DENTSPLY International DEF 14A 2008
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
DENTSPLY INTERNATIONAL INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
Susquehanna Commerce Center
221 W. Philadelphia Street
York, PA 17405-0872
Fax (717) 854-2343
April 11, 2008
Dear DENTSPLY Stockholder:
You are cordially invited to attend the 2008 Annual Meeting of Stockholders to be held on Tuesday, May 13, 2008, at 9:30 a.m., at the Companys Employee Meeting Room at 570 West College Avenue, in York, Pennsylvania.
The Annual Meeting will include voting on the matters described in the accompanying Notice of Annual Meeting and Proxy Statement, a report on Company operations, and discussion.
Whether or not you plan to attend, you can ensure that your shares are represented at the Annual Meeting by voting your proxy. You have three ways to vote your proxy. You may vote by mail by promptly completing, signing, dating and returning the enclosed proxy card in the envelope provided, you may vote by telephone by calling 1-800-690-6903 and following the instructions, or you may vote by internet by following the instructions on the proxy card or going to the internet at www.proxyvote.com and following the instructions on that site. Your vote is important. Please take a moment to vote through one of the above methods.
Bret W. Wise
Chairman of the Board,
Chief Executive Officer and President
DENTSPLY INTERNATIONAL INC.
SUSQUEHANNA COMMERCE CENTER
221 WEST PHILADELPHIA STREET
YORK, PENNSYLVANIA 17405-0872
The Annual Meeting of Stockholders (the Annual Meeting) of DENTSPLY International Inc., a Delaware corporation (the Company), will be held on Tuesday, May 13, 2008, at 9:30 a.m., local time, at the Companys Employee Meeting Room, 570 West College Avenue, York, Pennsylvania, for the following purposes:
1. To elect four Class I directors to serve for a term of three years and until their respective successors are duly elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP, independent registered public accounting firm, to audit the books and accounts of the Company for the year ending December 31, 2008;
3. If properly presented at the meeting, to vote on a shareholder proposal requesting the Company to prepare a sustainability report; and
4. To transact such other business as may properly come before the Annual Meeting and any and all adjournments and postponements thereof.
The Board of Directors fixed the close of business on March 17, 2008 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the Company. Reference is made to the accompanying Proxy Statement for further information with respect to the business to be transacted at the Annual Meeting.
A complete list of the stockholders entitled to vote at the Annual Meeting will be available during ordinary business hours for examination by any stockholder, for any purpose germane to the Annual Meeting, for a period of at least ten days prior to the Annual Meeting, at the office of the Companys Secretary, Susquehanna Commerce Center, 221 West Philadelphia Street, York, Pennsylvania.
The Board of Directors urges you to vote your proxy by mail, by telephone or through the internet. You are cordially invited to attend the Annual Meeting in person. The voting of your proxy will not affect your right to revoke your proxy or to vote in person if you do attend the Annual Meeting.
By Order of the Board of Directors,
Brian M. Addison
Vice President, Secretary and
April 11, 2008
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. OR, IF YOU WISH, YOU MAY PROVIDE YOUR PROXY INSTRUCTION USING THE TELEPHONE BY CALLING 1-800-690-6903, OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN VOTING YOUR PROXY PROMPTLY.
DENTSPLY INTERNATIONAL INC.
SUSQUEHANNA COMMERCE CENTER
221 WEST PHILADELPHIA STREET
YORK, PENNSYLVANIA 17405-0872
Table of Contents
DENTSPLY INTERNATIONAL INC.
SUSQUEHANNA COMMERCE CENTER
221 WEST PHILADELPHIA STREET
YORK, PENNSYLVANIA 17405-0872
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of DENTSPLY International Inc., a Delaware corporation (DENTSPLY or the Company), for use at the Companys 2008 Annual Meeting of Stockholders (together with any and all adjournments and postponements thereof, the Annual Meeting) to be held on Tuesday, May 13, 2008, at 9:30 a.m., local time, at the Companys Employee Meeting Room, 570 West College Avenue, York, Pennsylvania, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement, together with the foregoing Notice and the enclosed proxy card, are first being sent to stockholders on or about April 11, 2008.
The Board of Directors (the Board) fixed the close of business on March 17, 2008 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. On the record date, there were 148,791,129 shares of Common Stock of the Company, par value $.01 per share (Common Stock), outstanding and entitled to vote. Each share of Common Stock is entitled to one vote per share on each matter properly brought before the Annual Meeting. Shares can be voted at the Annual Meeting only if the stockholder is present in person or is represented by proxy. The presence, in person or by proxy at the Annual Meeting, of shares of Common Stock representing at least a majority of the total number of shares of Common Stock outstanding on the record date will constitute a quorum for purposes of the Annual Meeting.
Whether or not you are able to attend the Annual Meeting, you are urged to vote your proxy, either by mail, telephone or the internet, which is solicited by the Companys Board of Directors and which will be voted as you direct. In the absence of instructions, shares represented by properly provided proxies will be voted as recommended by the Board of Directors.
Any proxy may be revoked at any time prior to its exercise by attending the Annual Meeting and voting in person, by notifying the Secretary of the Company of such revocation in writing or by delivering a duly executed proxy bearing a later date, provided that such notice or proxy is actually received by the Company prior to the taking of any vote at the Annual Meeting.
The cost of solicitation of proxies for use at the Annual Meeting and sought by the Board of Directors will be borne by the Company. Solicitations will be made primarily by mail, facsimile or through the internet, and employees or agents of the Company may solicit proxies personally or by telephone for no additional consideration. The Company may specifically engage a firm to assist in the solicitation of proxies on behalf of the Board and would anticipate paying a reasonable fee for such services plus reasonable out-of-pocket expenses.
Brokers, banks and other nominee holders will be requested to obtain voting instructions of beneficial owners of stock registered in their names. The Company will reimburse these record holders for their reasonable out-of-pocket expenses incurred in doing so. Shares represented by a duly completed proxy submitted by a nominee holder on behalf of beneficial owners will be counted for quorum purposes, and will be voted to the extent instructed by the nominee holder on the proxy card or through the internet. The rules applicable to a nominee holder may preclude it from voting the shares that it holds on certain kinds of proposals unless it receives voting instructions from the beneficial owners of the shares (sometimes referred to as broker non-votes).
The Restated Certificate of Incorporation and the by-laws of the Company provide that the number of directors (which is to be not less than three) is to be determined from time to time by the Board of Directors. The Board is currently comprised of eleven persons.
Pursuant to the Companys Restated Certificate of Incorporation, the members of the Board of Directors are divided into three classes. Each class is to consist, as nearly as may be possible, of one-third of the whole number of members of the Board. The term of the Class I directors expires at the Annual Meeting. The terms of the Class II and Class III directors will expire at the 2009 and 2010 Annual Meetings of Stockholders, respectively. At each Annual Meeting, the directors elected to succeed those whose terms expire are of the same class as the directors they succeed and are elected for a term to expire at the third Annual Meeting of Stockholders after their election and until their successors are duly elected and qualified. A director elected to fill a vacancy is elected to the same class as the director he/she succeeds, and a director elected to fill a newly created directorship holds office until the next election of the class to which such director is elected.
The four incumbent Class I directors are nominees for election to the Board this year for a three-year term expiring at the 2011 Annual Meeting of Stockholders. In the election, the four persons who receive the highest number of votes actually cast will be elected. The proxy named in the proxy card and on the internet voting site intends to vote for the election of the four Class I nominees listed below unless otherwise instructed. If a holder does not wish his or her shares to be voted for a particular nominee, the holder must identify the exception in the appropriate space provided on the proxy card or on the internet site, in which event the shares will be voted for the other listed nominees. If any nominee becomes unable to serve, the proxy may vote for another person designated by the Board of Directors or the Board may reduce the number of directors. The Company has no reason to believe that any nominee will be unable to serve.
The Companys by-laws require that stockholders seeking to nominate persons for election to the Board, or to propose other business to be brought before an Annual Meeting of Stockholders, comply with certain procedures. See Stockholder Proposals for Proxy Statement and Nominations in this Proxy Statement.
Set forth below is certain information with regard to each of the nominees for election as Class I directors and each continuing Class II and Class III director.
The Class I directors will be elected by a plurality of the votes of shares present and entitled to vote. Accordingly, the four nominees for election as directors who receive the highest number of votes actually cast will be elected. Broker non-votes will be treated as shares that neither are capable of being voted nor have been voted and, accordingly, will have no effect on the outcome of the election of directors.
The Board of Directors unanimously recommends a vote FOR the nominees for
election as Class I directors.
The Audit and Finance Committee appointed PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm, to audit the financial statements of the Company and to audit the Companys internal control over financial reporting for the year ending December 31, 2008.
In connection with the audit of the Companys financial statements, it is expected that PwC will also audit the books and accounts of certain subsidiaries of the Company at the close of their current fiscal years. A representative of PwC will be present at the Annual Meeting and will have the opportunity to make a statement, if such person desires to do so, and to respond to appropriate questions.
Following is a summary of the fees billed to the Company by PricewaterhouseCoopers LLP for professional services rendered during 2007 and 2006, and are categorized in accordance with the rules of the Securities Exchange Commission (SEC) on auditor independence as follows (in thousands):
The Audit and Finance Committee reviewed summaries of the services provided by PwC and the related fees and determined that the provision of non-audit services is compatible with maintaining the independence of PwC.
The Audit and Finance Committee has adopted procedures for pre-approval of services provided by PwC. Under these procedures, all services to be provided by PwC must be pre-approved by the Audit and Finance Committee, or can be pre-approved by the Chairman of the Audit and Finance Committee subject to ratification by the Committee at its next meeting. Management makes a presentation to the Committee (or the Chairman of the Committee, as applicable) describing the types of services to be performed and the projected budget for such services. Following this presentation, the Committee advises Management of the services that are approved and the projected level of expenditure for such services. All of the fees reported above were approved by the Audit and Finance Committee (Audit Committee) in accordance with their procedures.
The proposal to ratify the appointment of PwC will be approved by the stockholders if it receives the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal. If there is an abstention noted on the proxy card for this proposal, the abstention will have the effect of a vote against the proposal, as it is a share represented by proxy and entitled to vote. Broker non-votes will be treated as shares not capable of being voted on the proposal and, accordingly, will have no effect on the outcome of voting on the proposal.
The Audit and Finance Committee and the Board of Directors recommend a vote FOR ratification of the selection of PwC as independent registered public accounting firm for the Company.
We have received a stockholder proposal from Walden Asset Management (Walden) as primary filer, whose address is One Beacon Street, Boston, Massachusetts 02108. Walden indicated in its proposal that it holds 265,000 shares (approximately two tenths of a percent) of the Companys stock and intends to introduce the following resolution at the Annual Meeting and has furnished the following statement in support of the proposal. There were also co-filers to the proposal who collectively indicated they hold 40,835 shares of the Companys stock. The names, addresses and shareholdings of the co-filers are available upon request made to the secretary of the Company.
Sustainability requires balancing the needs of the present with the needs of the future, whether these needs are considered in ecological, economic, or societal contexts. Sustainable business includes encouraging long lasting social well being in communities where [companies] operate, interacting with different stakeholders (e.g. clients, suppliers, employees, government, local communities, and non-governmental organizations), and responding to their specific and evolving needs, thereby securing a long-term license to operate, superior customer and employee loyalty, and ultimately superior financial returns. (Dow Jones Sustainability Group)
Mainstream institutional investment and brokerage houses are seeking tools to understand the links between sustainability performance and capital markets. Leading companies such as MG, Goldman Sachs, Legg Mason, Merrill Lynch, and Morgan Stanley collect information on companies social and environmental practices to help make investment decisions. In addition, the Carbon Disclosure Project, a coalition of 315 institutional investors representing more than $40 trillion in assets, has requested greater disclosure from companies on their climate change programs and policies.
We believe that developing a sustainability report allows a company to be more responsive to the global business environment, one with finite natural resources, shifting legislation, and changing public expectations of corporate behavior. The reporting process helps companies to: better integrate and gain strategic value from existing corporate social responsibility efforts, identify gaps and opportunities, develop company-wide communications, and structure a venue to publicize innovative practices or respond to critiques.
Given DENTSPLYS business focus, we believe the importance of a corporate wide analysis of opportunities and exposures in sustainability issues is important. We believe that DENTSPLY will benefit from understanding the risks and opportunities that sustainability issues, such as climate change, toxins legislation and standards for human rights, can play across its many business lines. We ask that the company make clear to shareholders that it is taking the necessary steps to identify, understand, monitor, and manage sustainability issues.
RESOLVED: Shareholders request that the Board of Directors issue a sustainability report to shareholders, at reasonable cost, and omitting proprietary information, by September 1, 2008.
The report should include the companys definition of sustainability, as well as a company-wide review of company policies, practices, and metrics related to long-term social and environmental sustainability.
We recommend that DENTSPLY use the Global Reporting Initiatives Sustainability Reporting Guidelines (the Guidelines) to prepare the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization developed with representatives from the business, environmental, human rights and labor communities. The Guidelines provide guidance on report content, including performance on direct economic impacts, environmental, labor practices and decent work conditions, human rights, society, and product responsibility. The Guidelines provide a flexible reporting system that allows the omission of content that is not relevant to company operations. Over 800 companies use or consult the Guidelines for sustainability reporting, including 3M, Akzo Nobel, BASF, Ingersoll-Rand, and General Electric.
The Company recognizes the importance of social, environmental and economic considerations in the manner in which it conducts business and their potential impact on its economic performance. The Company also recognizes the importance of these issues to our stockholders and others that have business relationships with us. The Company is committed to ethical business practices and compliance with the law in all areas of its operations and strives to be a good corporate citizen in the communities where it operates. The Company takes the issues raised by the proposal seriously but believes that conducting a special review of social, environmental and economic performance for the purpose of preparing an additional report to stockholders on sustainability would be expensive, time-consuming and unnecessary. Such a report would not add to the Companys efforts in these areas or result in any additional benefit to stockholders, employees or others because the Companys current policies and practices address the concerns of the stockholder proposal.
It should be noted that the stockholder proposal recommends the use of the Global Reporting Initiatives (GRI) Sustainability Reporting Guidelines to prepare the report. The GRI Guidelines are a complex, vague and voluminous set of metrics that would require substantial time and funds to evaluate and apply. The proposal does not convey the burden on human resources or the considerable expense involved in preparing a report using the GRI Guidelines other than to note that the sustainability report should be prepared at reasonable cost. Information previously available on GRIs website stated that companies that responded to a survey conducted by GRI spent an average of more than $600,000 in preparing sustainability reports using the GRI Guidelines with one entity spending $3 million on its sustainability report. The Company does not believe that stockholders would be benefited by having the Company expend hundreds of thousands of dollars, or more, on preparing a separate sustainability report in accordance with a costly, complex and ambiguous set of guidelines. Instead, the Company prefers, in the exercise of its business judgment, to prudently allocate its limited resources and assets to the continued development and enhancement of its business operations and the activities described herein.
As a manufacturer of dental products in the healthcare market the Company recognizes that its commercial success depends on its ability to promote the health of the public and that ultimately the achievement of the Companys business objectives is based on the welfare of the end users of its products, the members of the public who are treated by the dental professionals who are our customers. Competitive advantage and the promotion of the wellbeing of the public are compatible objectives and are pursued by the Company in tandem.
DENTSPLY has an active and long-standing corporate social responsibility policy. We believe that we currently integrate and gain strategic value from our existing corporate social responsibility initiatives. As a dental manufacturer, our first goal is to improve the oral health of the public, including underserved individuals, both children and adults. DENTSPLY was instrumental in the founding of the American Fund for Dental Health over 50 years ago, which subsequently became Oral Health America, a vital and active non-profit organization committed to improving the oral health of the public. The Company continues to invest in dental charitable organizations dedicated to providing needed dental care for children and adults. The Company also invests in the future of dental services and professionals through support of student research in dental schools throughout the world. In addition, we strive to serve as good corporate citizens improving the social, educational and health infrastructure in the communities in which we operate. The Company supports various non-profit and charitable organizations with cash grants from the DENTSPLY Foundation and encourages the Companys senior management to donate their time through service on the boards of various non-profit organizations. The Company also encourages its Associates to give back to their communities by donating their time as volunteers.
The Company believes that in addition to social considerations, environmental considerations are also important in the conduct of our business. Although the nature of the Companys business is such that it is not a heavy consumer of energy resources or raw materials, the Company has ongoing initiatives to evaluate and improve its operating efficiencies, including the reduction of energy usage and raw material consumption. Most notable of these is the Companys lean manufacturing program that is applied throughout our global manufacturing base with an emphasis on streamlining operations, increasing throughput per square footage of plant space, reducing material and energy consumption, and reducing scrap materials. In addition, the Company engages in
numerous recycling programs and we have various initiatives to automate and streamline administrative functions through use of electronic media, to reduce paper consumption in our business units.
The Companys products and operations are subject to extensive regulations administered by the Federal Food and Drug Administration and similar foreign agencies. These regulations relate to all aspects of the Companys business including the manner in which the Company manufactures and markets its products and operates its facilities. We are subject to periodic inspections by agents of the FDA and other government agencies who are responsible for ensuring that our products and practices meet all applicable standards. Additionally, the Companys facilities are periodically inspected by third party Notified Bodies to allow the Companys products to be sold on a worldwide basis.
The Company has programs to ensure compliance with FDA regulations and all other laws applicable to our business, including product safety, environmental and labor laws. Specifically, although the Companys operations have minimal environmental impacts, it maintains an environmental, health and safety audit program to monitor its compliance with applicable requirements. The Companys environmental programs include, among others, hazardous and general waste handling and management, recycling, and energy and water usage reduction.
As a general matter, the Company does not subcontract out the production of its products, particularly in countries where use of child labor has been identified as occurring. Moreover, the Company has human resources personnel responsible for various Company operations throughout the world to ensure compliance with applicable labor and employment laws to ensure compliance with human rights standards.
The Companys ethical approach to business operations is embedded in the Companys culture. The Company has adopted a Code of Business Conduct & Ethics to promote the appropriate and responsible conduct of its businesses throughout the world. This Code applies to all Company personnel and all employees receive a copy of our Code. Violation of this Code of Conduct is basis for dismissal from the Company. The Code and compliance activities hereunder are overseen by a corporate compliance committee consisting of the most senior business and legal officers of the Company. These compliance activities are supported by the Companys commitment to sound ethical practices and a mission statement that places unquestionable integrity as the guiding core value of our Company.
The Company continues to monitor and review its policies to ensure that the principles set forth above are appropriately implemented and to address new concerns or issues that arise by our participation in a global marketplace whose standards continue to evolve.
In sum, the Company believes that its existing corporate practices including programs and activities to ensure compliance with applicable legal requirements, existing corporate social responsibility programs, our dedication to improving the health and welfare of the communities in which we operate, and our manufacturing initiatives that reduce the impact that our operations have on the environment adequately address the matters raised by the proposal. Therefore, conducting a special review and preparing a sustainability report are unnecessary, and an ineffective use of the Companys funds. The time and expense that would be incurred would divert personnel and resources from our business and operations, including the sustainability activities described above, and would not be in the best interests of our stockholders.
The proposal to request the Companys Board to prepare a Sustainability Report will be approved if it receives the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal. If there is an abstention noted on the proxy card for this proposal, the abstention will have the effect of a vote against the proposal as it is a share represented by proxy and entitled to vote. Broker non-votes will be treated as shares not capable of being voted on the proposal and, accordingly, will have no effect on the outcome of voting on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE PROPOSAL TO ISSUE A SUSTAINABILITY REPORT.
The following table sets forth certain information with respect to all persons or groups known by the Company to be the beneficial owners of more than 5% of its outstanding Common Stock as of March 17, 2008.
STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the beneficial ownership of the Companys Common Stock as of March 17, 2008 held by (i) the Companys chief executive officer, chief financial officer and the other named executive officers, (ii), each director and nominee for director and (iii) all directors and executive officers of the Company as a group (based on 148,791,129 shares of Common Stock outstanding as of such date).
Under federal securities laws, the Companys directors, certain officers, and persons holding more than 10% of the Common Stock of the Company are required to report, within specified due dates, their initial ownership and any subsequent changes in ownership of the Companys securities to the Securities and Exchange Commission. The required reporting periods were significantly reduced in August 2002 for most reports to two business days. The Company is required to describe in this proxy statement whether it has knowledge that any person required to file such report may have failed to do so in a timely manner. Based upon reports furnished to the Company and written representations and information provided to the Company by persons required to file reports, the Company believes that during fiscal 2007, all such persons complied with all applicable filing requirements, except that, Form 4s were filed late for Brian Addison, Christopher Clark, William Jellison, Rachel McKinney, James Mosch, Robert Size, Timothy Warady and Bret Wise for a grant of Restricted Stock Units (RSUs) in February 2007 and their annual SERP allocation in March 2007. Also, one report was filed late for each director to report the application of the quarterly dividend in October 2007 to their existing RSUs.
The Human Resources Committee is comprised of three directors, all of whom are independent under the listing standards of the NASDAQ Stock Market, Inc. (the Listing Standards), and operates under a written charter (a copy of the Human Resources Committee Charter is attached to this Proxy Statement as Appendix D). The Committee is pleased to present its report on executive compensation. This report describes the components of the
Companys executive officer compensation programs and the basis on which compensation determinations are made with respect to the executive officers of the Company. The Compensation Committee has reviewed and discussed with management the Companys Compensation Discussion and Analysis section of this Proxy Statement. Based on such review and discussions, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. The Compensation Discussion and Analysis is incorporated by reference into the Companys Annual Report on Form 10-K for the year ended December 31, 2007.
HUMAN RESOURCES COMMITTEE
COMPENSATION DISCUSSION AND ANALYSIS
Role of the Human Resources Committee
The Human Resources Committee of the Board of Directors (the Committee) administers the Companys executive compensation program. The role of the Committee is to oversee DENTSPLYs compensation plans and policies, administer its equity incentive plans (including reviewing and approving equity grants to executive officers) and annually review and approve all compensation decisions relating to executive officers, including those for the Chief Executive Officer (CEO) and the other executive officers named in the Summary Compensation Table (the Named Executive Officers). The Committee reviews and approves, among other things, salary increases for the Companys Named Executive Officers, the structure of the Companys Annual Incentive Plan, including annual performance objectives for the Named Executive Officers; and the structure and actual grants of awards under the Companys equity incentive programs. The Committee reviews with the Board its decisions regarding compensation for the CEO, and if it determines appropriate, seeks ratification by the Board.
The Committee is assisted in its work by the Companys Corporate Human Resources Department. In addition, with respect to the compensation established for the Named Executive Officers for 2007, the Committee engaged an independent compensation consultant, Towers Perrin, to advise on matters related to CEO and other executive compensation.
As part of the review of the CEOs compensation, the Committee reviews and approves goals and objectives relevant to the compensation of the Companys CEO, evaluates the CEOs performance with respect to those goals and objectives and determines, either as a committee or together with the Board of Directors, the CEOs total compensation level based on such evaluation. The Committee also reviews and approves compensation and incentive arrangements (including performance-based arrangements and bonus awards under the Annual Incentive Plan) for the Companys other Named Executive Officers (as well as such other employees of the Company as the Committee may determine from time to time to be necessary or desirable) and the grant of awards pursuant to the Companys Equity Incentive Plan.
General Compensation Philosophy and Objectives
The Committees compensation philosophy is to provide a compensation package that is designed to satisfy the following principal objectives:
The Committee believes that compensation paid to the Companys executive officers should be competitive with the market, be aligned with the performance of the Company on both a short-term and long-term basis, take into consideration individual performance of the executive, and assist the Company in attracting and retaining key executives critical to the Companys long-term success. The Companys executive compensation program balances a level of fixed compensation with incentive compensation that varies with the performance of the Company and the individual executive. The Companys base pay and benefit programs for executives provide basic economic security at a level that is consistent with the market for executive management and competitive compensation practices. The annual and long-term incentive compensation programs reward performance measured against goals and standards established by the Committee, and are designed to encourage executives to increase shareowner value by focusing on growth in revenue and earnings, generation of cash flow and efficient deployment of capital, leading to increasing the Companys stock price.
Other objectives of the total compensation program are to provide: the ability for executives to accumulate capital, predominantly in the form of equity in the Company, in order to align executive interests with those of the shareowners; a competitive level of retirement income; and, in the event of special circumstances, such as termination of employment in connection with a change in control of the Company, special severance protection to help ensure executive retention during the change in control process and to ensure executive focus on serving the Company and shareowner interests without the distraction of possible job and income loss.
In furtherance of the philosophy and objectives discussed above, the Committee has determined that the total compensation program for executive officers should consist of the following components:
Determination of Executive Compensation
The Company focuses annually on developing a total remuneration level for executives that is intended to be externally competitive and meet the Companys compensation objectives. Salary ranges, annual bonus plan targets and equity compensation targets are developed using a total remuneration perspective.
Generally speaking, the Company designs its compensation programs such that there is a correlation between level of position and degree of risk. Based on that guiding principle, the Companys more senior executives with the highest levels of responsibility and accountability have a higher percentage of their total potential remuneration at risk, i.e., incentive and equity compensation, than do employees with lower levels of responsibility and accountability. This means that a higher proportion of their total potential compensation is based upon variable incentive pay and equity compensation, than is the case with the Companys employees with lower levels of responsibility and accountability.
In establishing the Companys current executive compensation policies, compensation programs and awards, the Committee reviewed, for purposes of market comparison, the levels of current compensation at companies of similar size as the Company, using compensation surveys provided by Towers Perrin. In November 2006, competitive data was developed by Towers Perrin, using a Towers Perrin database of compensation surveys. The database used by Towers Perrin in 2006 was comprised of one hundred and ninety-six comparator companies generating annual revenues of $1 billion to $3 billion (Peer Group) and included the companies set forth in Appendix A to this proxy statement. This data from the Peer Group is considered by the Committee and compared with the compensation of the Companys executive officers in evaluating the amount and proportions of base pay, annual incentive pay and long-term compensation, as well as the targeted total compensation value. In reviewing
executive officers compensation, the Committee also considers recommendations from the CEO regarding total compensation for other executive officers. The Towers Perrin report provides to the Committee historical and prospective total compensation components for each executive officer as compared to the Peer Group. Base pay and annual incentives are targeted to a range around the 50th percentile, and long-term incentives are targeted to a range around the 75th percentile of the Peer Group, subject to individual performance and experience factors of each executive officer. The Committee does not consider the overall wealth accumulation or prior compensation of executives in establishing the current level of compensation, except to the extent the prior years compensation is considered in the comparative analysis described above.
Determination of Annual Base Salaries
In establishing base salaries of the Companys executives, the Committee strives to reflect the external market value of a particular role as well as the experiences and qualifications that an individual brings to the role. The primary purpose of the base salaries is to pay a fair, market competitive rate in order to attract and retain key executives. Base salary adjustments are generally made annually and have in the past been awarded based on individual performance, level of responsibilities, competitive data from the Peer Group, employee retention efforts, the Companys overall guidelines and annual salary budget guidelines. Base salaries are targeted to a range around the 50th percentile of the base pay paid by the Peer Group for a comparable role, in order to ensure that the Company is able to compete in the market for outstanding employees without unduly emphasizing fixed compensation.
The starting point for the Committee in establishing base salaries and annual incentive awards is to review the total annual cash compensation of the executive officers with the total annual cash compensation for comparable positions in the Peer Group. In determining the total annual cash compensation of the executive officer, the Committee establishes a comparative base salary and what the annual incentive awards would be at the 100% target achievement level. Once the Committee establishes the appropriate range for base salaries relative to comparable positions reflected in the Peer Group, the Committee adjusts the base salary of the individual executive officer based on consideration of several factors, including individual performance, Company performance, the experience level of the executive, the nature and breadth of the executives responsibilities, and the desire to minimize the risk of losing the services of the executive to another company. Total direct compensation in relation to other executives, as well as prior year individual performance and performance of the business lines for which the executive is responsible, are also taken into consideration in determining any adjustment. The base salaries of the executive officers were reviewed in December 2006 in connection with the review of total compensation and changes were made effective at the beginning of 2007. Because target annual incentive award levels are set as a percentage of salary, increases in salary also affect the annual cash incentive award opportunity. At its meeting in December 2006, the Committee approved base salaries for the named executive officers for 2007 as follows:
Bret W. Wise, Chairman of the Board, Chief Executive Officer and President $700,000
Christopher T. Clark, Executive Vice President and Chief Operating Officer $450,000
William R. Jellison, Senior Vice President and Chief Financial Officer $383,000
James G. Mosch, Senior Vice President $342,000
Brian M. Addison, Vice President, Secretary and General Counsel $331,000
Determination of Annual Incentive Awards
As discussed above in the section on General Compensation Philosophy and Objectives, the Committee believes it is important to have a portion of the executives total annual cash compensation tied to the short-term (annual) performance of the Company and its executives. It is intended that this component of the total compensation of executives be competitive with the market, but also reward executives for good performance and reduce the targeted compensation opportunity for performance that fails to meet the objectives established by the Committee. The Committee believes this helps to align the compensation and objectives of the executives with the Company and its shareholders. Annual incentive awards are determined as a percentage of each executives base salary. The Committee determines the general performance measures and other terms and conditions of awards for executives covered under the Companys annual incentive program, and the weight attributable to each performance goal for
the Named Executive Officers. For executives below the level of the Named Executive Officers, the CEO and other executives establish the performance objectives and weighting based on direction provided in the Annual Incentive Plan.
The Committee annually reviews and establishes targets for annual bonus payouts to be applicable for the performance year. These targets are generally established in the fourth quarter of the year preceding or at the beginning of the performance year. In establishing the target payouts, the Committee evaluates the compensation levels in the Peer Group. The Committee establishes performance targets for the executive officers, which if achieved at the 100% level, would result in annual bonuses that, in combination with base salary, are competitive in the 50th percentile range with the total annual compensation of comparable positions in the Peer Group. If the Company exceeds the targets established by the Committee, the executives will be rewarded with higher annual bonuses and if the Company falls below the targets, the executives bonuses will be reduced below the 100% target level. The general principle in setting targets and measuring performance is that management is responsible and accountable for the financial results of the Company as measured based on United States (U.S.) Generally Accepted Accounting Principles (GAAP) consistently applied. The annual incentive plan provides that the Committee may adjust the GAAP results to address unique or significant events, such as the impact of merger and acquisition activity, charges related to settlement of litigation, unbudgeted restructuring expenses or gains, interest carrying costs related to unbudgeted share repurchases, and the impact of significant or non- recurring unbudgeted one-time gains or losses, that were not considered in the targets set for the year, are not reflective of current operations, or benefit future periods.
As noted earlier, the Committee believes that employees in higher ranks should have a higher proportion of their total compensation delivered through pay-for-performance cash incentives; as a result, their total annual compensation will be more significantly correlated, both upward and downward, to the Companys performance. The variability of the cash compensation of the Companys executives is closely linked to annual financial results of the Company, delivering lower-than-market total cash compensation in times of poor financial performance and higher total cash compensation when the Company performs well. Consistent with this principle, for 2007, the bonus targets for the named Executive Officers ranged from 50 to 100% of base salary depending on the executives position, as set forth below.
Bret W. Wise, Chairman, Chief Executive Officer and President 100%
Christopher T. Clark, Executive Vice President and Chief Operating Officer 75%
William R. Jellison, Senior Vice President and Chief Financial Officer 55%
James G. Mosch, Senior Vice President 55%
Brian M. Addison, Vice President, Secretary and General Counsel 50%
As noted above, the actual annual incentive awards are based on an executives performance against objectives established by the Committee. Generally, the Committee expects awards, in the aggregate, to range from 90% to 110% of target. Awards may range from no award being earned to 200% of target, although attainment at the maximum award level is not expected. Awards, for the positions of the Named Executive Officers over the last three years have ranged from 93.6% to 145.5% of target. The key performance measures for the Named Executive Officers are targets for the Companys net income and internal sales growth. In the case of operating executives who have responsibility for certain businesses, in addition to the targets for the Companys income and sales growth, a portion of their annual target is comprised of the operating income and internal sales growth of those businesses. The targets for net income and internal sales growth are evaluated in conjunction so that minimal levels of achievement must be met on both targets in order for any incentive award to be paid. The Committee establishes objectives for net income and internal sales growth which it believes is challenging but fair and consistent with the executive compensation objectives described above. If the objectives are met the Company will produce better than market results which should translate into greater shareholder returns. The targets for 2007 at 100% for the Named Executive Officers, other than Mr. Mosch, who has direct operating segment responsibility, were internal sales growth of 5% and corporate net income of $244.5 million. 50% of Mr. Moschs objectives were based on the same objectives as the other Named Executive Officers and the other 50% was based on the sales growth and income from operations of the operating segment for which Mr. Mosch had responsibility. The Company believes it would be
competitively harmful to disclose the operating segment objectives as that would enable competitors to identify what the financial targets and business strategies are for certain specific operating businesses. The targets for the operating segments are set based on the projected budgets for the operating businesses and are meant to be challenging and which, if met, would result in the operating business outperforming its competition in the market.
At its February 2008 meeting, the Committee reviewed the performance of the Company and its executives with respect to objectives to determine whether the Named Executive Officers had met or exceeded the 2007 performance goals. Annual cash incentive awards are determined by multiplying the results for each performance objective by the target award opportunity for each Named Executive Officer as described above, and then multiplied by the base salary as of December 31, 2007, the end of the performance period.
The target net income used for annual incentive objective purposes is corporate reported net income, net of specific items as described above. The items that were excluded from reported net income for 2007 were unbudgeted restructuring and other costs, the impact of unbudgeted acquisitions, interest carrying costs on unbudgeted share repurchases, and the favorable impact of the change in the corporate tax rate in Germany.
Based on the Committees assessment of the performance of the Named Executive Officers and the Company, the Named Executive Officers were paid bonuses at the percent of target as set forth below:
Bret W. Wise, Chairman, Chief Executive Officer and President 145.5%
Christopher T. Clark, Executive Vice President and Chief Operating Officer 145.5%
William R. Jellison, Senior Vice President and Chief Financial Officer 145.5%
James G. Mosch, Senior Vice President 160.4%
Brian M. Addison, Vice President, Secretary and General Counsel 145.5%
Long-Term Incentive Compensation
The third principal component in total compensation for the Companys executives is the award of stock options and restricted stock units (RSUs) under the Companys Equity Incentive Plan.
The Committee believes that long-term incentive compensation serves an essential purpose in attracting and retaining senior executives and providing them long-term incentives to maximize shareholder value. We also believe that long-term incentive awards align the interests of the executive officers with those of our shareowners. Long-term incentive awards for executive officers are made generally annually, as part of the total remuneration approach to executive compensation, under the shareholder-approved Amended and Restated Dentsply Equity Incentive Plan. The long-term incentive program is designed to reward mid- and long-term performance and is currently comprised of two components:
A stock option becomes valuable only if DENTSPLYs stock price increases above the option exercise price and the holder of the option remains employed for the period required for the option to vest. This provides an incentive for an option holder to remain employed by DENTSPLY and to maximize shareholder value. The Committee believes that equity-based compensation ensures that the Companys executive officers have a continuing stake in the long-term success of the Company and is most closely aligned with the interest of shareholders. For this reason, the Committee has placed more emphasis and weight on the long-term equity incentive portion of the total compensation of executives, targeting the equity incentive compensation at a range around the 75th percentile of the Peer Group.
Historically, the Companys equity incentive has been comprised of stock options which are granted at the Board meeting in December of each year as well as to newly hired executives at the Committee meeting which follows the executives employment date. Stock options are granted at the closing price on the day of the grant and accordingly, will have value only if the market price of the Companys common stock increases after the grant date.
As a result, stock option awards are designed to reward executives for increases in the Companys stock price. Stock option grants become exercisable over three years one-third at the end of each year following grant and are exercisable for ten years from the grant date, subject to earlier expiration in the event of termination of employment or retirement. Under the terms of the Companys Equity Incentive Plan, RSUs and unvested stock options are forfeited if the executive voluntarily leaves prior to a qualified retirement.
During 2006, the Committee performed a comprehensive review of the use and value of the Companys Equity Incentive Program with respect to executive officer compensation programs. As a result of this review, the Committee decided to utilize, beginning in 2007, RSUs as part of the Companys equity incentive program, in addition to stock options. The Committee believes that the use of RSUs as part of the Companys equity compensation program is more consistent with current market practices, provides a greater opportunity for executives to build share ownership in the Company, provides an incentive for executives to remain with the Company and provides an equity vehicle that allows DENTSPLY to attract, motivate and retain the employee talent considered critical for achieving the Companys goals.
Determination of Stock Option and RSU Grants
Guidelines for the size and type of awards are developed based upon, among other factors, shares available for grant under the Equity Incentive Plan, the executives position in the Company, his or her contributions to the Companys objectives and total compensation, as compared to the Peer Group. Larger equity awards are made to more senior executives so that a larger portion of their total potential compensation will be variable and will increase upon shareholder value creation. In determining the size of equity incentive grants to executive officers, the Committee targets a range around the 75th percentile of the Peer Group for persons holding comparable positions. The Committee then takes into consideration the Companys performance against its business and financial objectives and its strategic plan, and individual performance, as well as the allocation of overall share usage attributed to executive officers. With respect to the number of RSUs granted, the Committee focuses, in particular, on the performance of the Company over the prior three years, primarily based on performance of executives relative to objectives under the Annual Incentive Plan. Once the RSU grant target for each executive is established it may be adjusted up or down based on performance of the Company against the objectives under the Annual Incentive Plan for the prior three years, and the Companys progress toward certain strategic objectives.
For stock option grants in December 2007 and grants of RSUs in February 2007, 70% of the expected value target established by the Committee was converted to an estimated number of stock options, and the remaining 30% of value was converted to RSUs. The split between stock options and RSUs was based both on comparisons to the market and the overall risk/reward tradeoff. With respect to the RSUs, the Committee considered the performance of the Company against the annual objectives for the past three years and progress by the Company against strategic objectives. Based on this review, the Committee determined that RSU grants in February 2007 should be made at 100% of targeted levels. In this determination, the Committee weighed heavily the progress made in 2007 against both established earnings and sales targets and strategic objectives.
While equity awards under the Equity Incentive Plan generally involve no immediate cash cost, the Company does recognize expense for such awards in accordance with Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment (SFAS No. 123(R)).
Equity Grant Practices
The Committee reviewed the Companys practices for equity incentive grants. The grant date utilized for annual and other grants is always on the date the Committee or the Board approves the grants. Stock options are granted with an exercise price equal to the closing price on the day of the grant and with RSUs the recipient is granted a right to a specified number of shares.
Termination of Employment
The Company has entered employment agreements with all of the Named Executive Officers. Each of these employment agreements provides that, upon termination of such individuals employment with the Company as a result of the employees death, the Company is obligated to pay the employees estate the then current base compensation of the employee for a period of one year following the date of the employees death, together with the employees pro rata share of any incentive or bonus payments for the period prior to the employees death in the year of such death. Each of the employment agreements also provides that, in the event that the employees employment is terminated by the Company other than in a change of control of the Company (as defined in the agreements) without cause, or by the employee with good reason, (i) the Company will be obligated to pay the employee, for a period of two years subsequent to termination of employment, all compensation at the base salary rate immediately preceding the termination, and (ii) the employee will be entitled to receive the benefits that they would have accrued during the two-year period following termination under employee benefit plans, programs or other arrangements of the Company or any of its affiliates in which the employee participated before their termination.
The amounts that each Named Executive Officer would receive in the event of a termination described above is set forth in the Potential Payment Upon Termination or Change in Control tables below.
Termination following Change-in-Control
The Committee believes executive officers, including all the Named Executive Officers, who are terminated or elect to resign for good reason (as defined in the employment agreements) in connection with a change in control (as defined in the employment agreements) of the Company should be provided separation benefits. These benefits are intended to ensure that executives focus on serving the Company and shareholder interests during a change in control transaction or activity without the distraction of possible job and income loss.
The Companys change-in-control benefits are consistent with the practices of companies with whom DENTSPLY competes for talent, and are intended to assist in retaining executives and recruiting new executives to the Company. As of the close of a transaction that results in a change in control of DENTSPLY, all outstanding equity grants awarded as part of the Companys equity incentive compensation program become available to executives, that is, restrictions on all outstanding restricted stock units lapse and all non-exercisable stock options become exercisable. In the event that a termination of employment is made by the Company without cause or by the employee with good reason within a period of two (2) years after a change in control of the Company, the Company is required to pay to the Named Executive Officers, within five days after the employees termination (subject to the requirements of Section 409A(a)(2)(B) of the Internal Revenue Code), the benefits described in the Potential Payment Upon Termination or Change in Control tables below.
Retirement and Other Benefits
The Company also maintains standard benefits that are consistent with those offered by other major corporations and are generally available to all of the Companys full time employees (subject to meeting basic eligibility requirements).
DENTSPLY offers retirement benefits to its U.S. employees through tax-qualified plans, including an employee and employer-funded 401(k) Savings Plan and a discretionary company-funded Employee Stock Ownership Plan (ESOP). The Committee allows for the participation of the executive officers in these plans, and the terms governing the retirement benefits under these plans for the executive officers are the same as those available for other eligible employees in the U.S. Similarly situated employees, including DENTSPLYs executive officers, may have materially different account balances because of a combination of factors: the number of years that the person has participated in the plan; the amount of money contributed, and the investments chosen by the participant with regard to those plans providing for participant investment direction. These plans do not involve any guaranteed minimum returns or above-market returns as the investment returns are dependent upon actual investment results. Employees direct their own investments in the 401(k) Savings Plan. The ESOP is a defined
contribution plan designed to allow employees, including executive officers, to accumulate retirement accounts through ownership of Company stock, and to allow DENTSPLY to make contributions or allocations to those funds.
DENTSPLYs healthcare, insurance, and other welfare and employee-benefit programs are the same for all eligible employees, including the Named Executive Officers. DENTSPLY shares the cost of health and welfare benefits with its employees, a cost that is dependent on the level of benefits coverage that each employee elects. The Company also provides other benefits such as medical, dental and life insurance to each Named Executive Officer, in a similar fashion to those provided to all other U.S.-based DENTSPLY employees.
The Company maintains a very limited number of benefit programs that are only available to the Named Executive Officers and other senior employees qualifying for eligibility based on salary grade level. Such benefits include a Supplemental Executive Retirement Plan (SERP) and the Dentsply Supplemental Savings Plan (DSSP). The purpose of the SERP is to provide additional retirement benefits for a limited group of management employees, including the Named Executive Officers, whom the Board concluded were not receiving competitive retirement benefits. The Committee annually approves participants in the SERP. Contributions equal to 11.7% of total annual compensation, reduced by Company contributions to the ESOP and 401(k) plans, are allocated to the participants accounts. No actual benefits are put aside for participants in the SERP and the participants are general creditors of the Company for payment of the benefits upon retirement or termination from the Company. Participants can elect to have these benefits administered as savings with interest or stock unit accounts, with stock units being distributed in the form of common stock at the time of distribution. Upon retirement or termination for any reason, participants in the SERP are paid the benefits in their account based on an earlier distribution election.
Effective January 1, 2008, the Company adopted the DSSP. This is a deferred compensation plan that allows management employees of the Company, including the Named Executive Officers, to defer a portion of their base salary and annual incentive bonus for payment at a future time, as elected by the participant. Deferred amounts are not funded by the Company but are a general obligation of the Company to administer and pay as set forth in the DSSP. The Plan is administered by T. Rowe Price, the Administrator of the Companys retirement plans, and participants have the right to elect investment options for the deferred funds, which are tracked by the Administrator.
Stock Ownership Guidelines
Because the Committee believes in further linking the interests of management and the shareholders, the Company maintains stock ownership guidelines for its executives. The guidelines specify the number of shares that DENTSPLYs executive management should accumulate and hold within six (6) years of the date of appointment to the executive position. Stock ownership is defined to include stock owned by the officer directly, stock owned indirectly through the Companys retirement Plans, and stock awarded pursuant to the equity incentive program, other than stock options. Under the current guideline established by the Committee, executives are required to own Company common stock equal in value to a multiple of their base salary, as set forth below:
All Named Executive Officers in their positions for at least six (6) years were in compliance with the Stock Ownership Guidelines as of the end of 2007.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the Tax Code), places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to the Named Executive Officers. There is an exception to the $1,000,000 limitation for performance-based compensation meeting certain requirements. Stock option incentive awards generally are performance-based compensation meeting those requirements, and, as such, are believed to be fully deductible. The Committee generally seeks ways to limit the impact of Section 162(m), however, the Committee believes that the tax deduction limitation should not compromise our ability to establish and implement incentive programs that support the compensation objectives discussed above. Accordingly, achieving these objectives and maintaining required flexibility in this regard may result in compensation that is not deductible for federal income tax purposes. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy requiring all compensation to be deductible. The Committee has established a performance goal for the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer for the vesting of their RSUs granted in 2007, requiring the Company to be profitable over the three year vesting period, consistent with the performance based requirements established by 162(m).
The following table sets forth the compensation earned by the named executive officers for the fiscal year ended December 31, 2007. The named executive officers are the Companys chief executive officer, chief financial officer, and three other most highly compensated executive officers ranked in the table below by their total compensation.
Summary Compensation Table
For Fiscal Year End December 31, 2007
Refer to the Compensation Discussion and Analysis section for a complete description of the components of compensation, along with a description of the material terms and conditions of each component.
For the named executive officers, salary compensation as a percentage of total compensation are as follows: Mr. Wise 16.0%, Mr. Jellison 28.7%, Mr. Clark 22.5%, Mr. Mosch 28.8%, and Mr. Addison 33.0%
Grants of Plan-Based Awards
The following table reflects the terms of compensation plan-based awards granted to Named Executive Officers in 2007.
2007 Grants of Plan-Based Awards
The grant date of stock and option awards is always on the date the Human Resources Committee or the Board of Directors approves the grants. Stock options are granted with an exercise price equal to the closing price on the day of the grant.
Outstanding Equity Awards at Year End
The following table reflects the number and terms of stock option awards and stock awards outstanding as of December 31, 2007 for the named executive officers.
Outstanding Equity Awards at Fiscal Year End
All Other Compensation
Option Exercises and Stock Vested
The following table sets forth certain information with respect to the exercise of options and stock vested during the year ended December 31, 2007 and the value of options held at that date.
Non-Qualified Deferred Compensation
Effective January 1, 1999 and amended December 10, 2002, the Board of Directors of the Company adopted a Supplemental Executive Retirement Plan (the Plan). The purpose of the Plan is to provide additional retirement benefits for a limited group of management employees, including the named executive officers, whom the Board concluded were not receiving competitive retirement benefits. Contributions equal to 11.7% of compensation reduced by ESOP contributions are allocated to the participants accounts. No actual benefits are put aside for participants and the participants are general creditors of the Company for payment of the benefits upon retirement or termination from the Company. Participants can elect to have these benefits administered as savings with interest or stock unit accounts, with stock units being distributed in the form of Common stock at the time of distribution.
Upon retirement or termination for any reason, participants in the Supplemental Executive Retirement Plan are paid the benefits in their account based on an earlier election to have their accounts distributed immediately or in annual installments for up to five (5) years.
In the event of a participants death before his or her account has been distributed, distribution shall be made to the beneficiary selected by the participant within thirty (30) days after the date of death (or, if later, after the proper beneficiary has been identified.)
In the event of a Change in Control as defined in this Plan, participants will be given the option to receive the value of their accounts in lump sums no later than sixty (60) days after the Change in Control. Optional distributions received subject to a change in control must represent the entire Supplemental Executive Retirement Accounts and will be subject to five percent (5%) penalty reductions.
All distributions under this Plan shall be based upon the amount credited to a participants account as of the last business day of the month immediately preceding the date of the distribution. The amount of installments payable to a participant electing distribution through installments shall be determined by dividing the amount credited to the participants vested account by the remaining number of installments, including the current installment to be paid. It is understood that administrative or legal requirements may lead to a delay between such valuation date and the date of distribution.
The following table sets forth contributions, earnings and year-end balances for 2007, with respect to non-qualified deferred compensation plans for the Named Executive Officers.
Non-Qualified Deferred Compensation
The table below discloses potential distributions of the Supplemental Executive Retirement Plan for the Named Executive Officers if they terminated as of December 31, 2007.
The Company is party to employment agreements with all of the Named Executive Officers. Each of these employment agreements provides that, upon termination of such individuals employment with the Company as a result of the employees death, the Company is obligated to pay the employees estate the then current base compensation of the employee for a period of one year following the date of the employees death, together with the employees pro rata share of any incentive or bonus payments for the period prior to the employees death in the year of such death. Each of the employment agreements also provides that, in the event that the employees employment is terminated by the Company without cause (as defined in the employment agreements), or by the employee with good reason (as described in the employment agreements), the Company shall pay compensation and provide benefits for a period (the Termination Period) beginning on the date of the termination notice and ending on the earlier of (i) the second annual anniversary of the date of such termination notice; or (ii) the date on which the Employee would attain age 65. During this period, (i) the Company will be obligated to pay the employee at the rate of salary being paid immediately before the termination, (ii) the employee will be entitled to receive bonus and incentive compensation in accordance with plans approved by the Board of Directors, (iii) the employee shall not be entitled to receive any further grants of stock options or equity incentives under any stock option or similar such plan subsequent to the date of termination notice, but equity grants shall continue to be exercisable, (iv) the employee will be entitled to receive the benefits that would have been accrued by him from participation under any pension, profit sharing, ESOP or similar retirement plan or plans of the Company or any Affiliate, and (v) the employee shall receive continued coverage during the Termination Period under all employee disability, annuity, insurance, or other employee welfare benefit plans, programs or arrangements of the Company or any Affiliate, provided that
such coverage shall terminate for any such benefit on the earlier of the following events: (i) the covered person becomes eligible for similar type coverage under another employers group plans; (ii) the covered person becomes eligible for Medicare health benefits; or (iii) the covered person fails to pay the premium for such coverage by the due date thereof. In the event of death of employee during the Termination Period, the Company shall continue to make payments for a period that is the lesser of the remainder of the Termination Period or twelve (12) months, and shall pay any bonuses due on a pro-rata basis until the date of the employees death, to the employees designated beneficiary or, if no beneficiary has been effectively designated, then to the employees estate.
Each of the employment agreements includes a three (3) year non-competition commitment and a commitment against disclosure of the Company confidential information and non-solicitation of Company employees.
The Company has also entered into employment agreements with certain other members of senior management having terms similar to those described above.
Potential Payments Upon Termination or Change in Control
The tables below represent the amount of compensation to each of the Named Executive Officers of the Company in the event of termination from the Company under different circumstances. The amount due to each officer upon retirement, resignation, termination by the employee with cause, termination by the company without cause, termination following a change in control and in the event of the death of the named executive is provided. The amounts assume that the date of termination was December 31, 2007 and include actual amounts earned through that time and estimates of amounts which would have been paid as of such date. The stock price of DENTSPLY International was assumed to remain at $45.02 per share, the closing price on December 31, 2007. Actual amounts to be paid may differ and can only be determined in the event of and at the time of the executives terminations from the Company.
The named executive officer would be entitled to receive amounts earned during his employment, regardless of the reason for his separation from the Company. Those amounts include:
(1) pro rata share of non-equity incentive compensation, would be paid in February of the year following the year in which earned;
(2) vested stock options could be exercised within 90 days of termination:
(3) lump sum distributions would be made for amounts accrued and vested through the Companys Employee Stock Ownership and 401(k) Plans
(4) distributions would be made based upon prior election for amounts accrued and vested through the Companys Supplemental Executive Retirement Plan; and
(5) lump sum distributions would be made for unused vacation pay.
In addition to the items listed above, the named executive officer would be entitled to the following:
(1) all outstanding stock options and RSUs would vest as of the date of a qualified retirement (age 65, or age 60 with fifteen years of service), and the options expire the earlier of 5 years from that date or the original expiration date;
Payments Made Upon Termination For Cause by the Executive, or Termination by the Company Without Cause
If a Named Executive Officer separates from the Company with cause, or if the Company terminates the executive without cause, the Named Executive Officer would be entitled, for a period (the Termination Period) beginning on the date of the termination notice and ending on the earlier of: (i) the second annual anniversary of the date of such termination notice; or (ii) the date on which the Employee would attain age 65, to the following:
(1) full rate of salary immediately preceding the date of notice of termination, the first six months to be paid in a lump sum at the end of such six month period, and thereafter to be paid bi-weekly;
(2) non-equity incentive compensation in accordance with the Annual Incentive Plan and based on the rate of salary immediately preceding the date of notice of termination, paid in February in the year following the year in which earned;
(3) the employee shall not be entitled to receive any further grants of stock options or equity incentives under any stock option or similar such plan subsequent to the date of termination notice, but equity grants shall continue to be exercisable;
(4) benefits that would have been accrued by him from participation under any pension, profit sharing, Employee Stock Ownership (ESOP) or similar retirement plan or plans of the Company or any Affiliate;
(5) the employee shall receive continued coverage during the Termination Period under all employee disability, annuity, insurance, or other employee welfare benefit plans, programs or arrangements of the Company or any Affiliate, provided that such coverage shall terminate for any such benefit on the earlier of the following events:
a. the employee becomes eligible for similar type coverage under another employers group plans;
b. the employee becomes eligible for Medicare health benefits; or
c. the employee fails to pay the premium for such coverage by the due date thereof.
Payments Made Upon Termination of Employment by the Executive For Cause or the Company Terminates or Gives Written Notice of Termination to the Employee within Two (2) Years after a Change of Control
If, within two (2) years after a Change of Control the Named Executive terminates employment for cause, or the Company terminates or gives written notice of termination of employment to the Named Executive (regardless of whether with or without cause), the Company shall pay the following amounts to the Named Executive in a single lump sum cash payment within five (5) business days of such termination (provided, that any amount that would be payable to the Named Executive during the six-month period beginning on his date of termination and which would not otherwise be exempt from the application of Section 409A(a)(2)(B) of the Code shall be withheld and paid instead on the six (6) month anniversary of the date of termination.
(1) An amount equal to three (3) times the Executives current annual salary for Messrs. Wise, Jellison, Clark, and Addison, and an amount equal to two (2) times the Executives current annual salary for Mr. Mosch;
(2) An amount equal to three (3) times the Executives Annual Incentive bonus for Messrs. Wise, Jellison, Clark, and Addison, and an amount equal to two (2) times the Executives Annual Incentive bonus for Mr. Mosch, for the year in which the termination occurs based on the target of 100% achievement; and
(3) An amount equal to the benefits that would have been accrued by the Named Executive for the three (3) year period from the date of termination for Messrs. Wise, Jellison, Clark, and Addison, and for the two (2) year period from the date of termination for Mr. Mosch, from participation by the Employee under any pension, profit sharing, employee stock ownership plan (ESOP) Supplemental Executive Retirement Plan (SERP) or similar retirement plan or plans of the Company or any Affiliate in which the Employee participated immediately before the termination, in accordance with the terms of any such plan (or, if not available, in lieu thereof be compensated for such benefits), based on service and compensation the Employee would have had during such period.
(4) Continued coverage for a two (2) year period from the date of termination under all employee disability, annuity, insurance, or other employee welfare benefit plans, programs or arrangements of the Company or any Affiliate in which the Named Executive participated immediately before the notice of termination, plus all improvements subsequent thereto (or, if not available or if required in order to comply with Code Section 409A, in lieu thereof be compensated in monthly cash payments for the premium-equivalent amount of such coverage and then be permitted to purchase such coverage, if available, by paying 100% of the premium cost for such coverage on an after-tax basis).
(1) In the event that it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive as described above, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a Payment), would constitute an excess parachute payment within the meaning of Section 280G of the Code, the Company shall pay the Executive an additional amount (the Gross-Up Payment) such that the net amount retained by the Executive after deduction of any excise tax imposed under section 4999 of the Code, and any federal, state and local income tax, employment tax, excise tax and other tax imposed upon the Gross-Up Payment, shall be equal to the Payment.
(2) If the net after-tax benefit to the Executive of receiving the Gross-Up Payment does not exceed the Safe Harbor Amount (as defined below) by more than 10% (as compared to the net after-tax benefit to the Executive resulting from elimination of the Gross-Up Payment and reduction of the Payments to the Safe Harbor Amount), then (i) the Company shall not pay the Executive the Gross-Up Payment, and (ii) the provisions of paragraph (3) below shall apply. The term Safe Harbor Amount means the maximum dollar amount of parachute payments that may be paid to the Participate under section 280G of the Code without imposition of an excise tax under section 4999 of the Code.
(3) If the Company is not required to pay the Employee a Gross-Up Payment as a result of the provisions of Paragraph (2) above, the Company will apply a limitation on the Payment amount as follows: The aggregate present value of the benefits paid to the Executive (the Separation Benefits) shall be reduced (but not below zero) to the Reduced Amount. The Reduced Amount shall be an amount expressed in present value which maximizes the aggregate present value of such Separation Benefits without causing any Payment to be subject to the limitation of deduction under section 280G of the Code.
If a named officer separates from the Company due to death, the named executive officers beneficiaries would be entitled to the following:
(1) salary at the rate immediately preceding the date of death for a period of one year from the date of death;
(2) pro-rata share of non-equity incentive compensation based on the rate of salary immediately preceding the date of death, paid in February of the year following the year in which earned;
(3) all outstanding stock options would vest as of the date of death and would be exercisable until the earlier of the stated expiration date of the option, or one (1) year from the date of death; and
(4) contributions would be made to the Employee Stock Ownership, 401(k) and Supplemental Executive Retirement Plans for the year of the death and lump sum distributions would be made to the beneficiaries; and
Members of the Board of Directors who are not employees of the Company (Outside Directors) received an annual fee in 2007 of $40,000. Outside Directors who were chairpersons of the Human Resources and Governance Committees received an additional annual fee of $7,500, the chairperson of the Audit and Finance Committee received an additional annual fee of $10,000 and the Lead Director received an additional annual fee of $10,000. Directors also received a fee of $1,500 for each Board and committee meeting attended and $1,000 for each Board and committee meeting attended via teleconferencing in 2007. As of March 17, 2008, these fees remain the same. Annual fees are paid quarterly. Each Outside Director receives equity incentive grants, currently stock options and restricted stock units, as fixed from time to time by the Board. In 2007, the equity incentive compensation for directors was set at an expected annual value of $90,000, using the binomial method of calculation, however, because of the change in timing of equity grants, as described in footnote 3 below, the actual grant values varied for the directors. There were 50,924 nonqualified stock options and 8,630 restricted stock units granted to directors collectively in 2007. Directors are reimbursed for travel and other expenses relating to attendance at Board and Committee meetings.
Effective January 1, 1997, the Company established a Directors Deferred Compensation Plan (the Deferred Plan). The Deferred Plan permits Outside Directors to elect to defer receipt of directors fees or other compensation for their services as directors. Outside Directors can elect to have their deferred payments administered as a cash with interest account or a stock unit account. Distributions to a director under the Deferred Plan will not be made to any Outside Director until the Outside Director ceases to be a Board member.
The following table shows the compensation paid to the Companys Outside Directors for the year ended December 31, 2007.
2007 Directors Compensation
Board of Directors Meetings
The Companys Board of Directors held six meetings during 2007, one of which was a telephone meeting. The Board of Directors has determined that the following directors are independent under the Listing Standards: Michael C. Alfano, Eric K. Brandt, Paula H. Cholmondeley, Michael J. Coleman, Wendy L. Dixon, William F. Hecht, Leslie A. Jones, Francis J. Lunger, John C. Miles, II and W. Keith Smith. In determining the independence of Dr. Alfano, the Board considered the fact that Dr. Alfano is the Executive Vice President of New York University and from time to time the Company sells products to the New York University College of Dentistry. The Board determined that Dr. Alfano has no personal interest or involvement in such transactions and that such transactions are conducted by the relevant businesspeople on an arms length basis with the College of Dentistry. The Board has an Executive Committee, an Audit Committee, a Corporate Governance and Nominating Committee (Governance Committee) and a Human Resources Committee. No directors attended fewer than 75% of the total number of meetings of the Board and the meetings of any committee of the Board on which a director served during the year ended December 31, 2007. The current composition and activities of the Committees are described below.
The Executive Committee acts for the Board and provides guidance to the executive officers of the Company between meetings of the Board. The members of the Executive Committee in 2007 were Messrs. Hecht, Jones, Miles and Wise. The Executive Committee held two meetings during 2007, both of which were telephone meetings. The Executive Committee members remain the same as of March 17, 2008.
The Audit Committee is responsible for selecting and retaining the independent registered public accounting firm, setting the independent registered public accounting firms compensation, pre-approving all auditing and permitted non-audit services by the independent registered public accounting firm, reviewing with the independent registered public accounting firm the scope and results of the audit, reviewing the adequacy and effectiveness of the
Companys system of internal control and performing the other duties set forth in the Audit and Finance Committee Charter (a copy of the Audit and Finance Committee Charter is attached to this Proxy Statement as Appendix B).
The members of the Audit Committee in 2007 were Ms. Cholmondeley (Chairperson), and Messrs. Brandt and Lunger, all of whom are independent as defined in the Listing Standards. The Board has determined that Ms. Cholmondeley and Messrs. Brandt and Lunger are Audit Committee Financial Experts under the rules and regulations of the Securities and Exchange Commission. The Audit Committee held nine meetings during 2007, six of which were telephone meetings. The Audit Committee members remain the same as of March 17, 2008.
The Governance Committee is responsible for identifying and recommending individuals as nominees to serve on the Board, reviewing and recommending Board policies and governance practices and appraising the performance of the Board and performing the other duties set forth in the Governance Committee Charter (a copy of the Governance Committee Charter is attached to this Proxy Statement as Appendix C). The members of the Committee in 2007 were Messrs. Smith (Chairman), Jones and Miles and Dr. Dixon, all of whom are independent as defined in the Listing Standards. The members of the Governance Committee remain the same as of March 17, 2008.
It is the policy of the Governance Committee to consider any candidates for nomination to the Board who are recommended and submitted by security holders in accordance with the Companys by-laws (see Stockholder Proposals for Proxy Statement and Nominations in this Proxy Statement). No such candidates were submitted to the Company for consideration. The Governance Committees policy is to evaluate any proposed candidates under the criteria utilized by the Governance Committee to evaluate all potential nominees, including, at a minimum, the following attributes:
When the Governance Committee engages in a process to identify director candidates, other than directors standing for re-election, the Governance Committee polls the existing directors for recommendations and sometimes utilizes the service of a search firm to identify potential candidates. All potential candidates are screened relative to their qualifications and go through an interview process with the Governance Committee and, if desired, by other members of the Board. When the Governance Committee uses a search firm, a fee is paid for such services. The Corporate Governance Committee held five meetings during 2007, one of which was a telephone meeting.
Human Resources Committee
The Human Resources Committee is responsible for evaluating and administering compensation levels for all senior officers of the Company, reviewing and evaluating employee compensation generally, and employee benefit plans and other activities as set forth in the Human Resources Committee Charter (a copy of the Human Resources Committee Charter is attached to this Proxy Statement as Appendix D). Its members in 2007 were Messrs. Hecht (Chairman) and Coleman and Dr. Alfano, all of whom are independent as defined in the Listing Standards. The
Human Resources Committee met five times during 2007, two of which were telephone meetings. The members of the Human Resources Committee remain the same as of March 17, 2008.
None of the current members of the Human Resources Committee has ever been an officer or employee of DENTSPLY. None of our executive officers served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Human Resources Committee.
Attendance at Annual Meetings
The Company has no policy regarding the attendance of Board members at the Companys Annual Stockholders Meeting. In 2007, all Board members attended the Annual Meeting of Stockholders.
Related Person Transactions
No related person transactions were noted for the year ended December 31, 2007.
The Company has a written policy and procedures with respect to the review and approval of Related Person Transactions. The Corporate Governance and Nominating Committee (the Committee) reviews the material facts of all Related Person Transactions that require the Committees approval and either approves or disapproves of the entry into the Transaction, subject to certain identified exceptions described below. In determining whether to approve or ratify a Related Person Transaction, the Committee takes into account, among other factors it deems appropriate, whether the Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Persons interest in the Transaction. The Chair of the Committee is delegated the authority by the Board to approve Related Party Transactions that, because of timing or scheduling, are not feasible to be approved by the full Committee.
The policy applies to any transaction, arrangement or relationship in which the Company (including any of its subsidiaries) will be a participant and in which any Related Person (as defined by SEC Rules) will have a direct or indirect material interest, and the amount involved exceeds $120,000.
The Committee has pre-approved, under the policy, the following Related Person Transactions without regard to the amount involved:
1. any Transaction involving the compensation, employment and/or benefits of an executive officer of the Company if the compensation arising from the Transaction is required to be reported in the Companys proxy statement;
2. any Transaction involving the compensation, employment and/or benefits of an executive officer of the Company that is not a named executive officer (as that term is defined in Item 402(a)(3) of Regulation S-K) if (a) the executive officer is not an immediate family member of another executive officer or director of the Company, (b) the compensation arising from the Transaction would have been reported under Item 402 as compensation earned for services to the Company if the executive officer was a named executive officer, and (c) such compensation had been approved, or recommended to the Board of Directors of the Company for approval, by the Human Resources Committee of the Board of Directors;
3. any Transaction involving the compensation, services and/or benefits of a director if the compensation arising from the Transaction is required to be reported in the Companys proxy statement;
4. any Transaction where the Related Persons interest arises solely from the ownership of the Companys common stock and all holders of the Companys common stock received the same benefit on a pro rata basis;
5. any Transaction with a Related Party involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority;
6. any Transaction with a Related Party involving services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; and
7. any Transaction in which the interest of the Related Person arises solely from such persons position as a director of another firm, corporation or other entity that is a party to the Transaction.
Except to the extent pre-approved, as noted above, Related Person Transactions are subject to the following procedures. The Related Person notifies the General Counsel of the Company of any proposed Transaction, including: the Related Persons relationship to the Company and interest in the proposed Transaction; the material terms of the proposed Transaction; the benefits to the Company of the proposed Transaction; and the availability from alternative sources of the products or services that are the subject of the proposed Transaction.
The proposed Related Person Transaction is submitted to the Committee for consideration at the next Committee meeting or, if the legal department, after consultation with the Chief Executive Officer or the Chief Financial Officer, determines that the Company should not wait until the next Committee meeting, to the Chair of the Committee acting pursuant to authority delegated by the Board. Any Transactions approved pursuant to delegated authority by the Chair of the committee, is reported to the Committee at the next Committee meeting.
To the extent the Company becomes aware of a Related Person Transaction that was not previously approved under this policy, it shall be promptly reviewed as described above and be ratified, amended or terminated, as determined appropriate by the Committee.
The Audit and Finance Committee (Audit Committee) was comprised of three directors in 2007, all of whom are independent as defined by the Listing Standards. In addition, Mr. Brandt and Ms. Cholmondeley have been designated by the Board as Audit Committee Financial Experts under applicable rules and regulations of the Securities and Exchange Commission. The Audit Committee operates under a written charter adopted by the Board of Directors. This charter is reviewed at least annually by the Committee and the Board and amended as determined appropriate (a copy of this charter is attached to this Proxy Statement as Appendix B).
The Audit Committee reviews the Companys financial reporting process on behalf of the Board. In addition, the Committee approves and retains the Companys independent registered public accounting firm.
Management is responsible for the Companys internal controls, including internal control over financial reporting, and the financial reporting process. The independent registered public accounting firm is responsible for performing an audit of the Companys financial statements in accordance with generally accepted auditing standards and an audit of the Companys internal control over financial reporting; and to issue a report thereon. The Committees responsibility is to oversee these processes.
In this context, the Committee has met and held discussions with management and PricewaterhouseCoopers LLP (PwC), the Companys independent registered public accounting firm. Management represented to the Committee that the Companys financial statements were prepared in accordance with generally accepted accounting principles, and the Committee has reviewed and discussed the audited financial statements with management and PwC. The Committee discussed with PwC the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees).
In addition, the Committee has discussed with PwC the firms independence from the Company and its management and has received the written disclosures and the letter from PwC required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), as it has been modified or supplemented.
The Committee discussed with PwC the overall scope and plans for their audits. The Committee meets with PwC, with and without management present, to discuss the results of their examinations, the evaluations of the Companys internal controls, and the overall quality of the Companys financial reporting.
Based upon the Committees discussions with management and PwC and the Committees review of the representations of management and the report of PwC to the Committee, the Committee recommended that the Board include the audited financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission.
AUDIT AND FINANCE COMMITTEE
As permitted by law, one copy of the Companys Proxy Statement and Annual Report is delivered to stockholders residing at the same address, unless such stockholders have notified the Company of their desire to receive multiple copies of the Proxy Statement and Annual Report. We believe this Householding approach provides greater convenience for our stockholders, as well as cost savings for us by reducing the number of duplicate documents that are sent to the same address.
The Company will promptly deliver, upon oral or written request, a separate copy of the Proxy Statement and Annual Report to any stockholders residing at an address to which only one copy was delivered. Requests for additional copies should be directed to Broadridge, either by calling toll-free (800) 542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.
Stockholders residing at the same address and currently receiving multiple copies of the Proxy Statement may also contact Broadridge, as noted above, to request that only a single copy of such document be mailed in the future.
We strongly encourage your participation in the Householding program, and believe that it will benefit both you and the Company. Not only will it reduce the volume of duplicate information that you receive in your household, but it will also reduce our printing and mailing costs.
The Board of Directors has no specific formal process for security holders to send communications to the Board. The Board does not believe a specific process is necessary in the event security holders wish to direct communications to a Board member. All Board members, including their Committee assignments, are identified each year in the Companys Proxy Statement. Communications which are intended for Board members can be sent to the Company for delivery to individual Board members. All mail received will be opened and screened for security purposes and mail determined to be appropriate and within the purview of the Board will be delivered to the respective Board member to which the communication is addressed. Mail addressed to Outside Directors or Non-Management Directors will be forwarded or delivered to the Chairman of the Corporate Governance and Nominating Committee. Mail addressed to the Board of Directors will be forwarded or delivered to the Chairman of the Board.
Stockholder proposals that are intended to be presented at the Companys Annual Meeting of Stockholders to be held in 2009 must be received by the Company no later than December 11, 2008 and must otherwise comply with Rule 14a-8 under the Securities Exchange Act, as amended, in order to be included in the proxy statement and proxy relating to that meeting.
The Companys by-laws provide that advance notice of stockholder-proposed business to be brought before an Annual Meeting of Stockholders must be given to the Secretary of the Company not less than 60 days in advance of the date of the mailing of materials regarding the prior years Annual Meeting, which mailing date is identified on the Chairmans letter at the front of the proxy statement. To propose business for an Annual Meeting, a stockholder must specify in writing the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, the proposing stockholders name and address, the class and number of shares beneficially owned by the stockholder, and any material interest of the stockholder in such business. In order to be brought before the 2009 Annual Meeting, stockholders must notify the Company in writing, in accordance with the procedures set forth above, of any stockholder-proposed business no later than February 9, 2009.
The Companys by-laws also provide that a stockholder may request that persons be nominated for election as directors by submitting such request, together with the written consent of the persons proposed to be nominated, to the Secretary of the Company not less than 60 days prior to the date of the Annual Meeting. To be in proper form, the nominating stockholder must set forth in writing, as to each proposed nominee, the nominees age, business address, residence address, principal occupation or employment, number of shares of Common Stock of the Company beneficially owned by such person and such other information related to such person as is required to be disclosed by applicable law, and, as to the stockholder submitting the request, such stockholders name and address as they appear on the Companys books and the number of shares of Common Stock of the Company owned beneficially by such person.
STOCKHOLDERS MAY OBTAIN AN ADDITIONAL COPY (WITHOUT EXHIBITS) OF THE COMPANYS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2007 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE BY WRITING TO: INVESTOR RELATIONS DEPARTMENT, DENTSPLY INTERNATIONAL INC., SUSQUEHANNA COMMERCE CENTER, 221 WEST PHILADELPHIA STREET, YORK, PENNSYLVANIA 17405-0872.
During 2007, the Board of Directors made some revisions to its Corporate Governance Guidelines and Policies. A copy of such Guidelines and Policies are available on the Companys website at www.dentsply.com under the Company tab.
The Board of Directors knows of no matters which are to be brought before the Annual Meeting other than those set forth in this Proxy Statement. If any other matters properly come before the Annual Meeting, the person named in the enclosed proxy card, or his duly appointed substitute acting at the Annual Meeting, will be authorized to vote or otherwise act thereon in accordance with his judgment on such matters.
The primary function of the Audit & Finance Committee (Committee) is to assist the Board of Directors (Board) in fulfilling its oversight responsibilities related to corporate accounting and financial reporting disclosures, corporate financing activities, treasury activities and risk management activities. It shall be the policy of the Committee to maintain free and open communication between the Board, the independent accountants, the internal auditors and the management of the Company.
In carrying out its responsibilities, the Committee shall remain flexible in its policies and procedures in order that it can best react to changing conditions and environment and to assure to the directors and shareholders that the corporate accounting, reporting and financing practices of the Company are in accordance with all requirements and are of the highest quality.
DENTSPLY International Inc.
Corporate Governance And Nominating Committee Charter
The primary function of the Corporate Governance and Nominating Committee (Committee) is to assist the Board of Directors of the Company (the Board) in the establishment of criteria for the selection and nomination of Board members and to establish policies and procedures for the governance of the Company and the Board. The Committee shall report to the Board on matters relating to the activities of the Committee.
The Committee shall have the following specific responsibilities:
DENTSPLY INTERNATIONAL INC.
Human Resources Committee Charter
The primary function of the Human Resources Committee is to provide general oversight and assistance to the Board of Directors of the Company (the Board) for the organizational structure of the Company and the compensation and hiring plans, policies and practices of the Company, including specifically the compensation of the executive officers.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Annual Report and Form 10-K are available at www.dentsply.com/proxy
IF VOTING BY MAIL,
PLEASE RETURN PROXY CARD PROMPTLY