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Ball DEF 14A 2013

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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 ý

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o

 

Preliminary Proxy Statement

 

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

ý

 

Definitive Proxy Statement

 

o

 

Definitive Additional Materials

 

o

 

Soliciting Material Pursuant to §240.14a-12

 

BALL CORPORATION

(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):

ý

 

No fee required.

o

 

Fee 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:
        
 

 


Ball Corporation Logo

BALL CORPORATION
10 Longs Peak Drive, Broomfield, Colorado 80021-2510



NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 24, 2013



        The Annual Meeting of Shareholders of Ball Corporation will be held at the Corporation's offices, 10 Longs Peak Drive, Broomfield, Colorado 80021-2510, on Wednesday, April 24, 2013, at 8:00 A.M. (MDT) for the following purposes:

    1.
    To elect three directors for three-year terms expiring at the Annual Meeting of Shareholders to be held in 2016;

    2.
    To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Corporation for 2013;

    3.
    To approve the 2013 Stock and Cash Incentive Plan;

    4.
    To approve, by non-binding advisory vote, the compensation of the named executive officers ("NEOs") as disclosed in the following Proxy Statement;

    5.
    To consider a shareholder proposal, if properly presented, to provide that director nominees shall be elected by majority vote; and

    6.
    To consider any other business as may properly come before the meeting, although it is anticipated that no business will be conducted other than the matters listed above.

        Only holders of common stock of record at the close of business on March 1, 2013, are entitled to notice of and to vote at the Annual Meeting or any adjournment thereof. A Proxy Statement containing important information about the meeting and the matters being voted upon appears on the following pages.

        Your vote is important.    You are urged to read the accompanying proxy materials carefully and in their entirety and submit your proxy as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. You have a choice of submitting your proxy by Internet or by telephone, or, if you request a paper copy of the materials, by mail.

    By Order of the Board of Directors,

 

 

Charles E. Baker
Corporate Secretary

March 12, 2013
Broomfield, Colorado

Important Notice Regarding the Availability of Proxy Materials for the
Ball Corporation Annual Shareholder Meeting to be Held on Wednesday, April 24, 2013



The Proxy Statement, Form 10-K and Annual Report of Ball Corporation are Available at
http://materials.proxyvote.com

PLEASE NOTE: The 2013 Annual Meeting of Shareholders will be held to tabulate the votes cast
and to report the results of voting on the items described above. No management presentations
or other business matters are planned for the meeting.


   

Ball and GRAPHIC are trademarks of Ball Corporation, Reg. U.S. Pat. & Tm. Office


BALL CORPORATION
10 Longs Peak Drive, Broomfield, Colorado 80021-2510



PROXY STATEMENT
March 12, 2013



ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 24, 2013

Important Notice Regarding the Availability of Proxy Materials for the Annual
Shareholder Meeting to be Held on Wednesday, April 24, 2013

The Proxy Statement, Form 10-K and Annual Report are Available at
http://materials.proxyvote.com



To Shareholders of Ball Corporation:

        This Proxy Statement and the accompanying proxy are furnished to shareholders in connection with the solicitation by the Board of Directors of Ball Corporation (the "Corporation" or "Ball") of proxies to be voted at the Annual Meeting of Shareholders (the "Annual Meeting") to be held April 24, 2013, for the purposes stated in the accompanying notice of the meeting. We are first furnishing and making available to shareholders the proxy materials on March 12, 2013.

        Please submit your proxy as soon as possible so that your shares can be voted at the meeting. All properly completed proxies submitted by telephone or Internet, and all properly executed written proxies returned by shareholders who request paper copies of the proxy materials, that are delivered pursuant to this solicitation, will be voted at the meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting. Only holders of record of shares of the Corporation's common stock as of the close of business on March 1, 2013, the record date for the Annual Meeting, are entitled to notice of and to vote at the meeting, or at any adjournments or postponements of the meeting.

        Any Ball Corporation shareholder of record as of March 1, 2013, the record date, desiring to submit a proxy by telephone or via the Internet will be required to enter the unique voter control number imprinted on the Ball Corporation proxy, and therefore should have the proxy for reference when initiating the process.

    To submit your proxy by telephone, call 1-800-690-6903 on a touch-tone telephone and follow the menu instructions provided. There is no charge for this call.

    To submit your proxy over the Internet, log on to the Web site www.proxyvote.com and follow the instructions provided.

Similar instructions are included on the enclosed proxy.

        A shareholder of record of the Corporation may revoke a proxy in writing at any time prior to the meeting by sending written notice of revocation to the Corporate Secretary; by voting again by telephone; by voting via the Internet; by voting in writing if you requested your materials in paper copy; or by voting in person at the meeting.

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ABOUT THE ANNUAL MEETING

        Why am I receiving the Proxy Statement?    You are receiving the Proxy Statement because you owned shares of Ball Corporation common stock on March 1, 2013, the record date, and that entitles you to vote at the Annual Meeting. The Corporation's Board of Directors ("Board") is soliciting your proxy to vote at the scheduled 2013 Annual Meeting or at any later meeting should the scheduled Annual Meeting be adjourned or postponed for any reason. Your proxy will authorize specified people (proxies) to vote on your behalf at the Annual Meeting in accordance with your written instructions. By use of a proxy, you can vote, whether or not you attend the meeting.

        What will I be voting on?    You will be voting on (1) the election of three director nominees named in this Proxy Statement for terms expiring in April 2016; (2) the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2013; (3) the approval of the 2013 Stock and Cash Incentive Plan; (4) an advisory vote to approve named executive officer compensation; and (5) a shareholder proposal, if properly presented, to provide that director nominees shall be elected by majority vote.

        What are the Board of Directors' recommendations?    The Board recommends a vote (1) FOR the election of the three director nominees named in this Proxy Statement; (2) FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Corporation's independent registered public accounting firm for 2013; (3) FOR the approval of the 2013 Stock and Cash Incentive Plan; (4) FOR the advisory vote on the compensation of the named executive officers; and (5) AGAINST the shareholder proposal to provide that director nominees shall be elected by majority vote.

        Could other matters be decided at the Annual Meeting?    We do not know of any other matters that will be raised at the Annual Meeting. The Chairman will allow presentation of a proposal or a nomination for the Board from the floor at the Annual Meeting only if the proposal or nomination was properly submitted. The proxies will have discretionary authority, to the extent permitted by law, to vote for or against other matters that may properly come before the Annual Meeting as those persons deem advisable.

        How many votes can be cast by all shareholders?    Each share of Ball Corporation common stock (other than 688 shares of common stock that have been granted as restricted stock without voting rights) is entitled to one vote on each of the three directors to be elected and one vote on each other matter that is properly presented at the Annual Meeting.

        How do I vote my shares if I am a record holder?    If you are a record holder of shares, that is the shares are registered in your name and not the name of your broker or other nominee, you are urged to submit your proxy as soon as possible, so that your shares can be voted at the meeting in accordance with your instructions. You may submit your proxy by telephone or via the Internet as instructed on the first page of the Proxy Statement and on your proxy, or you can complete, sign, date and mail your proxy card if you request a paper copy of the proxy materials. You may also vote by attending the Annual Meeting, or sending a personal representative to the Annual Meeting with an appropriate proxy, in order to vote. Unless you or a personal representative plan to be in attendance and vote at the meeting, your vote must be received no later than 11:59 P.M. (EDT) on Tuesday, April 23, 2013.

        How do I vote my shares if I hold my shares under the Employee Stock Purchase Plan ("ESPP") or the 401(k) Plan?    Participants may vote their shares in the manner set forth above, however, shares held through the Plans must be voted by 11:59 P.M. (EDT) on Sunday, April 21, 2013. Any unvoted shares will be voted by the Trustee of the 401(k) Plan and by the Administrator of the ESPP in accordance with the Plans and the Board of Directors' recommendations.

        How do I vote my shares if I hold my shares in "street name" through a bank or broker?    If you hold your shares as a beneficial owner through a bank, broker or other nominee, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the materials you receive from your bank, broker or other nominee to ensure your shares are voted in the way you would like at the meeting. Your bank, broker or other nominee will send you specific instructions in this regard to vote your shares. If you do not provide instructions to your bank, broker or other nominee, whether your shares are voted depends on the type of item being considered for a vote. For example, under applicable stock exchange rules, brokers are permitted to vote on "discretionary" items if the voting instructions from the beneficial owners of the shares are not provided in a timely manner. The brokers are not permitted to vote on "nondiscretionary" items. The proposal to approve the appointment of independent auditors is considered a "discretionary" item. This means that brokerage firms may vote in their discretion on this matter on behalf of clients who have not furnished voting instructions at least 10 days before the date of the meeting. In contrast, the other items to be voted on at the Annual Meeting are "nondiscretionary" items. This means brokerage firms that have not received voting

2


instructions from their clients on these items may not vote on them. These so-called "broker nonvotes" will be included in the calculation of the number of votes considered to be present at the meeting for purposes of determining a quorum, but will not be considered in determining the number of votes necessary for approval and will have no effect on the outcome of the votes for such items.

        Can I revoke my proxy or change my vote?    Shareholders of record may revoke their proxies or change their votes in writing at any time prior to the meeting by sending written notice of revocation to the Corporate Secretary; by voting again by telephone or via the Internet; by voting in writing if they requested their materials in paper copy; or by voting in person at the meeting. Attendance in and of itself at the Annual Meeting will not revoke a proxy. For shares you hold beneficially but not of record, you may change your vote by submitting new voting instructions to your broker or nominee or, if you have obtained a valid proxy from your broker or nominee giving you the right to vote your shares, by attending the meeting and voting in person.


VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS

        At the close of business on March 1, 2013, there were outstanding 148,884,161 shares of common stock (together with the associated preferred stock purchase rights under the Rights Agreement dated as of July 26, 2006, between the Corporation and Computershare Investor Services, LLC, as amended). Other than 688 shares of common stock granted as restricted stock without voting rights, each of the shares of common stock is entitled to one vote. Shareholders do not have cumulative voting rights with respect to the election of directors.

        Based on Schedule 13G filings with the Securities and Exchange Commission ("SEC"), the following table indicates the beneficial owners of more than 5% of the Corporation's outstanding common stock as of December 31, 2012:

Name and Address
of Beneficial Owner
  Shares
Beneficially Owned
  Percent
of Class
 
Vanguard Fiduciary Trust Company
500 Admiral Nelson Boulevard
Malvern, Pennsylvania 19355
    9,694,716 (1)   6.30  

The Vanguard Group
100 Vanguard Boulevard
Malvern, Pennsylvania 19355

 

 

9,475,069

(2)

 

6.15

 

FMR LLC
Edward C. Johnson 3d
82 Devonshire Street
Boston, Massachusetts 02109

 

 

8,662,620

(3)

 

5.63

 

BlackRock Inc.
40 East 52nd Street
New York, New York 10022

 

 

7,846,155

(4)

 

5.10

 

(1)
The shares are held with shared voting and dispositive power.

(2)
272,353 shares with sole voting power and 259,453 shares with shared dispositive power and 9,215,616 shares held with sole dispositive power.

(3)
1,611,258 shares with sole voting power and 8,662,620 with sole dispositive power.

Fidelity Management & Research Company ("Fidelity"), 82 Devonshire Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR LLC and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 7,042,786 shares or 4.578% of the Common Stock outstanding of Ball Corporation ("the Company") as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940.

Edward C. Johnson 3d and FMR LLC, through its control of Fidelity, and the funds each has sole power to dispose of the 7,042,786 shares owned by the Funds.

3


    Members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC.

    Neither FMR LLC nor Edward C. Johnson 3d, Chairman of FMR LLC, has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees.

    Fidelity Management Trust Company, 82 Devonshire Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR LLC and a bank as defined in Section 3(a) (6) of the Securities Exchange Act of 1934, is the beneficial owner of 48,062 shares or 0.031% of the Common Stock outstanding of the Company as a result of its serving as investment manager of the institutional account(s).

    Edward C. Johnson 3d and FMR LLC, through its control of Fidelity Management Trust Company, each has sole dispositive power over 48,062 shares and sole power to vote or to direct the voting of 48,062 shares of Common Stock owned by the institutional account(s) as reported above.

    Strategic Advisers, Inc., 82 Devonshire Street, Boston, MA 02109, a wholly-owned subsidiary of FMR LLC and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, provides investment advisory services to individuals. As such, FMR LLC's beneficial ownership includes 4,812 shares, or 0.003%, of the Common Stock outstanding of Ball Corporation, beneficially owned through Strategic Advisers, Inc.

    Pyramis Global Advisors, LLC ("PGALLC"), 900 Salem Street, Smithfield, Rhode Island, 02917, an indirect wholly-owned subsidiary of FMR LLC and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 1,241,640 shares or 0.807% of the outstanding Common Stock of Ball Corporation as a result of its serving as investment adviser to institutional accounts, non-U.S. mutual funds, or investment companies registered under Section 8 of the Investment Company Act of 1940 owning such shares.

    Edward C. Johnson 3d and FMR LLC, through its control of PGALLC, each has sole dispositive power over 1,241,640 shares and sole power to vote or to direct the voting of 1,237,320 shares of Common Stock owned by the institutional accounts or funds advised by PGALLC as reported above.

    Pyramis Global Advisors Trust Company ("PGATC"), 900 Salem Street, Smithfield, Rhode Island, 02917, an indirect wholly-owned subsidiary of FMR LLC and a bank as defined in Section 3(a) (6) of the Securities Exchange Act of 1934, is the beneficial owner of 315,840 shares or 0.205% of the outstanding Common Stock of the Ball Corporation as a result of its serving as investment manager of institutional accounts owning such shares.

    Edward C. Johnson 3d and FMR LLC, through its control of Pyramis Global Advisors Trust Company, each has sole dispositive power over 315,840 shares and sole power to vote or to direct the voting of 311,400 shares of Common Stock owned by the institutional accounts managed by PGATC as reported above.

    FIL Limited ("FIL"), Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. FIL, which is a qualified institution under section 240.13d-l(b) (1) (ii), is the beneficial owner of 9,480 shares or 0.006% of the Common Stock outstanding of the Company.

    Partnerships controlled predominantly by members of the family of Edward C. Johnson 3d, Chairman of FMR LLC and FIL, or trusts for their benefit, own shares of FIL voting stock. While the percentage of total voting power represented by these shares may fluctuate as a result of changes in the total number of shares of FIL voting stock outstanding from time to time, it normally represents more than 25% and less than 50% of the total votes which may be cast by all holders of FIL voting stock. FMR LLC and FIL are separate and independent corporate entities, and their Boards of Directors are generally composed of different individuals.

    FMR LLC and FIL are of the view that they are not acting as a "group" for purposes of Section 13(d) under the Securities Exchange Act of 1934 (the "1934" Act) and that they are not otherwise required to attribute to each other the "beneficial ownership" of securities "beneficially owned" by the other corporation within the meaning of Rule 13d-3 promulgated under the 1934 Act. Therefore, they are of the view that the shares held by the other corporation need not be aggregated for purposes of Section 13(d). However, FMR LLC is making its filing on Form 13G on a voluntary basis as if all of the shares are beneficially owned by FMR LLC and FIL on a joint basis.

(4)
7,846,155 shares are held with sole voting and sole dispositive power.

4



BENEFICIAL OWNERSHIP

        The following table lists the beneficial ownership of common stock of the Corporation of our director nominees, continuing directors, all individuals who served as either our Chief Executive Officer ("CEO") or our Chief Financial Officer ("CFO") during the last fiscal year, the three other most highly compensated executive officers of the Corporation and, as a group, all of such persons and our other executive officers as of the close of business on March 1, 2013.

   
 
   
   
   
  Included in Shares
Beneficially Owned
  Excluded from Shares
Beneficially Owned
 
Title of Class
  Name of
Beneficial Owner

  Shares
Beneficially
Owned(1)

  Percent of
Class(2)

  Number of Shares Which
Become Available or
Subject to Options
Exercisable or Which
Become Exercisable
Within 60 Days of
March 1, 2013(3)

  Deferred Share
or Stock Unit
Equivalent(4)

  Restricted
Stock
Shares or
Units(5)

 
   
 

Common

 

Robert W. Alspaugh

      *         18,893     24,119  
 

Common

 

Charles E. Baker

    242,983 (6) *     200,050     35,323     28,050  
 

Common

 

Shawn M. Barker

    47,671   *     31,176     17,520     25,100  
 

Common

 

Hanno C. Fiedler

    116,730   *             22,807  
 

Common

 

John A. Hayes

    788,515 (7) *     635,230     211,115     174,230  
 

Common

 

R. David Hoover

    2,115,488 (8) 1.4     1,605,088     452,149     5,783  
 

Common

 

John F. Lehman

    159,030   *         55,481     22,119  
 

Common

 

Scott C. Morrison

    286,338   *     174,948     107,184     59,300  
 

Common

 

Georgia R. Nelson

    6,000   *         26,374     22,119  
 

Common

 

Jan Nicholson

    294,420   *         26,481     22,119  
 

Common

 

Raymond J. Seabrook

    200,755 (9) *     112,250     59,494     46,000  
 

Common

 

George M. Smart

    34,442   *         12,855     22,119  
 

Common

 

Theodore M. Solso

    75,526   *         51,469     22,119  
 

Common

 

Stuart A. Taylor II

    80,678   *         51,370     22,119  
 

Common

 

Erik H. van der Kaay

    51,266   *         42,805     22,119  
 

Common

 

All of the above and present executive officers as a group (20)

    5,040,881 (10) 3.4     3,100,316     1,300,116     640,584  
   
(1)
Full voting and dispositive investment power; unless otherwise noted.

(2)
* Indicates less than 1% ownership.

(3)
Includes RSUs that may vest or options that may vest or be acquired upon exercise during the next 60 days.

(4)
These deferred shares or stock units are equivalent to an equal number of shares of common stock that have been deferred to the Ball Corporation Deferred Compensation Company Stock Plans, with no voting rights or dispositive investment power with respect to the underlying common stock prior to its issuance.

(5)
These Restricted Stock Shares or RSUs have no voting rights or dispositive investment power.

(6)
Includes 1,040 shares owned by Mr. Baker's children, as to which he disclaims beneficial ownership.

(7)
Includes 68,200 shares held in trust for Mr. Hayes' spouse, as to which he disclaims beneficial ownership.

(8)
Includes 287,813 shares held in trust for Mr. Hoover's spouse, as to which he disclaims beneficial ownership.

(9)
Includes 2,567 shares owned by Mr. Seabrook's child, as to which he disclaims beneficial ownership.

(10)
Includes 595,226 shares to which beneficial ownership is disclaimed. In addition, 13,206 shares have been pledged as security.

5



VOTING ITEM 1—ELECTION OF DIRECTORS

        Pursuant to our Amended Articles of Incorporation and the Indiana Business Corporation Law, our Board of Directors ("Board") is divided into three classes, as nearly equal in number as possible, with directors serving staggered three-year terms. Amendments to the Indiana Business Corporation Law in 2009 made this classified Board structure statutorily required for Ball Corporation, effective from and after July 31, 2009. On April 24, 2013, three persons are to be elected to serve as directors until the 2016 Annual Meeting of Shareholders. Unless otherwise instructed on the accompanying proxy, the persons named in the proxy intend to vote for nominees Hanno C. Fiedler, John F. Lehman and Georgia R. Nelson to hold office as directors of the Corporation until the 2016 Annual Meeting of Shareholders (Class I), or, in each case, until his or her respective successor is elected and qualified. All nominees have consented to be named as candidates in the Proxy Statement and have agreed to serve if elected. If, for any reason, any of the nominees becomes unavailable for election, the shares represented by proxies will be voted for any substitute nominee or nominees designated by the Board. The Board has no reason to believe that any of the nominees will be unable to serve.

        Erik H. van der Kaay, who has served as a director since 2004, has reached the retirement age for directors and, therefore, will not stand for reelection at the 2013 Annual Meeting. The Corporation wishes to express its appreciation to Mr. van der Kaay for his significant contributions to the Corporation and its shareholders during his tenure as a director.

        In accordance with the Indiana Business Corporation Law, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. If more "withhold" than "for" votes are received, our Bylaws require the director to resign and our Nominating/Corporate Governance Committee must make a recommendation to the Board to consider whether to accept the resignation. The relevant Bylaw provisions are set out in Exhibit A to this Proxy Statement. Abstentions and broker nonvotes are considered neither votes "for" nor "against." Proxies may not be voted for a greater number of persons than the three named nominees.

        Set forth for each director nominee in Class I and for each continuing director in Classes II and III is the director's principal occupation and employment during the past five years or, if longer, the period during which the director has served as a director, and certain other information, including his or her public company directorships during the past five years.

6



DIRECTOR NOMINEES AND CONTINUING DIRECTORS

To Be Elected for a Term of Three Years Until the 2016 Annual Meeting (Class I)

PHOTO
Hanno C. Fiedler

 

Executive Vice President, Ball Corporation, and Chairman and Chief Executive Officer, Ball Packaging Europe, December 2002 to December 2005; Chairman and Chief Executive Officer, Schmalbach-Lubeca AG, 1996 to 2002. Age 67.

 

Director since 2002. Member, Audit and Nominating/Corporate Governance Committees.

Mr. Fiedler serves on the Supervisory Board of manroland AG, Offenbach, Germany. In the past five years, Mr. Fiedler has served on the Supervisory Boards of Pfleiderer AG, Neumarkt, Germany; Langmatz GmbH (now Langmatz AG), Garmisch-Partenkirchen, Germany; Thyssenkrupp Steel AG, Duisburg, Germany; HowaldtswerkeDeutsche Werft AG, Kiel, Germany; and Pfleiderer Unternehmensverwaltung GmbH, Neumarkt, Germany.


PHOTO
John F. Lehman

 

Chairman, J.F. Lehman & Company, New York, New York, since 1990. Age 70.

 

Director since 1987. Member, Finance and Nominating/Corporate Governance Committees.

Mr. Lehman is a director of EnerSys, Reading, Pennsylvania, and Verisk Analytics, Inc., Jersey City, New Jersey.


PHOTO
Georgia R. Nelson

 

President and Chief Executive Officer, PTI Resources, LLC, Chicago, Illinois, since June 2005; President, Midwest Generation EME LLC, Chicago, Illinois, April 1999 to June 2005; General Manager, Edison Mission Energy Americas, Irvine, California, January 2002 to June 2005. Age 63.

 

Director since 2006. Member, Human Resources and Nominating/Corporate Governance Committees.

Ms. Nelson is a director of Cummins Inc., Columbus, Indiana. In the past five years, Ms. Nelson has served on the board of Tower Automotive, Inc., Novi, Michigan, and Nicor Inc., Naperville, Illinois.


        
The Board of Directors recommends that shareholders vote "FOR" the election of each nominee for Director named above.

7


To Continue in Office Until the 2014 Annual Meeting (Class II)

PHOTO
John A. Hayes

 

President and Chief Executive Officer, Ball Corporation, since January 2011; President and Chief Operating Officer, January 2010 to January 2011; Executive Vice President and Chief Operating Officer 2008 to 2010; President, Ball Packaging Europe and Senior Vice President, Ball Corporation 2007 to 2008; Executive Vice President, Ball Packaging Europe and Vice President, Ball Corporation 2005 to 2006; Vice President, Corporate Strategy, Marketing and Development 2003 to 2005; Vice President, Corporate Planning and Development 2000 to 2003; Senior Director, Corporate Planning and Development 1999. Age 47.

 

Director since 2010.

PHOTO
George M. Smart

 

President, Sonoco-Phoenix, Inc., North Canton, Ohio, a subsidiary of Sonoco Products Company, 2001 to 2004. Age 67.

 

Director since 2005. Member, Human Resources and Nominating/Corporate Governance Committees.

Mr. Smart is a director of FirstEnergy Corp., Akron, Ohio.


PHOTO
Theodore M. Solso

 

Chairman and Chief Executive Officer, Cummins Inc., Columbus, Indiana, 2000 to 2011. Age 66.

 

Director since 2003. Member, Human Resources and Nominating/Corporate Governance Committees.

Mr. Solso is a director of General Motors Co. In the past five years, Mr. Solso has served on the board of Irwin Financial Corporation, Columbus, Indiana, and Ashland Inc., Covington, Kentucky.


PHOTO
Stuart A. Taylor II

 

Chief Executive Officer, The Taylor Group LLC, Chicago, Illinois, since June 2001; Senior Managing Director, Bear, Stearns & Co. Inc., Chicago, Illinois, 1999 to 2001. Age 52.

 

Director since 1999. Member, Audit and Human Resources Committees.

Mr. Taylor is a director of Hillenbrand, Inc., Batesville, Indiana, and United Stationers, Inc., Deerfield, Illinois.

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To Continue in Office Until the 2015 Annual Meeting (Class III)

PHOTO
Robert W. Alspaugh

 

Chief Executive Officer, KPMG International, 2002 to 2005. Age 66.

 

Director since 2008. Member, Audit and Finance Committees.

Mr. Alspaugh is a director of Autoliv, Inc., Stockholm, Sweden, and VeriFone Systems, Inc., San Jose, California.


PHOTO
R. David Hoover

 

Chairman, Ball Corporation since January 2011. Chairman and Chief Executive Officer January 2010 to January 2011; Chairman, President and Chief Executive Officer, April 2002 to January 2010; President and Chief Executive Officer, January 2001 to April 2002; Vice Chairman, President and Chief Operating Officer, April 2000 to January 2001; Vice Chairman, President and Chief Financial Officer, January 2000 to April 2000; Vice Chairman and Chief Financial Officer, 1998 to 2000; Executive Vice President and Chief Financial Officer, 1997 to 1998; Executive Vice President, Chief Financial Officer and Treasurer, 1996 to 1997. Age 67.

 

Director since 1996. Member, Finance Committee.

Mr. Hoover is a director of Eli Lilly and Company, Indianapolis, Indiana, Energizer Holdings, Inc., St. Louis, Missouri, and Steelcase, Inc., Grand Rapids, Michigan. In the past five years, Mr. Hoover served on the board of Irwin Financial Corporation, Columbus, Indiana, and Qwest Communications International,  Inc., Denver, Colorado.


PHOTO
Jan Nicholson

 

President, The Grable Foundation, Pittsburgh, Pennsylvania, since 1990; Managing Director, Strategic Risk Assessment, MBIA Insurance Corporation, Armonk, New York, 1998 to 2000; Managing Director, Research and Development, Capital Markets Assurance Corporation (CapMAC), New York, New York, 1994 to 1998. Age 67.

 

Director since 1994. Member, Audit and Finance Committees.

Ms. Nicholson is a director of Radian Group Inc., Philadelphia, Pennsylvania.

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DIRECTOR AND NOMINEE EXPERIENCE AND QUALIFICATIONS

        Set out below are the specific experience, qualifications, attributes and skills of each of the Corporation's directors and director nominees which led the Ball Corporation Board of Directors ("Ball Board") to conclude that each person should serve as a director of the Corporation.

        Robert W. Alspaugh—Mr. Alspaugh enjoyed a distinguished 35-year career with KPMG, with increasing responsibility, which culminated in his acting as Deputy Chairman and Chief Operating Officer of KPMG-U.S. from 1998 to 2002 and Chief Executive Officer of KPMG International from 2002 to October 2005. Mr. Alspaugh's extensive experience, qualifications and skills as a leader of one of the "big four" global accounting firms enhance his service on the Corporation's Audit Committee and he has provided valuable input as a result. He also sits on two other public company boards, one in the U.S. and the other in Europe (where he chairs the audit committee), thus providing good cross-functional background and experience, with an international component. Mr. Alspaugh's extensive professional experience as a leader of a major global accounting firm, advising and supporting large international corporations, as well as his service on other company boards, make him well qualified to serve as a director.

        Hanno C. Fiedler—After a successful career with TRW, Inc., in 1996 Mr. Fiedler became Chairman and Chief Executive Officer of Schmalbach-Lubeca AG, one of the largest and most successful rigid packaging companies based in Europe. When Ball acquired the beverage can business of Schmalbach-Lubeca in December 2002, Mr. Fiedler became Chairman and Chief Executive Officer of Ball Packaging Europe GmbH and also joined the Board of Ball Corporation. In that capacity, Mr. Fiedler provided excellent leadership to our newly-acquired European business which generated strong earnings performance during his tenure, despite the adverse effects of the German mandatory deposit system for rigid packaging which was initiated in 2003. Mr. Fiedler retired from active management of Ball Packaging Europe at the end of 2005. He serves on the Supervisory Board of a major German company. His leadership experience within the rigid container industry worldwide, with specific emphasis on Europe, makes him well qualified to serve as a director.

        John A. Hayes—Prior to joining Ball Corporation in 1999, Mr. Hayes was a Vice President of Lehman Brothers Inc. and part of an investment banking team which focused on merger and acquisition and financing advice to several major companies, including the Corporation. At Ball, Mr. Hayes initially headed our corporate development and planning activities as Senior Director and then Vice President, Corporate Planning and Development, taking on the added responsibilities of marketing and new product development from 2003 to mid-2005. He then served as President of Ball Packaging Europe, which produced excellent financial results and strong revenue growth under his leadership. During 2008 and 2009, Mr. Hayes served as Ball's Executive Vice President and Chief Operating Officer, successfully leading our key operating divisions through the economic and financial crisis. In January 2010, he was named our President and Chief Operating Officer and joined the Ball Board. In January 2011, he became our President and Chief Executive Officer. Mr. Hayes' extensive investment banking and leadership experience within Ball make him well qualified to serve as a director.

        R. David Hoover—Mr. Hoover has enjoyed a varied and successful 43-year career with Ball, serving in multiple corporate and divisional roles, including as Vice President and Treasurer from 1987 through 1992, Chief Financial Officer from 1993 to April 2000, and Chief Operating Officer for the balance of 2000. He was our Chief Executive Officer from January 2001 to January 2011, and led the Corporation through an unprecedented period of growth in revenues, earnings per share and free cash flow. Mr. Hoover's considerable working knowledge and leadership experience with respect to our Corporation make him uniquely qualified to serve as a director. He has been a Ball Board member for 17 years, serving as Chairman since 2002, and serves as a director of three other U.S.-based public companies. Mr. Hoover has also served on the Board of Trustees of DePauw University since 2002 and serves on the Boards of the Boulder Community Hospital and the Denver Children's Hospital.

        John F. Lehman—Mr. Lehman served as Secretary of the Navy in the Reagan Administration from 1981 to 1987, after which he was Managing Director of Paine Webber Inc.'s Investment Banking Division from 1988 to 1990 where he led the firm's aerospace and defense advisory practice. He then established J.F. Lehman & Company, a New York-based investment company, and has served as its Chairman since 1990. Mr. Lehman also serves as a director of two other public companies. In addition, Mr. Lehman is Chairman of the Princess Grace Foundation and an Overseer of the School of Engineering at the University of Pennsylvania. He has a rare combination of extensive business experience, public service, political acumen and global perspective. Mr. Lehman served as a member of the National Commission on Terrorist Attacks Upon the United States, also known as the 9/11 Commission, from 2002 to 2004. He has been an astute and valuable member of Ball's Board for over 25 years and has chaired its Finance Committee for many years. Mr. Lehman's public service, financial industry experience and Ball Board experience make him well qualified to serve as a director.

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        Georgia R. Nelson—Ms. Nelson has enjoyed a successful career in the energy industry, serving as a senior executive for several U.S. and international energy companies, including as President of Midwest Generation EME, LLC from April 1999 to June 2005 and General Manager of Edison Mission Energy Americas from January 2002 to June 2005. She has had extensive international experience as well as environmental and policy experience on four continents. Ms. Nelson regularly lectures on business and corporate governance matters, including at Northwestern University's Kellogg Graduate School of Management, and serves on the advisory committee of the Center for Executive Women at Northwestern. Ms. Nelson is a National Association of Corporate Directors (NACD) Board Leadership Fellow. She also serves as a director of Cummins, Inc. and CH2M HILL Inc. Previously, Ms. Nelson served on four other publicly traded company boards. Ms. Nelson's leadership roles in global businesses, as well as her service on other company boards, clearly qualify her to serve as a director of our Corporation.

        Jan Nicholson—Ms. Nicholson enjoyed a long and successful career in the financial services industry in New York, which, after an 18-year tenure at Citicorp, included positions as Managing Director, Research and Development for CapMAC from 1994 to 1998 and Managing Director, Strategic Risk Assessment for MBIA Insurance Corporation from 1998 to 2000. She also served as a director of Rubbermaid, Inc. from 1992 until 1999, and chaired its audit committee from 1994 through 1998. In addition, Ms. Nicholson is a director of Radian Group Inc., a public company, and has been President of The Grable Foundation since 1990. She has been a member of Ball's Board for 19 years and chaired our Audit Committee from 2004 to 2012. Ms. Nicholson's career in the financial services industry and her service on the Rubbermaid Audit Committee and board, as well as her long service in those capacities with Ball, make her well qualified to serve as a director.

        George M. Smart—Mr. Smart's long career and success in the U.S. can manufacturing industry make him well qualified to serve as a director. He steadily assumed increasing responsibility at Central States Can Co., a division of Van Dorn Company, culminating in his acting as its President and Chief Executive Officer from 1978 to 1993. When Central States was acquired in 1993, Mr. Smart and his management team established a start-up company, Phoenix Packaging Corporation, to manufacture and sell full-panel easy-open ends for food containers, including to Ball's food can division. Serving as Chairman and Chief Executive Officer for Phoenix, Mr. Smart led its growth to a profitable company with revenues in excess of $80 million, when it was sold to Sonoco Products Company and became Sonoco-Phoenix, Inc. in 2001. Mr. Smart served as President of Sonoco-Phoenix until 2004 and has been Chairman of the Board of FirstEnergy Corp. since 2004. Mr. Smart also previously served on the boards of Belden & Blake Corporation, Commercial Intertech Corporation, Unizan Financial, Van Dorn Company, and as Chairman of the Can Manufacturers Institute.

        Theodore M. Solso—Mr. Solso has had a successful 40-year career at Cummins Inc., a Fortune 500 manufacturing company with operations around the world. This culminated with Mr. Solso becoming Chairman and Chief Executive Officer of Cummins in January 2000, a position he held through 2011, for a total of 12 years. Under his leadership, Cummins increased revenues from $6.6 billion in 2000 to over $18 billion in 2011. During the same period, its earnings per share and operating cash flow increased from $0.35 and $550 million, to $9.55 and $2.1 billion, respectively. Mr. Solso has been on our Board since 2003 and is a member of both The Indiana Academy and the President's Management Advisory Board, as well as being a trustee of Earth University in Costa Rica, and currently serves on the board of General Motors Co. Mr. Solso's long experience in leadership positions with a major global manufacturing company, and his service on other public company boards make him well qualified to serve as a director.

        Stuart A. Taylor II—Prior to starting his own private equity firm, Mr. Taylor spent 19 years in investment banking. The majority of that time was spent at Morgan Stanley in its Corporate Finance Department. In that capacity he executed a number of mergers and acquisitions and financings, including working with Ball in 1993 on the acquisition of Heekin Can Company. He also spent time at several other firms including Bear Stearns where he was a Senior Managing Director and Head of the Chicago office. In 2001, Mr. Taylor established The Taylor Group LLC, of which he is Chief Executive Officer, a successful investment company that primarily invests in small to mid-market businesses. Mr. Taylor has been a director of Ball since 1999, acted as our Presiding Director from 2004 to 2008 and chairs our Human Resources Committee. He is also a director of two other U.S.-based public companies. Mr. Taylor's extensive experience as an investment banker, entrepreneurial investor and Ball Board member make him well qualified to serve as a director.

        Erik H. van der Kaay—Mr. van der Kaay, a native of the Netherlands, had a long and successful career in the U.S. telecom industry, including service as a senior executive with Allen Telecom throughout the 1990s, culminating as Executive Vice President, and as Chairman, President and Chief Executive Officer of Datum, Inc. from 1998 to 2002 and as Chairman of Symmetricom, Inc. from 2002 to 2003. He has also served as the managing director of a Brazilian telecom company, as well as on the board of directors of several public companies and is currently a board member of

11


RF Micro Devices in the U.S. and Orolia, S.A. in Europe, providing good cross-functional background and experience, with an international component. In addition, he has served since 2007 as a member of the South East Audit Committee Leadership Network convened by Ernst & Young and composed of audit committee members of leading public companies. Mr. van der Kaay's experience as a leader and as a director of several other companies as well as his business and financial acumen, and his international perspective, have made him well qualified to serve as a director and we are grateful for his service.


BOARD LEADERSHIP STRUCTURE AND RISK OVERSIGHT

        In January 2011, John A. Hayes became our President and Chief Executive Officer ("CEO") and R. David Hoover, our predecessor CEO, continues to serve as Chairman of the Board. The decision to split the position of Chairman and CEO was part of an orderly succession plan by which Mr. Hayes transitioned into his current role. Mr. Hayes rose to the position of CEO after more than 11 years with Ball, most recently serving as President and Chief Operating Officer and a member of the Board. Mr. Hayes previously served as President of Ball Packaging Europe from 2006 to early 2008, and then as Executive Vice President and Chief Operating Officer of the Corporation. Splitting the role of Chairman and CEO has allowed Mr. Hayes the opportunity to focus on his new executive responsibilities in managing the Corporation; while having Mr. Hoover as nonmanagement Chairman has provided continuity. Mr. Hayes and Mr. Hoover have worked closely together for many years, and their continued collaboration in the past two years has resulted in a smooth change in senior management that has been beneficial to shareholders.

        Our Board of Directors is composed of Mr. Hoover, Mr. Hayes and nine other directors, all of whom are independent directors. The Board has four standing committees—Audit, Nominating/Corporate Governance, Human Resources and Finance. Each of the committees, except for Finance, is composed solely of independent directors (the Finance Committee is primarily composed of independent directors), with each of the four committees having an independent director serving as chairman.

        Pursuant to SEC and New York Stock Exchange ("NYSE") rules, regularly scheduled executive sessions of nonmanagement directors are held. Executive sessions of independent directors are also held at least annually. Such meetings promote open discussion by nonmanagement and independent directors, enabling them to serve as a check on management, if necessary. The meetings of the independent directors are chaired by the Presiding Director, who is an independent director appointed by the Board.

        In accordance with NYSE requirements, our Audit Committee is responsible for overseeing the risk management function of the Corporation. While the Audit Committee has primary responsibility for overseeing risk management, the entire Board is involved in overseeing risk management for the Corporation. Additionally, each Board committee considers the specific risks within its area of responsibility. Our Internal Audit Department has, for many years, analyzed various areas of risk to the Corporation and has provided risk assessment and analysis to our Audit Committee. In 2007, the Corporation established a comprehensive Enterprise Risk Management process which is now supervised by our Senior Vice President and Chief Financial Officer, whereby key corporate and divisional risks are systematically identified and assessed on a quarterly basis. The results of this ongoing risk assessment are reported to our Audit Committee and to our Board at least annually.

        One of the responsibilities of our Board of Directors is to evaluate the effectiveness of the Board and make recommendations involving its organization and operation. We recognize that different board leadership structures may be appropriate for different companies and at different times. We believe our current leadership structure, with Mr. Hayes serving as CEO, Mr. Hoover as Chairman of the Board, a Board with a majority of independent directors, an independent chairman for each of our standing Board committees and separate meetings of nonmanagement and independent directors, the latter led by the Presiding Director, provides the most effective form of leadership for our Corporation at this time. We believe that our directors provide effective oversight of risk management through the Board's regular dialogue with Ball management, the Enterprise Risk Management process and assessment of specific risks within each Board committee's areas of responsibility.

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BOARD DIVERSITY

        Ball's Nominating/Corporate Governance Committee consistently applies the principles of diversity in its consideration of candidates for Board positions. In addition to considering characteristics such as race, gender and national origin, the Committee considers a variety of other characteristics, such as business and professional experience, education and skill, all leading to differences of viewpoint and other individual qualities that contribute to Board heterogeneity. This has resulted in a diverse group of talented and capable Board members, as described in more detail under "Director and Nominee Experience and Qualifications" on pages 10-12.


GOVERNANCE OF THE CORPORATION

Corporate Governance Guidelines

        The Board has established Corporate Governance Guidelines to comply with the relevant provisions of Section 303A of the NYSE Listed Company Manual (the "NYSE Listing Standards"). The Corporate Governance Guidelines are set forth on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance." A copy may also be obtained upon request from the Corporation's Corporate Secretary.

Policies on Business Ethics and Conduct

        Ball established a Corporate Compliance Committee in 1993 chaired by a designated Compliance Officer. The Committee publishes a code of business ethics, which is in the form of the Business Ethics booklet. The Board has adopted a separate additional business ethics statement referred to as the Ball Corporation Executive Officers and Directors Business Ethics Statement ("Executive Officers and Directors Ethics Statement") designed to establish principles requiring the highest level of ethical behavior toward achieving business success within the requirements of the law and the Corporation's policies and ethical standards. The Business Ethics booklet and the Executive Officers and Directors Ethics Statement are set forth on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance." Copies may also be obtained upon request from the Corporation's Corporate Secretary.

Director Training

        All new directors receive orientation training soon after being elected to the Board. Continuing education programs are made available to directors including internal presentations, third-party presentations and externally offered programs. Five directors attended externally offered director training programs in 2012.

Communications With Directors

        The Corporation has established means for shareholders or others to send communications to the Board. Persons interested in communicating with the Board, its individual directors or its committees may send communications in writing to the Corporate Secretary or the Chairman of the Board. The communication should be sent in care of the Corporate Secretary, Ball Corporation, by mail to P.O. Box 5000, Broomfield, Colorado 80038-5000 or facsimile transmission to 303-460-2691.

        In accordance with the NYSE and SEC requirements, the Corporation has established additional means for interested parties to send communications to the Board and selected committees, which are described on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance."

        Shareholder proposals for inclusion in the Corporation's proxy materials will continue to be handled and must be communicated as disclosed in this Proxy Statement on page 66.

Meetings of Nonmanagement and Independent Directors

        The Board meets regularly and not less than four times per year. Nonmanagement directors meet regularly, usually in conjunction with a regular Board meeting. Independent directors meet at least annually. Georgia R. Nelson and Theodore M. Solso served as Presiding Director for meetings of independent directors held in 2012.

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Director Independence Standards

        Pursuant to the NYSE Listing Standards, the Board has adopted a policy adhering to the director independence requirements of the NYSE in determining the independence of directors. These standards are described on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance."

        The Board has determined that a majority of the Board is independent, and that based upon the NYSE independence standards, during 2012 each of the members of the Board was and currently is independent with the exception of Messrs. Hayes and Hoover.


CERTAIN COMMITTEES OF THE BOARD

        The standing committees of the Board are the Audit, Nominating/Corporate Governance, Human Resources and Finance Committees.

Audit Committee:

        The primary purpose of the Audit Committee is to assist the Board in fulfilling its responsibilities to oversee management's conduct and the integrity of the Corporation's public financial reporting process including the overview of (1) accounting policies, (2) the system of internal accounting controls over financial reporting, (3) disclosure controls and procedures, (4) the performance of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Corporation (the "independent auditor"), (5) the Internal Audit Department and (6) oversight of our risk management. The Audit Committee is responsible for engaging and evaluating the Corporation's independent auditor, including the independent auditor's qualifications and independence; resolving any differences between management and the independent auditor regarding financial reporting; preapproving all audit and non-audit services provided by the independent auditor; and establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters.

        Members of the Audit Committee are Ms. Nicholson and Messrs. Alspaugh, Fiedler, van der Kaay and Taylor. The Board has determined that each member of the Audit Committee is independent and financially literate, has accounting or financial management expertise and is an Audit Committee financial expert under the NYSE Listing Standards and the SEC regulations. The Audit Committee met five times during 2012.

        The Report of the Audit Committee is set forth on page 55. The Committee has considered the non-audit services provided during 2012 and 2011 by the independent auditor as disclosed below and determined the services were compatible with maintaining the auditor's independence. The Committee believes the fees paid to the independent auditor in respect of the services were appropriate, necessary and cost efficient in the management of the business of the Corporation and are compatible with maintaining the auditor's independence.

Audit Fees and Services

        The following table represents fees for professional services rendered by PricewaterhouseCoopers LLP for the audit of the Corporation's annual Consolidated Financial Statements and quarterly reports and the auditor's report under the Sarbanes-Oxley Act of 2002 for fiscal 2012 and fiscal 2011, together with fees for audit-related services and tax services rendered by PricewaterhouseCoopers LLP during fiscal 2012 and fiscal 2011. Audit-related services for 2012 consisted of consultations related to the bond offering, acquisitions, stock repurchase programs, local and special audits, derivative transactions and an internal controls review. Audit-related services for 2011 consisted primarily of acquisitions and joint venture accounting and derivative transactions. Tax fees for 2012 and 2011 consisted principally of tax compliance, including tax compliance matters related to tax audits and return preparation fees and fees for tax consultations, primarily related to the Corporation's relocation of its European headquarters.

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  Fiscal 2012
  Fiscal 2011
 
   

    

             

Audit Fees

             

Attestation Report and Accounting Consultations

  $ 4,685,000   $ 5,433,000  

Foreign Statutory Audits

    1,569,000     1,544,000  

             

Audit-Related Fees

             

Benefit Plans

  $ 24,000   $ 25,000  

Consultations

    278,000     206,000  

             

Tax Fees

             

Tax Compliance Matters

  $ 812,000   $ 932,000  

Tax Consultations

    6,379,000     3,641,000  

             

All Other Fees

  $ 29,000   $ 62,000  
   

        The Audit Committee's Charter requires management to submit for preapproval all audit, audit-related and non-audit-related services to be performed by the independent auditor. Management and the independent auditor submit a report of fees for review and preapproval by the Committee on a quarterly basis. The Audit Committee requires management and the independent auditor to submit a report at least annually regarding audit, audit-related, tax and all other fees paid by the Corporation to the independent auditor for services rendered in the immediately preceding two fiscal years. The Committee considers whether the fees for non-audit and audit-related services are compatible with maintaining the auditor's independence and requires management and the independent auditor to confirm this as well. The Audit Committee preapproved 100% of all of the above-referenced fees paid in 2012 and 2011 for services that were provided by PricewaterhouseCoopers LLP.

        There were no hours expended by persons other than the independent auditor's full-time, regular employees on the independent auditor's engagement to audit the Corporation's financial statements.

        A copy of the Audit Committee Charter is set forth on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance."

Nominating/Corporate Governance Committee:

        The Nominating/Corporate Governance Committee is responsible for assisting the Board in fulfilling its responsibility to identify qualified individuals to become Board members; recommending to the Board the selection of Board nominees for the next Annual Meeting of Shareholders; addressing the independence and effectiveness of the Board by advising and making recommendations on matters involving the organization and operation of the Board, Corporate Governance Guidelines and directorship practices; overseeing the evaluation of the Board and its committees; and reviewing and assessing the Corporation's sustainability activities and performance. The Nominating/Corporate Governance Committee utilizes the standards set forth below for considering director nominees.

        Members of the Nominating/Corporate Governance Committee are Messrs. Fiedler, Lehman, Smart, Solso and Ms. Nelson. The Board has determined that the members of the Committee are independent under the NYSE Listing Standards. The Nominating/Corporate Governance Committee met four times during 2012.

        The Board has established a process whereby nominees for the Board may be submitted by members of the Board, the CEO, shareholders and any other persons. The Committee considers these recommended candidates in light of criteria set forth below.

        The Committee will seek candidates who meet at a minimum the following criteria: (1) have sufficient time to attend or otherwise be present at Board, relevant Board committee and Shareholders' meetings; (2) will subscribe to Ball Corporation's Corporate Governance Guidelines and the Executive Officers and Directors Ethics Statement; (3) demonstrate credentials and experience in a broad range of corporate matters; (4) have experience, qualifications, attributes and skills that would qualify them to serve as a director; (5) will subscribe to the finalized strategic and operating plans of the Corporation as approved by the Board from time to time; (6) are not affiliated with special interest groups that represent major causes or constituents; and (7) meet the criteria, if any, for being a director of the Corporation as set forth in the Indiana Business Corporation Law, the Articles of Incorporation and the Bylaws of the Corporation.

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        The Committee will apply the principles of diversity in consideration of candidates. The Committee may utilize and pay third-party consultants to identify and screen candidates on a confidential basis for service on the Board. The Committee will also determine candidates' qualifications in light of the standards set by the Committee and by evaluating the qualifications of all candidates in an attempt to select the most qualified nominees suited to serve as a director while attempting to ensure that a majority of the Board is independent and, where needed, to meet the NYSE and SEC requirements for financial literacy, accounting or financial management expertise or audit committee financial expert status.

        The Nominating/Corporate Governance Committee will consider candidates recommended by shareholders in accordance with the Corporation's Bylaws. Any such recommendation should be in writing and addressed to the Chair, Nominating/Corporate Governance Committee, in care of the Corporate Secretary, Ball Corporation, by mail to P.O. Box 5000, Broomfield, Colorado 80038-5000.

        The Nominating/Corporate Governance Committee received no recommendations for candidates as nominees for the Board from a security holder or group of security holders that beneficially owned more than 5% of the Corporation's voting common stock for at least one year as of the date of the recommendation.

        A copy of the Nominating/Corporate Governance Committee Charter is set forth on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance."

Human Resources Committee:

        The primary purpose of the Human Resources Committee is to assist the Board in fulfilling its responsibilities related to the evaluation and compensation of the CEO and overseeing the compensation of the other executive officers of the Corporation; reviewing and approving the schedule of salary ranges and grades for the salaried employees of the Corporation; approving the Corporation's stock and cash incentive compensation programs including awards to executive officers and the number of shares to be optioned and/or granted from time to time to employees of the Corporation; approving and receiving reports on major benefit plans, plan changes and determinations and discontinuations of benefit plans; discussing the performance evaluation system and succession planning system of the Corporation, including discussions with the Chairman of the Board and the CEO about the succession plan for the Chairman of the Board and the CEO; hiring experts, including executive compensation consultants, as deemed appropriate to advise the Committee; assessment of compensation-related risks; and authorizing the filing of required reports with federal, state and local governmental agencies.

        Members of the Human Resources Committee are Messrs. Smart, Solso and Taylor and Ms. Nelson. Mr. Fiedler served as a member of the Committee from May 20, 2012, until January 15, 2013. The Board has determined that the members of the Committee are independent under the NYSE Listing Standards. The Human Resources Committee met five times during 2012. A copy of the Human Resources Committee Charter is set forth on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance."

Finance Committee:

        The Finance Committee assists the Board in fulfilling its responsibility to oversee management in the financing and related risk management of the Corporation, the status of the Corporation's retirement plans and insurance policies and the Corporation's policies relating to interest rates, commodity hedging and currency hedging. The Committee may hire experts as deemed appropriate to advise the Committee in the performance of its duties. The Committee reports to the Board concerning the financing of the Corporation and the performance of the Committee.

        The members of the Finance Committee are Messrs. Alspaugh, Hoover and Lehman and Ms. Nicholson. The Committee met four times during 2012. A copy of the Finance Committee Charter is set forth on the Corporation's Web site at www.ball.com under the "Investors" page, and under the link, "Corporate Governance."

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BOARD MEETINGS AND ANNUAL MEETING

        The members of the Board are expected to attend all meetings of the Board, relevant committee meetings and the Annual Meeting of Shareholders. The Board held five meetings during 2012. Every director attended 75% or more of the aggregate of the total number of meetings of the Board and the total number of meetings held by all committees of the Board on which the director served. All directors attended the 2012 Annual Meeting.


TRANSACTIONS WITH RELATED PERSONS, PROMOTERS
AND CERTAIN CONTROL PERSONS

        Ball Corporation has adopted a policy with respect to transactions with related persons requiring its executive officers and directors to comply with all SEC and NYSE requirements concerning transactions between the Corporation and "related persons," as defined in the applicable SEC and NYSE rules. With respect to related persons, David L. Taylor currently serves as President and Chief Executive Officer of a wholly owned subsidiary of Ball Corporation, and is the spouse of Lisa A. Pauley, an executive officer of the Corporation. For 2012, Mr. Taylor's base salary was approximately $418,000. To facilitate compliance with such policy, the Board adopted procedures for the review, approval or ratification of any transaction required to be reported under the applicable rules. The policy provides that each executive officer and director will promptly report to the Chairman of the Board any transaction with the Corporation undertaken or contemplated by such officer or director, by any beneficial owner of 5% or more of the Corporation's voting securities or by any immediate family member. The Chairman of the Board will refer any transaction to the General Counsel for review and recommendation. Upon receipt of such review and recommendation, the matter will be brought before the Nominating/Corporate Governance Committee to consider whether the transaction in question should be approved, ratified, suspended, revoked or terminated. This policy for transactions with related persons is in writing and is part of the Ball Corporation Executive Officers and Directors Ethics Statement. The written form of the policy can be found on the Corporation's Web site as indicated in the section "Policies on Business Ethics and Conduct" on page 13.

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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS

        The Compensation Discussion and Analysis ("CD&A") portion of our proxy materials describes Ball Corporation's 2012 executive compensation program and its strong alignment with our pay-for-performance philosophy.

EXECUTIVE SUMMARY

        Ball Corporation experienced another strong year in 2012—including sales of $8.7 billion, net earnings of $483 million and free cash flow of $548 million, all of which were all-time high comparables in our company's 132-year history, as more specifically described under the heading "Management's Discussion and Analysis" in Ball's Annual Report on Form 10-K. The chart below summarizes certain key financial results for fiscal year 2012 compared to fiscal year 2011:

 
 
  2012
  2011
  % Growth
 

Revenue (net sales)

  $8.7 billion   $8.6 billion   1.2%

Net Earnings (comparable basis)*

  $483 million   $460 million   5.1%

Free Cash Flow*

  $548 million   $505 million   8.5%

Stock Price

  $44.75   $35.71   25.3%

Earnings Per Share (comparable basis)*

  $3.06   $2.73   12.1%
 
*
These financial measures are on a non-U.S. GAAP basis and should be considered in connection with the consolidated financial statements contained within Item 8 of the 2012 Annual Report on Form 10-K (the "annual report"). Non-U.S. GAAP measures should not be considered in isolation and should not be considered superior to, or a substitute for financial measures calculated in accordance with U.S. GAAP. A reconciliation of Non-GAAP measures to U.S. GAAP is available in Item 7 of the annual report.

        Ball's stock price closed the year at $44.75, an increase of 25.3% over the prior year compared to 7.3% for the Dow Jones Industrial Average and 13.4% for the S&P 500. Including reinvested dividends, Ball generated a total return of 26.5% for the same period. Also during 2012, Ball increased the quarterly cash dividend by 43% to 10 cents per share, which provided annual dividends of $62 million, and repurchased $494 million of Ball's common stock.

        The strong business performance in 2012 is a continuation of the performance we have delivered over the last decade. The graph below compares the cumulative 10-year total return to holders of Ball Corporation's common stock with the cumulative total returns of the S&P 500 Index and the Dow Jones U.S. Containers & Packaging Index. The graph tracks the performance of a $100 investment in our common stock (with the reinvestment of all dividends) and in each of the indexes from December 31, 2002, to December 31, 2012.

CHART

       Source: Bloomberg L.P.® Charts

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

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        Much of our financial success is attributable to the fact that we continue to focus on the key components of our financial strategy, which include:

Generating free cash flow;

Disciplined and balanced capital allocation;

Growing earnings before interest and taxes ("EBIT") by maximizing value in existing businesses, expansion into new markets and products through internal capital investments, and merger and acquisition activities; and

Generating incremental Economic Value Added ("EVA®") over our 9% after-tax hurdle rate, which is above our weighted average cost of capital ("WACC"), and over time leads to a higher share price and shareholder returns.

 
CHART

        In 2012, we had many operational successes that were driven by our nearly 15,000 global employees and our focused execution of Ball's Drive for 10 vision for continued, long-term value creation, including:

    Maximizing value in our existing businesses, by aligning our supply with demand, strong program performance in our aerospace business, manufacturing efficiencies, customer mix and the positioning of our products and services.

    Expanding into new products and capabilities, including the introduction of the new "royal pint" 586mL can in North America and the debut of our premium "protected seal" wine can in Europe, as well as the introduction of a metal technology breakthrough that enables the use of recycled aluminum in the manufacture of extruded aluminum packaging for aerosols.

    Aligning ourselves with the right customers and markets by transitioning to a global packaging business, growing our specialty packaging business to more than 15% of our global beverage packaging sales, increased demand for our popular Alumi-Tek® bottle, and the construction of a joint venture metal beverage can plant in Alagoinhas, Brazil.

    Broadening our geographic reach through the acquisition of Envases del Plata S.A. de C.V., a leading producer of extruded aluminum aerosol packaging in Mexico with a manufacturing plant in San Luis Potosi.

    Leveraging our know-how and technological expertise to provide a competitive advantage, including the selection of our aerospace business by NASA to lead a technology demonstration of a high performance "green" propellant alternative to the highly toxic fuel hydrazine, and to be part of a team to build the first space-based instrument to monitor major air pollutants across the North American continent for NASA's Tropospheric Emissions: Monitoring of Pollution (TEMPO) mission.

        The actions we took in 2012 are linked directly to our Drive for 10 vision, and position Ball well for continued success in 2013. We see opportunities for disciplined growth in selected markets and products, and our strong balance sheet provides a solid foundation to support all of our activities.

        Pay-for-Performance Serves as the Foundation of our Executive Compensation Program—The design, governance and administration of our executive compensation program is centered on the principle of aligning pay to performance, achieved by linking the majority of executive compensation opportunities to long-term shareholder returns and the value-added financial performance of Ball. We believe this principle has directly contributed to the successful performance of the business through:

    A management-as-owners culture that builds a management team with meaningful ownership in Ball. Executives are closely aligned to shareholder interests through established ownership expectations, equity-settled long-term incentives and specialized opportunities that encourage individuals to make meaningful, personal investments in Ball Corporation common stock.

 

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    Incentive pay programs that utilize value-added financial performance metrics—specifically, EVA®, return on average invested capital ("ROAIC"), and total shareholder return ("TSR")—that allow for close alignment with shareholder value generation by creating accountability for both the efficient deployment of capital and strong earnings generation.

        The major compensation elements of Ball's pay-for-performance philosophy are shown in the table below, with the page in the CD&A that details the specifics of each of these components:

   
Compensation Element
  Basis for Performance Measurement
  Alignment with Principle of
Pay-for-Performance

  Page
 
   
                 
   
Short-Term Annual Cash Compensation  
   

Base Salary

  Individual performance and contribution based on primary duties and responsibilities   Competitive compensation element required to recruit and retain top executive talent; pay for primary duties and responsibilities     30  
   

Economic Value Added Annual Incentive Plan

  EVA® Growth
(net operating profit after-tax, less a cost of capital charge)
  Measures the increase in actual economic value generated by the business     30  
   
Long-Term Incentives (Cash)  
   

Long-Term Cash Incentive Plan ("LTCIP")

 

ROAIC

Relative TSR vs. S&P 500 subset

  Rewards ROAIC performance above a target rate set above Ball's weighted average cost of capital and shareholder returns that outperform the market     32  
   

Acquisition-Related Special Incentive Plan

  EBIT and Cash Flow (for Metal Beverage Packaging Division, Americas)   Rewards the successful integration and performance of a business acquired in 2009     34  
   
Long-Term Incentives (Equity)  
   

Stock Options/Stock-Settled Stock Appreciation Rights ("SARs")

  Stock Price Appreciation   Rewards absolute stock price growth over time     35  
   

Performance-Contingent Restricted Stock Units ("RSUs")

 

ROAIC

Stock Price

  Builds executive ownership with stock unit awards that vest contingent upon ROAIC over a 3-year period exceeding Ball's weighted average cost of capital     35  
   

Restricted Stock/RSUs

  Stock Price   Granted from time-to-time, generally in connection with the promotion or recruitment of individuals to facilitate ownership and retention     36  
   

Deposit Share Program ("DSP")

  Stock Price   Promotes an executives-as-owners culture by making deposit share opportunities from time-to-time in the discretion of the Committee, in exchange for the recipient voluntarily investing in and holding shares of Ball Corporation common stock     35  
   

        Our Heavy Weighting of Compensation to Performance Creates Pay-for-Performance Linkage—Consistent with our management-as-owners, pay-for-performance philosophy described previously, the majority of the target total compensation for our executives is variable based on performance, which constitutes pay at risk. The CEO is eligible to participate in the same executive programs as the CFO and the other NEOs; however, a larger portion of the CEO's target total compensation is at risk. The following charts represent the mix of target total compensation awarded to Ball's CEO and other NEOs in 2012. As illustrated, 86% of the target total compensation awarded to the CEO and 75% awarded to other NEOs in 2012 was based on elements that are at risk and may vary from year to year depending on business performance. Furthermore, 70% of the CEO's and 59% of the other NEOs' target total compensation was based on long-term performance. This emphasis on longer term compensation, through performance based long-term cash and stock awards, ensures a strong continued alignment between Ball's executive ownership and shareholder value creation objectives.

 

20


 

2012 Target Compensation Mix

CHART

        Our Compensation Plans are Closely Linked to Business Performance—Ball's fiscal 2012 financial results and the resulting EVA® improvement were directly linked to the pay outcome of our annual short-term incentive plan, since the payout factor is based on the amount of profits generated, in excess of both operating and capital costs, resulting in EVA® in excess of targets, as shown below:

 
Compensation Element
  2012 Performance Achievement
  2012 Pay Outcome
 

       
 

Annual Cash Compensation

 

Economic Value Added Annual Incentive

  The actual EVA® generated in excess of Ball's internal 9% after-tax hurdle rate for fiscal year 2012 of $161.4 million exceeded our $117.1 million EVA® incentive plan target by $44.3 million   Payout for our NEOs was at 185% of target
 

        Likewise, our success in fiscal year 2012 reflects a continuation of the successful execution of our business strategy and strong performance in prior years; therefore, pay realized by our NEOs from long-term incentive performance cycles completed at 2012 year-end reflects our commitment to improved financial performance and stock price growth, as shown below:

 
Compensation Element
  2012 Performance Achievement
  2012 Pay Outcome
 

       
 

Long-Term Incentives (Equity)

 

Performance-Contingent RSUs
2010 to 2012 Period

  Actual 3-year average ROAIC of 12.2% exceeded the target of 6.6%   All performance-contingent RSUs granted in 2010 fully vested for all NEOs on January 31, 2013
 

 

21


 

 
Compensation Element
  2012 Performance Achievement
  2012 Pay Outcome
 

       
 

Long-Term Incentives (Cash)

 

Long-Term Cash Incentive Plan ("LTCIP")
2010 to 2012 Cycle

  Relative TSR versus the S&P 500 subset was at the 67th percentile, which exceeded the target of 50th percentile (for 50% of payout)

Actual 3-year average ROAIC of 12.2% exceeded the target of 9.0% (for 50% of payout)

  All of our NEOs received LTCIP payout equal to 184.8% of target
 

Acquisition-Related Special Incentive Plan
3rd Payout

  Cumulative 39-month EBIT and cash flow were both above target   The final 39-month period resulted in an award of 47.1%, resulting in a cumulative total award of 103.8%
 

        We Are Committed to Shareholder Oriented Corporate Governance—Our governance process ensures that the executive compensation program is appropriately maintained and updated to always meet a standard of excellence in pay-for-performance alignment. Specifically, a number of practices and policies are in place to promote the continuous improvement and accountability of our executive compensation program:

    A Human Resources Committee of the Board of Directors ("Committee") composed entirely of directors who meet the NYSE independence standards;

    An executive compensation consultant, engaged by and reporting directly to the Committee;

    A review of total compensation via tally sheets;

    External benchmarking of compensation levels and incentive design practices;

    Dividend equivalents for performance-based awards which only vest when performance measures are achieved;

    Nominal perquisites that are not grossed-up for taxes;

    Ongoing assessment of the relationship between risk and compensation programs;

    Executive stock ownership guidelines for executives and directors, which have been attained by all;

    An anti-hedging policy for our executives and directors;

    A shareholder-approved recoupment or "clawback" provision for cash incentive and stock compensation, which in the case of fraud or intentional misconduct by any executive at a level of vice president or above, may result in full reimbursement to Ball of any incentive compensation or cancellation of any outstanding awards to the executive; and

    Change in control agreements with multiples that do not exceed two times pay and that require a termination of employment following a change in control ("double trigger") before severance benefits are triggered. Excise tax gross-ups have been eliminated for any new change in control agreements entered into after January 1, 2010.

 

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        Composition of our NEOs in 2012—This year's NEOs include Mr. Hayes, Ball's President and CEO, Mr. Morrison, SVP and CFO, Mr. Seabrook, EVP and COO of Global Packaging, Mr. Baker, VP and General Counsel and Mr. Barker, VP and Controller.

     
 
Officers
  Title
 

John A. Hayes

 

President and CEO, elected on January 26, 2011

Scott C. Morrison

 

SVP and CFO since 2010

Raymond J. Seabrook

 

EVP and COO, Global Packaging since 2010 (retired at end of 2012)

Charles E. Baker

 

VP and General Counsel since 2004, elected Corporate Secretary on July 27, 2011

Shawn M. Barker

 

VP and Controller since 2010
 

        NEO Target Compensation Awarded in 2012—After review of competitive market data based on both General Industry and Peer Group, Ball's financial and operational performance, executive compensation consultant and CEO recommendations, tally sheet analysis, promotion actions leading to greater responsibility, executive individual performance, and internal pay comparisons, the Committee authorized the following target total compensation elements for the CEO and other NEOs:

    Base pay increases to all NEOs, including above average increases for Messrs. Hayes and Morrison to move their compensation closer towards market;

    Continued utilization of the short-term incentive EVA® plan. Target incentive opportunity percentages remained the same for all NEOs except Mr. Hayes and Mr. Morrison, which increased to move their total compensation closer towards market;

    Continued utilization of the long-term cash incentive plan for all NEOs. Target incentive opportunity percentages remained the same for all NEOs;

    The award of performance-contingent RSUs, SARs and stock options; and

    In 2011, the Committee approved opportunities under the Deposit Share Program (DSP) to our NEOs and broader management team. Under this program, we provide grants of restricted stock units in exchange for the recipient buying and holding a matching number of common shares. These deposit share opportunities are made from time-to-time at the discretion of the Committee, and are intended to support our commitment to have a management team of owners at Ball Corporation, with individuals voluntarily investing in Ball. Deposit share opportunities granted in 2011 required acquisition of common shares by March 2, 2012, in order to receive the matching Restricted Stock Units. Messrs. Hayes, Morrison, Seabrook and Baker acquired common shares in 2011; Messrs. Seabrook and Barker also acquired common shares during 2012, to fulfill this DSP requirement.

        The Committee is confident that our executive compensation program, along with our management-as-owners culture and our pay-for-performance philosophy, have directly contributed to the successful performance of the business and resulted in an executive team closely aligned with shareholders.

 

23



COMPENSATION OBJECTIVES AND PHILOSOPHY

        The primary objective of the Corporation's executive compensation program is to attract and retain exceptional leaders and enable them to behave like an owner—one of our key business values. When setting executive compensation, the Corporation applies a consistent approach for all executive officers and intends that the combination of compensation elements closely aligns the executives' financial interests with those of the shareholders. The program is mainly designed to:

    Attract, motivate and retain a highly capable and performance-focused executive team;

    Promote a culture of management owners whose financial interests are aligned with those of the Corporation's shareholders;

    Pay for performance such that total compensation reflects the individual performance of executives and the absolute and relative performance of the Corporation; and

    Efficiently manage the potential stock dilution, cash flow, tax and reported earnings implications of executive compensation, consistent with the other objectives of the program.

        Target total compensation is composed of base salary, annual EVA® incentive compensation and long-term incentive compensation in the form of both cash and equity. In support of the Corporation's emphasis on significant ownership by key executives, the Corporation delivers long-term incentive opportunities that encourage ownership. Generally, the amount of compensation realized or potentially realizable does not directly impact the level at which future pay opportunities are set. However, when granting equity awards, the Committee reviews and considers both individual performance and the number of outstanding and previously granted equity awards.

        In addition to promoting share ownership, the Corporation's executive compensation objectives and philosophy focus on rewarding performance. This means that shareholder returns along with corporate performance, both short-term and long-term, comprise the largest portion of executive pay.


ROLE OF THE HUMAN RESOURCES COMMITTEE AND EXECUTIVE
COMPENSATION CONSULTANT

        The Human Resources Committee (the "Committee") oversees the administration of the executive compensation program and determines the compensation of the executive officers of the Corporation. The Committee is solely composed of nonmanagement directors, all of whom meet the independence requirements of the NYSE. Furthermore, the Committee has retained an independent consultant (the "Consultant") to assist in fulfilling its responsibilities. The Consultant is employed by Pay Governance, LLC and is engaged by and reports directly to the Committee. Specifically, the Consultant's role is to develop recommendations for the Committee related to all aspects of executive compensation programs and the Consultant works with management to obtain information necessary to develop the recommendations. Pay Governance, LLC, an independent company that is not affiliated with the Corporation, provides no other services to the Corporation, and we do not believe any conflict of interest exists that may limit its ability to provide independent advice to the Committee.


MARKET REFERENCE POINTS AND PEER GROUPS

        When benchmarking compensation to the competitive market, we use two market reference points for our executive officers. This two-pronged approach provides a spectrum of relevant information on executive compensation levels, practices and trends in the marketplace.

        The primary market reference point (General Industry) reflects the broad talent market in which we compete. The critical skills required by the Corporation's management team have historically been found both inside and outside of the container and packaging industry, and as such, the Committee believes it is appropriate to focus on General Industry market levels as the primary market reference point for evaluating the competitiveness of our executive compensation programs. These data are size-adjusted to reflect the relative size of the Corporation or the relevant business unit for the executive. Size-adjusting the data ensures that market levels are being developed for like roles

24


within businesses of similar size and scope. Data for the General Industry are collected from multiple proprietary survey sources published by leading market data providers.

        The secondary market reference point (Peer Group) is comprised of companies within the container and packaging, distiller and brewer, food, household durable and nondurable goods, aerospace and general manufacturing industries. We use the secondary reference point to identify any differences in compensation practices between related industry peers and the broader general industry. Our Peer Group consisted of 20 companies with fiscal-annual revenues ranging from $3.5 billion to $15 billion with the exception of one peer company that exceeded the $15 billion criteria threshold (median revenues of $6.6 billion). Data for the Peer Group are collected from both proprietary survey sources where custom analyses for selected peer groups are available and publicly disclosed data from SEC filings.

        In developing the Peer Group, the Consultant used objective, quantitative financial and industry criteria, as well as qualitative criteria regarding the nature of our business operations. Specifically, the Consultant used the following principles and criteria in identifying the Peer Group companies:

 
Design Principle
  Criteria
 
Quantitative financial criteria to ensure organizations are comparable in terms of size and structure  

Revenue between ~$3-$15 billion (an approximate range of 0.5x-2x Ball's revenues)

Market capitalization between ~$3-$15 billion (used as a secondary reference)

Ratio of market capitalization to revenue between 0.5 and 2.0

Positive operating margins ranging from 5-20%

Three-year TSRs with no outlying large declines, ideally outperforming the S&P 500

 
Qualitative criteria regarding appropriate industry, business types and organizational complexity  

Ball's direct peers in the container and packaging industry

Nondurable consumer product companies with some or all of the following characteristics: containers and packaging are a critical element of the final product, there is a substantial business focus on meeting annual performance expectations, and the individual consumer represents the ultimate purchaser of the product

Broader manufacturing companies within the aerospace, office services supplies, capital goods, chemical manufacturing, paper products and steel industries

 

        For 2012, our Peer Group remained unchanged from the prior year and included the following comparators:

 
Avery Dennison Corporation
Bemis Company, Inc.
Campbell Soup Company
ConAgra Foods, Inc.
Crown Holdings Inc.
Eastman Chemical Company
Goodrich Corp.
  Greif, Inc.
H.J. Heinz Company
ITT Corporation
MeadWestvaco Corporation
Molson Coors Brewing Company
Owens-Illinois, Inc.
Pactiv Corp.
  PPG Industries, Inc.
Sara Lee Corp.
Sealed Air Corporation
Silgan Holdings, Inc.
Sonoco Products Company
United States Steel Corp.
 

25


        The chart below illustrates the Corporation's relative positioning compared to the 2012 Peer Group on relevant financial metrics.

Ball Market Capitalization, Revenue and Net Income
as Compared to the Peer Group

CHART

  Note: Financial statistics shown above are on a GAAP, as-reported basis and were provided by the Consultant and obtained from the S&P's Capital IQ database.

 

*

 

Market Cap is as of December 31, 2011.

 

**

 

Revenue and Net Income are as reported for FY 2011.

        In the third quarter of 2012, the following amendments were made to our Peer Group due to corporate actions that no longer made some companies viable comparators:

    Exelis replaced ITT Corporation following ITT's split into three separate, freestanding entities. Exelis is the most appropriate comparator of the post-split entities.

    Pactiv was removed from the Peer Group after being acquired by Reynolds.

    Sara Lee was removed from the Peer Group after splitting into two separate entities and divesting a portion of their operations.

        This amended Peer Group will be used for all 2013 pay decisions.


PROCESS FOR DETERMINING EXECUTIVE COMPENSATION

        The Committee reviews and adjusts executive target total compensation levels, including long-term incentive levels in January of each year.

        The Corporation begins the annual process by reviewing each executive officer's target total compensation in relation to the 50th percentile of both the primary and secondary market reference points, e.g., General Industry and Peer Group. The data is gathered by the Consultant and presented to the Corporation and the Committee in detailed reports providing a comparative analysis of our executive officer compensation to the market data. The Consultant works in collaboration with the Corporation's Executive Compensation Department when preparing such reports.

26


        Additionally, the Consultant creates tally sheets for each executive outlining each executive's annual target and actual pay in relation to competitive market information as well as total accumulated pay under various corporate performance scenarios, both recent and projected. The tally sheets are used to analyze and determine executive officer pay recommendations and understand the potential realizable compensation under various performance scenarios. The Consultant also prepares for the Committee an independent review and recommendation of the CEO's compensation. In its deliberations, the Committee meets with the CEO and other members of senior management, as appropriate, to discuss the application of the competitive benchmarking (pay and performance) relative to the unique structure and needs of the Corporation.

        The CEO's target total compensation package is set by the Committee during an executive session based on the Committee's review of the competitive information and recommendation prepared by the Consultant, assessment of the CEO's individual performance in conjunction with the financial and operating performance of the Corporation, and appropriate business judgment.

        A recommendation for the target total compensation of the Corporation's other executive officers, including the CFO and other NEOs, is made by the CEO after reviewing the executive's and the Corporation's business performance in conjunction with the executive's responsibility and experience when compared to the competitive market information prepared by the Consultant. The compensation package for the other executive officers is established by the Committee taking into consideration the recommendation of the CEO, the executive officer's individual job responsibilities, experience and overall performance, along with appropriate business judgment.

        The Committee may also adjust an executive's compensation level during the year as a result of a promotion. Such adjustments take into consideration competitive market data and a recommendation provided by the Consultant, as well as the recommendation of the CEO, which takes into account the additional responsibilities assigned and overall experience and performance of the executive.

27



ELEMENTS OF BALL'S EXECUTIVE COMPENSATION PROGRAM AND 2012 PERFORMANCE

        The primary elements of the Corporation's executive compensation program are designed to be consistent with the compensation objectives described previously. The elements are outlined in the following table. The purpose of each element is also provided to demonstrate how each fits with the overall compensation objectives, specifically, stock ownership and pay-for-performance.

 
Component
  Element
  Purpose
  Performance Measures
  2012 Performance Outcome
 

Base Compensation—Current Year

  Annual Base Salary   Fixed element of pay based on an individual's primary duties and responsibilities.   Individual performance and contribution based on primary duties and responsibilities.   All NEOs received base pay increases, which included increases for certain NEOs to move total compensation closer towards market as applicable.
 

Annual Incentive—Performance Based Cash

  Annual EVA® Incentive Compensation Plan   Designed to reward achievement of specified annual corporate and/or operating unit financial goals pursuant to EVA® principles.   Actual 2012 EVA® based on the amount of corporate net operating profit after-tax, less a charge for capital employed in the business based on the Corporation's after-tax internal hurdle rate, as compared to the 2012 EVA® incentive plan target.   Resulted in an award of 185% of target for all NEOs. No amounts were banked.
 

Long-Term Incentive— Performance Based Cash

  Long-Term Cash Incentive Plan   Designed to promote long-term creation of shareholder value in absolute terms (ROAIC) and relative terms (performance versus a group of companies in the S&P 500) and provide an executive retention incentive.   50% based on TSR over 3 years relative to a group of S&P 500 companies and 50% based on ROAIC over 3 years, as compared to targets.   The 2010 to 2012 cycle resulted in an award payment of 184.8% of target for all NEOs based on above target performance for relative TSR (67th percentile) and ROAIC (12.2%) for 3 years.
     

  Acquisition-Related Special Incentive Plan   Designed to promote the successful integration of a newly acquired business thereby enhancing financial returns and cash flow.   Cumulative EBIT and cumulative cash flow of the Metal Beverage Packaging Division, Americas.   The 39-month cycle ended December 31, 2012, resulted in a final award payment of 47.1%, resulting in a total cumulative award of 103.8%.
 

Long-Term Incentive— Performance Based Equity

  Stock Options and Stock-Settled SARs   Designed to promote share ownership and long-term performance resulting in the creation of shareholder value.   Stock price performance relative to the grant date stock price (exercise price) of the stock options/SAR grants.   Stock price performance ending December 31, 2012, excluding dividends:
         

  Restricted Stock/RSUs   Designed to promote share ownership, provide a retention incentive and provide long-term incentive for the creation of shareholder value.   Stock price performance.   Ball vs. S&P 500 1-year:
    25.3% vs. 13.4%.
Ball vs. S&P 500 3-year:
    73.1% vs. 27.9%.
         

  Deposit Shares   Designed to promote executive financial investment in the Corporation, promote share ownership and provide long-term incentive for performance resulting in the creation of shareholder value.   Attainment of required holding period and stock price performance.    
     

  Performance-Contingent RSUs   Designed to promote share ownership through the achievement of financial returns in excess of the Corporation's weighted average cost of capital.   Actual ROAIC over 3 years, equal to or exceeding the Corporation's weighted average cost of capital established at the beginning of the performance period.   For all NEOs, resulted in 100% vesting of the 2010 to 2012 performance-contingent RSU award on January 31, 2013, based on actual ROAIC of 12.2% over the 3-year period exceeding the weighted average cost of capital target of 6.6%.
 

28


 
Component
  Element
  Purpose
  Performance Measures
  2012 Performance Outcome
 

Benefits

  Life and Pension Benefits   Supports basic life and retirement income security needs.   N/A   N/A
             

  Supplemental Executive Retirement Plan ("SERP")   Replicates benefits provided under the qualified pension plan, not otherwise payable due to IRS qualified plan limits.        
             

  Non-Qualified Deferred Compensation   Provides eligible participants the ability to defer certain pretax compensation into a savings plan to support retirement income or other needs.        
             

  Perquisites and Other Personal Benefits   Noncash compensation generally nominal in value, which may consist of financial planning, corporate contributions, aircraft usage and insurance premiums. The percent of total compensation may exceed the nominal range for an executive on foreign assignment.        
 


SPECIFICS RELATED TO THE 2012 EXECUTIVE COMPENSATION ELEMENTS

        When determining our executive target total compensation decisions in January 2012, the Committee took into account the Corporation's strong operating and financial performance in 2011, which resulted in a total return to shareholders of 4.9%, based on stock price appreciation plus reinvested dividends, compared to a 0.0% return of the S&P 500 and the 5.2% return of the Dow Jones Industrial Average. The Corporation also generated significant free cash flow of $505 million and achieved EVA® profitability greater than 2010 two-year interval levels and an after-tax return on invested capital of 12.3%. The Committee also recognized that all NEOs contributed to many other 2011 successes of the Corporation, including successfully completing the acquisition and integration of Aerocan S.A.S. in Europe; expanding our geographic reach by building new beverage can plants in Brazil, China and Vietnam; strategically redeploying assets by relocating a metal beverage can production line originally intended for a plant in Lublin, Poland, to our Belgrade, Serbia, plant; aligning our North American manufacturing footprint to better meet changing market demand; expanding specialty can production in our Fort Worth, Texas, plant capable of producing both 16- and 24-ounce cans; and expanding Ball Aerospace's manufacturing center in Westminster, Colorado, and NASA's successful launch of the Ball-built NPP satellite. These results are due in large part to our focus on disciplined growth, operational excellence and talent management.

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Base Salary

        Base salary levels are set on the basis of factors such as job responsibilities, the CEO's subjective judgment of individual performance and contributions to overall business performance, experience level, internal merit increase budgets, external market base salary movement and market competitiveness as compared to 50th percentile data. The Committee reviewed base salary levels in late January 2012 and approved base salary increases for all NEOs, with changes becoming effective retroactively to January 1, 2012. These increases were approximately 3.0%—made as part of our merit increase process—with the exception of larger increases provided to Messrs. Hayes and Morrison as we continue to move their compensation towards the 50th percentile of market survey data for comparable positions, following their promotions in 2011 and 2010, respectively. Even after these market adjustments in 2012, base salary for both Messrs. Hayes and Morrison remained at a level that is below market median.

 
NEO
  Final Target
2011 Base
Salary

  %
Increase
During
Fiscal
2012

  Final Target
2012 Base
Salary

  Rationale
 
John A. Hayes   $ 900,000     8.33 % $ 975,000   Increase based on market data and includes action to move his compensation closer towards market following his promotion to CEO in 2011, as well as his leadership and significant contributions to the Corporation's 2011 business performance outlined above.
Scott C. Morrison   $ 450,000     8.00 % $ 486,000   Increase based on market data and includes action to move his compensation closer towards market following his promotion to SVP and CFO in 2010, as well as his contributions to the 2011 execution of our stock repurchase plan and prudent balance sheet management.
Raymond J. Seabrook   $ 621,000     2.52 % $ 636,650   Increase based on market data, as well as his contributions to the oversight of the integration of acquisitions in aluminum extruded container and metal beverage packaging industries and significant contributions to the Corporation's 2011 business performance outlined above.
Charles E. Baker   $ 372,500     3.01 % $ 383,700   Increase based on market data, as well as his handling of a legacy environmental matter and contributions to the legal/contractual elements of the Aerocan acquisition and other business activities in 2011.
Shawn M. Barker   $ 260,000     3.00 % $ 267,800   Increase based on market data and his contributions to the establishment of a global financial consolidation and reporting system and global accounting policies and definitions.
 

Annual Incentive

        This short-term pay-for-performance incentive is used to encourage and reward the CEO and other NEOs for making decisions that improve performance as measured by EVA®. It is designed to produce sustained shareholder value by establishing a direct link between EVA® improvement and incentive compensation. EVA® was selected as the measure for Ball's Annual Incentive Compensation Plan because it has been demonstrated to correlate management's incentive with share price growth and shareholder returns. EVA® is computed by subtracting a charge for the use of invested capital from net operating profit after-tax as illustrated below:

EVA®   =   Net Operating Profits After Taxes
("NOPAT")
  minus   Capital Charge (the Amount of
Capital Invested by Ball
multiplied by Ball's After-Tax
Hurdle Rate)

        Generating profits in excess of both operating and capital costs (debt and equity) creates EVA®. If EVA® improves, value has been created.

30


        Performance Measures—Targets are established annually for each operating unit and for the Corporation as a whole based on prior performance. The Plan design motivates continuous improvement in order to achieve payouts at or above target over time.

        The Corporation's and/or operating unit's EVA® financial performance determines the amount, if any, of awards earned under the Annual Incentive Compensation Plan. Such awards are based on actual EVA® performance relative to the established EVA® target. For any one year, the EVA® target is equal to the sum of the prior year's target EVA® and one-half the amount of the prior year's EVA® gain or shortfall relative to the prior year's EVA® target and may be calculated as follows:

Current Year's
EVA® Target
  =   Prior Year's
EVA® Target
  plus   1/2   GRAPHIC   Prior Year's
Actual EVA®
  minus   Prior Year's
EVA® Target
  GRAPHIC

        Improvement in EVA® occurs when the amount of net operating profit after-tax less a charge for capital employed in the business increases over time. It establishes a direct link between annual incentive compensation and continuous improvement of return on invested capital relative to a 9% after-tax "hurdle rate." The Corporation has established 9% as the hurdle rate when evaluating capital expenditures and strategic initiatives in most regions in which we do business. This hurdle rate is above the Corporation's true cost of capital.

        For a given year, a payout at 100% of target annual incentive compensation is achieved when actual EVA® is equal to the EVA® target. Actual annual incentive payments each year can range from 0-200% of the targeted incentive opportunity based on corporate performance and/or the performance of the operating unit over which the executive has responsibility. For the Corporation's consolidated plan, a payout of 0% is realized when actual EVA® is $104 million less than targeted EVA®. A payout of 200% or greater may be achieved if actual EVA® is $52 million or higher than target EVA®. However any amounts over 200% of target are banked and remain at risk until paid over time in one-third increments whenever actual performance under the Annual Incentive Plan results in a payout of less than 200% of target. When the bank balance falls below $7,500 it is paid in full. All payments from the bank balance are made at the same time annual incentive payments are made. In 2012, the Corporation's actual EVA® performance exceeded our EVA® target by $44.3 million and resulted in a payout of 185% of target, as shown below:

   
  EVA®
Objectives for Fiscal 2012
 
   
  Target     200% Payout     Actual  
$ 117.1 million   $ 169.1 million   $ 161.4 million  
   

        Target Incentive Percentages and 2012 Incentive Paid—A target incentive opportunity is established each year as a percentage of an executive's annual base salary and is targeted at approximately the 50th percentile of the competitive market with the opportunity to earn more for above-target performance or less for below-target performance. Each NEO's 2012 target incentive opportunity was based on the Corporation's consolidated EVA® performance. The table below summarizes for each NEO the 2012 target incentive opportunity as compared to the actual incentive paid as a result of the year's strong EVA® performance; the value paid may include a one-third increment of a prior bank balance.

   
 
  Target Annual Incentive
  Actual Annual Incentive
 
 
     
NEO
  % of Base
  $ Value
  % of Base
  $ Value Paid
 
   

John A. Hayes

  115%   $ 1,119,591   213%   $ 2,077,497  

Scott C. Morrison

  70%   $ 339,715   130%   $ 628,473  

Raymond J. Seabrook

  75%   $ 477,262   139%   $ 891,062  

Charles E. Baker

  50%   $ 191,742   93%   $ 354,723  

Shawn M. Barker

  50%   $ 133,825   93%   $ 247,576  
   

        Certain executives including the CEO and the other NEOs may elect to defer the payment of all or a portion of their annual incentive compensation into the 2005 Deferred Compensation Plan and/or the 2005 Deferred Compensation Company Stock Plan, as described in the "Non-Qualified Deferred Compensation" section on page 46.

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Long-Term Incentives

        This element of compensation is designed to provide ownership and cash opportunities to promote the achievement of longer term financial performance goals and enhanced TSR. The Corporation's long-term incentive opportunity is generally provided through a combination of equity and cash awards, which the Committee believes best matches the compensation principles for the program.

        The 2012 total target long-term incentive value awarded, and the corresponding mix of vehicles used to deliver this value, is summarized below. The majority of long-term incentive awards provide value only if the Corporation achieves positive stock price and financial performance.

   
 
   
  Mix of Long-Term Vehicles
 
 
   
     
NEO
  Total
Target
Long-Term
Value

  % LTCIP
(2012-2014 Cycle)

  % Options/
SARs

  % Performance-
Contingent RSUs
(2012-2014 Cycle)

  % DSP
 
   

John A. Hayes

  $ 5,080,427     19 %   39 %   41 %   0 %

Scott C. Morrison

  $ 1,151,334     22 %   38 %   41 %   0 %

Raymond J. Seabrook

  $ 1,572,578     6 %   34 %   55 %   5 %

Charles E. Baker

  $ 675,878     22 %   38 %   41 %   0 %

Shawn M. Barker

  $ 730,757     12 %   20 %   23 %   44 %
   

        This award mix was set to achieve the objectives described previously, in light of market practices and cost implications. The total target amount of long-term incentives, based on the grant date expected value, is generally established in relation to the 50th percentile of the competitive market, individual roles and responsibilities, individual performance (as outlined in the preceding Base Salary section) and the Corporation's financial and operating performance. As a result of the leadership changes in 2011, the Corporation also provided a DSP opportunity to our NEOs and broader management team to further their stock ownership and alignment with shareholder interests. The deposit share opportunity granted in 2011 required acquisition of common shares by March 2, 2012, in order to receive the matching Restricted Stock Units. Messrs. Hayes, Morrison, Seabrook and Baker acquired common shares in 2011; Messrs. Seabrook and Barker also acquired common shares during 2012, to fulfill this DSP requirement.

        This emphasis on long-term compensation, through performance-based long-term cash and equity awards, ensures a strong continued alignment with the Corporation's executive ownership and shareholder value creation objectives.

        Performance-Based Cash Awards—The Corporation's performance-based long-term cash incentive award, LTCIP, is intended to focus executives on the achievement of multiyear performance goals that will enhance shareholder value. The Corporation's TSR and ROAIC are considered in determining the amount, if any, of awards earned under the Corporation's LTCIP. Performance is measured on a cumulative basis over a three-year performance cycle. Awards pursuant to the LTCIP are generally made on an annual basis such that three performance cycles overlap. Any actual award earned is paid at the end of the three-year performance cycle. During 2012, there were three overlapping cycles underway:

    2010 through 2012—Awarded in 2010, completed at the end of 2012 (included in the Summary Compensation Table).

    2011 through 2013—Awarded in 2011, in process, will complete at the end of 2013, payment in early 2014 if performance measures are attained.

    2012 through 2014—Awarded in 2012, in process, will complete at the end of 2014, payment in early 2015 if performance measures are attained (included in the Grants of Plan-Based Awards Table).

        The LTCIP provides executives the opportunity to earn awards based on a combination of two performance measures. One-half of the award is based on the Corporation's three-year TSR as measured against the TSRs of a group of companies in the S&P 500 excluding companies in the S&P 500 Index that are classified as being part of the Financial or Utilities industry sectors or the Transportation industry group. Companies added to the S&P 500 during the performance cycle are also excluded. TSR is measured by comparing the average daily closing price and dividends of

32


the Corporation in the third year of the performance cycle with the average daily closing price and dividends prior to the start of the performance cycle relative to the distribution of the equivalent TSRs during the performance cycle of the group of companies as described above. The target performance requirement for the TSR measure is the 50th percentile of the S&P group described above. The other one-half of the award is based on ROAIC performance over the three-year period. ROAIC is calculated by dividing the average of the Corporation's net operating profit after-tax over the relevant performance cycle by its average invested capital over such period. The target performance requirement for the ROAIC measure is 9%, which is above the Corporation's estimated weighted average cost of capital. The target, minimum and maximum performance requirements are as follows:

 
Performance Measure
  Minimum
  Target
  Maximum
 

TSR

  37.5th percentile   50th percentile   75th percentile
 

ROAIC (after-tax)

  7%   9%   11%
 

        For each measure, minimum performance results in a zero payout factor, target performance results in a 100% payout factor and maximum performance results in a 200% payout factor for the respective one-half of the award. Performance between minimum, target and maximum is extrapolated to determine the payout factor.

        Each NEO's incentive opportunity is established by considering external long-term incentive market data and the Corporation's internal pay equity and is set as a percentage of the executive's average base salary plus target annual incentive over the three-year performance cycle (i.e., average target annual cash compensation during the performance cycle).

        The executive's award for any given performance cycle is calculated as follows:

LTCIP Payment   =   Executive's Avg.
Base Salary Plus
Target Annual
Incentive for
3-Year Cycle
  times   Executive's
Incentive
Percentage
  times   GRAPHIC   GRAPHIC   50% ×
TSR
Payout
Factor
  GRAPHIC   plus   GRAPHIC   50% ×
ROAIC
Payout
Factor
  GRAPHIC   GRAPHIC

        Actual payments at the end of the performance cycle for each factor (TSR and ROAIC) can range from 0-100% of the target opportunity based on actual performance relative to the established performance measures described above.

        For the 2012 through 2014 performance cycle, the incentive opportunities awarded in early 2012 to the CEO and other NEOs, and reported in the Grants of Plan-Based Awards Table, are as follows:

   
NEO
  Target LTCIP Incentive Percentage
for the 2012-2014 Performance Cycle

  Target $
Value

 
   

John A. Hayes

  40%   $ 984,927  

Scott C. Morrison

  25%   $ 251,502  

Raymond J. Seabrook

  25%   $ 92,801  

Charles E. Baker

  20%   $ 145,788  

Shawn M. Barker

  20%   $ 90,685  
   

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        For the 2010 through 2012 performance cycle, the incentive opportunities for the CEO and other NEOs were as follows:

 
NEO
  Target LTCIP Incentive Percentage
for the 2010-2012 Performance Cycle

 

John A. Hayes

  30%—2010
40%—2011-2012

Scott C. Morrison

  25%

Raymond J. Seabrook

  25%

Charles E. Baker

  20%

Shawn M. Barker

  20%
 

        The target incentive percentage increase for Mr. Hayes in 2011-2012 shown above was associated with the promotion at the time of the change.

        As a result of the Corporation's actual performance for the 2010 through 2012 performance cycle of 12.2% ROAIC and 67th percentile TSR, cash payouts (made in early 2013) to the CEO and other NEOs are 184.8% of the target opportunities and reported in the Summary Compensation Table.

        Special Acquisition Incentive Plan—In conjunction with the 2009 acquisition of certain beverage can manufacturing operations, the Corporation implemented an Acquisition-Related Special Incentive Plan designed to motivate participating employees to successfully integrate the acquisition into the Corporation. Payouts under this Plan are based on cumulative EBIT and cumulative cash flow over a 39-month period, with awards, if any, made at 15 months (December 31, 2010), 27 months (December 31, 2011) and 39 months (December 31, 2012). Minimum, target and maximum values have been established for each performance measure; however, due to the competitive and sensitive nature of the financial metrics, these values have been excluded. The performance measures were based on financial metrics assumed in the acquisition valuation model, and the level of difficulty in achieving them was moderate, thus a payout at or near target is the most likely outcome. This incentive opportunity is established as a percentage of an executive's average base salary over the 39-month performance period and is provided below for each NEO.

 
NEO
  Target Incentive Percentage
 

John A. Hayes

  40%

Scott C. Morrison

  40%

Raymond J. Seabrook

  40%

Charles E. Baker

  40%

Shawn M. Barker

  40%
 

        The executive's actual award will be calculated as follows:

Special
Incentive
Payment
  =   Executive's
Avg. Annual
Base Salary
Over 39-
Month Period
  times   Executive's
Annual
Incentive
Percentage
  times   GRAPHIC   GRAPHIC   70% ×
EBIT
Payout Factor
  GRAPHIC   plus   GRAPHIC   30% ×
Cash Flow
Payout Factor
  GRAPHIC   GRAPHIC

        Actual payments at the end of the performance period can range from 0-150% of the target opportunity based on actual performance relative to the established performance measures. Actual performance between minimum (which results in zero payout), target (which results in 100% payout) and maximum (which results in 150% payout) is extrapolated to determine the payout factor. The third and final 39-month cumulative period was completed on December 31, 2012, and based on performance, the NEOs each received the final payment equal to 47.13% of the total target amount.

        Equity-Based Awards—The Corporation's equity awards may be provided through various forms (SARs, Incentive Stock Options ("ISOs"), Non-Qualified Stock Options ("NQSOs"), performance-contingent RSUs, restricted stock and RSUs), all of which are tied to the price of Ball Corporation common stock. Annual equity awards associated with target

34


total compensation are typically granted in January on the date of the quarterly meeting of the Board; however, equity awards may be granted during the year as part of an executive's promotion or for retention purposes. In the case of newly hired executives, equity awards may be granted upon the executive joining the Corporation. Equity-based awards are determined for each NEO in order to bring target total direct compensation to the level deemed appropriate by the Committee in relation to the external market 50th percentile and each executive's roles and responsibilities.

        In January 2012, the Committee approved the award of SARs, ISOs (on a basis limited to the Internal Revenue Code statutory maximum), and performance-contingent RSUs to the CEO and other NEOs and executive officers. Each form of equity is described below. The awards were split with the value weighting of approximately 40-50% SARs/ISOs and 50-60% Performance-Contingent RSUs. Previously, in 2011 the Corporation awarded opportunities under the DSP to our NEOs and broader management team in order to further the new leadership team's Ball Corporation stock ownership; Messrs. Seabrook and Barker acquired common shares in early 2012 to fulfill this opportunity. The number and/or value of the equity awarded in 2012 to the CEO and other NEOs is reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table. All equity awards are pursuant to the provisions of the 2010 Stock and Cash Incentive Plan.

    Stock-Settled SARs and Stock Options:  SARs, ISOs and NQSOs are granted in order to reward executives for the creation of shareholder value, and will only provide value to executives if the price of the Corporation's stock increases. Such awards generally vest at 25% per year for four years and expire in 10 years. The grant value of each SAR, ISO or NQSO is based on the closing price of the Corporation's common stock on the date of grant.

    Performance-Contingent RSUs:  The performance-contingent RSUs are granted in order to encourage executives to ensure long-term return on the Corporation's invested capital in excess of its current estimated weighted average cost of capital. The award of performance-contingent RSUs provides participants with the opportunity to receive the Corporation's common stock if the Corporation's ROAIC, during a three-year period, is equal to or exceeds the Corporation's estimated weighted average cost of capital as established at the beginning of the performance period.

    The performance period for the 2012 award is a 36-month period from January 2012 to December 2014 and the estimated weighted average cost of capital and required return for the performance period is established at 6.3%. Vesting of the units is solely based on meeting or exceeding the established performance target. If the goal is met, the entire participant's awarded units for that three-year period vest. If the target is not met, all of the participant's awarded units for that three-year period are forfeited.

    For the three-year performance period 2010 through 2012, the ROAIC target of 6.6% was exceeded; the actual ROAIC during the performance period was 12.2% and all granted units for that three-year period vested for NEOs. The value realized on vesting is reported in the Option Exercises and Stock Vested Table.

    For 2013 awards made for the 2013-2015 performance period, the Corporation's Human Resources Committee has approved two significant changes to the performance-contingent Restricted Stock Unit (RSUs) program. The changes are designed to further strengthen the alignment of pay and performance, and increase the line-of-sight between the performance-contingent RSU program going forward and achievement of the Corporation's Drive for 10 vision. The performance measure and degree of vesting in the 2013 performance-contingent RSU awards will be based on the compound growth in EVA® dollars achieved over a three-year period relative to a pre-determined performance range. Performance-contingent RSU awards in 2013 have a potential outcome from 0% to 200% for three-year compound growth achieved in EVA® dollars versus a pre-determined performance range.

    Deposit Share Program/RSUs:  The Corporation may grant restricted stock or RSUs pursuant to the DSP, which was introduced in 2001. The DSP is intended to increase share ownership among certain executives who must make additional investments in the Corporation's stock in order to participate. Under this program, an executive receives one share of restricted stock or one RSU for every newly acquired share by the participant (either in the market, through the exercise and holding of stock options or settlement of SARs, or deferral of annual incentive compensation to the Deferred Compensation Company Stock Plan) during a specified acquisition period, up to a preestablished maximum number of shares. As long as the executive continues to hold the newly acquired shares, the restricted stock or units granted cliff vest four years from the date of grant; or, if stock ownership guidelines are met, 30% of the shares or units will vest at the end of the second year and third year and 40% will vest at the end of the fourth year. Restricted stock or units granted pursuant to the DSP are made on the 15th day of each month following the executive's submission of adequate documentation to the Corporation detailing the acquisition of the newly acquired shares.

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    Restricted Stock or RSUs:  The Committee or CEO may also grant restricted stock or RSUs not related to the DSP, which is generally associated with a promotion, employment or retention action. Pursuant to the provisions of the 2010 Stock and Cash Incentive Plan, the Committee delegated to the CEO the authority to grant up to a maximum of 10,000 restricted shares or RSUs to any one individual in a calendar year, except the CEO may not make such grants to officers of the Corporation. Any such grant is ratified by the Committee at the first Committee meeting following such grant. Grants made are generally effective at the closing stock price on the day of the grant or may be effective at the closing stock price on a specific day in the future as defined by the Committee or the CEO. As an example, the future grant of a restricted stock award may be approved pending the effective date of a promotion, employment or a specific date. These awards generally vest in either 20% or 25% increments on each anniversary of the grant date. These grants serve as a long-term incentive element, promote share ownership and may provide an executive retention incentive.

Retirement Benefits

        The Corporation strives for overall benefits to be competitive with the market. The CEO and other NEOs participate in the same benefit plans, with two exceptions noted below, and on the same terms as provided to all U.S. salaried employees. Included in these benefits are the annual pension accruals under the qualified pension plan ("Salaried Pension Plan") and contributions to the qualified 401(k) savings plan.

        The Corporation sponsors two qualified salaried defined benefit pension plans in the U.S., one covering its Aerospace subsidiary's employees and the other covering all other U.S. salaried employees. Prior to January 1, 2007, the benefits were determined by final average salary, covered compensation and years of service. Beginning in 2007, the benefit in both plans is an accumulated annual credit based on base salary, the Social Security Wage Base ("SSWB") and a multiplier that is based on service.

        The 401(k) savings plan is a tax-qualified defined contribution plan that allows U.S. salaried employees, including the NEOs, to contribute to the plan 1%-55% of their base salary up to IRS-determined limits on a before-tax basis. Prior to January 1, 2007, the Corporation matched 50% of the first 6% of base salary contributed to the plan. Beginning in 2007, the Corporation matched 100% of the first 3% of base salary contributed, and 50% of the next 2% of base salary contributed, up to a maximum match of 4% of base salary contributed.

        Certain executives, including the NEOs, also receive benefits under the non-qualified SERP, which replaces benefits otherwise available in the qualified pension plan except for limits on covered compensation in the qualified plan set by the Internal Revenue Code of 1986, as amended (the "Code"). The SERP is designed to provide retirement benefits that are calculated on base salary that exceeds the maximum amount of pay that can be included in the pension calculation under a pension plan that is tax qualified under the Code. Further information regarding the Salaried Pension Plan and the SERP are provided in the "Pension Benefits" section on page 47.

        The Corporation's pension plans and SERP provide pension benefits based on base salary only and do not include incentive compensation as part of the pension calculation.

        Additionally, the Corporation provides a deferred compensation benefit to certain employees. Under the terms of the deferred compensation program, participants are eligible to defer current annual incentive compensation to be paid and/or RSUs to be issued in the future. When amounts are deferred, the participant becomes a general unsecured creditor of the Corporation and deferred amounts become subject to claims on the same basis as other general unsecured creditors to the Corporation. The deferred compensation plans provide a means for participants to accumulate funds for retirement or other purposes.

36



OTHER EXECUTIVE COMPENSATION POLICIES AND GUIDELINES

Plan Terms and Procedures

        In 2012, the annual and long-term incentives awarded were established and paid pursuant to the terms of the Ball Corporation 2010 Stock and Cash Incentive Plan and the Ball Corporation Annual EVA® Incentive Compensation Plan, which are administered by the Committee. This Plan permits grants of cash awards, stock options, SARs or stock awards (e.g., shares, restricted stock and RSUs).

Risk Assessment

        The Committee continually reviews the relationship between risk and reward in our compensation programs, both through recurring in-depth reviews and ongoing review of any program changes as they occur. At this time, the Committee does not believe that these compensation programs encourage excessive or inappropriate risk. The Corporation's internal assessment of risk confirms that our compensation arrangements do not foster undue risk taking. They are performance driven and have strong governance and control mechanisms.

        The Committee's executive compensation Consultant conducted a thorough risk assessment of our executive compensation programs in 2010, and since that time has conducted an assessment of any risk inherent in program changes that have occurred throughout each subsequent year, and reported on this to the Committee. The Consultant reviews a number of criteria regarding compensation design and governance and whether financial risks, operational risks or reputational risks may be generated through any of our programs, policies or practices. The Consultant concluded that the Corporation's pay programs do not contain any material risks. The basis for the Consultant's conclusion is that the Corporation's long-term incentives are predominantly performance contingent and tied to shareholder returns; market comparisons are reasonably utilized; ownership requirements are set out; the Corporation focuses on rewarding financial remuneration based upon EVA® performance; and there is strong Committee involvement and oversight.

Stock Ownership Guidelines

        Consistent with its stock ownership philosophy, the Corporation has established guidelines for senior management. The 2012 stock ownership guidelines (minimum requirements) are as follows:

   
Executive
  Ownership Multiple
(of Base Salary)

 
   

CEO

   
5 times
 

CFO, EVPs and SVPs

   
3 times
 

Other Executives

   
1 to 2 times
 
   

        As of December 31, 2012, all executive officers including the CEO and the other NEOs have met their ownership guidelines. Furthermore, the Corporation has established a 10,000 share stock ownership guideline for each nonmanagement director and all have met their ownership guidelines.

Anti-Hedging Policy

        When the Corporation's share price appreciates, an executive or director may desire to lock in a portion of that appreciation, thereby managing a portion of the economic risk associated with concentrated holdings of Ball Corporation common stock. The Corporation has evaluated the potential approaches that executives and directors can use. As a result of this review, executives are permitted to use prepaid variable forward contracts or contracts to purchase or sell Ball Corporation common stock pursuant to SEC Rule 10b5-1. Put and call options and other hedging transactions involving Corporation stock (including selling the stock "short") are not permitted.

Severance and Change in Control Benefits

        The CEO and other NEOs are covered by arrangements that specify payments in the event the executive's employment is terminated. The type and amount of payments vary by executive level and whether the termination is

37


following a change in control of the Corporation. These severance benefits, which are competitive with General Industry practices, are payable only if the executive's employment is terminated as specified in each of the agreements. Further discussion is provided in the "Other Potential Post-Termination Employment Benefits" section on page 49.

Accounting and Tax Considerations

        When establishing pay elements or associated programs, the Committee reviews projections of the estimated pro forma expense and tax impact of all material elements of the executive compensation program. Generally, an accounting expense is accrued over the requisite service period of the particular pay element, which in many cases is equal to the performance cycle, and the Corporation realizes a tax deduction upon payment to and/or realization by the executive.

        The Plans are intended to meet the deductibility requirements of Code Section 162(m) as performance-based pay, resulting in amounts paid being tax deductible to the Corporation. Code Section 162(m) generally provides that publicly-held corporations may not deduct in any one taxable year certain compensation in excess of $1 million paid to the CEO or any other executive officer (other than the CFO as such) whose total compensation is required to be disclosed in the Summary Compensation Table by reason of being the next three most highly-compensated executive officers. To the extent that any cash compensation for any NEO, otherwise deductible for a particular tax year, would not be deductible in that year because of the limitations of Code Section 162(m), the Committee has mandated that such compensation will be deferred until retirement; however, the Committee, in its sole discretion, may approve payment of nondeductible compensation from time to time if it deems circumstances warrant it.

        Beginning January 1, 2006, the Corporation began accounting for stock-based payments including current and prior year stock options, SARs, restricted stock and RSUs in accordance with the requirements of FASB ASC Topic 718 ("Topic 718"), which addresses accounting for stock compensation.

        In December 2005, the Committee approved three new deferred compensation plans that incorporate rules applicable to non-qualified deferred compensation as provided by Code Section 409A regulations. The Corporation has administered its non-qualified deferred compensation plans in good faith compliance with the Code Section 409A regulations. In 2008, the Corporation reviewed and updated all plans and agreements to conform to Code Section 409A final regulations.

        Code Section 280G considerations related to tax reimbursements made to executives for taxes on amounts paid in the event of termination following a change in control are discussed in the narrative to the "Other Potential Post-Termination Employment Benefits" section on page 49.


TABLES AND NARRATIVES

        Set forth on pages 40 through 53 are tables showing, for the CEO, CFO, the two other highest paid executive officers and one retired NEO of the Corporation, the following: (1) fiscal year 2012 elements of compensation in summary form; (2) equity and non-equity incentives awarded in 2012; (3) outstanding stock options and stock awards held as of December 31, 2012; (4) the value realized on stock options exercised and stock awards that vested during 2012; (5) information regarding non-qualified deferred compensation; (6) projected pension benefit values; and (7) projections for other potential post-termination benefits. On page 54 is a table summarizing the fiscal year 2012 elements of compensation for the Corporation's nonemployee directors. Accompanying each table are narratives and/or footnotes intended to further the understanding of the information disclosed in the tables. The tables should be read in conjunction with the CD&A beginning on page 18, which explains the Corporation's compensation objectives and philosophy, its process for determining executive compensation and a description of the elements of compensation.

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SUMMARY COMPENSATION TABLE

        The Summary Compensation Table on page 40 represents all fiscal year 2012 elements of compensation for the Corporation's NEOs, including:

    Base salary earned,

    Awards earned under the Annual EVA® Incentive Compensation Plan for 2012 performance,

    Awards earned under the LTCIP for the three-year performance cycle ended in 2012,

    Fair value of RSU awards pursuant to the deposit share program ("DSP") and performance-contingent RSU awards granted in 2012, calculated in accordance with Topic 718, and

    Fair value of stock option and SAR awards granted in 2012, calculated in accordance with Topic 718.

        The 2012 payout factors used to determine the amounts earned for the Annual EVA® Incentive Compensation Plan, Acquisition-Related Special Incentive Plan and LTCIP for the CEO, CFO and the other NEOs are provided in the "2012 Performance Outcome" column on page 28.

        In addition to these elements of compensation, the table also presents the increase in 2012 in the value of pensions payable at age 65 for the NEOs as well as above-market earnings associated with non-qualified deferred compensation. Certain of the Corporation's predecessor deferred compensation plans provide for an interest rate that is equal to the Moody's Seasoned Corporate Bond Index ("Moody's") and in some plans, an interest rate that is 5 percentage points higher than Moody's, and in others, a fixed interest rate equal to 9%. No additional deferrals are permitted into these plans. Any earnings credited to accounts within plans that provide the Moody's rate plus 5 percentage points and/or the 9% fixed interest that is in excess of above-market earnings that would have been credited at a rate that is 120% of the applicable federal long-term rate have been classified as above-market earnings on deferred compensation.

        The All Other Compensation column represents the sum of the values of:

    Perquisites and other personal benefits,

    Corporation contributions to defined contribution plans or deferred compensation plans,

    Corporation-paid insurance premiums, and

    Company match of securities purchases pursuant to the Corporation's broad-based Employee Stock Purchase Plan ("ESPP").

        The individual values are disclosed in the All Other Compensation Table that follows the Summary Compensation Table.

        Details regarding post-termination compensation are discussed in the section entitled "Other Potential Post-Termination Employment Benefits" on page 49.

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Summary Compensation Table

   
Name & Principal Position
  Year
  Salary
($)

  Stock
Awards
($)(1)

  Option
Awards
($)(2)

  Non-Equity
Incentive Plan
Compensation
($)(3)

  Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings ($)(4)

  All Other
Compensation
($)(5)

  Total ($)
 
   

John A. Hayes

   
2012
 
$

973,558
 
$

2,103,660
 
$

1,991,840
 
$

3,325,575
 
$

160,588
 
$

692,373
 
$

9,247,594
 

President and CEO

    2011   $ 896,635   $ 2,689,219   $ 1,680,526   $ 2,606,584   $ 133,969   $ 184,615   $ 8,191,548  

    2010   $ 725,000   $ 1,463,050   $ 1,463,760   $ 1,885,640   $ 73,873   $ 75,868   $ 5,687,191  
   

Scott C. Morrison

   
2012
 
$

485,308
 
$

467,480
 
$

432,352
 
$

1,056,060
 
$

86,239
 
$

44,149
 
$

2,571,587
 

SVP and CFO

    2011   $ 449,039   $ 1,146,145   $ 396,774   $ 884,656   $ 74,359   $ 45,516   $ 2,996,489  

    2010   $ 400,000   $ 528,605   $ 266,760   $ 723,670   $ 39,999   $ 44,025   $ 2,003,059  
   

Raymond J. Seabrook

   
2012
 
$

636,349
 
$

939,809
 
$

539,968
 
$

1,509,694
 
$

359,101
 
$

39,709
 
$

4,024,631
 

EVP and COO Global Packaging

    2011   $ 620,596   $ 1,044,858   $ 559,002   $ 1,460,930   $ 261,507   $ 42,078   $ 3,988,971  

    2010   $ 600,000   $ 681,075   $ 663,480   $ 1,412,594   $ 247,548   $ 45,447   $ 3,650,144  
   

Charles E. Baker

   
2012
 
$

383,485
 
$

275,210
 
$

254,880
 
$

626,596
 
$

133,930
 
$

34,530
 
$

1,708,632
 

VP, General Counsel and

    2011   $ 362,041   $ 556,516   $ 263,865   $ 597,502   $ 128,635   $ 34,600   $ 1,943,159  

Corporate Secretary

    2010   $   $   $   $   $   $   $  
   

Shawn M. Barker

   
2012
 
$

267,650
 
$

490,920
 
$

149,152
 
$

440,906
 
$

39,872
 
$

33,589
 
$

1,422,090
 

VP and Controller

    2011   $   $   $   $   $   $   $  

    2010   $   $   $   $   $   $   $  
   
(1)
Reflects the fair value of performance-contingent equity awards granted for each reported year, calculated in accordance with Topic 718 assuming the probable outcome. The assumptions used in the calculation of these amounts are included in the Corporation's Annual Report on Form 10-K in Notes 1 and 16 to the Consolidated Financial Statements for fiscal year ended December 31, 2012.

(2)
Reflects the fair value of ISO or SAR equity awards granted for each reported year, calculated in accordance with Topic 718. The assumptions used in the calculation of these amounts are included in the Corporation's Annual Report on Form 10-K in Notes 1 and 16 to the Consolidated Financial Statements for fiscal year ended December 31, 2012.

(3)
Includes payouts from the Annual Incentive Compensation Plan and LTCIP, which were earned in 2012 and paid or deferred in 2013. The detail for each NEO is as follows:

    Mr. Hayes—Annual Incentive Compensation Plan = $2,077,497, LTCIP = $1,072,734 and Special Acquisition Incentive Plan = $175,344; no portion of the annual incentive was deferred in February 2013.

    Mr. Morrison—Annual Incentive Compensation Plan = $628,473, LTCIP = $339,184 and Special Acquisition Incentive Plan = $88,403; and $157,118 of the annual incentive was deferred in February 2013.

    Mr. Seabrook—Annual Incentive Compensation Plan = $891,062, LTCIP = $499,993 and Special Acquisition Incentive Plan = $118,639; and $120,000 of the annual incentive was deferred in February 2013.

    Mr. Baker—Annual Incentive Compensation Plan = $354,723, LTCIP = $201,123 and Special Acquisition Incentive Plan = $70,750; and $177,362 of the annual incentive was deferred in February 2013.

    Mr. Barker—Annual Incentive Compensation Plan = $247,576, LTCIP = $143,523 and Special Acquisition Incentive Plan = $49,807; and $80,000 of the annual incentive was deferred in February 2013.

(4)
The aggregate change in pension value and above-market earnings, on deferred compensation for each NEO, is as follows:

    Mr. Hayes—$156,181 aggregate change in pension value and $4,407 above-market earnings on deferred compensation.

    Mr. Morrison—$86,239 aggregate change in pension value.

    Mr. Seabrook—$263,392 aggregate change in pension value and $95,709 above-market earnings on deferred compensation.

    Mr. Baker—$111,532 aggregate change in pension value and $22,398 above-market earnings on deferred compensation.

    Mr. Barker—$39,872 aggregate change in pension value.

40


(5)
Includes value of financial planning services, the incremental cost for the personal use of the corporate aircraft, the value of executive physical examinations, employer contributions to 401(k), employer contributions to the 2005 Deferred Compensation Company Stock Plan, employer paid disability insurance premiums and the value of the Corporation's match for the ESPP. The value for Mr. Hayes also includes employer paid expenses and tax equalization related to his foreign assignment. Additional information for all is included in the All Other Compensation Table below.

All Other Compensation Table

   
NEO
  Perquisites
and Other
Personal
Benefits(1)(2)

  Payments/
Accruals on
Termination
Plans

  Registrant
Contributions
to Defined
Contribution
Plans

  Insurance
Premiums

  Discounted
Securities
Purchases

  Registrant
Contributions
to Deferred
Compensation
Plans

  Tax
Reimbursements(3)

  Other
Payments

 
   

John A. Hayes

 
$

11,150
 
$

 
$

10,000
 
$

1,688
 
$

1,200
 
$

 
$

668,335
 
$

 

Scott C. Morrison

 
$

11,150
 
$

 
$

10,000
 
$

1,799
 
$

1,200
 
$

20,000
 
$

 
$

 

Raymond J. Seabrook

 
$

5,602
 
$

 
$

10,000
 
$

2,907
 
$

1,200
 
$

20,000
 
$

 
$

 

Charles E. Baker

 
$

1,150
 
$

 
$

10,000
 
$

2,180
 
$

1,200
 
$

20,000
 
$

 
$

 

Shawn M. Barker

 
$

1,150
 
$

 
$

10,000
 
$

1,399
 
$

1,040
 
$

20,000
 
$

 
$

 
   
(1)
Represents the value of $10,000 for financial planning services for Messrs. Hayes and Morrison, and $2,500 for Mr. Seabrook; the incremental costs for the personal use of the corporate aircraft for Mr. Seabrook of $1,952; and $1,150 for executive physical examinations for all NEOs.

(2)
The incremental cost of the personal use of the corporate aircraft was calculated based on the 2012 average direct operating cost apportioned among business versus nonbusiness related passengers.

(3)
The amount for Mr. Hayes includes tax equalization payments related to his foreign assignment as it is the Corporation's policy to neutralize the tax effects by limiting the assignee's tax costs to what the assignee would have paid had the assignee not resided in the foreign location. Beginning in 2010, tax reimbursements for financial planning services and spouse business travel were eliminated.

41



GRANTS OF PLAN-BASED AWARDS TABLE

        The table on page 43 summarizes the plan-based awards granted by the Corporation to the NEOs during 2012, which includes the following:

    Annual cash incentives pursuant to the Annual Incentive Compensation Plan for the 2012 performance cycle,

    Cash-based long-term incentives under the LTCIP for the 2012 to 2014 three-year performance cycle,

    Fair value of performance-contingent RSUs for the 2012 to 2014 three-year performance period, calculated in accordance with Topic 718,

    Fair value of stock-settled SARs and/or Incentive Stock Options ("ISOs"), calculated in accordance with Topic 718, and

    Fair value of RSUs granted pursuant to the deposit share program ("DSP"), calculated in accordance with Topic 718.

        Awards made under the Annual EVA® Incentive Compensation Plan are determined based on EVA® performance. For the NEOs, awards can range from 0-200% of target. Amounts earned in excess of 200% are banked and may be paid over time in one-third increments based on corporate and/or operating unit performance.

        Awards under the LTCIP are granted on an annual basis and are determined based on the Corporation's TSR relative to the group of S&P 500 companies described in the CD&A as well as the Corporation's ROAIC. Each executive is eligible to receive a range of awards that is based on the executive's average base salary plus target incentive compensation during the three-year performance cycle. The target and maximum award values shown in the following table reflect projected increases in target total compensation of 4% per year during the performance cycle. The actual target and maximum award values may vary depending on future changes to target total compensation and on the Corporation's performance. The award made in 2012 is for the three-year performance cycle beginning January 1, 2012, and ending December 31, 2014.

        Performance-contingent RSUs were granted to the NEOs in 2012. The awards will cliff vest after the performance cycle if the Corporation's ROAIC exceeds its weighted average cost of capital of 6.3% as established at the beginning of the performance period.

        SARs were granted to the NEOs in 2012. The awards vest annually in 25% increments starting on the first anniversary of the date of grant. Should the price of the Corporation's stock increase during the vesting period, each NEO would receive, upon exercise, a number of shares of Corporation stock that reflects the value of the appreciation over the original grant price. ISOs were also granted, on an individual basis and in compliance with IRC Section 422 to the NEOs in 2012, with a vesting schedule identical to that of the SARs.

        A DSP opportunity was not provided to the NEOs in 2012, however, a DSP opportunity was previously offered in 2011; Messrs. Hayes, Morrison, Seabrook and Baker acquired common shares in 2011; Messrs. Seabrook and Barker also acquired common shares during 2012, to fulfill this DSP requirement.

        Dividends or dividend equivalents are paid quarterly on the number of unlapsed restricted shares or RSUs accounted for on the record date used for determining dividends payable to shareholders and at the same dividend rate as paid to shareholders. Dividend equivalents related to performance-contingent RSUs granted pursuant to the 2010 Stock and Cash Incentive Plan will be accrued and paid only if the performance condition is achieved and the restrictions on the units lapse.

        The vesting of plan-based awards may be accelerated as described in the narrative to the Other Potential Post-Termination Employment Benefits Table on page 49.

42


Grants of Plan-Based Awards Table

   
 
   
   
   
   
   
   
   
   
  Exercise
or Base
Price of
Equity
Incentive
Plan
Awards
or Option
Awards
($ per
Share)

   
 
 
   
   
   
   
  Estimated
Future
Payouts
Under
Equity
Incentive
Plan
Awards
Target
#

   
   
   
   
 
 
   
  Estimated Future Payouts Under
Non-Equity Incentive Plan Awards

  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)

   
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

  Grant Date
Fair Value of
Equity
Incentive
Plan Awards
and Stock
and Option
Awards(1)

 
 
   
  Grant Date
per Share
Fair Value
of All Other
Stock
Awards

 
 
   
   
NEO
  Grant
Date

  Threshold
($)

  Target
($)

  Maximum
($)

 
   

John A. Hayes

   
1/1/12

(2)

$

492,463
 
$

984,927
 
$

1,969,853
                                     

    1/1/12 (3) $ 0   $ 1,119,591   $ 2,239,183                                      

    1/25/12 (4)                     55,800                     $ 37.700   $ 2,103,660  

    1/25/12                                         211,000   $ 37.700   $ 1,991,840  

Scott C. Morrison

   
1/1/12

(2)

$

120,721
 
$

251,502
 
$

503,004
                                     

    1/1/12 (3) $ 0   $ 339,715   $ 679,431                                      

    1/25/12 (4)                     12,400                     $ 37.700   $ 467,480  

    1/25/12                                         45,800   $ 37.700   $ 432,352  

Raymond J. Seabrook

   
1/1/12

(2)

$

44,544
 
$

92,801
 
$

185,602
                                     

    1/1/12 (3) $ 0   $ 477,262   $ 954,524                                      

    1/25/12 (4)                     23,000                     $ 37.700   $ 867,100  

    1/25/12                                         57,200   $ 37.700   $ 539,968  

    4/13/12 (5)                           1,700   $ 42.770               $ 72,709  

Charles E. Baker

   
1/1/12

(2)

$

72,894
 
$

145,788
 
$

291,577
                                     

    1/1/12 (3) $ 0   $ 191,742   $ 383,485                                      

    1/25/12 (4)                     7,300                     $ 37.700   $ 275,210  

    1/25/12                                         27,000   $ 37.700   $ 254,880  

Shawn M. Barker

   
1/1/12

(2)

$

45,343
 
$

90,685
 
$

181,370
                                     

    1/1/12 (3) $ 0   $ 133,825   $ 267,650                                      

    1/25/12 (4)                     4,400                     $ 37.700   $ 165,880  

    1/25/12                                         15,800   $ 37.700   $ 149,152  

    3/15/12 (5)                           8,000   $ 40.630               $ 325,040  
   
(1)
The grant date fair value of equity incentive plan awards, based on the probable outcome of the performance condition, and stock and option awards all calculated in accordance with Topic 718, and as referenced in the Corporation's Annual Report on Form 10-K in Notes 1 and 16 to the Consolidated Financial Statements for the fiscal year ended December 31, 2012.

(2)
Represents grants made under the LTCIP. Payout levels are based on projected average base salary plus target incentive compensation over the three-year period ending December 31, 2014 (utilizing actual base salary for 2012 and 2013, and a 4% increase in base salary for 2014).

(3)
Represents grants made under the Annual Incentive Compensation Plan.

(4)
Represents performance-contingent RSUs granted January 25, 2012, at a value of $37.70 per unit, with an assumption of probable outcome if the performance measurements are met.

(5)
Represents grants made under the DSP; Mr. Seabrook's DSP grant for 1,700 shares and Mr. Barker's grant for 8,000 shares, awarded from the 2011 DSP opportunity and filled during 2012.

43



OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2012

        The following table outlines the outstanding option awards and stock awards held by the NEOs as of December 31, 2012. The outstanding option awards and stock awards represented in the table were granted to the NEOs over a period of several years, including 2012.

   
 
 
Option Awards
 
Stock Awards
 
NEO
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1)

  Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

  Option
Exercise
Price ($)

  Option
Expiration
Date

  Number
of Shares or
Units of Stock
That Have Not
Vested (#)(2)

  Market Value
of Shares or
Units of Stock
That Have Not
Vested ($)(3)

  Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)(4)

  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)(3)

 
   

John A. Hayes

    7,464           $ 24.6600     4/25/2017     34,000   $ 1,521,500     160,230   $ 7,170,293  

    52,536 (5)         $ 24.6600     4/25/2017                          

    83,000 (5)         $ 25.0550     4/23/2018                          

    500     500       $ 20.0400     1/28/2019                          

    137,250 (5)   45,750 (5)     $ 20.0400     1/28/2019                          

    3,400     3,400       $ 25.2250     1/27/2020                          

    103,600 (5)   103,600 (5)     $ 25.2250     1/27/2020                          

    42,990     128,970 (5)     $ 35.8350     1/26/2021                          

          1,800         $ 37.7000     1/25/2022                          

        209,200 (5)     $ 37.7000     1/25/2022                          

Scott C. Morrison

   
8,520
   
   
 
$

19.8700
   
4/27/2015
   
26,200
 
$

1,172,450
   
38,000
 
$

1,700,500
 

    7,828           $ 21.8450     4/26/2016                          

    14,000 (5)         $ 21.8450     4/26/2016                          

    6,328           $ 24.6600     4/25/2017                          

    17,672 (5)         $ 24.6600     4/25/2017                          

    18,000 (5)         $ 25.0550     4/23/2018                          

    2,550     1,700       $ 20.0400     1/28/2019                          

    23,700 (5)   15,800 (5)     $ 20.0400     1/28/2019                          

    3,400     3,400       $ 25.2250     1/27/2020                          

    16,100 (5)   16,100 (5)     $ 25.2250     1/27/2020                          

    10,150     30,450 (5)     $ 35.8350     1/26/2021                          

        400         $ 37.7000     1/25/2022                          

        45,400 (5)     $ 37.7000     1/25/2022                          

Raymond J. Seabrook

   
39,000
   
   
 
$

19.8700
   
12/31/2014
               
73,000
 
$

3,266,750
 

    62,000 (5)         $ 21.8450     12/31/2014                          

    65,000 (5)         $ 24.6600     4/25/2017                          

    62,900 (5)         $ 25.0550     12/31/2017                          

    96,000 (5)   32,000 (5)     $ 20.0400     12/31/2017                          

        3,400       $ 25.2250     12/31/2017                          

    45,100 (5)   45,100 (5)     $ 25.2250     12/31/2017                          

    14,300 (5)   42,900 (5)     $ 35.8350     12/31/2017                          

        2,700       $ 37.7000     12/31/2017                          

        54,500 (5)     $ 37.7000     12/31/2017                          

Charles E. Baker

   
14,000
   
   
 
$

19.8700
   
4/27/2015
   
8,000
 
$

358,000
   
24,200
 
$

1,082,950
 

    2,000           $ 21.8450     4/26/2016                          

    24,000 (5)         $ 21.8450     4/26/2016                          

    2,680           $ 24.6600     4/25/2017                          

    29,320 (5)         $ 24.6600     4/25/2017                          

    26,000 (5)         $ 25.0550     4/23/2018                          

    5,850     1,950       $ 20.0400     1/28/2019                          

    36,150 (5)   12,050 (5)     $ 20.0400     1/28/2019                          

    3,500     3,500       $ 25.2250     1/27/2020                          

    16,000 (5)   16,000 (5)     $ 25.2250     1/27/2020                          

    6,750 (5)   20,250 (5)     $ 35.8350     1/26/2021                          

        27,000 (5)     $ 37.7000     1/25/2022                          

Shawn M. Barker

   
2,625
   
   
 
$

25.0550
   
4/23/2018
   
13,350
 
$

597,413
   
14,800
 
$

662,300
 

    1,500 (5)         $ 25.0550     4/23/2018                          

    4,500     2,000       $ 20.0400     1/28/2019                          

        2,500 (5)     $ 20.0400     1/28/2019                          

    300     300       $ 25.2250     1/27/2020                          

        9,400 (5)     $ 25.2250     1/27/2020                          

    3,950 (5)   11,850 (5)     $ 35.8350     1/26/2021                          

        15,800 (5)     $ 37.7000     1/25/2022                          
   
(1)
The vesting schedule for the unexercisable stock options and SARs become exercisable in 25% annual increments on the anniversary of the grant date, beginning on the first anniversary.

44


(2)
The vesting schedule for units not yet vested for each NEO is as follows:

    Mr. Hayes—4,000 on January 23, 2013, 9,000 on March 15 in years 2013 and 2014, and 12,000 on March 15, 2015.

    Mr. Morrison—1,800 on June 15, 2013, 2,400 on June 15, 2014, 6,600 on March 15 in years 2013 and 2014, and 8,800 on March 15, 2015.

    Mr. Baker—2,400 on March 15 in years 2013 and 2014, and 3,200 on March 15, 2015.

    Mr. Barker—1,051 on March 15, 2013, 400 on July 14 in years 2013 and 2014, 450 on September 15, 2013, 3,450 on March 15, 2014, 600 on September 15, 2014, 3,799 on March 15, 2015, and 3,200 on March 15, 2016.

(3)
The market value of shares is based on $44.75, the closing price of Ball Corporation common stock on December 31, 2012.

(4)
The vesting date for the units not yet vested for each NEO for January 31 in years 2013, 2014 and 2015, contingent on meeting the performance goal of the period ending December 31 in years 2012, 2013 and 2014, respectively, is as follows:

 
  January 31, 2013
  January 31, 2014
  January 31, 2015
 

Mr. Hayes

    58,000     46,430     55,800  

Mr. Morrison

    14,600     11,000     12,400  

Mr. Seabrook

    27,000     23,000     23,000  

Mr. Baker

    9,600     7,300     7,300  

Mr. Barker

    6,000     4,400     4,400  
(5)
Represents a grant of stock-settled SARs.


OPTION EXERCISES AND STOCK VESTED IN 2012

        The following table summarizes for each NEO the options exercised and the stock awards vested during 2012. The options that were exercised by each NEO were granted in prior years and became exercisable pursuant to a prescribed vesting schedule. The value realized on exercise reflects the appreciation in the stock price from the option base price on grant date to the exercise date and is reported on a before-tax basis. The shares acquired upon vesting for each NEO were for restricted stock/units granted in prior years that vested pursuant to a prescribed vesting schedule. The value realized reflects the closing stock price on the vesting date and is also reported on a before-tax basis. NEOs can defer the receipt of units of certain awards into the Ball Corporation 2005 Deferred Compensation Company Stock Plan, pursuant to which distributions may take place no earlier than the participant's separation from service. Information regarding the 2005 Deferred Compensation Company Stock Plan is provided in the "Non-Qualified Deferred Compensation" section that follows. Footnotes are provided to detail circumstances when amounts realized upon vesting were deferred. The value realized on vesting also includes the vested value of dividend equivalents paid during 2012 on outstanding restricted stock or RSUs.

   
 
  Option Awards
  Stock Awards
 
 
     
NEO
  Number of
Shares
Acquired on
Exercise

  Value
Realized on
Exercise ($)

  Number of
Shares
Acquired on
Vesting(2)

  Value
Realized on
Vesting ($)(1)(2)(3)

 
   

John A. Hayes

    54,586   $ 2,078,391     46,000   $ 1,836,880  

Scott C. Morrison

    10,000   $ 281,775     9,800   $ 407,710  

Raymond J. Seabrook

    67,063   $ 1,841,962     31,896   $ 1,281,844  

Charles E. Baker

    11,850   $ 252,654     12,000   $ 478,160  

Shawn M. Barker

    11,036   $ 388,505     4,850   $ 200,163  
   
(1)
Value realized on vesting is based on the closing stock price on the day the RSUs vested.

(2)
Amounts deferred to the 2005 Deferred Compensation Company Stock Plan upon vesting of stock awards for each NEO is as follows:

    Mr. Morrison—Deferred 4,000 vested RSUs valued at $157,040.

    Mr. Seabrook—Deferred 20,000 vested RSUs valued at $785,200.

    Mr. Barker—Deferred 2,337 vested RSUs valued at $93,105.

(3)
Value realized on vesting also includes the value of dividend equivalents vested and paid during 2012 on outstanding restricted stock or RSU balances eligible for dividend equivalents on the record date at a dividend rate equal to that paid to the Corporation's common shareholders. Dividend equivalents paid during 2012 for each NEO is as follows:

    Mr. Hayes—$36,800

    Mr. Morrison—$16,680

    Mr. Seabrook—$13,708

    Mr. Baker—$7,040

    Mr. Barker—$7,155

45



NON-QUALIFIED DEFERRED COMPENSATION

        The Corporation has three active deferred compensation plans to which eligible participants may make contributions: the 2005 Ball Corporation Deferred Compensation Plan, the 2005 Ball Corporation Deferred Compensation Company Stock Plan, and the 2005 Ball Corporation Deferred Compensation Plan for Directors.

    2005 Deferred Compensation Plan and Deferred Compensation Plan for Directors—Eligible employee participants may defer payment of a portion or all of their annual incentive compensation, and nonemployee members of the Corporation's Board may defer a portion or all of their annual director fees; and may also include the deferral of payments of other forms of a NEO's cash compensation, as mandated by the Committee, to the extent that such compensation would not be deductible in a given year as a result of the limitations of Code Section 162(m). Amounts deferred or credited are notionally invested among various investment funds where the balance is not actually invested in investment funds, but the return on the participant's balance is determined as if the amounts were invested in those funds. The menu of investment funds consists of 15 mutual fund-like investments. The one-year annual rate of return of the funds ranged from 0.05% to 22.25%, and the three-year average annual rate of return of the funds ranged from a 0.06% to 18.43%. Distributions are based on the payment schedule elected by the participant, and may occur in service or commence at a defined point no sooner than six months following separation of service, in the form of either a lump sum and/or annual installments ranging between two and fifteen years.

    2005 Deferred Compensation Company Stock Plan—Eligible employee participants may defer payment of a portion or all of their annual incentive compensation, and nonemployee members of the Corporation's Board as participants may defer payment of a portion or all of their annual director fees. Elections to defer annual incentive compensation or director fees are made annually. Participants may also elect to defer the issuance of RSUs. Amounts are deferred or credited to a participant account as stock units with each unit having the value equivalent to one share of Ball Corporation common stock, and also receive a 20% Corporation match with a maximum match of $20,000 per year. Pursuant to specified timing rules, participants may reallocate a prescribed percentage of units to other mutual fund-like investments; however, at least 50% of the balance will remain in stock units until retirement. Dividend equivalents, applicable to any balance denominated in units, are credited to participant accounts as of each dividend payment date for the Corporation's common stock. Distributions follow the payment schedule elected by the participant and may commence at a defined point no sooner than six months following separation of service, in the form of a lump sum and/or annual installments ranging between two and fifteen years.

        The basis for investment earnings on prior plans varies as follows:

    2001 Deferred Compensation Plan and 2002 Deferred Compensation Plan for Directors—Balance is notionally invested in mutual fund-like investments.

    2000 Deferred Compensation Company Stock Plan—Balance is represented in the form of stock units, with each unit having a value equivalent to one share of Ball Corporation common stock. Dividend equivalents are credited to the account as of each dividend payment date for the Corporation's common stock.

    1989 Deferred Compensation Plan—Provides for an annual return equal to the average composite yield on Moody's for the 12 months ending October 31.

    1986 Deferred Compensation Plan and 1986 Deferred Compensation Plan for Directors and 1988 Deferred Compensation Plan—Provides for an annual return equal to the average composite yield on Moody's for the 12 months ending October 31 plus 5 percentage points; additionally, the 1988 Deferred Compensation Plan includes a fixed rate set by the Corporation at 9% for company directed deferrals.

    Ball-InCon Deferred Compensation Plan—Depending on the time of the initial deferral, the plan provides for an annual return equal to the average composite yield on Moody's for the 12 months ending October 31 or the Moody's rate plus 5 percentage points.

46


        The following table provides information related to the Corporation's deferred compensation plans. The Aggregate Balance at Last FYE column represents compensation earned, deferred and accumulated by the NEOs over many years and does not represent current year compensation.

Non-Qualified Deferred Compensation Table

   
NEO
  Executive
Contributions in
Last FY ($)

  Registrant
Contributions in
Last FY ($)

  Aggregate
Earnings in
Last FY ($)

  Aggregate
Withdrawals/
Distributions
($)

  Aggregate
Balance at
Last FYE ($)

 
   

John A. Hayes

 
$

 
$

 
$

2,090,334
 
$

 
$

10,781,501
 

Scott C. Morrison

 
$

431,403
 
$

20,000
 
$

1,038,164
 
$

 
$

5,667,312
 

Raymond J. Seabrook

 
$

885,200
 
$

20,000
 
$

3,284,489
 
$

 
$

18,400,988
 

Charles E. Baker

 
$

200,000
 
$

20,000
 
$

486,470
 
$

 
$

3,343,716
 

Shawn M. Barker

 
$

166,371
 
$

20,000
 
$

107,855
 
$

 
$

604,111
 
   

    Mr. Hayes—$4,407 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2012 and $2,060,517 of the Aggregate Balance was reported as compensation in the Summary Compensation Table since 2006. The Aggregate Earnings reflects $304,350 from cash accounts composed of $6,397 based on Moody's rate plus 5 percentage points and $297,953 based on notional investments in investment funds, plus $1,785,984 based on an increase in value and dividend equivalents on equity accounts.

    Mr. Morrison—$20,000 of the Registrant Contributions is reported as compensation in the Summary Compensation Table for fiscal year 2012 and $662,213 of the Aggregate Balance was reported as compensation in the Summary Compensation Table since 2010. The Aggregate Earnings reflects $94,795 from cash accounts composed of notional investments in investment funds, plus $943,369 based on an increase in value and dividend equivalents on equity accounts.

    Mr. Seabrook—$20,000 of the Registrant Contributions and $95,709 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2012 and $3,271,531 of the Aggregate Balance has been reported as compensation in the Summary Compensation Table since 2006. The Aggregate Earnings reflects $412,238 from cash accounts composed of $138,928 based on Moody's rate plus 5 percentage points, $7,106 based on Moody's rate and $266,204 based on notional investments in investment funds, plus $2,872,251 based on an increase in value and dividend equivalents on equity accounts.

    Mr. Baker—$20,000 of the Registrant Contributions and $22,398 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2012 and $284,775 of the Aggregate Balance has been reported as compensation in the Summary Compensation Table since 2011. The Aggregate Earnings reflects $144,616 from cash accounts composed of $32,512 based on Moody's rate plus 5 percentage points, $1,526 based on Moody's rate and $110,577 based on notional investments in investment funds, plus $341,854 based on an increase in value and dividend equivalents on equity accounts.

    Mr. Barker—$20,000 of the Registrant Contributions is reported as compensation in the Summary Compensation Table for fiscal year 2012. The Aggregate Earnings reflects $3,593 from cash accounts based on notional investments in investment funds, plus $104,262 based on an increase in value and dividend equivalents on equity accounts.


PENSION BENEFITS

        Retirement benefits are provided to the NEOs under a qualified salaried defined benefit pension plan and a non-qualified Supplemental Executive Retirement Plan ("SERP"). The Pension Benefits Table on page 49 shows each NEO's number of years of credited service, present value of accumulated benefits and payments during fiscal year 2012 for the qualified plan and the SERP. The present value of the accumulated benefit is the December 31, 2012, value of the annual benefit that was earned as of December 31, 2012.

        The Corporation offers two qualified salaried defined benefit pension plans in the U.S. that provide the same benefits. One plan covers its Aerospace subsidiary's salaried employees and the other covers all other U.S. salaried employees. The NEOs are covered under the latter. The qualified plans were designed to provide tax-qualified pension benefits that are generally available to all U.S. salaried employees. Effective January 1, 2007, the Corporation changed the formula by which the accrued pension benefit under the plans is determined. Prior to January 1, 2007, the accrued pension benefit expressed as a monthly annuity payable at age 65 was based on final average salary, covered compensation and years of service. After January 1, 2007, the accrued pension benefit is a monthly annuity that is equivalent to a lump sum payable when the participant reaches age 65 calculated on base salary each year, the Social Security Wage Base ("SSWB") and a multiple based on years of service. Payments of accrued benefits earned may be in the form of an

47


annuity, lump sum or a combination of both, depending on the election of the participant at retirement. The Corporation also sponsors a non-qualified SERP that mirrors the pension plans and is designed to replace the benefits that would have been provided under the pension plans if they were not subject to IRS-imposed limits. Under the Code, the maximum permissible benefit from the qualified plans for retirement in 2012 is $200,000 and annual compensation exceeding $250,000 in 2012 cannot be considered in computing the maximum permissible benefit under the plans.

Terms for Accrued Benefits Prior to January 1, 2007

        The monthly accrued benefit for benefits earned prior to January 1, 2007, was determined according to the following formula:

    1% times Final Monthly Average Salary plus 0.5% times Final Monthly Average Salary in excess of Covered Compensation times Benefit Service through December 31, 2006, up to a maximum of 35 years, where

    Salary is defined to be a NEO's monthly base salary excluding bonus and incentive compensation.

        Final Monthly Average Salary is calculated based on the highest average for any 60 consecutive months out of the last 120 months, through December 31, 2006.

        Covered Compensation is an average of the SSWB in effect during a NEO's career. The SSWB is the maximum monthly amount of income on which FICA taxes are due. The years included in the average are the 35 years ending in the year the NEO is eligible for an unreduced social security benefit. This portion of the benefit formula accounts for the fact that social security does not cover earnings over a certain level.

        Benefit Service is a NEO's service as a salaried employee with the Corporation plus any service with a predecessor plan as appropriate. Participants are 100% vested in their benefit at the time they are credited with five or more years of service with the Corporation.

        Normal retirement age under the plan is 65 with a minimum of five years of benefit service, but a participant may elect to receive payment upon termination or at any time after reaching age 55. Benefits paid before age 65 are subject to reduction based on the age and service at termination. Participants who terminate employment after age 55 with at least 10 years of vesting service will receive a reduction of benefit equal to 4% for each year that benefit commencement age precedes age 65 but is greater than age 60, and a 6% reduction for each year that benefit commencement age precedes age 60. Benefits for participants not meeting these requirements are reduced for payment prior to age 65 on an actuarial equivalent basis.

Terms for Accrued Benefits Beginning January 1, 2007

        The monthly annuity, which is the equivalent of a lump sum benefit payable at age 65, is based on a percentage of the participant's base pay each year as follows:

 
If, at the beginning of the year, benefit service is:
  Annual lump sum benefit accrued and payable at age 65
 
0 to 9 full years of benefit service   11.5% of base pay + 5% of base pay over 50% of SSWB(1)
 
10 to 19 full years of benefit service   13.0% of base pay + 5% of base pay over 50% of SSWB(1)
 
20 or more full years of benefit service   15.0% of base pay + 5% of base pay over 50% of SSWB(1)
 
(1)
SSWB is the maximum earnings on which the participant pays FICA tax each year. This portion of the pension formula accounts for the fact that social security does not cover earnings over a certain level.

        Base pay is the NEO's base salary during the calendar year excluding incentive compensation, severance pay or vacation payouts.

        Upon termination or retirement, the vested pension benefit accrued beginning January 1, 2007, may be paid to the participant in either a lump sum or annuity. If the benefit is paid prior to age 65, the benefit will be reduced 5% compounded annually for each year the payment is made before such age.

48


Terms for SERP Accrued Benefits

        Since the SERP mirrors the qualified pension plan, the formulas for deriving the SERP accrued benefits are the same as those described above for the pension plans; however, the amount of retirement benefit the participants receive is equal to the difference between the benefit calculated without IRS limits and the benefits calculated using the IRS limits. Effective January 1, 2007, the SERP was amended by the Committee to provide participants with benefits accrued as of December 31, 2006, a one-time option to elect the form of payment under which the participant will receive benefits in the future. The payment options available consist of various annuities and a lump sum. For all SERP benefits accrued beginning January 1, 2007, participants will receive benefits only in the form of a lump sum. In accordance with Code Section 409A, payments from the SERP will commence six months after termination of employment. The SERP was also amended to provide that when determining lump sum payments, the SERP would use the same assumptions that exist in the salaried retirement plans except that the interest rate used shall be equal to four-fifths of the interest rate used to determine lump sum benefits under those salaried retirement plans in recognition that payments from the SERP cannot be rolled into a tax-deferred account such as an IRA.

Present Value Assumptions

        The Present Value of Accumulated Benefit reported in the table below is based on the following assumptions, which are consistent with those used for the Corporation's Consolidated Financial Statements for fiscal year ending December 31, 2012:

 

Discount Rate

  4.125%
 

Mortality

  RP-2000 Mortality Table—projected 15 years
 

Preretirement Decrements

  None
 

Qualified Form of Pension Payment

  Life Only Annuity—50% & Lump Sum—50%
 

Pension Benefits Table

   
NEO
  Plan Name
  Number
of Years
Credited
Service

  Present
Value of
Accumulated
Benefit ($)

  Payments
During
Last
Fiscal
Year ($)

 
   

John A. Hayes

  Qualified     13.9   $ 240,227   $  

  SERP     13.9   $ 280,454   $  

Scott C. Morrison

  Qualified     12.3   $ 240,560   $  

  SERP     12.3   $ 70,062   $  

Raymond J. Seabrook

  Qualified     20.2   $ 716,130   $  

  SERP     20.2   $ 324,681   $  

Charles E. Baker

  Qualified     19.5   $ 456,161   $  

  SERP     19.5   $ 108,148   $  

Shawn M. Barker

  Qualified     12.0   $ 134,174   $  

  SERP     12.0   $ 3,075   $  
   


OTHER POTENTIAL POST-TERMINATION EMPLOYMENT BENEFITS

        This section provides information related to the potential post-termination employment benefits that could be payable or due to the CEO and other NEOs under various termination scenarios. Such potential benefits payable or due may result from the Corporation's obligation to the executive under (1) any existing compensation and benefit plan, policy, practice or program of the Corporation that is generally available to all participants, or (2) under any agreement specifically entered into by the Corporation and the executive.

        In general, the compensation and benefit elements provided to employees, including the CEO and other NEOs, are governed by provisions, terms or procedures of plan documents, policies and practices that define the rights of and the obligations due to the participant in the case of termination of employment. These provisions, terms or procedures apply to all employees, including the CEO and other NEOs receiving such compensation or benefit. Such compensation and benefit elements would include annual incentive compensation, long-term cash incentives, long-term equity incentives, retirement benefits and deferred compensation.

49


        The Corporation has entered into certain severance benefit and change in control agreements with the CEO and other NEOs which contain provisions that require the Corporation to provide post-termination payments or benefits to each executive in the event of termination of employment without cause or termination following a change in control of the Corporation. The Corporation does not have employment agreements with any of these executives. The respective agreements with the NEOs contain customary non-compete provisions, non-solicitation provisions, non-disparagement provisions and confidentiality covenants, and were amended and restated in 2008 to conform with Code Section 409A.

        The key provisions, terms or procedures that would apply to the CEO and other NEOs for the various compensation and benefit elements under various termination scenarios are summarized in the table below. It is followed by another table containing an estimate of the compensation payable or the value of compensation elements due to the CEO and other NEOs under the various termination scenarios assuming termination was effective at the end of the fiscal year 2012.

Post-Termination Employment Benefits Summary

 
Component
  Voluntary or
Termination for
Cause

  Death
  Disability
  Termination
Without Cause

  Termination
Following a
Change in Control

 

 

 

 

 

 

 

 

 

 

 

 

Cash Severance

  No additional benefits received.   No additional benefits received.   No additional benefits received.   CEO—2 times base salary plus target annual incentive.
All Other NEOs—1.25 to 1.5 times base salary plus target annual incentive.
Form of payment to all NEOs is a lump sum.
  All NEOs—2 times base salary plus target annual incentive, which is paid in a lump sum.
 

 

 

 

 

 

 

 

 

 

 

 

Treatment of Annual Incentives

  If terminated mid-performance cycle, NEOs age 55 or above receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   If death occurs mid-performance cycle, NEOs' beneficiaries receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   If disability occurs mid-performance cycle, NEOs receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   If terminated mid-performance cycle, NEOs receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   If terminated mid-performance cycle, NEOs receive a prorated portion of the target award.
 

 

 

 

 

 

 

 

 

 

 

 

Treatment of Long-Term Cash Incentives

  If terminated mid-performance cycle, NEOs age 55 or above receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   If death occurs mid-performance cycle, NEOs' beneficiaries receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   If disability occurs mid-performance cycle, NEOs receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   If terminated mid-performance cycle, NEOs age 55 or above receive a prorated portion of the award at the end of the performance cycle contingent on meeting the performance goal.   LTCIP—NEOs receive a lump sum payment based on the performance at the end of the calendar year immediately preceding the change in control.
Special Acquisition—NEOs receive a prorated portion of the target award.
 

 

 

 

 

 

 

 

 

 

 

 

Treatment of Restricted Stock/ Deposit Shares

  Restricted Stock/Units—All unvested stock/units are forfeited.

Deposit Shares—NEOs age 55 or above receive a prorated portion of unvested stock/units. All other NEOs forfeit unvested stock/units.
  Restricted Stock/Units—All unvested stock/units vest.

Deposit Shares—All unvested stock/units vest.
  Restricted Stock/Units—All unvested stock/units vest.

Deposit Shares—All unvested stock/units vest.
  Restricted Stock/Units—All unvested stock/units are forfeited.

Deposit Shares—NEOs age 55 or above receive a prorated portion of unvested stock/units. All other NEOs forfeit unvested stock/units.
  Restricted Stock/Units—All unvested stock/units vest.

Deposit Shares—All unvested stock/units vest.
 

50


 
Component
  Voluntary or
Termination for
Cause

  Death
  Disability
  Termination
Without Cause

  Termination
Following a
Change in Control

 

 

 

 

 

 

 

 

 

 

 

 

Treatment of Performance- Contingent RSUs

  For NEOs age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-competition agreement, unvested units will cliff vest on the vest date if the performance measure is achieved. For all other NEOs, the unvested units are forfeited.   All unvested units vest.   All unvested units vest.   For NEOs age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-competition agreement, unvested units will cliff vest on the vest date if the performance measure is achieved. For all other NEOs, the unvested units are forfeited.   All unvested units vest.
 

 

 

 

 

 

 

 

 

 

 

 

Treatment of Stock Options

  Stock Options Granted Prior to 2007—Unvested shares are forfeited. For NEOs age 55 or above, options remain exercisable for a maximum of 2 years (90 days for ISOs). For all other NEOs, the options remain exercisable for 30 days.

Stock Options Granted in 2007 or After—For NEOs age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-competition agreement, unvested options will continue to vest under the normal schedule and options will remain exercisable for a maximum of 5 years (90 days for ISOs). For all other NEOs, the same provisions as those described above for grants made prior to 2007 are applicable.

  Stock Options—All options vest.   Stock Options—Shares continue to vest pursuant to the original vesting schedule.   Stock Options Granted Prior to 2007—Unvested shares are forfeited. For NEOs age 55 or above, options remain exercisable for a maximum of 2 years (90 days for ISOs). For all other NEOs, the options remain exercisable for 30 days.

Stock Options Granted in 2007 or After—For NEOs age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-competition agreement, unvested options will continue to vest under the normal schedule and options will remain exercisable for a maximum of 5 years (90 days for ISOs). For all other NEOs, the same provisions as those described above for grants made prior to 2007 are applicable.

  Stock Options—All options vest and in lieu of common stock issuable upon exercise, the NEOs are paid a lump sum amount equal to the number of outstanding shares underlying the options times the excess of the closing stock price on the date of termination over the exercise price.
 

 

 

 

 

 

 

 

 

 

 

 

Retirement Benefits

  No additional benefits received.   No additional benefits received.   No additional benefits received.   CEO—Paid a lump sum amount equal to an additional 2 years of service credited.

All Other NEOs—Paid a lump sum amount equal to an additional 1.25 to 1.5 years of service credited.
  All NEOs—Paid a lump sum amount equal to an additional 2 years of service credited.
 

 

 

 

 

 

 

 

 

 

 

 

Health and Welfare Benefits

  No additional benefits received.   No additional benefits received.   Continue for period of disability.   CEO—Continued for 2 years.

All Other NEOs— Continued for 1.25 to 1.5 years.
  All NEOs—Continued for 2 years.
 

51