with respect to employees or former employees of the independent auditors, |
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assessing the independent registered public accounting firms independence from us, and |
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periodically reporting to the Board regarding the Audit Committees activities. |
Beneficial Ownership of Common Stock (1)(2) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Executive Officers, Directors and 5% Shareholders |
Number of Shares |
Percentage Outstanding Shares |
|||||||||
Brian A.
Markison (3) |
472,093 | * | |||||||||
Joseph
Squicciarino (4) |
99,979 | * | |||||||||
Stephen J.
Andrzejewski (5) |
172,991 | * | |||||||||
Frederick
Brouillette, Jr. (6) |
160,532 | * | |||||||||
Eric J. Bruce
(7) |
53,603 | * | |||||||||
Eric G. Carter
(8) |
18,260 | * | |||||||||
James W. Elrod
(9) |
57,123 | * | |||||||||
James E. Green
(10) |
69,409 | * | |||||||||
Earnest W.
Deavenport, Jr. (11) |
61,760 | * | |||||||||
Elizabeth M.
Greetham (12) |
31,831 | * | |||||||||
Philip A.
Incarnati |
| * | |||||||||
Gregory D.
Jordan (13) |
46,927 | * | |||||||||
R. Charles Moyer
(14) |
60,393 | * | |||||||||
D. Greg Rooker
(15) |
137,528 | * | |||||||||
Ted G. Wood (16)
|
80,387 | * | |||||||||
All executive
officers and directors as a group (15 persons) (17) |
1,522,816 | * | |||||||||
Lord, Abbett
& Co. LLC (18) |
19,567,950 | 8.04 | % | ||||||||
Barclays Global
Investors, NA. (19) |
29,607,447 | 12.16 | % |
* |
Less than 1%. | |
(1) |
Unless otherwise indicated, beneficial ownership consists of sole voting and investing power based on 243,511,495 shares issued and outstanding as of April 9, 2007. Options to purchase shares which are exercisable or become exercisable within 60 days of April 9, 2007 and restricted stock units convertible into common stock within 60 days of April 9, 2007 are deemed to be outstanding for the purpose of computing the percentage of outstanding shares owned by each person to whom a portion of such options relate but are not deemed to be outstanding for the purpose of computing the percentage owned by any other person. | |
(2) |
Attached to each share of common stock is a preferred share purchase right to acquire one one-thousandth of a share of the companys Series A Junior Participating Preferred Stock, no par value per share, which preferred share purchase rights are not presently exercisable. | |
(3) |
Includes 267,813 shares issuable upon the exercise of options and 204,280 shares of restricted stock. | |
(4) |
Includes 7,652 shares issuable upon the exercise of options and 92,327 shares of restricted stock. | |
(5) |
Includes 105,471 shares issuable upon the exercise of options and 67,520 shares of restricted stock. | |
(6) |
Includes 131,222 shares issuable upon the exercise of options and 29,310 shares of restricted stock. | |
(7) |
Includes 5,471 shares issuable upon the exercise of options and 48,132 shares of restricted stock. | |
(8) |
Includes 18,260 shares of restricted stock. | |
(9) |
Includes 24,923 shares issuable upon the exercise of options and 32,200 shares of restricted stock. | |
(10) |
Includes 1,760 shares held individually, 47,199 shares issuable upon the exercise of options and 20,450 shares of restricted stock. | |
(11) |
Includes 1,500 shares held individually and 53,333 shares issuable upon the exercise of options and 6,927 restricted stock units convertible into common stock within 60 days of April 9, 2007. | |
(12) |
Includes 24,904 shares issuable upon the exercise of options and 6,927 restricted stock units convertible into common stock within 60 days of April 9, 2007. | |
(13) |
Includes 40,000 shares issuable upon the exercise of options and 6,927 restricted stock units convertible into common stock within 60 days of April 9, 2007. | |
(14) |
Includes 133 shares held individually and 53,333 shares issuable upon the exercise of options and 6,927 restricted stock units convertible into common stock within 60 days of April 9, 2007. | |
(15) |
Includes 26,418 shares held individually, 850 shares held by The Jason Foundation, and 103,333 shares issuable upon the exercise of options and 6,927 restricted stock units convertible into common stock within 60 days of April 9, 2007. | |
(16) |
Includes 46,666 shares held individually and 26,794 shares issuable upon the exercise of options and 6,927 restricted stock units convertible into common stock within 60 days of April 9, 2007. |
(17) |
Includes 891,448 shares subject to options exercisable, and 41,562 restricted stock units convertible into common stock, within 60 days of April 9, 2007. | |
(18) |
Based on information provided by Lord, Abbett & Co. LLC as of March 30, 2007. The address of Lord, Abbett & Co. LLC is 90 Hudson Street, 11th Floor, Jersey City, New Jersey 07302. | |
(19) |
Based on a Schedule 13G filed on January 23, 2007 with the SEC by Barclays Global Investors, NA. The address of Barclays Global Investors, NA is 45 Fremont Street, San Francisco, California 94105. |
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that executive compensation should depend upon company and individual performance; |
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that the interests of executives should be closely aligned with those of shareholders through equity-based compensation; and |
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that compensation should be appropriate and fair in comparison to the compensation provided to similarly situated executives within the pharmaceutical industry and within other publicly-traded companies of Kings size and complexity. |
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the potential for incentive-based cash compensation based upon our 2006 financial results and, in some cases, individual or departmental operational objectives, |
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various forms of equity compensation, including some grants based upon 2006 financial results and others based upon our total shareholder return, relative to our peer companies, during 2006, 2007 and 2008, |
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various benefits and perquisites, and |
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the potential for post-termination compensation under some circumstances. |
Compensation Element Overview | Purpose of the Compensation Element | |||||
---|---|---|---|---|---|---|
Base Salary |
Base salary pays for competence
in the executive role. An executives salary level depends on the
scope of his or her responsibilities, individual performance, and the
relationship to amounts paid to other executives at peer companies. |
To provide competitive fixed compensation
based on sustained performance in the executives role and competitive
market practice. |
||||
Short-Term Incentives |
Executive Management Incentive Award (EMIA) The EMIA program rewards with cash awards annual achievement of overall corporate financial objectives and, in some cases, specific individual or departmental operational objectives. In 2006, objectives for the Chief Executive Officer,
Chief Financial Officer and Chief Commercial Officer were tied solely
to Kings achievement of 2006 earnings per share and/or revenue targets.
Rewards for other executives were based on the achievement
of both earnings per share targets and operational objectives specific
to the executives department or function. |
To
motivate and focus our executive team on the achievement of our annual
performance goals. |
Compensation Element Overview | Purpose of the Compensation Element | |||||
---|---|---|---|---|---|---|
Long-Term
Incentives |
Stock Options Stock options reward sustained stock price appreciation and encourage executive retention during a three-year vesting term and a ten-year option life. Performance Share Units (PSUs) (One-Year Performance Period + Two-Year Vesting Period) One-Year PSUs encourage achievement of annual earnings per share and revenue targets and encourage executive retention over the additional two-year vesting period. Participants may earn either 0% or between 50% and 200% of a targeted number of PSUs based on Kings performance against annual earnings per share and revenue targets. Payout of earned units is deferred for an additional two years. The potential value of a participants units increases and decreases according to Kings stock price performance during the vesting period. Performance Share Units (Three-Year Performance Period) Three-Year PSUs reward achievement of Kings three-year total shareholder return (stock price appreciation plus dividends) for the period 2006 through 2008 versus the returns of companies in the Dow Jones U.S. Pharmaceuticals Index. Participants may earn either 0%, or between 50% and 200% of a targeted number of PSUs based on Kings three-year total shareholder return performance as compared to the performance of companies in the index. Restricted Stock Restricted stock rewards sustained stock price appreciation and encourages executive retention during its three-year vesting term. The value of participants restricted stock increases and decreases according to Kings stock price performance during the vesting period and thereafter. |
We
strive to deliver a balanced long- term incentive portfolio to executives,
focusing on (a) share price appreciation, (b) retention, (c) internal
financial objectives, and (d) performance against peer companies. The primary objectives of the overall design are: to align management interests with those of shareholders,
to increase managements potential for stock ownership
opportunities (all awards are earned in shares),
to attract and retain excellent management talent, and
to reward growth of the business, increased profitability,
and sustained shareholder value.
The overall value of target grants for each executive was determined by multiplying the executives base salary by a percentage that approximates the median percentage used for similarly situated executives in comparable companies. The estimated relative values of the elements of the long-term incentive portfolio are as follows: Stock Options 25%
Perf. Share Units One-Year 30%
Perf. Share Units Three-Year 20%
Restricted Stock 25%
We believe that the weighting of these incentives gives appropriate emphasis to each of the various goals of the compensation program. |
Compensation Element Overview | Purpose of the Compensation Element | |||||
---|---|---|---|---|---|---|
Benefits |
In
General Executives participate in employee benefit plans available to all employees of King, including health, life insurance and disability plans. The cost of these benefits is partially borne by the employee. More highly compensated employees, such as the named executive officers, pay a greater percentage of benefit costs than do other employees. 401(k) Plan Executives may participate in Kings 401(k) retirement savings plan, which is available to all employees. In 2006, the company matched employees contributions to the plan, up to 4% of their base salary, subject to regulatory limits. Beginning in 2007, King began matching contributions up to 5% of base salary. During 2006, the company paid the fees associated with participation in the 401(k) plan. Beginning in 2007, employees became responsible for paying these fees. Non-Qualified Deferred Compensation Plan Executives may participate in Kings Non-Qualified Deferred Compensation Plan, which is available to the 7-8% most highly compensated employees. Life Insurance King provides life insurance benefits to all employees. The coverage amount for executives is $500,000 and premiums paid for coverage above $50,000 are treated as imputed income to the executive. Disability Insurance King provides short-term and long-term disability insurance to employees which would, in the event of disability, pay an employee two-thirds of his or her base salary. |
These benefits are designed to attract and retain employees and provide security for their health and welfare needs. We believe that these benefits are reasonable, competitive and consistent with Kings overall executive compensation program. |
Compensation Element Overview | Purpose of the Compensation Element | |||||
---|---|---|---|---|---|---|
Perquisites |
King
does not utilize perquisites or personal benefits extensively. The few
perquisites that are provided complement other compensation vehicles and
enable the company to attract and retain key executives. These perquisites
include: financial planning and tax services, not to exceed $11,000
annually, and
limited
personal use of corporate aircraft.
|
We
believe these benefits better allow us to attract and retain superior employees
for key positions, allow our executive team to work more efficiently and
limit distractions from Kings business. Financial planning and tax services (a) allow our executive
team to optimize the value of their compensation and our benefit programs,
(b) facilitate a balanced investment strategy, and (c) allow the executive
team to stay focused on Kings business issues by reducing time spent
on personal financial matters.
The Compensation
and Human Resources Committee of our Board of Directors is responsible
for determining the general parameters for personal use of corporate aircraft
by executives, and that committee regularly reviews such usage, including
usage by the Chief Executive Officer. Further, each use of a corporate
aircraft by an executive for personal purposes (1) requires the specific
approval of the Chief Executive Officer, (2) is only allowed if it would
not interfere with Kings operations, and (3) results in imputed
income to the executive according to Internal Revenue Code and Department
of Transportation requirements. The incremental cost of aircraft use by
the named executive officers to the company is included in column (j)
of the Summary Compensation table and the additional table detailing All
Other Compensation beginning on page 28.
|
Compensation Element Overview | Purpose of the Compensation Element | |||||
---|---|---|---|---|---|---|
Post-Termination Pay |
Severance Plan Kings Severance Pay Plan: Tier I is designed to pay severance benefits to an executive for a qualifying separation. It is also designed to pay an enhanced benefit for a qualifying separation in connection with a change of control. For the Chief Executive Officer, the Severance Pay Plan: Tier I provides for a payment of two times the sum of base salary plus target cash incentive award upon the occurrence of termination events and three times the sum of base salary plus target cash incentive award upon the occurrence of termination events following a change in control. For the other named executive officers, the Severance Pay Plan: Tier I provides for a payment of one and one-half times the sum of base salary plus target cash incentive award upon the occurrence of termination events and two times the sum of base salary plus target cash incentive award upon the occurrence of termination events following a change in control. The Severance Pay Plan: Tier I covers all of the named executive officers. For additional information regarding the Severance Pay Plan: Tier I see the section entitled Post-Termination Payments beginning on page 32. Offer Letters Some of the named executive officers agreed to the terms of offer letters in connection with their accepting positions at King. Offer letters between King and Mr. Markison and between King and Mr. Squicciarino address severance matters. For information regarding the terms of these offer letters, please see the section entitled Post-Termination Payments beginning on page 32. |
The
Severance Pay Plan: Tier I is intended (1) to allow executives to concentrate
on making decisions in the best interests of King (or any successor organization
in the event that a change of control is to occur), and (2) generally
alleviate an executives concerns about the loss of his or her position
without cause. We regularly use offer letters in connection with the hiring of new employees. These letters have contained provisions related to post-termination pay and benefits when necessary to provide short-term employment security to newly-hired executives. |
Allergan,
Inc. |
Forest Laboratories, Inc. |
NBTY,
Inc. |
||||||||
Alpharma
Inc. |
Genentech, Inc. |
Par
Pharmaceutical |
||||||||
Barr
Pharmaceuticals, Inc. |
Genzyme Corp. |
Parexel International |
||||||||
Cephalon
Inc. |
Gilead Sciences |
Perrigo Co. |
||||||||
Chiron
Corp. |
Hospira Inc. |
Pharma Product Development |
||||||||
Dade
Behring Holdings |
Medicis Pharmaceutical Corp. |
Valeant Pharmaceuticals |
||||||||
Endo
Pharmaceuticals |
Mylan
Pharmaceuticals |
Watson Pharmaceuticals, Inc. |
Performance
Measures
|
Brian
A. Markison President and CEO |
Joseph Squicciarino Chief Financial Officer |
Stephen
J. Andrzejewski Chief Commercial Officer |
Eric
J. Bruce Chief Technical Operations Officer |
James
W. Elrod General Counsel |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Earnings
Per Share |
75% | 100% | 25% | 50% | 50% | |||||||
Revenues
|
25% | 0% | 75% | 0% | 0% | |||||||
Individual
Operational Objectives |
0% | 0% | 0% | 50% | 50% |
Performance
Level
|
Brian
A. Markison
|
Joseph Squicciarino |
Stephen
J. Andrzejewski |
Eric
J. Bruce
|
James
W. Elrod |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Maximum/Outstanding |
200% | 140% | 120% | 120% | 100% | |||||||
Target
|
100% | 70% | 60% | 60% | 50% | |||||||
Threshold
|
50% | 35% | 30% | 30% | 25% | |||||||
Below
threshold |
0% | 0% | 0% | 0% | 0% |
Objective
|
Threshold |
Target |
Stretch |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues*
|
$1.67
billion |
$1.856
billion |
$1.949
billion |
|||||||||||
Earnings per
share* |
$1.36 |
$1.60 |
$1.68 |
* | For purposes of determining achievement of the EMIA targets, these measures exclude certain categories of non-recurring items that the Committee believes do not reflect the performance of Kings core continuing operations. The Committee identified the categories to be excluded at the same time it set the EMIA targets. |
Officer
|
2006 EMIA Payout |
Percentage of Base Salary |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Brian A.
Markison President and Chief Executive Officer |
$ | 1,650,000 | 200 | % | ||||||
Joseph
Squicciarino Chief Financial Officer |
$ | 652,446 | 140 | % | ||||||
Stephen J.
Andrzejewski Chief Commercial Officer |
$ | 463,600 | 120 | % | ||||||
Eric J. Bruce
Chief Technical Operations Officer |
$ | 428,830 | 111 | % | ||||||
James W. Elrod
General Counsel |
$ | 335,000 | 100 | % |
|
stock options, becoming exercisable over three years (33%, 33% and 34% on each anniversary) and having a total term of ten years, |
|
shares of restricted stock, vesting in full three years from the date of grant, |
|
one-year performance share units, the exact number of which could range between 0% and 200% of a target number depending upon Kings 2006 earnings per share and revenue performance (applying the same financial targets as discussed above regarding the EMIA), then subject to a two-year holding period, after which each PSU is to be paid with one share of common stock (One-Year PSUs), and |
|
three-year performance share units, to be paid in common stock at the end of three years, with the number of shares to be paid ranging between 0% and 200% of a target number depending upon Kings total shareholder return over the years 2006 through 2008 as compared to the total shareholder return of the stocks making up the Dow Jones U.S. Pharmaceutical Index (Three-Year PSUs). |
Officer
|
Target One-Year PSUs |
|||||
---|---|---|---|---|---|---|
Brian A.
Markison |
34,290 | |||||
Joseph
Squicciarino |
14,730 | |||||
Stephen J.
Andrzejewski |
10,530 | |||||
Eric J. Bruce
|
10,530 | |||||
James W. Elrod
|
6,300 |
Performance
Level
|
Payout (as a percentage of Target) |
|||||
---|---|---|---|---|---|---|
Outstanding or
greater |
200 | % | ||||
Target
|
100 | % | ||||
Threshold
|
50 | % | ||||
Below Threshold
|
0 | % |
Officer
|
Target Three-Year PSUs |
|||||
---|---|---|---|---|---|---|
Brian A.
Markison |
24,290 | |||||
Joseph
Squicciarino |
10,430 | |||||
Stephen J.
Andrzejewski |
7,460 | |||||
Eric J. Bruce
|
7,460 | |||||
James W. Elrod
|
4,460 |
Kings
Total Shareholder Return Percentile Rank among Dow Jones U.S. Pharmaceuticals Index Companies |
Payout (as a percentage of Target) |
|||||
---|---|---|---|---|---|---|
>70th percentile |
200 | % | ||||
70th percentile |
200 | % | ||||
50th percentile |
100 | % | ||||
30th percentile |
50 | % | ||||
<30th percentile |
0 | % |
(a) | (b) |
(c) |
(e) |
(f) |
(g) |
(i) |
(j) |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name And Principal Position | Year | Salary ($) |
Stock Awards ($)(1) |
Option Awards ($)(1) |
Non-Equity Incentive Plan Compensation ($)(2) |
All
Other Compensation ($)(3) |
Total ($) |
|||||||||||||||||||||
Brian
A. Markison President and Chief Executive Officer |
2006 | $ | 825,000 | $ | 1,398,615 | $ | 947,317 | $ | 1,650,000 | $ | 171,542 | $ | 4,992,474 | |||||||||||||||
Joseph
Squicciarino Chief Financial Officer |
2006 | $ | 466,033 | $ | 830,040 | $ | 64,914 | $ | 652,446 | $ | 59,029 | $ | 2,072,462 | |||||||||||||||
Stephen
J. Andrzejewski Chief Commercial Officer |
2006 | $ | 386,333 | $ | 481,733 | $ | 273,438 | $ | 463,600 | $ | 37,624 | $ | 1,642,728 | |||||||||||||||
Eric
J. Bruce Chief Technical Operations Officer |
2006 | $ | 386,333 | $ | 381,266 | $ | 46,412 | $ | 428,830 | $ | 36,439 | $ | 1,279,280 | |||||||||||||||
James
W. Elrod General Counsel |
2006 | $ | 327,402 | $ | 250,130 | $ | 73,084 | $ | 335,000 | $ | 178,038 | $ | 1,163,654 |
(1) |
The amounts shown represent the dollar amounts recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123(R) and include amounts from awards granted during and prior to 2006. Assumptions used in the calculation of these amounts are described in Note 20 to the companys financial statements for the year ended December 31, 2006, included in the companys Annual Report on Form 10-K that was filed with the SEC on March 1, 2007. All awards were made under the companys Incentive Plan or its predecessor plan, the 1997 Stock Option Plan for Employees of King Pharmaceuticals, Inc., and are subject to individual award agreements, the forms of which were previously filed with the SEC. During 2006, there were no forfeitures of awards related to service-based vesting conditions for the named executive officers. |
(2) |
Cash incentive awards pursuant to the 2006 Executive Management Incentive Award (EMIA) program. |
(3) |
The following two tables detail All Other Compensation received by each named executive officer. |
Name | Perquisites and Other Personal Benefits |
Relocation Payments |
401(k) Matching Contributions |
Tax Reimbursements |
Total Other Compensation |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Brian A.
Markison |
$ | 161,706 | $ | 0 | $ | 8,800 | $ | 1,036 | $ | 171,542 | ||||||||||||
Joseph
Squicciarino |
$ | 49,081 | $ | 0 | $ | 8,800 | $ | 1,148 | $ | 59,029 | ||||||||||||
Stephen J.
Andrzejewski |
$ | 20,990 | $ | 0 | $ | 8,800 | $ | 7,834 | $ | 37,624 | ||||||||||||
Eric J. Bruce
|
$ | 17,678 | $ | 4,601 | $ | 8,800 | $ | 5,360 | $ | 36,439 | ||||||||||||
James W.
Elrod |
$ | 11,000 | $ | 122,307 | $ | 8,800 | $ | 35,931 | $ | 178,038 | ||||||||||||
Type of Compensation | Brian A. Markison |
Joseph Squicciarino |
Stephen J. Andrzejewski |
Eric J. Bruce |
James W. Elrod |
|||||||||||||||||
Perquisites |
||||||||||||||||||||||
Financial
planning and tax services |
$ | 11,000 | $ | 5,500 | $ | 10,000 | $ | 11,000 | $ | 11,000 | ||||||||||||
Personal use
of corporate aircraft(1) |
$ | 150,706 | $ | 43,581 | $ | 0 | $ | 6,678 | $ | 0 | ||||||||||||
Other(2)
|
$ | 0 | $ | 0 | $ | 10,990 | $ | 0 | $ | 0 | ||||||||||||
Total
Perquisites |
$ | 161,706 | $ | 49,081 | $ | 20,990 | $ | 17,678 | $ | 11,000 | ||||||||||||
Relocation
Payments |
$ | 0 | $ | 0 | $ | 0 | $ | 4,601 | $ | 122,307 | ||||||||||||
401(k)
Matching Contributions |
$ | 8,800 | $ | 8,800 | $ | 8,800 | $ | 8,800 | $ | 8,800 | ||||||||||||
Tax
Reimbursements |
||||||||||||||||||||||
Financial
planning and tax services |
$ | 1,036 | $ | 1,148 | $ | 2,861 | $ | 3,130 | $ | 1,696 | ||||||||||||
Relocation
payments |
$ | 0 | $ | 0 | $ | 0 | $ | 2,230 | $ | 34,235 | ||||||||||||
Other(2)
|
$ | 0 | $ | 0 | $ | 4,973 | $ | 0 | $ | 0 | ||||||||||||
Total Tax
Reimbursements |
$ | 1,036 | $ | 1,148 | $ | 7,834 | $ | 5,360 | $ | 35,931 | ||||||||||||
Total All
Other Compensation |
$ | 171,542 | $ | 59,029 | $ | 37,624 | $ | 36,439 | $ | 178,038 |
(1) |
Includes the aggregate incremental cost to King of: aircraft operation; crew transportation, meals and lodging; and aircraft handling, parking, de-icing and maintenance. |
(2) |
Relates to a trip to reward Kings top sales performers. |
(a) | (b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
(k) |
(l) |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated
Future Payouts Under Equity Incentive Plan Awards (2) |
|||||||||||||||||||||||||
Name
|
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
All
Other Stock Awards: Number Of Shares Of Stock or Units (#)(3) |
All
Other Option Awards: Number Of Securities Underlying Options (#)(4) |
Exercise Or Base Price Of Option Awards ($/Sh)(5) |
Grant
Date Fair Value Of Stock And Option Awards ($) |
|||||||||||||||
Brian
A. Markison |
$412,500 | $825,000 | $1,650,000 | |||||||||||||||||||||||
3/20/2006 | 12,145 | 24,290 | 48,580 | $ | 727,000 | |||||||||||||||||||||
3/20/2006 | 17,145 | 34,290 | 68,580 | $ | 674,827 | |||||||||||||||||||||
3/20/2006 | 27,450 | $ | 540,216 | |||||||||||||||||||||||
3/20/2006 | 53,980 | $ | 19.68 | $ | 584,414 | |||||||||||||||||||||
Joseph Squicciarino |
$163,112 | $326,223 | $ 652,446 | |||||||||||||||||||||||
3/20/2006 | 5,215 | 10,430 | 20,860 | $ | 312,170 | |||||||||||||||||||||
3/20/2006 | 7,365 | 14,730 | 29,460 | $ | 289,886 | |||||||||||||||||||||
3/20/2006 | 11,790 | $ | 232,027 | |||||||||||||||||||||||
3/20/2006 | 23,190 | $ | 19.68 | $ | 251,067 | |||||||||||||||||||||
Stephen
J. Andrzejewski |
$115,900 | $231,800 | $ 463,600 | |||||||||||||||||||||||
3/20/2006 | 3,730 | 7,460 | 14,920 | $ | 223,278 | |||||||||||||||||||||
3/20/2006 | 5,265 | 10,530 | 21,060 | $ | 207,230 | |||||||||||||||||||||
3/20/2006 | 8,430 | $ | 165,902 | |||||||||||||||||||||||
3/20/2006 | 16,580 | $ | 19.68 | $ | 179,503 | |||||||||||||||||||||
Eric
J. Bruce |
$115,900 | $231,800 | $ 463,600 | |||||||||||||||||||||||
3/20/2006 | 3,730 | 7,460 | 14,920 | $ | 223,278 | |||||||||||||||||||||
3/20/2006 | 5,265 | 10,530 | 21,060 | $ | 207,230 | |||||||||||||||||||||
3/20/2006 | 8,430 | $ | 165,902 | |||||||||||||||||||||||
3/20/2006 | 16,580 | $ | 19.68 | $ | 179,503 | |||||||||||||||||||||
James
W. Elrod |
$ 83,750 | $167,500 | $ 335,000 | |||||||||||||||||||||||
3/20/2006 | 2,230 | 4,460 | 8,920 | $ | 133,488 | |||||||||||||||||||||
3/20/2006 | 3,150 | 6,300 | 12,600 | $ | 123,984 | |||||||||||||||||||||
3/20/2006 | 5,040 | $ | 99,187 | |||||||||||||||||||||||
2/21/2006 | 21,300 | $ | 409,599 | |||||||||||||||||||||||
3/20/2006 | 9,920 | $ | 19.68 | $ | 107,399 |
(1) |
Reflects grants pursuant to the companys Incentive Plan in connection with the companys 2006 Executive Management Incentive Award program. Details regarding that program, including actual payout amounts, may be found in the Compensation Discussion and Analysis. |
(2) |
Reflects One-Year and Three-Year performance share units (PSUs) granted pursuant to the companys Incentive Plan in connection with the 2006 Long Term Incentive Award program. Further details regarding that program, including performance-based conditions, may be found in the Compensation Discussion and Analysis. |
(3) |
Principally reflects restricted stock granted pursuant to the companys Incentive Plan in connection with the 2006 Long Term Incentive Award program. Further details regarding that program may be found in the Compensation Discussion and Analysis. Mr. Elrod also received a grant of 21,300 shares of restricted stock upon becoming General Counsel. |
(4) |
Reflects stock options granted pursuant to the companys Incentive Plan in connection with the 2006 Long Term Incentive Award program. Further details regarding that program may be found in the Compensation Discussion and Analysis. |
(5) |
The exercise price of each stock option awarded to our named executive officers in 2006 is the closing price of our common stock on the date of grant. |
(a) | (b) |
(c) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Option
awards
|
Stock
awards
|
|||||||||||||||||||||||||||||||
Name
|
Number
Of Securities Underlying Unexercised Options (#) Exercisable |
Number
Of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
Number
Of Shares Or Units Of Stock That Have Not Vested (#) |
Market
Value Of Shares Or Units Of Stock That Have Not Vested ($) |
Equity
Incentive Plan Awards: Number Of Unearned Shares, Units Or Other Rights That Have Not Vested (#)(13) |
Equity
Incentive Plan Awards: Market Or Payout Value Of Unearned Shares, Units Or Other Rights That Have Not Vested ($) |
||||||||||||||||||||||||
Brian
A. Markison |
57,362 | 57,362 | (1) | 19.4600 | 3/8/2014 | |||||||||||||||||||||||||||
5,138 | 5,138 | (1) | 19.4600 | 3/8/2014 | ||||||||||||||||||||||||||||
125,000 | 125,000 | (2) | 10.6700 | 7/15/2014 | ||||||||||||||||||||||||||||
53,980 | (3) | 19.6800 | 3/20/2016 | |||||||||||||||||||||||||||||
130,000 | (7) | $ | 2,069,600 | |||||||||||||||||||||||||||||
27,450 | (8) | $ | 437,004 | |||||||||||||||||||||||||||||
68,580 | (9) | $ | 1,091,794 | |||||||||||||||||||||||||||||
12,145 | $ | 193,348 | ||||||||||||||||||||||||||||||
Joseph
Squicciarino |
23,190 | (3) | 19.6800 | 3/20/2016 | ||||||||||||||||||||||||||||
66,667 | (10) | $ | 1,061,339 | |||||||||||||||||||||||||||||
11,790 | (8) | $ | 187,697 | |||||||||||||||||||||||||||||
29,460 | (9) | $ | 469,003 | |||||||||||||||||||||||||||||
5,215 | $ | 83,023 | ||||||||||||||||||||||||||||||
Stephen
J. Andrzejewski |
5,863 | 5,863 | (4) | 17.0550 | 5/3/2014 | |||||||||||||||||||||||||||
44,137 | 44,137 | (4) | 17.0550 | 5/3/2014 | ||||||||||||||||||||||||||||
16,580 | (3) | 19.6800 | 3/20/2016 | |||||||||||||||||||||||||||||
50,000 | (7) | $ | 796,000 | |||||||||||||||||||||||||||||
8,430 | (8) | $ | 134,206 | |||||||||||||||||||||||||||||
21,060 | (9) | $ | 335,275 | |||||||||||||||||||||||||||||
3,730 | $ | 59,382 | ||||||||||||||||||||||||||||||
Eric
J. Bruce |
16,580 | (3) | 19.6800 | 3/20/2016 | ||||||||||||||||||||||||||||
30,612 | (11) | $ | 487,343 | |||||||||||||||||||||||||||||
8,430 | (8) | $ | 134,206 | |||||||||||||||||||||||||||||
21,060 | (9) | $ | 335,275 | |||||||||||||||||||||||||||||
3,730 | $ | 59,382 | ||||||||||||||||||||||||||||||
James
W. Elrod |
10,000 | 10,000 | (5) | 9.7850 | 3/4/2015 | |||||||||||||||||||||||||||
825 | 1,675 | (6) | 15.5600 | 10/18/2015 | ||||||||||||||||||||||||||||
9,920 | (3) | 19.6800 | 3/20/2016 | |||||||||||||||||||||||||||||
21,300 | (12) | $ | 339,096 | |||||||||||||||||||||||||||||
5,040 | (8) | $ | 80,237 | |||||||||||||||||||||||||||||
12,600 | (9) | $ | 200,592 | |||||||||||||||||||||||||||||
2,230 | $ | 35,502 |
(1) |
Became exercisable on March 8, 2007. |
(2) |
Will become exercisable on July 15, 2007. |
(3) |
One-third of the option became exercisable on March 20, 2007, another third will become exercisable on March 20, 2008 and the remaining third will become exercisable on March 20, 2009. |
(4) |
Will become exercisable on May 3, 2007. |
(5) |
Became exercisable on March 4, 2007. |
(6) |
Approximately half will become exercisable on June 1, 2007 and the remaining half will become exercisable on June 1, 2008. |
(7) |
Restricted stock which vests on June 1, 2008. |
(8) |
Restricted stock which vests on March 20, 2009. |
(9) |
One-year performance share units which are payable in stock following a restricted period which ends on December 31, 2008. |
(10) |
Restricted stock, half of which vests on June 27, 2007 and half of which vests on June 27, 2008. |
(11) |
Restricted stock which vests on June 13, 2008. |
(12) |
Restricted stock which vests on February 21, 2009. |
(13) |
Three-year performance share units granted to the named executive officers in 2006 will be paid in common stock after December 31, 2008 based upon Kings three-year total shareholder return (stock price appreciation plus dividends) versus the returns of companies in the Dow Jones U.S. Pharmaceuticals Index for the years 2006 through 2008. |
(a) | (d) |
(e) |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Stock Awards |
|||||||||||
Name |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
|||||||||
Brian A.
Markison |
0 | N/A | |||||||||
Joseph
Squicciarino |
33,333 | $ | 535,661 | ||||||||
Stephen J.
Andrzejewski |
0 | N/A | |||||||||
Eric J. Bruce
|
0 | N/A | |||||||||
James W. Elrod
|
0 | N/A |
(a) | (b) |
(c) |
(d) |
(e) |
(f) |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Executive Contributions In Last FY ($) (1) |
Registrant Contributions In Last FY ($) |
Aggregate Earnings In Last FY ($) (2) |
Aggregate Withdrawals/Distributions ($) |
Aggregate Balance At Last FYE ($) |
|||||||||||||||||
Brian A.
Markison |
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Joseph
Squicciarino |
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Stephen J.
Andrzejewski |
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Eric J. Bruce
|
$ | 30,501 | $ | 0 | $ | 2,238 | $ | 0 | $ | 32,739 | ||||||||||||
James W.
Elrod |
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
(1) |
The amount in this column for Mr. Bruce reflects the deferral of a portion of his base salary for 2006 and is included in the Summary Compensation Table in the Salary column. |
(2) |
There are no above-market or preferential earnings on deferred compensation. Consequently, the Summary Compensation Table does not include earnings on deferred amounts. |
|
A severance payment equal to three times the sum of current annual salary and target cash incentive bonus for the Chief Executive Officer or two times the sum of current annual salary and target cash incentive bonus for the other named executive officers; |
|
Continuation of welfare benefits as described below; |
|
Acceleration of all unvested equity awards; and |
|
Additional tax gross up payments in order to compensate for any tax liability imposed on change of control payments to the extent these payments constitute parachute payments under Section 280G of the Internal Revenue Code of 1986, as amended (the Code). |
|
A severance payment equal to two times the sum of current annual salary and target cash incentive bonus for the Chief Executive Officer or one and one-half times the sum of current annual salary and target cash incentive bonus for the other named executive officers; |
|
Continuation of welfare benefits as described below; |
|
Acceleration of all unvested equity awards; and |
|
Additional tax gross up payments in order to compensate for any tax liability imposed on change of control payments to the extent these payments constitute parachute payments under Section 280G of the Code. |
|
Conviction of or pleading guilty or nolo contendere to an act of fraud, embezzlement, theft or any other act constituting a felony or any crime involving moral turpitude and/or dishonesty; |
|
Gross negligence or willful misconduct which results or, in the sole opinion of the plan administrator would be likely to result, in material harm to the company or which results or, in the sole opinion of the plan administrator would be likely to result, in a materially adverse effect on the companys reputation, operations, properties, or business or employee relationships; |
|
By action or inaction, failing or refusing faithfully and conscientiously to perform one or more material assignments or responsibilities of the executives position; |
|
Failing or refusing to look after the best interests of the company committed to the executives care; |
|
Failing or refusing reasonably to advance the interests of the company; |
|
Failing to devote full time, attention and energy to the business of the company; or |
|
Failing to devote best efforts to the business of the company. |
|
Implementation of a material demotion or diminution in the nature or status of the executives authorities, duties, responsibilities, reporting relationships, title and/or position from those in effect as of thirty (30) days prior to the Change in Control, determined in the context of the individuals relative position in the overall controlled group of corporations which includes the company immediately prior to the Change in Control as compared to the individuals position in the overall controlled group of corporations which includes the company immediately after the Change in Control, other than any such material change that is remedied by the company within ten (10) days after receipt of written notice thereof given by the executive; |
|
Failure to pay promptly any material compensation when due; |
|
Reduction in the rate of annual base salary without the executives consent; |
|
Material breach of any employment contract or other agreement as to the terms and conditions of employment; |
|
Requiring the executive to be based at a work location in excess of fifty (50) miles from the current location of the executives principal job location or office. |
|
Requiring the executive to be based at a work location in excess of fifty miles from the current location of the executives principal job location or office. |
|
The sale of substantially all of the assets of the company; or |
|
Any person or group (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act), other than the executive officers, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act except that a person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than thirty five percent (35%) of the total voting stock of the company; |
|
The company consolidates with, or merges with or into, another person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any person, or any person consolidates with, or merges with or into, the company, in any such event pursuant to a transaction in which any voting stock of the company is reclassified or changed into or exchanged for cash, securities |
or other property, other than any such transaction where (i) any voting stock of the company is reclassified or changed into or exchanged for nonredeemable voting stock of the surviving or transferee corporation and (ii) immediately after such transaction no person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the executive officers, is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than thirty five percent (35%) of the total voting stock of the surviving or transferee corporation; or |
|
During any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the company (together with any new directors whose election by the shareholders of the company was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the company then in office. |
|
his base salary at the time of termination of his employment, and |
|
his target cash incentive bonus for the year of termination (which amount would not be pro-rated based on the date of his termination). |
|
King would continue to provide Mr. Markison with health and welfare benefits generally made available to executives until the second anniversary of his termination of employment, provided that this obligation would end if he became covered by the employee benefits plans of a subsequent employer; |
|
all unvested stock options awarded to Mr. Markison would immediately become fully vested; and |
|
in the event that any payments he received were considered excess parachute payments under Section 280G of the Code, he would be entitled to a gross-up payment to make him whole for any excise tax imposed on him under Section 4999 of the Code (and such gross-up payment would include amounts to make him whole for the Federal, state and local income and excise taxes owing with respect to the gross-up payment). |
|
conviction of, or plea of guilty or no contest to, a felony, |
|
embezzlement, |
|
the illegal use of drugs, |
|
a material violation of law, regulation or written company policy which, in the good faith belief of the Board, is conduct so unacceptable as to prohibit the Board from continuing to maintain him in the position of Chief Executive Officer, or |
|
if no change in control has occurred, his failure to substantially perform his duties as determined by the Board. |
|
a reduction of his compensation or benefits, responsibilities, duties, authority, reporting relationships, title and/or position (in each case other than his position, if any, as director of King or any subsidiary or as an officer of any subsidiary), unless other similarly situated senior executives of King are required to accept a similar reduction, and excluding any isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by King promptly after receipt of notice from Mr. Markison; provided, however, that this clause (i) shall not be deemed triggered merely as a result of Kings ceasing to be a publicly traded company in connection with a change in control or as a result of Kings (or its successors) becoming a subsidiary of another company, |
|
the company, without his consent, requires him to relocate (which term shall not include travel) to a location more than fifty miles from his current residence, |
|
the failure to pay to him any compensation or benefits due him, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by King promptly after receipt of notice thereof given by Mr. Markison, or |
|
Kings material breach of any provision of Mr. Markisons offer letter. |
|
his base salary at the time of termination of his employment, and |
|
his target cash incentive bonus for the year of termination (which amount would not be pro-rated based on the date of his termination). |
|
King would continue to provide him with health and welfare benefits generally made available to the company executives until the third anniversary of his termination of employment, provided that such obligation would cease if he became covered by the employee benefits plans of a subsequent employer, |
|
all unvested stock options awarded to Mr. Markison under the stock option plan would immediately become fully vested, and |
|
in the event that any payments he received were considered excess parachute payments under Section 280G of the Code, he would be entitled to a gross-up payment to make him whole for any excise tax imposed on him under Section 4999 of the Code (and such gross-up payment would include amounts to make him whole for the Federal, state and local income and excise taxes owing with respect to the gross-up payment). |
|
The sale of substantially all of Kings assets; |
|
Any person or group (as these terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than fifty percent (50%) of the total voting stock of King; |
|
King consolidates with, or merges with or into, another person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets, in one transaction or a series of transactions, to any person or any person consolidates with, or merges with or into, King, in any such event pursuant to a transaction in which any voting stock of King is reclassified or changed into or exchanged for cash, securities or other property, other than any such transaction where (A) any voting stock of King is |
reclassified or changed into or exchanged for non-redeemable voting stock of the surviving or transferee corporation and (B) immediately after such transaction no person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than fifty percent (50%) of the total voting stock of the surviving or transferee corporation; or |
|
During any consecutive two-year period, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by the shareholders of King was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board then in office. |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
---|---|---|---|---|---|---|---|---|
Brian A. Markison, President and CEO | Involuntary Termination Without Cause |
Involuntary Termination For Cause |
Resignation | Resignation For Good Reason |
Retirement (1) |
Death | Disability | Change
In Control (4) |
Benefits Earned Prior to Termination
|
||||||||
Value of unexercised vested
stock options
|
$ 656,250 | $ 0 | $656,250 | $ 656,250 | N/A | $ 656,250 | $ 656,250 | $ 656,250 |
401(k) plan balance
|
$ 55,342 | $55,342 | $55,342 | $ 55,342 | N/A | $ 55,342 | $ 55,342 | $ 55,342 |
Executive deferred comp.
plan balance
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
Total Already Earned
|
$ 711,592 | $55,342 | $711,592 | $ 711,592 | N/A | $ 711,592 | $ 711,592 | $ 711,592 |
Additional Payments Earned
Upon Termination
|
||||||||
Cash severance
|
$3,300,000 | $ 0 | $ 0 | $3,300,000 | N/A | $ 0 | $ 0 | $ 4,950,000 |
Non-equity incentive for year of termination
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 825,000 | $ 825,000 | $ 0 |
Addl value due to vesting of unvested stock
options (2)
|
$ 656,250 | $ 0 | $ 0 | $ 656,250 | N/A | $ 656,250 | $ 656,250 | $ 656,250 |
Addl value due to vesting of restricted stock
and PSUs (1-year perf. period) (2)(3)
|
$3,598,398 | $ 0 | $ 0 | $3,598,398 | N/A | $3,598,398 | $3,598,398 | $ 3,598,398 |
Addl value due to vesting of PSUs (3-year
perf. period)
|
$ 128,904 | $ 0 | $ 0 | $ 128,904 | N/A | $ 386,697 | $ 386,697 | $ 386,697 |
Health and welfare continuation
|
$ 97,842 | $ 0 | $ 0 | $ 97,842 | N/A | $ 0 | $ 0 | $ 146,763 |
Financial planning
|
$ 22,000 | $ 0 | $ 0 | $ 22,000 | N/A | $ 22,000 | $ 22,000 | $ 33,000 |
Sec. 280(G) excise tax and
related gross-up
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 3,217,394 |
Addl Payments
Due to Termination
|
$7,803,394 | $ 0 | $ 0 | $7,803,394 | N/A | $5,488,345 | $5,488,345 | $12,988,502 |
Total
|
$8,514,986 | $55,342 | $711,592 | $8,514,986 | N/A | $6,199,937 | $6,199,937 | $13,700,094 |
(1) |
Executive is not retirement eligible. |
(2) |
Treatment of unvested awards upon termination without cause and for good reason is governed by an offer letter dated July 15, 2004 and the Severance Pay Plan: Tier 1. |
(3) |
Includes One-Year PSUs earned as of December 31, 2006. |
(4) |
Change in Control followed by termination for good reason or involuntarily without cause within 24 months. |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
---|---|---|---|---|---|---|---|---|
Joseph Squicciarino, Chief Financial Officer | Involuntary Termination Without Cause |
Involuntary Termination For Cause |
Resignation | Resignation For Good Reason |
Retirement (1) |
Death | Disability | Change
In Control (5) |
Benefits Earned Prior to Termination
|
||||||||
Value of unexercised vested stock options
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
401(k) plan balance
|
$ 33,281 | $33,281 | $33,281 | $ 33,281 | N/A | $ 53,125 | $ 53,125 | $ 33,281 |
Executive deferred comp. plan balance
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
Total Already Earned
|
$ 33,281 | $33,281 | $33,281 | $ 33,281 | N/A | $ 53,125 | $ 53,125 | $ 33,281 |
Additional Payments Earned Upon Termination
|
||||||||
Cash severance (2)
|
$1,874,484 | $ 0 | $ 0 | $1,874,484 | N/A | $ 0 | $ 0 | $2,281,135 |
Non-equity incentive for year of termination
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 326,223 | $ 326,223 | $ 0 |
Addl value due to vesting of unvested stock
options (3)
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
Addl value due to vesting of restricted stock
and PSUs (1-year perf. period) (3)(4)
|
$1,718,039 | $ 0 | $ 0 | $1,718,039 | N/A | $1,718,039 | $1,718,039 | $1,718,039 |
Addl value due to vesting of PSUs (3-year
perf. period)
|
$ 55,354 | $ 0 | $ 0 | $ 55,354 | N/A | $ 166,046 | $ 166,046 | $ 166,046 |
Health and welfare continuation
|
$ 73,381 | $ 0 | $ 0 | $ 73,381 | N/A | $ 0 | $ 0 | $ 73,381 |
Financial planning
|
$ 22,000 | $ 0 | $ 0 | $ 22,000 | N/A | $ 22,000 | $ 22,000 | $ 33,000 |
Sec. 280(G) excise tax and related gross-up
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $1,417,521 |
Addl Payments
Due to Termination
|
$3,743,258 | $ 0 | $ 0 | $3,743,258 | N/A | $2,232,308 | $2,232,308 | $5,689,122 |
Total
|
$3,776,539 | $33,281 | $33,281 | $3,776,539 | N/A | $2,285,433 | $2,285,433 | $5,722,403 |
(1) |
Executive is not retirement eligible. |
(2) |
Resignation without cause, for good reason and upon a change in control includes additional amount for 3-year salary guarantee per an offer letter dated May 25, 2005. |
(3) |
Treatment of unvested awards upon termination without cause and for good reason is governed by the Severance Pay Plan: Tier 1. |
(4) |
Includes One-Year PSUs earned as of December 31, 2006. |
(5) |
Change in Control followed by termination for good reason or involuntarily without cause within 24 months. |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
---|---|---|---|---|---|---|---|---|
Stephen J. Andrzejewski, Chief Commercial Officer | Involuntary Termination Without Cause |
Involuntary Termination For Cause |
Resignation | Resignation For Good Reason |
Retirement (1) |
Death | Disability | Change
In Control (4) |
Benefits Earned Prior to Termination
|
||||||||
Value of unexercised vested stock options
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
401(k) plan balance
|
$ 70,655 | $70,655 | $70,655 | $ 70,655 | N/A | $ 70,655 | $ 70,655 | $ 70,655 |
Executive deferred comp. plan balance
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
Total Already Earned
|
$ 70,655 | $70,655 | $70,655 | $ 70,655 | N/A | $70,655 | $ 70,655 | $ 70,655 |
Additional Payments Earned Upon Termination
|
||||||||
Cash severance
|
$ 940,500 | $ 0 | $ 0 | $ 940,500 | N/A | $ 0 | $ 0 | $1,254,000 |
Non-equity incentive for year of termination
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 231,800 | $ 231,800 | $ 0 |
Addl value due to vesting of unvested stock
options (2)
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
Addl value due to vesting of restricted stock
and PSUs (1-year perf. period) (2)(3)
|
$1,265,481 | $ 0 | $ 0 | $1,265,481 | N/A | $1,265,481 | $1,265,481 | $1,265,481 |
Addl value due to vesting of PSUs (3-year
perf. period)
|
$ 39,593 | $ 0 | $ 0 | $ 39,593 | N/A | $ 118,763 | $ 118,763 | $ 118,763 |
Health and welfare continuation
|
$ 73,381 | $ 0 | $ 0 | $ 73,381 | N/A | $ 0 | $ 0 | $ 73,381 |
Financial planning
|
$ 22,000 | $ 0 | $ 0 | $ 22,000 | N/A | $ 22,000 | $ 22,000 | $ 33,000 |
Sec. 280(G) excise tax and related gross-up
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 816,086 |
Addl Payments
Due to Termination
|
$2,340,955 | $ 0 | $ 0 | $2,340,955 | N/A | $1,638,044 | $1,638,044 | $3,560,711 |
Total
|
$2,411,610 | $70,655 | $70,655 | $2,411,610 | N/A | $1,708,699 | $1,708,699 | $3,631,366 |
(1) |
Executive is not retirement eligible. |
(2) |
Treatment of unvested awards upon termination without cause and for good reason governed by Severance Pay Plan: Tier 1. |
(3) |
Includes One-Year PSUs earned as of December 31, 2006. |
(4) |
Change in Control followed by termination for good reason or involuntarily without cause within 24 months. |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
---|---|---|---|---|---|---|---|---|
Eric J. Bruce, Chief Technical Operations Officer | Involuntary Termination Without Cause |
Involuntary Termination For Cause |
Resignation | Resignation For Good Reason |
Retirement (1) |
Death | Disability | Change
In Control (4) |
Benefits Earned Prior to Termination
|
||||||||
Value of unexercised vested
stock options
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
401(k) plan balance
|
$ 16,495 | $16,495 | $16,495 | $ 16,495 | N/A | $ 26,221 | $ 26,221 | $ 16,495 |
Executive deferred comp.
plan balance
|
$ 32,739 | $32,739 | $32,739 | $ 32,739 | N/A | $ 32,739 | $ 32,739 | $ 32,739 |
Total Already Earned
|
$ 49,234 | $49,234 | $49,234 | $ 49,234 | N/A | $ 58,960 | $ 58,960 | $ 49,234 |
Additional Payments Earned
Upon Termination
|
||||||||
Cash Severance
|
$ 940,500 | $ 0 | $ 0 | $ 940,500 | N/A | $ 0 | $ 0 | $1,254,000 |
Non-equity incentive for year of termination
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 231,800 | $ 231,800 | $ 0 |
Addl value due to vesting of unvested stock
options (2)
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
Addl value due to vesting of restricted stock
and PSUs (1-year perf. period) (2)(3)
|
$ 956,824 | $ 0 | $ 0 | $ 956,824 | N/A | $ 956,824 | $ 956,824 | $ 956,824 |
Addl value due to vesting of PSUs (3-year
perf. period)
|
$ 39,593 | $ 0 | $ 0 | $ 39,593 | N/A | $ 118,763 | $ 118,763 | $ 118,763 |
Health and welfare continuation
|
$ 63,024 | $ 0 | $ 0 | $ 63,024 | N/A | $ 0 | $ 0 | $ 63,024 |
Financial planning
|
$ 22,000 | $ 0 | $ 0 | $ 22,000 | N/A | $ 22,000 | $ 22,000 | $ 33,000 |
Sec. 280(G) excise tax and
related gross-up
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 555,778 |
Addl Payments
Due to Termination
|
$2,021,941 | $ 0 | $ 0 | $2,021,941 | N/A | $1,329,387 | $1,329,387 | $2,981,389 |
Total
|
$2,071,175 | $49,234 | $49,234 | $2,071,175 | N/A | $1,388,347 | $1,388,347 | $3,030,623 |
(1) |
Executive is not retirement eligible. |
(2) |
Treatment of unvested awards upon termination without cause and for good reason is governed by Severance Pay Plan: Tier 1. |
(3) |
Includes One-Year PSUs earned as of December 31, 2006. |
(4) |
Change in Control followed by termination for good reason or involuntarily without cause within 24 months. |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
---|---|---|---|---|---|---|---|---|
James W. Elrod, General Counsel | Involuntary Termination Without Cause |
Involuntary Termination For Cause |
Resignation | Resignation For Good Reason |
Retirement (1) |
Death | Disability | Change
In Control (4) |
Benefits Earned Prior to Termination
|
||||||||
Value of unexercised vested stock options
|
$ 61,650 | $ 0 | $ 61,650 | $ 61,650 | N/A | $ 61,650 | $ 61,650 | $ 61,650 |
401(k) plan balance
|
$ 92,375 | $92,375 | $ 92,375 | $ 92,375 | N/A | $ 92,375 | $ 92,375 | $ 92,375 |
Executive deferred comp. plan balance
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 0 |
Total Already Earned
|
$ 154,025 | $92,375 | $154,025 | $ 154,025 | N/A | $ 154,025 | $ 154,025 | $ 154,025 |
Additional Payments Earned Upon Termination
|
||||||||
Cash Severance
|
$ 753,750 | $ 0 | $ 0 | $ 753,750 | N/A | $ 0 | $ 0 | $1,005,000 |
Non-equity incentive for year of termination
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 167,500 | $ 167,500 | $ 0 |
Addl value due to vesting of unvested stock
options (2)
|
$ 61,950 | $ 0 | $ 0 | $ 61,950 | N/A | $ 61,950 | $ 61,950 | $ 61,950 |
Addl value due to vesting of restricted stock
and PSUs (1-year perf. period) (2)(3)
|
$ 619,925 | $ 0 | $ 0 | $ 619,925 | N/A | $ 619,925 | $ 619,925 | $ 619,925 |
Addl value due to vesting of PSUs (3-year
perf. period)
|
$ 23,673 | $ 0 | $ 0 | $ 23,673 | N/A | $ 71,003 | $ 71,003 | $ 71,003 |
Health and welfare continuation
|
$ 73,381 | $ 0 | $ 0 | $ 73,381 | N/A | $ 0 | $ 0 | $ 73,381 |
Financial Planning
|
$ 22,000 | $ 0 | $ 0 | $ 22,000 | N/A | $ 22,000 | $ 22,000 | $ 33,000 |
Sec. 280(G) excise tax and related gross-up
|
$ 0 | $ 0 | $ 0 | $ 0 | N/A | $ 0 | $ 0 | $ 710,184 |
Addl Payments
Due to Termination
|
$1,554,679 | $ 0 | $ 0 | $1,554,679 | N/A | $ 942,378 | $ 942,378 | $2,574,443 |
Total
|
$1,708,704 | $92,375 | $154,025 | $1,708,704 | N/A | $1,096,403 | $1,096,403 | $2,728,468 |
(1) |
Executive is not retirement eligible. |
(2) |
Treatment of unvested awards upon termination without cause and for good reason is governed by Severance Pay Plan: Tier 1. |
(3) |
Includes One-Year PSUs earned as of December 31, 2006. |
(4) |
Change in Control followed by termination for good reason or involuntarily without cause within 24 months. |
(a) | (b) |
(c) |
(d) |
(g) |
(h) |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name
|
Fees Earned Or Paid In Cash ($) (1) |
Stock Awards ($) (2)(3) |
Option Awards ($) (3)(5) |
All Other Compensation ($) (6) |
Total ($) |
|||||||||||||||||
Ted G. Wood
|
$ | 184,667 | $ | 76,319 | $ | 10,519 | $ | 9,070 | $ | 280,575 | ||||||||||||
Earnest W.
Deavenport Jr. |
$ | 74,991 | $ | 76,319 | $ | 10,519 | $ | 0 | $ | 161,829 | ||||||||||||
Elizabeth M.
Greetham |
$ | 69,467 | $ | 76,319 | $ | 10,519 | $ | 0 | $ | 156,305 | ||||||||||||
Gregory D.
Jordan |
$ | 76,992 | $ | 76,319 | $ | 10,519 | $ | 0 | $ | 163,830 | ||||||||||||
R. Charles
Moyer |
$ | 86,667 | $ | 76,319 | $ | 10,519 | $ | 0 | $ | 173,505 | ||||||||||||
Philip A.
Incarnati |
$ | 9,533 | $ | 9,781 | $ | 0 | $ | 0 | $ | 19,314 | ||||||||||||
D. Greg
Rooker |
$ | 68,267 | $ | 76,319 | $ | 10,519 | $ | 923 | $ | 156,028 | ||||||||||||
Phillip M.
Pfeffer |
$ | 25,250 | $ | 0 | (4) | $ | 10,519 | $ | 0 | $ | 35,769 |
(1) |
Excludes amounts paid in 2006 for service in 2005 and includes amounts paid in 2007 for service in 2006. |
(2) |
As of December 31, 2006, each of the non-management directors other than Mr. Incarnati held 6,927 restricted stock units. Mr. Incarnati held 3,606 restricted stock units. Mr. Pfeffers service on the Board was completed in May 2006 and he held no restricted stock units as of December 31, 2006. Each restricted stock unit entitles the holder to receive one share of Kings common stock upon vesting. All restricted stock units held by directors are scheduled to vest as of April 28, 2007 (except for the units held by Mr. Incarnati, which vest on November 1, 2008) or earlier upon the occurrence of certain events. The grant date fair values of the restricted stock units issued to the directors during 2006 were as follows: $59,499 for Mr. Incarnati, $0 for Mr. Pfeffer and $119,990 for all others. |
(3) |
The amounts shown represent the dollar amounts recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123(R) and include amounts from awards granted during and prior to 2006. Assumptions used in the calculation of these amounts are described in Note 20 to the companys financial statements for the year ended December 31, 2006, included in the companys Annual Report on Form 10-K that was filed with the SEC on March 1, 2007. |
(4) |
Mr. Pfeffer received a grant of restricted stock units in April 2006 which expired when he departed the Board following the completion of his term as a director in May 2006. |
(5) |
The following table lists the number of stock options held by each non-management director as of December 31, 2006. All options were fully exercisable as of that date. |
Name
|
Stock Options Held at Fiscal Year End |
|||||
---|---|---|---|---|---|---|
Ted G. Wood
|
26,794 | |||||
Earnest W.
Deavenport Jr. |
53,333 | |||||
Elizabeth M.
Greetham |
24,904 | |||||
Gregory D.
Jordan |
40,000 | |||||
R. Charles Moyer
|
53,333 | |||||
Philip A.
Incarnati |
0 | |||||
D. Greg Rooker
|
103,333 | |||||
Phillip M.
Pfeffer |
0 |
(6) |
Reflects the aggregate incremental cost to the company of the directors personal use of corporate aircraft, including: aircraft operation; crew transportation, meals and lodging; and aircraft handling, parking, de-icing and maintenance. |
Election of directors requires the affirmative vote of the
holders of a plurality of the shares of common stock represented at the annual meeting. Shares of common stock represented by proxy cards returned to us will be voted for the nominees listed below unless you specify otherwise. The Board of Directors recommends the election of Philip A. Incarnati, Gregory D. Jordan and Brian A. Markison as directors and proxies solicited by the Board will be voted in favor thereof unless a shareholder has indicated otherwise on his or her proxy card. |
PROPOSAL 2 |
APPROVAL OF THE THIRD AMENDED AND RESTATED CHARTER TO PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS |
|
The Boards belief that providing Kings shareholders with the opportunity annually to register their views on the collective performance of the Board and on each director individually will further ensure that our corporate governance policies provide accountability to shareholders; |
|
The Boards belief that, even though annual election of directors may enhance the ability of a third party to acquire control of King without engaging in arms-length discussions with the Board, there are other factors that reduce the likelihood that a third party would be successful in taking over King without engaging in such discussions with the Board; and |
|
The support for annual elections of directors among our
shareholders, as evidenced by the favorable vote of approximately 74% of the votes cast, or approximately 69% of the outstanding shares, in favor of a
non-binding shareholder proposal calling for annual election of directors presented at the 2006 annual meeting of shareholders. |
The affirmative votes of at least 80% of the outstanding
shares of common stock are required in order to approve the Third Amended and Restated Charter. The Board of Directors recommends a vote to approve the Third Amended and Restated Charter, and proxies solicited by the Board will be voted in favor of the amendment unless a shareholder indicates otherwise on his or her proxy card. |
PROPOSAL 3 |
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
2006 |
2005 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Audit fees
(1) |
$ | 1,715,318 | $ | 1,442,585 | ||||||
Audit related
fees (2) |
289,159 | 78,321 | ||||||||
Tax fees (3)
|
269,310 | 231,639 | ||||||||
All other
fees (4) |
349,289 | 13,845 | ||||||||
Total
|
$ | 2,623,076 | $ | 1,766,390 |
(1) |
Audit fees relate to work performed for the audit of financial statements or to services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or in connection with its audit engagement. |
(2) |
Audit related fees consisted principally of assurance and related services that are reasonably related to the performance of the audit or review of financial statements, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. |
(3) |
Fees for professional services rendered by the independent registered public accounting firm for tax compliance, tax advice, and tax planning. |
(4) |
All other fees in 2006 consisted of subscriptions to services and fees associated with service as Independent Review Organization in connection with the requirements of the corporate integrity agreement between King and the Office of Inspector General of the United States Department of Health and Human Services. |
The affirmative votes of the shares of common stock
present or represented by proxy at the meeting must exceed the opposing votes in order to ratify the appointment of the independent registered public accounting firm. The Board of Directors recommends a vote to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, and proxies solicited by the Board will be voted in favor of such ratification unless a shareholder indicates otherwise on his or her proxy card. |
1. |
Name. The name of the Corporation is King Pharmaceuticals, Inc. |
2. |
Authorized Shares. |
By: |
James W. Elrod General Counsel and Secretary |
KING PHARMACEUTICALS,
INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 2007, 9:00 A.M. EASTERN DAYLIGHT TIME
ADMISSION TICKET
You must present this admission ticket in order to gain admittance to the meeting. This ticket admits only the share owner(s) listed on the reverse side and one guest and is not transferable. If these shares are held in the name of a broker, trust, bank or other nominee, you should bring a proxy or letter from the broker, trustee, bank or nominee confirming your beneficial ownership of the shares.
Directions to Embassy Suites Hotel and Conference Center
Raleigh Durham/Research Triangle Park East
201 Harrison Oaks Blvd.
Cary, NC 27513
Tel: 919-677-1840
1) FROM RDU INTERNATIONAL AIRPORT:
Take 40 East to Exit 287 (Cary/Harrison Ave.). At the top of the exit ramp, turn
right, go through the traffic light and take the first right turn after the light
onto Harrison Oaks Blvd. Proceed .02 miles.
2) FROM I-40 EAST: (Charlotte,
Atlanta, Asheville) Follow I-85 North (if coming from south, otherwise just follow
I-40 East) and pass through Greensboro where I-85 and I-40 merge. Follow I-40/85
until the two split and continue following I-40 East to Exit 287 (Cary, Harrison
Ave.). At the top of the exit ramp, turn right, go through the traffic light and
take the first right turn after the light onto Harrison Oaks Blvd. Proceed .02 miles.
3) FROM I-40 WEST: (Eastern NC,
Wilmington, Wrightsville Beach) Follow I-40 West to Exit 287 (Cary/Harrison Ave.).
At the top of the exit ramp, turn left, go through the traffic light and take the
first right turn after the light onto Harrison Oaks Blvd. Proceed .02 miles.
4) FROM I-95 NORTH: (Fayetteville,
SC, GA, FL) Take I-95 North into North Carolina. Then take I-40 West towards Raleigh
and proceed to Exit 287 (Cary/Harrison Ave.). At the top of the exit ramp, turn
left, go through the traffic light and take the first right turn after the light
onto Harrison Oaks Blvd. Proceed .02 miles.
5) FROM I-85 SOUTH: (VA) Take
I-85 South to Durham, NC. From Durham, take 15-501 South, then take Durham Freeway
South (Hwy 147 South)
to I-40. Follow I-40 East to Exit 287 (Cary/Harrison Ave). At the top of the exit
ramp, turn right, go through the traffic light and take
the first right turn after the light onto Harrison Oaks Blvd. Proceed .02 miles.
6) FROM I-95 SOUTH: (Washington
DC, VA, NY) Follow I-95 South to I-40 West and proceed to Exit 287 (Cary/Harrison
Ave.). At the top
of
the exit ramp, turn left, go through the traffic light and take the first right
turn after the light onto Harrison Oaks Blvd. Proceed .02
miles.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2007 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of James W. Elrod and William L. Phillips III, or either of them, with full power of substitution and revocation as Proxy, to vote all shares of stock standing in my name on the books of King Pharmaceuticals, Inc. (the Company) at the close of business on March 30, 2007, which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders of the Company to be held at Embassy Suites Hotel and Conference Center, Raleigh Durham/Research Triangle Park East, 201 Harrison Oaks Blvd., Cary, North Carolina, on Wednesday, May 16, 2007, at 9:00 a.m., Eastern Daylight Time, and at any and all adjournments, upon the matters set forth in the notice of the meeting. The Proxy is further authorized to vote according to the recommendation of management as to any other matters which may come before the meeting. At the time of preparation of the Proxy Statement, the Board of Directors knows of no business to come before the meeting other than that referred to in the Proxy Statement.
The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting of Shareholders of King Pharmaceuticals, Inc. and the related Proxy Statement.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON THE REVERSE SIDE AND WHEN NO INSTRUCTIONS ARE GIVEN WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD AS DESCRIBED IN THE ACCOMPANYING NOTICE OF ANNUAL MEETING AND PROXY STATEMENT AND ON THIS PROXY.
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Address Changes/Comments: |
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(Continued and to be signed on the reverse side)
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VOTE BY INTERNET - www.proxyvote.com |
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Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Daylight Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
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ELECTRONIC DELIVERY OF FUTURE
SHAREHOLDER |
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If you would like to reduce the costs incurred by King Pharmaceuticals, Inc. 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 shareholder communications electronically in future years. |
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VOTE BY PHONE - 1-800-690-6903 |
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VOTE BY MAIL |
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If you are not voting via telephone or the Internet, please detach along perforated line and mail in the envelope provided promptly as votes submitted by mail must be received prior to the annual meeting. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
KINGP1 |
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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KING PHARMACEUTICALS, INC. | |||||||||||||||||||
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE |
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For |
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To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT AND write the nominees name you wish to withhold on
the line below. |
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Vote on Proposals |
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2. |
Approval of a Third Amended and Restated Charter providing for the annual election of directors and incorporating amendments to the Second Amended and Restated Charter previously approved by shareholders. |
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Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm. |
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For address changes and/or comments, please check this box |
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Please indicate if you plan to attend this meeting. |
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature (Joint Owners) |
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