Dionex DEF 14A 2008
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14A INFORMATION
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TABLE OF CONTENTS
501 Mercury Drive
Sunnyvale, California 94085
TO THE STOCKHOLDERS OF DIONEX CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Dionex Corporation, a Delaware corporation (the Company), will be held at Dionex Corporation, 501 Mercury Drive, Sunnyvale, California, on Tuesday, October 28, 2008 at 9:30 a.m. local time, for the following purposes:
1. To elect directors to serve for the ensuing year and until their successors are elected.
2. To ratify the selection of Deloitte & Touche LLP as the Companys independent registered public accounting firm for its fiscal year ending June 30, 2009.
3. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.
The Board of Directors has fixed the close of business on September 8, 2008 as the record date for the determination of stockholders entitled to notice of and to vote at this Annual Meeting and at any adjournment or postponement thereof.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to Be Held on October 28, 2008. The proxy statement and annual report to stockholders are available at http://investor.dionex.com/annuals.cfm. The Board of Directors recommends that you vote FOR the proposals identified above.
By Order of the Board of Directors
Gina M. Christopher
September 18, 2008
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. STOCKHOLDERS WITH SHARES REGISTERED DIRECTLY WITH THE COMPANYS TRANSFER AGENT, COMPUTERSHARE TRUST COMPANY N.A. (COMPUTERSHARE), MAY CHOOSE TO VOTE THOSE SHARES VIA THE INTERNET AT COMPUTERSHARES VOTING WEB SITE (WWW.EPROXYVOTE.COM/DNEX), OR THEY MAY VOTE TELEPHONICALLY, WITHIN THE U.S. ONLY, BY CALLING COMPUTERSHARE AT 1-877-779-8683. STOCKHOLDERS HOLDING SHARES WITH A BROKER OR BANK MAY ALSO BE ELIGIBLE TO VOTE VIA THE INTERNET OR TO VOTE TELEPHONICALLY IF THEIR BROKER OR BANK PARTICIPATES IN THE PROXY VOTING PROGRAM PROVIDED BY ADP INVESTOR COMMUNICATION SERVICES. SEE VOTING VIA THE INTERNET OR BY TELEPHONE IN THE PROXY STATEMENT FOR FURTHER DETAILS. EVEN IF YOU HAVE VOTED BY PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM THAT RECORD HOLDER.
501 Mercury Drive
Sunnyvale, California 94085
2008 PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors (the Board) of Dionex Corporation, a Delaware corporation (the Company), for use at the Annual Meeting of Stockholders to be held on Tuesday, October 28, 2008, at 9:30 a.m. local time (the Annual Meeting), or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at Dionex Corporation, 501 Mercury Drive, Sunnyvale, California, 94085.
The Company will bear the entire cost of solicitation of proxies, including preparation, assembly, printing and mailing of this proxy statement, the proxy and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of Common Stock beneficially owned by others to forward to such beneficial owners. The Company may reimburse persons representing beneficial owners of Common Stock for their costs of forwarding solicitation materials to such beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, telegram or personal solicitation by directors, officers or other regular employees of the Company. No additional compensation will be paid to directors, officers or other regular employees for such services.
The Company intends to mail this proxy statement and accompanying proxy card on or about September 18, 2008 to all stockholders entitled to vote at the Annual Meeting.
Stockholders may vote via the Internet, by telephone or by mailing a completed proxy card as an alternative to voting in person at the annual meeting.
Stockholders may grant a proxy to vote their shares by means of the telephone or on the Internet. The laws of Delaware, under which the Company is incorporated, specifically permit electronically transmitted proxies, provided that each such proxy contains or is submitted with information from which the inspector of election can determine that such proxy was authorized by the stockholder.
Stockholders of record with shares registered directly with Computershare may grant a proxy to vote their shares by means of the telephone, within the U.S. only, by calling Computershare at 1-877-779-8683 (toll-free), or may grant a proxy to vote their shares via the Internet at Computershares voting Web site (www.eproxyvote.com/dnex).
Most beneficial owners whose stock is held in street name receive instructions for granting proxies from their banks, brokers or other agents, rather than the Companys proxy card. A number of brokers and banks are participating in a program provided through ADP Investor Communication Services that offers telephone and Internet voting options. This program is different from the program provided by Computershare for shares registered directly in the name of the stockholder. If your shares are held in an account with a broker or bank participating in the ADP Investor Communication Services program, you may vote those shares telephonically by calling the telephone number shown on the voting form received from your broker or bank, or via the Internet at ADP Investor Communication Services voting Web site (www.proxyvote.com).
Votes submitted via the Internet or by telephone must be received by 1:00 a.m., Eastern Daylight Time, on October 28, 2008. Submitting your proxy via the Internet or by telephone will not affect your right to vote in person should you decide to attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must bring to the meeting a letter from the broker, bank or other nominee confirming your beneficial ownership of the shares. Additionally, in order to vote at the meeting, you must obtain from the record holder a proxy issued in your name.
The telephone and Internet voting procedures are designed to authenticate stockholders identities, to allow stockholders to give their voting instructions and to confirm that stockholders instructions have been recorded properly. Stockholders granting a proxy to vote via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that must be borne by the stockholder.
Only holders of record of Common Stock at the close of business on September 8, 2008 will be entitled to notice of and to vote at the Annual Meeting. At the close of business on September 8, 2008, the Company had outstanding and entitled to vote 18,061,906 shares of Common Stock. Each holder of record of Common Stock on such date will be entitled to one vote for each share held on all matters to be voted upon at the Annual Meeting.
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of the outstanding shares are represented by votes at the meeting or by proxy. Votes will be counted by the inspector of election appointed for the meeting, who will separately count For and Against votes, abstentions and broker non-votes. A broker non-vote occurs when a broker, bank or other agent holding shares as nominee for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner, despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions. Abstentions will be counted towards the vote total for each proposal, and will have the same effect as Withheld or Against votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal.
Any person giving a proxy pursuant to this solicitation has the power to revoke it at any time before it is voted. It may be revoked by filing with the Secretary of the Company at the Companys principal executive office, 501 Mercury Drive, Sunnyvale, California 94085, a written notice of revocation or a duly executed proxy bearing a later date, or it may be revoked by attending the meeting and voting in person. Attendance at the meeting will not, by itself, revoke a proxy.
The deadline for submitting a stockholder proposal for inclusion in the Companys proxy statement and form of proxy for the Companys 2009 annual meeting of stockholders pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the Exchange Act) is May 21, 2009. Stockholders wishing to submit proposals or director nominations that are not to be included in such proxy statement and proxy must give written notice to the Secretary at the principal executive offices of the Company not later than the close of business on July 30, 2009 nor earlier than the close of business on June 30, 2009. Stockholders are also advised to review the Companys Bylaws, which contain additional requirements with respect to advance notice of stockholder proposals and director nominations.
The Securities and Exchange Commission (the SEC) has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as householding, potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are stockholders in the Company will be householding the Companys proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that your broker will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your broker or direct your written request to: Investor Relations, Dionex Corporation, Evelyn Posey, 501 Mercury Drive, Sunnyvale, CA 94085 or contact Evelyn Posey at 1-408-481-4105. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their broker.
There are six nominees for the six Board of Directors (the Board) positions presently authorized in the Companys Bylaws. Each director to be elected will hold office until the next annual meeting of stockholders and until his successor is elected and has qualified, or until such directors earlier death, resignation or removal. Each nominee listed below is currently a director of the Company and was elected by the stockholders.
Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the six nominees named below. If any nominee should be unavailable for election as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee as management may propose. Each person nominated for election has agreed to serve if elected, and management has no reason to believe that any nominee will be unable to serve. Directors are elected by a plurality of the votes of the holders of Common Stock present in person or represented by proxy and entitled to vote. In other words, the six nominees receiving for votes from such holders will be elected.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
The following information pertains to the nominees, their principal occupations for the preceding five-year period, certain directorships, and their ages as of August 31, 2008.
Mr. Anderson has been the managing director of Sutter Hill Ventures, a venture capital investment partnership, since 1974. Mr. Anderson has served as a director of the Company since it began operations in 1980. Mr. Anderson is a director of various private companies.
Mr. Bowman has served as a director since the Company began operations in 1980 and as the Companys President and Chief Executive Officer from that time until his resignation from those positions in August 2002. Mr. Bowman was Chairman of the Board until he resigned from this role in November 2005. Mr. Bowman is also a director of Illumina, Inc., a developer, manufacturer, and marketer of next-generation life-science tools and integrated systems for the analysis of genetic variation and biological function.
Dr. Braunschweiler has served as President and Chief Executive Officer and director since joining the Company in August 2002. Prior to that time, Dr. Braunschweiler was employed by Mettler-Toledo, a supplier of precision instruments, where he served most recently as Group Vice-President and Head of the Laboratory and Packaging Division. Prior to that, he served in a variety of management positions at Mettler-Toledo.
Mr. McGeary is Chairman of the Board of BearingPoint, Inc., a management and technology consulting company. From 2000 to 2002, Mr. McGeary was Chief Executive Officer of Brience, Inc., a wireless and broadband company. From 1997 to 2000, Mr. McGeary was Co-Chief Executive Officer of BearingPoint, Inc. Mr. McGeary has served as a director of the Company since November 2005. Mr. McGeary also currently serves on the board of directors of Cisco Systems, Inc. Mr. McGeary is a certified public accountant.
Mr. Pigliucci is the Lead Director of the Company. Mr. Pigliucci has served as the Managing Partner of Aldwych Associates, LLP, a management and technology consulting partnership since 2007. Prior to joining Aldwych Associates, LLP and since 2005, he served as an independent consultant. Mr. Pigliucci was Chairman and Chief Executive Officer of Discovery Partners International, a supplier of equipment and services to the drug discovery market from 1998 until November 2005. Mr. Pigliucci has been a director of the Company since March 1998. Mr. Pigliucci is also a director of Biosphere Medical and various private companies.
Mr. Pope is the Executive Vice President of Operations and Chief Financial Officer for MarketTools, a privately held software-as-a-service market research company. From March 2007 through August 2008, Mr. Pope was a Vice President in the Office of the CEO at BearingPoint, one of the worlds largest management and information technology consulting firms. From March 2005 to March 2006, Mr. Pope was President of Network General Corporation, a global enterprise network and application performance analysis company. Prior to joining Network General Corporation, Mr. Pope served as the President and Chief Executive Officer of DigitalThink, Inc., a provider of custom e-learning solutions, from April 2002 until the acquisition of DigitalThink by Convergys in May 2004. Mr. Pope has served as a director of the Company since October 2002.
During the fiscal year ended June 30, 2008, the Board held seven meetings. The Board has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. During the fiscal year ended June 30, 2008, each Board member attended at least 75% of the meetings of the Board and the committees upon which such member served except that Mr. Anderson attended 66.67% of the meetings of the Compensation Committee.
It is the Companys policy to invite the members of the Board to attend the annual meetings of stockholders. All members of the Board attended last years annual meeting of stockholders.
The Audit Committee oversees the Companys financial reporting process on behalf of the Board and reports the results of these activities to the Board. As part of this responsibility, the Audit Committee: evaluates the performance of and assesses the qualifications of the independent registered public accounting firm; determines and approves the engagement of the independent registered public accounting firm; determines whether to retain or terminate the existing independent registered public accounting firm or to appoint and engage a new independent registered public accounting firm; reviews and approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services; monitors the rotation of partners of the independent registered public accounting firm on the Companys engagement team as required by law; confers with management and the independent registered public accounting firm regarding the effectiveness of internal control over financial reporting; establishes procedures, as required by applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; reviews the financial statements to be included in the Companys Annual Report on Form 10-K; and discusses with management and the independent registered public accounting firm the results of the annual audit and the results of the Companys quarterly financial statements. The members of the Audit Committee are Messrs. Pope (Chairman), McGeary and Pigliucci. During the fiscal year ended June 30, 2008, the Audit Committee held five meetings. All members of the Audit Committee are independent as independence is currently defined in Rules 4350(d)(2)(A)(i) and (ii) of the Nasdaq Stock Market (Nasdaq) listing standards. In addition, the Board has determined that Mr. Pope is an audit committee financial expert, as defined in applicable SEC rules. The charter of the Audit Committee is available on the Companys Web site at www.dionex.com.
The Compensation Committee reviews and approves the overall compensation strategy and policies for the Company. The Compensation Committee reviews and approves corporate performance goals and objectives relevant to the compensation of the Companys executive officers and other senior management; reviews and approves the compensation and other terms of employment of the Companys Chief Executive Officer; and reviews and approves the compensation and other terms of employment of the other executive officers. The members of the Compensation Committee are Messrs. Anderson (Chairman), McGeary, Pigliucci and Pope. During the fiscal year ended June 30, 2008, the Compensation Committee held three meetings. All members of the Compensation
Committee are independent as independence is currently defined in Rule 4200(a)(15) of the Nasdaq listing standards and non-employee directors for purposes of Rule 16b-3 under the Exchange Act.. Messrs. Anderson, McGeary and Pigliucci are outside directors for purposes of Section 162(m) of the Internal Revenue Code. In addition, the Compensation Committee created the Executive Equity Compensation Subcommittee (the Equity Subcommittee) in July 2004, which is discussed in more detail in the Compensation Discussion and Analysis below. During the fiscal year ended June 30, 2008, the Equity Subcommittee held one meeting. The charter of the Compensation Committee is available on the Companys Web site at www.dionex.com.
The Nominating and Corporate Governance Committee (the Nominating Committee) is responsible for: identifying, reviewing and evaluating candidates to serve as directors of the Company; reviewing and evaluating incumbent directors; recommending to the Board candidates for election to the Board; making recommendations regarding the membership of the Committees of the Board; overseeing all aspects of the Companys corporate governance functions on behalf of the Board; and making recommendations to the Board regarding corporate governance issues. The members of the Nominating Committee are Messrs. Anderson, McGeary (Chairman), Pigliucci and Pope. During the fiscal year ended June 30, 2008, the Nominating Committee held two meetings. All members of the Nominating Committee are independent as independence is currently defined in Rule 4200(a)(15) of the Nasdaq listing standards. The charter of the Nominating Committee is available on the Companys Web site at www.dionex.com.
The Board has adopted governance principles and guidelines for the Company (Corporate Governance Guidelines) to assist the Board in exercising its duties and to best serve the interests of the Company and its stockholders. The Corporate Governance Guidelines are available on the Companys Web site at www.dionex.com.
As required under the Nasdaq listing standards, a majority of the members of a listed companys board of directors must qualify as independent, as affirmatively determined by the board of directors. The Board consults with the Companys counsel to ensure that the Boards determinations are consistent with all relevant securities and other laws and regulations regarding the definition of independent, including those set forth in applicable Nasdaq listing standards, as in effect from time to time.
Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his family members, and the Company, its senior management and its independent registered public accounting firm, the Board has determined that all directors are independent directors within the meaning of the applicable Nasdaq listing standards, except for Dr. Braunschweiler, the President and Chief Executive Officer of the Company, and Mr. Bowman, the former President and Chief Executive Officer of the Company and former Chairman of the Board.
As required under Nasdaq listing standards, the Companys independent directors meet in regularly scheduled executive sessions at which only independent directors are present. The Lead Director of the Board, Mr. Pigliucci, generally presides over these executive sessions.
The Nominating Committee has a policy of considering candidates for membership to the Board who are nominated by stockholders in the same manner as candidates recommended by members of the Board.
Any stockholder wishing to nominate a director candidate should submit in writing the candidates name, biographical information, business qualifications and a representation that the nominating stockholder is the beneficial or record owner of the Companys stock to Roderick McGeary, Chairman of the Nominating and Corporate Governance Committee, Dionex Corporation, 501 Mercury Drive, Sunnyvale, California 94085. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee
and to serve as a director if elected. All qualified submissions are reviewed by the Nominating Committee at the next appropriate meeting. If a stockholder wishes the Nominating Committee to consider a director candidate for nomination at our next annual meeting of stockholders, then the Companys Bylaws require that written recommendations be received by the Company no sooner than 120 days and no later than 90 days prior to the first anniversary of the preceding years annual meeting of stockholders.
To date, the Nominating Committee has not received a timely director nomination from a stockholder or group of stockholders holding more than 5% of the Companys voting stock.
Stockholders may communicate directly with any of the Companys senior managers or any member of the Board, including the Chairman of the executive sessions of non-management directors or any Board committee, by writing directly to those individuals at Dionex Corporation, 501 Mercury Drive, Sunnyvale, California 94085. Stockholder communications related to director candidate recommendations should be directed to the Chairman of the Nominating Committee, Mr. McGeary. In addition, if the Companys stockholders or employees have any concerns related to the Companys financial or accounting practices, the Company encourages communicating those concerns directly to the Chairman of the Audit Committee, Mr. Pope.
The Company has adopted the Dionex Corporation Code of Business Ethics and Values (the Code of Ethics) that applies to all officers, directors and employees. The Code of Ethics is available on the Companys Web site at www.dionex.com. If the Company makes any substantive amendments to the Code or grants any waiver from a provision of the Code of Ethics to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver as required by applicable laws.
The Companys employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Ethics. The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of related concerns.
The Audit Committee oversees the Companys financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management the audited financial statements included in the Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2008, which include the consolidated balance sheets of the Company as of June 30, 2008 and 2007, and the related consolidated statements of income, stockholders equity and comprehensive income and cash flows for each of the fiscal years ended June 30, 2008, 2007 and 2006, and the notes thereto. This review included a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent registered public accounting firm, who are responsible for expressing an opinion on the conformity of those audited financial statements with the accounting principles generally accepted in the United States of America, their judgments as to the quality, not just the acceptability, of the Companys accounting principles and such other matters as are required to be discussed with the Audit Committee under the auditing standards generally accepted in the United States, including those described in the Statement on Auditing Standards No. 114 (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board (PCAOB) in Rule 3200T. The Audit Committee discussed and reviewed the results of the independent registered public accounting firms examination of the financial statements.
In addition, the Audit Committee has discussed with the independent registered public accounting firm its independence from management and the Company and received a letter and other written disclosures from the independent registered public accounting firm as required by the Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as adopted by the PCAOB in Rule 3600T. The Audit Committee also reviewed all non-audit services performed by the independent registered public accounting firm and considered whether the independent registered public accounting firms provision of non-audit services is compatible with maintaining its independence.
The Audit Committee discussed with the Companys independent registered public accounting firm the overall scope and plans for their audits. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluations of the Companys internal controls, and the overall quality of the Companys financial reporting. The Audit Committee held five meetings during the fiscal year ended June 30, 2008.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2008 for filing with the SEC. The Audit Committee and the Board have also recommended, and have asked the stockholders to ratify, the selection of the Companys independent registered public accounting firm.
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
MICHAEL W. POPE (Chair)
1 The material in this report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Deloitte & Touche LLP (Deloitte & Touche) has served as the Companys independent registered public accounting firm with respect to the Companys books and accounts since the Company began operations in 1980.
The stockholders are being asked to ratify the Audit Committees selection of Deloitte & Touche as its independent registered public accounting firm for the fiscal year ending June 30, 2009. Although it is not required to do so, the Audit Committee is submitting the approval of Deloitte & Touche to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to provide such ratification, the Audit Committee will reconsider its approval of Deloitte & Touche as its independent registered public accounting firm for the fiscal year ending June 30, 2009. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.
Representatives of Deloitte & Touche are expected to be present at the Annual Meeting. They do not expect to make any statement, but will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the Common Stock present in person or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be required to ratify the selection of Deloitte & Touche.
Fees for professional services (in thousands) provided by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, Deloitte & Touche), in each of the last two fiscal years, in each of the following categories, were:
Audit Fees. Fees for audit services include fees associated with the annual audit, the reviews of the Companys interim financial statements and audit of the effectiveness of the Companys internal control over financial reporting under SEC rules and regulations and Sarbanes-Oxley Act of 2002. This category also includes fees for audits provided in connection with statutory and regulatory filings and engagements or services that generally only the independent registered public accounting firm reasonably can provide to a client.
Audit-Related Fees. Audit-related fees include fees associated with accounting consulting services that are reasonably related to the performance of the audit or review of the Companys financial statements. This category may include fees related to consultations regarding generally accepted accounting principles, reviews and evaluations of the impact of new regulatory pronouncements, and audit services not required by statute or regulation.
Tax Fees. Tax fees include tax compliance, tax advice, tax planning and tax return preparation work.
All Other Fees. No fees were billed in this category for fiscal years 2008 or 2007.
All audit-related services and tax services provided to the Company by the Companys independent registered public accounting firm were pre-approved by the Audit Committee, which concluded that the provision of these services by Deloitte & Touche was compatible with the maintenance of that firms independence of its auditing functions.
The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accounting firm. On an on-going basis, management communicates specific projects and categories of service for which the advance approval of the Audit Committee is requested. The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of the independent registered public accounting firm. On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services compared to the initial estimated amounts. The Audit Committee also may delegate the ability to pre-approve audit and permitted non-audit services to one or more of its members, provided that any pre-approvals are reported to the full Audit Committee at its next scheduled meeting.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The following table sets forth certain information regarding the ownership of the Companys Common Stock as of August 1, 2008 by (i) each director and nominee for director, (ii) each Named Executive Officer (as defined below under Compensation of Directors and Executive Officers Summary Compensation Table), (iii) all executive officers and directors as a group and (iv) all those known by the Company to be beneficial owners of more than five percent of its Common Stock:
Section 16(a) of the Exchange Act requires the Companys directors and executive officers, and persons who own more than ten percent of a registered class of the Companys equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Executive officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
To the Companys knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended June 30, 2008, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with.
The following table lists the names and positions of all our current executive officers. There are no family relationships between any director and executive officer of Dionex Corporation. Executive officers serve at the discretion of the Board of Directors.
Dr. Braunschweiler has served as President and Chief Executive Officer and a member of our Board of Directors since joining us in August 2002. Prior to that time, Dr. Braunschweiler was employed by Mettler-Toledo, a supplier of precision instruments, where he served most recently as Group Vice-President and Head of the Laboratory and Packaging Division. Prior to that, he served in a variety of management positions at Mettler-Toledo. Dr. Braunschweiler has been residing in Switzerland since 2006.
Mr. Barton has served as Senior Vice President of Global Sales and Service since August 1, 2008. Previously and since September 2007, Mr. Barton served as Vice President of Sales and Service International. From October 2003 to September 2007, he served as Vice President Sales and Service Asia/Pacific. Since joining us in 1987, he has served in numerous positions in the Sales, Accounting and Finance departments.
Mr. Bow has served as Vice President of North American Sales and Service since joining us in September 2003. Prior to that, he founded and served as President of Genesis Chemicals, Buffers & Biochemicals Corp, GW Incorporated and GenChem GmbH.
Mr. Chance has served as Executive Vice President and Chief Operating Officer since August 1, 2008. Previously and since December 2006, Mr. Chance served as Executive Vice President of the Company. He was the Vice President of our Chemical Analysis Business Unit (CABU) from April 2003 to December 2006. From 2000 to 2003, Mr. Chance served as Chief Executive Officer of Aptus Pharmaceuticals, Inc., a biotech company. From 1989 through 2000, he served as a business unit general manager and in various other positions at Siemens Industrial Automation, an automation technology provider.
Mr. Fairbanks has served as Vice President of Information Technology since May 2007. Prior to joining Dionex and since June 2005, he served as Chief Information Officer of Silicon Graphics, Inc., a leading provider of products, services, and solutions for use in high-performance computing and data management. Prior to that, from 1993 to 2005, Mr. Fairbanks served in various senior director roles in Information Technology at Silicon Graphics, Inc.
Dr. Hauffe has served as Vice President of Corporate Marketing and Business Development since January 2006. Between 2000 and 2006, Dr. Hauffe served as General Manager of Dionex GmbH, our subsidiary in Idstein, Germany. From 1993 to 1997, Dr. Hauffe served as our Product Manager Life Sciences in Europe.
Dr. Jochum has served as Senior Vice President, Life Sciences Business Unit since August 1, 2008. Previously and since October 2000, Dr. Jochum served as Vice President of our Life Sciences Business Unit (LSBU). Prior to that and since joining us in October 1998, he served as Managing Director of our subsidiary, Dionex Softron. Prior to joining us, he served as Managing Director of Softron GmbH, which we acquired in 1998.
Mr. McCollam has served as Senior Vice President, Finance and Administration and Chief Financial Officer since August 1, 2008. Previously and since October 1999, Mr. McCollam served as Vice President Finance and Administration and Chief Financial Officer. Prior to that and since joining us in 1993, he served as Director of Finance and Corporate Controller.
Mr. Plohetski has served as Vice President of our Chemical Analysis Business Unit since December 2006. From March 2003 to November 2006, he served as our Director of Manufacturing. Prior to joining us in 2003, Mr. Plohetski served as Vice President of Engineering at Carl Zeiss, Inc. from 1982 to 2002.
Mr. Pohl has served as Senior Vice President, Research and Development and Chief Science Officer since August 1, 2008. Previously and since May 2004, Mr. Pohl served as Vice President of Research and Development and Chief Technology Officer. Prior to that and since June 2001, he served as Vice President of Research and Development. From March 2000 to June 2001, Mr. Pohl served as Vice President, Research and Development of Ciphergen Biosystems, Inc., a provider of enabling tools for proteomics. From 1979 to 2000, he served as our Vice President of Consumables and in various other capacities at the Company.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
In fiscal 2008, each Non-Employee Director (as defined below) received an annual fee of $21,000, $1,500 for each regularly scheduled meeting attended and $1,000 for every other meeting attended, including telephonic meetings. The Lead Director and the Chairman of the Audit Committee each received an additional annual retainer of $8,000. In fiscal 2009, each Non-Employee Director will receive an annual fee of $35,000. The Lead Director will receive an additional annual retainer of $12,000. The Chairman of the Audit Committee will receive an additional annual retainer of $18,000. The Audit Committee members not including the Chairman of the Audit Committee each will receive an additional annual retainer of $6,000. The Compensation Committee members each will receive an additional annual retainer of $4,000. The Nominating and Corporate Governance Committee members each will receive an additional annual retainer of $2,000. A Non-Employee Director is defined as a director who is not an employee of the Company or any parent corporation or subsidiary corporation of the Company as those terms are defined in Sections 424(e) and (f) of the Code, respectively (any such corporation, an Affiliate), and has not been an employee of the Company or any Affiliate for all or part of the preceding fiscal year.
Each non-employee member of the Board also is eligible for equity grants under the Dionex Corporation 2004 Equity Incentive Plan (the 2004 Plan), which the stockholders approved on October 22, 2004. The 2004 Plan is administered by the Board. On the date of the annual meeting of stockholders, each non-employee member of the Board who is then serving on the Board is automatically granted, without further action by the Company, the Board or the stockholders of the Company, an option to purchase 1,000 shares of the Companys Common Stock and a restricted stock unit for 1,000 shares of the Companys Common Stock. Each person who is elected for the first time to be a non-employee member of the Board is automatically granted an option to purchase 4,000 shares of Common Stock and a restricted stock unit for 4,000 shares of the Companys Common Stock. The exercise price of options granted to non-employee members of the Board under the 2004 Plan is 100% of the fair market value of the Common Stock subject to the option on the date of the option grant. Options granted under the 2004 Plan vest in 25% increments each year beginning one year from the date of grant. The term of options granted under the 2004 Plan is ten years unless a shorter term is selected by the Board. The restricted stock units are subject to the same four-year vesting schedule the Board has imposed on initial and annual non-employee director option grants, but the holder of a vested restricted stock unit grant would not be entitled to receive the shares from such grant until he or she leaves the Board of Directors or the fifth anniversary of the date of grant, whichever comes first.
In fiscal 2008, the Company granted options to purchase an aggregate of 5,000 shares of Common Stock to non-employee members of the Board. The options were granted with an exercise price per share of $87.03. Options to purchase 14,000 shares of Common Stock granted under the 2004 Plan were exercised by the non-employee members of the Board during fiscal 2008, and the value realized upon exercise of such options was $515,474.
The following table sets forth a summary of the compensation of the Companys non-employee directors for fiscal 2008:
Compensation Discussion and Analysis
The goal of the compensation program is to tie compensation to the attainment of specific business and individual objectives while providing compensation sufficient to attract, retain, motivate and reward executive officers and other key employees who contribute to the long-term success of the Company. In furtherance of these goals, annual base salaries are generally set at levels that take into account both competitive and performance factors. The Company also relies on annual longer-range incentive compensation in order to attract and motivate its executives. Incentive compensation is variable and is closely tied to corporate performance to encourage profitability, growth and the enhancement of stockholder value. The Companys total compensation package, composed of base salary, bonus awards and stock option grants and restricted stock unit grants, is designed to be competitive with leading separations science and high technology companies with which the Company competes for employees. All compensation at the Company is based upon a sustained high level of individual performance and the Companys overall performance.
The Compensation Committee consists of non-employee directors and makes determinations with regard to all compensation matters specifically relating to executive officers and other senior management employees. The Compensation Committee created the Executive Equity Compensation Subcommittee (the Equity Subcommittee) in July 2004. The Equity Subcommittee has the authority to grant stock options and other stock awards to executive officers and key employees of the Company. Membership on the Equity Subcommittee is limited to directors who are outside directors for purposes of Section 162(m) of the Code. Messrs. Anderson, McGeary and Pigliucci were members of the Equity Subcommittee for fiscal 2008.
The Compensation Committee has primary responsibility for ensuring that the Companys executive compensation and benefit program is consistent with the Companys compensation philosophy and is responsible for determining the executive compensation packages offered to our executive officers. Our Compensation Committee plays an integral role in setting executive officer compensation each year. In the first quarter of each fiscal year, our Compensation Committee holds a regular meeting in which our Chief Executive Officer reviews with the Compensation Committee our financial and business performance for the previous year and managements business outlook and operating plan for the current year. In reviewing the prior years performance, the Compensation Committee compares our performance to the financial and operational goals set for such year and the bonus targets. In this meeting, the Chief Executive Officer also reviews with the Compensation Committee his assessment of the individual performance of each executive officer, including his own performance, according to a variety of qualitative performance criteria and salary and bonus trends. The Compensation Committee discusses with the full Board recent
data and current trends in equity ownership programs for comparable companies. Taking into account the information conveyed and discussed at these meetings and the recommendations of our Chief Executive Officer, the Compensation Committee then determines, subject in some cases to ratification by the full Board of Directors:
Each element of our executive compensation system is described in more detail below.
There are four principal elements of the Companys executive compensation: (1) cash-based compensation, consisting of base salary, amounts paid pursuant to the Companys Employee Profit Sharing Plan for North American employees (Profit Sharing Plan) and annual incentive bonus awards under the Companys Management Bonus Plan (MBP); (2) equity-based compensation, including stock option grants and restricted stock unit grants; (3) insurance, retirement and other employee benefits; and (4) severance and change in control benefits.
Each element of compensation addresses specific objectives of the executive compensation program and together they are designed to meet the overall objectives of the Companys executive compensation program. The mix of short-term cash incentives and long-term equity incentives is designed to focus executives on achievement of annual financial and operating objectives that drive long-term shareholder value. The Company considers multiple factors, including the competitive market, Company and individual performance. Base salaries are important in attracting and retaining senior executives. The MBP is designed to motivate executive officers to achieve the annual growth and operating targets established at the beginning of the fiscal year. Long-term equity based compensation awards are designed to motivate senior executives and other key employees to contribute to the Companys long-term growth of stockholder value and to align executives compensation with the growth in the Companys stock price.
Cash-based compensation paid to executive officers in fiscal 2008 consisted of base salary, amounts paid pursuant to the Profit Sharing Plan to eligible employees, and amounts paid pursuant to the MBP. For fiscal 2008, in making its determination of cash-based executive compensation, the Compensation Committee reviewed an analysis prepared by the Companys management of compensation paid to executive officers of companies in the separations science and high technology industries. Generally, the Compensation Committee sets annual base salary levels and bonus amounts to provide for total cash-based compensation that is comparable to the compensation paid to executive officers of separations science and high technology companies of similar size with which the Company competes for talented executives.
The Compensation Committee annually reviews and adjusts each executive officers base salary. To ensure retention of qualified management, the Compensation Committee generally sets base salaries paid to executive officers at the competitive levels described above, taking into account all cash compensation, based on the survey of market peers (the Survey) described below under Competitive market assessment. In addition, when reviewing base salaries, the Compensation Committee considers both qualitative and quantitative factors relating to individual and corporate performance, levels of responsibility, prior experience and breadth of knowledge. The Compensation Committee does not base its considerations on any single one of these factors nor does it specifically assign relative weights to these factors. In many instances, judgments based on these qualitative factors necessarily involve a subjective assessment by the Compensation Committee. Generally, in determining salary adjustments for executive officers (other than the Chief Executive Officer), the Compensation Committee takes into account the evaluation and recommendations of the Chief Executive Officer and information provided in the Survey.
The Profit Sharing Plan has been established to reward all North American full-time employees of the Company, including executive officers, for their contributions to the Companys profitability for any given year. The Profit Sharing Plan provides for a compensation bonus pool, the size of which is based on profits for a given year. In fiscal 2008, each eligible employee, including eligible executive officers, received pursuant to the Profit Sharing Plan an amount equal to 8.3% of such employees eligible compensation. Each employees eligible compensation consists of such employees regular base salary and incentive compensation, which includes: gross salary or wages; commissions; management and other performance-related bonuses; overtime pay; shift differentials; paid holidays; vacation pay; sick pay; and uninsured short term disability benefits paid directly by the Company.
The MBP, an annual incentive award plan, is a variable pay program for officers and other senior managers of the Company. The MBP is designed to focus officers on meeting business objectives and implementing business strategies of the Company and to drive growth of revenues and earnings by aligning the interests of the Company officers with those of its stockholders, and to assist the Company in attracting and retaining quality talent through incentive compensation determined in accordance with an objective, measurable, transparent and easy -to-administer system.
Under the MBP, at the beginning of each fiscal year the Compensation Committee establishes bonus targets and bonus payment formulae tied to both the satisfaction of individual performance goals and financial performance goals of the Company. Bonus payments are then approved by the Compensation Committee shortly following the end of each fiscal year based on the application of the pre-determined formulae (given below), and may be equal to, less than or greater than the target bonus amounts based on whether the individual performance goals and corporate financial performance goals were satisfied, partially satisfied or exceeded. The bonus targets are expressed as a percentage of an individuals base salary. The financial performance goals consist of achieving operating, strategic and financial goals that are considered to be critical to the Companys fundamental long-term goal of building stockholder value as established at the beginning of each fiscal year. The individual performance goals generally include both objective and subjective components. Both individual performance goals and financial performance goals may change from year to year. In establishing these criteria at the beginning of each fiscal year and when subsequently evaluating an individuals performance relative to these criteria, the Compensation Committee relies on recommendations from the Chief Executive Officer and other members of senior management. Ordinarily, the Companys financial performance must meet certain threshold levels before any bonuses are awarded. These performance goals are established so that target attainment is not assured. The attainment of payment for performance requires significant effort on the part of our executives. Our Compensation Committee establishes goals under the MBP that it believes will be realistic but difficult for our executive officers to achieve.
Payments under the MBP are based on the application of the pre-determined formulae which is as follows: 20% of the MBP is based on individual performance criteria and 80% of the MBP is based on Company goals related to sales and earnings growth. For fiscal 2009, payments under the MBP will be based on the application of the following pre-determined formulae: 80% of the MBP will be based on Company goals related to sales and earnings growth, 15% of the MBP will be based on individual performance criteria and 5% of the MBP will be based on achievement of Company or business unit operating expense targets.
When awarding payments to an officer under the MBP, the Compensation Committee takes into account competitive considerations, the officers contributions to the performance of the Company, the officers leadership abilities and experience in the separations science industry, the officers scope of responsibility for the Companys financial performance, and contributions by the officer to the Companys achievements in strategic planning and positioning for the fiscal year.
Dr. Braunschweilers current bonus target is 75% of his base salary, Mr. Chances current bonus target is 50% of his base salary and the current bonus target for the other Named Executive Officers is 40% of their base salary. The maximum bonus that may be paid under the MBP is 150% of the bonus target (cap).
The aggregate amount of total cash-based compensation earned by Dr. Braunschweiler during fiscal year 2008, including his base salary and his annual bonus under the MBP, was 1,051,434 Swiss Francs (or $1,003,277 based on the currency conversion rate of 1 US dollar to 1.0480 Swiss Francs on June 30, 2008), which is comparable to the peer data in the Survey. The aggregate amount of total cash-based compensation paid to Mr. Chance during fiscal year 2008, including his base salary, his Profit Sharing Plan award and his annual bonus under the MBP, was $585,138 which is comparable to the peer data in the Survey. The aggregate amount of total cash-based compensation awarded to Mr. McCollam, including his base salary, his Profit Sharing Plan award and his annual bonus under the MBP, was $454,415, which is comparable to the peer data in the Survey. The aggregate amount of total cash-based compensation awarded to Mr. Pohl, including his base salary, his Profit Sharing Plan award and his annual bonus under the MBP, was $451,144, which is comparable to the peer data in the Survey. The aggregate amount of total cash-based compensation awarded to Dr. Jochum, including his base salary and his annual bonus under the MBP, was 391,634 Euros (or $608,127 based on the currency conversion rate of 1 US dollar to 0.6440 Euros on June 30, 2008), which is comparable to the peer data in the Survey. Amounts listed above under the MBP and Profit Sharing Plan were earned in fiscal year 2008 but not actually paid until fiscal year 2009 in accordance with the Companys standard practices. Amounts listed above do not include payments under the MBP or the Profit Sharing Plan paid in fiscal year 2008 but earned in fiscal year 2007. The amounts earned in fiscal 2007 can be found in the Summary Compensation Table below.
Following a review of the Survey, in August of 2008 the Compensation Committee determined that for fiscal year 2009: (a) Dr. Braunschweiler should receive no base salary increase and his annual base salary remains at 525000 Swiss Francs (or $500,954 based on the currency conversion rate of 1 US dollar to 1.0480 Swiss Francs on June 30, 2008) (b) Mr. Chance should receive a base salary increase from $340,000 to $350,000, (c) Mr. McCollam should receive a base salary increase from $285,000 to $310,000 (d) Mr. Pohl should receive a base salary increase from $285,000 to $310,000, and (e) Dr. Jochum should receive a base salary increase from 265,000 Euros to 270,000 Euros (or $419,254 based on the currency conversion rate of 1 US dollar to 0.6440 Euros on June 30, 2008).
The Board adopted the 2004 Plan to provide a means to secure and retain the services of employees, directors and consultants of the Company and its affiliates, to provide incentives for such individuals to exert maximum efforts for the success of the Company and its affiliates, and to provide a means by which such eligible individuals may be given an opportunity to benefit from increases in the value of the Companys Common Stock through the grant of stock options and restricted stock units. While permitted by the 2004 Plan, the Company does not currently grant other full value stock awards. The Compensation Committee grants stock options and restricted stock units to senior management annually at the Compensation Committees first regular meeting in each fiscal year, typically occurring in August.
The Company uses stock options and restricted stock units to align the interests of management with those of stockholders and management by providing management a substantial economic interest in the long-term appreciation of the Companys stock. In determining the size of an option or restricted stock unit to be granted to an executive officer, the Compensation Committee takes into account the officers position and level of responsibility within the Company, the officers existing stock and vested option holdings, the potential reward to the officer if the stock price appreciates in the public market, and the competitiveness of the officers overall compensation arrangements, including stock options and restricted stock units. Generally, with respect to option grants the Company grants executive officers NSOs because NSOs provide the Company with more favorable tax treatment.
Our Compensation Committee encourages stock ownership by executive management and periodically reviews the ownership levels and considers the appropriateness of implementing stock ownership guidelines. Our Compensation Committee has chosen not to require stock ownership guidelines for the executive management.
Our Insider Trading Policy prohibits our executive officers from engaging in any hedging or monetization transactions involving Company securities.
We maintain broad-based benefits that are provided to all employees, including health and dental insurance, life and disability insurance, a 401(k) plan and Employee Stock Purchase Plan (ESPP). Executives are eligible to participate in all of our employee benefit plans, in each case on the same basis as other employees.
The 401(k) plan is a tax-qualified retirement savings plan pursuant to which all U.S. based employees, including officers, are able to contribute 1% to 25% of their annual salary up to the limit prescribed by the Internal Revenue Service to the 401(k) plan on a before-tax basis. The Company will match 100% of the first 5% of pay that is contributed to the 401(k) plan. All employee contributions to the 401(k) plan are fully vested upon contribution. All matching contributions are subject to vesting over a five-year period.
The purpose of the ESPP is to encourage U.S. employees of the Company to acquire Common Stock. It is believed that the ESPP will serve the interests of the Company and its stockholders because it allows employees to have a greater personal financial interest in the Company through ownership of Common Stock, which in turn will stimulate employees efforts on the Companys behalf, and maintain and strengthen their desire to remain with the Company. It is believed that the ESPP will also assist in the recruitment of employees. Pursuant to the ESPP, all eligible employees, including eligible executive officers of the Company, may purchase stock of the Company at 85% of the lesser of the fair market value of the Companys Common Stock on the date the offering commenced and the fair market value on the purchase date at the end of the offering period.
With respect to employees outside of the United States, the Company pays social security system contributions pursuant to statutory regulations applicable to such employees.
The Company provides U.S. based executive officers with supplemental medical reimbursement pursuant to the Medical Care Reimbursement Plan (the MCRP) of up to $1,500 per year. The purpose of the MCRP is to encourage and insure full and complete medical care for the welfare of each covered employee, his spouse and dependents, and to supplement the benefits provided by the Companys group medical insurance plan. Covered expenses include uninsured amounts paid for hospital bills, medical, optometric and dental bills, drugs, and premiums on accident or health insurance.
The Company provides U.S. based executive officers with reimbursement for legal, tax and estate planning fees up to $2,500 per year. The purpose of the plan, among other things, is to reduce the amount of time spent on personal and family legal, tax and estate planning matters by senior officers and thereby make more of their time available for the conduct of Company business.
The Company makes monthly lease payments on an automobile for Dr. Jochum, which includes automobile insurance and maintenance costs. The Company also pays contributions on a direct life insurance policy and on an accident insurance policy for Dr. Jochum. The Company provides these perquisites because many companies in Germany and across Europe provide similar perquisites and as a result the Compensation Committee believes that it is necessary that we do the same for retention and recruitment purposes.
On November 20, 2006, Lukas Braunschweiler entered into an Executive Employment Agreement (the Agreement) with Dionex (Europe) Management AG, a wholly-owned subsidiary of the Company organized under the laws of Switzerland. The Agreement was entered into in connection with Dr. Braunschweilers relocation to our offices in Switzerland, where employment agreements with executives are customary. The Agreement was intended to provide for compensation arrangements that are substantially similar to those that were in place when
Dr. Braunschweiler was based in our Sunnyvale headquarters. Section 4(c) of this Agreement was amended as of January 30, 2008 to comply with certain provisions of the Swiss Pension Insurance Act.
Under the terms of the Agreement, Dr. Braunschweilers primary duties and responsibilities include: (a) acting as, and to performing the duties of, President and Chief Executive Officer of the Company; (b) overall management of the Company; (c) overall management of Dionex (Europe) Management AG; and (d) regular reporting to the Board of Directors of the Company and Dionex (Europe) Management AG with regard to the course of business and management issues of significance.
Dionex (Europe) Management AG pays Dr. Braunschweilers base salary and he is eligible to receive an annual bonus pursuant to the terms and conditions of the MBP. While he was based in our Sunnyvale headquarters, Dr. Braunschweiler received profit sharing payments under the Companys Profit Sharing Plan in which the North American employees of the Company participate, the Companys matching contribution to his 401(k) account, and certain medical benefits. Under the terms of the Agreement, Dr. Braunschweiler no longer receives these payments or benefits. Instead, Dionex (Europe) Management AG: (a) with respect to Dr. Braunschweilers base salary, pays for a substantially equivalent cost, his portion of the mandatory contribution to the AVH/IV/ALV pillar of social security in Switzerland, in addition to Dionex (Europe) Management AGs mandatory portion, plus the amounts required by law for accident insurance and sick leave; and (b) makes contributions to Dr. Braunschweilers Swisscanto pension fund maintained by Dionex (Europe) Management AG. The total annual amount of these contributions is 78,669 Swiss Francs, which is approximately U.S. $75,065. Dr. Braunschweiler is eligible to receive benefits, if any become due, under the terms of the Dionex Change in Control Severance Benefit Plan (Change in Control Plan), which is discussed in more detail below.
The Agreement does not alter or affect any equity grants previously provided to Dr. Braunschweiler by the Company. Dr. Braunschweilers employment with Dionex (Europe) Management AG is considered continuous service for the purposes of such equity grants, and he is eligible for future grants under the Companys equity incentive plans.
Under the terms of the Agreement, Dr. Braunschweilers employment can be terminated: (a) for cause (as defined in the Agreement) at any time by Dionex (Europe) Management AG; and (b) by Dionex (Europe) Management AG without cause, or by Dr. Braunschweiler for any reason, on or after November 1, 2007, upon six months written notice to the other party.
On June 30, 2008, the Company and Dr. Braunschweiler entered into an Option Cancellation Agreement. The Company previously granted stock options to Dr. Braunschweiler on August 7, 2007 pursuant to the 2004 Plan for an aggregate of thirty-five thousand shares of the Common Stock of the Company at an exercise price of $72.56 per share. The option grant was cancelled by the Option Cancellation Agreement so that Dr. Braunschweiler would be able to avoid unfavorable tax consequences in Switzerland that would result from the grant of such options.
We are not party to a written employment agreement with any other Named Executive Officer.
The Companys Change in Control Plan was established in October 2001 and amended in August 2008 to comply with Section 409A requirements. The purpose of the Change in Control Plan is to provide for the payment of severance benefits to certain eligible employees of the Company whose employment with the Company is terminated without cause or constructively terminated within 13 months following a change in control. Eligible employees are executive employees of the Company who have been designated by the Board as eligible employees. All of our executive officers are eligible employees. An employee who otherwise is an eligible employee will not receive benefits under the Change in Control Plan if (i) the employee has executed an individual severance benefit or change in control agreement with the Company, (ii) the employees employment with the Company is involuntarily terminated by the Company other than in an involuntary termination without cause, (iii) the employee voluntarily terminates employment with the Company and such termination does not constitute a constructive termination (as defined in the Change in Control Plan), (iv) the employee voluntarily terminates employment with the Company in order to accept employment with another entity that is wholly or partly owned by the Company, or (v) the employee is offered immediate reemployment by a successor to the Company following a change in ownership of the Company. To receive
benefits under the Change in Control Plan, an eligible employee must execute a release of claims in favor of the Company and such release must become effective in accordance with its terms.
Under the Change in Control Plan, each eligible employee will receive 12 months of base salary if terminated without cause or constructively terminated within 13 months following the effective date of a change in control. Each eligible employee will also receive a bonus payment equal to the average of the employees annual bonuses paid by the Company with respect to the last three completed fiscal years of the Company for which the employee was eligible to receive a bonus (or such fewer fiscal years for which the employee was eligible to receive an annual bonus). For a period of 12 months following the date of the eligible employees termination, the Company will also pay the portion of the premiums of the employees group medical, dental and vision coverage, including coverage for the employees eligible dependents, that the Company paid prior to the employees termination, provided that the employee elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985. In addition, effective as of the date of the eligible employees termination, the employee will be credited with full acceleration of vesting for all options outstanding that the employee holds on such date that have not yet vested. On behalf of an eligible employee, the Company will pay for an executive assistance program for a period not to exceed three months and at a cost not to exceed $7,500, provided that the employee enrolls in the program within six months following the employees termination.
The Company may amend or terminate the Change in Control Plan at any time; provided, however, that no such amendment or termination may occur following a change in control if such amendment or termination would affect the rights of any persons who were employed by the Company prior to the change in control.
The payment of severance benefits and the acceleration of vesting on grants under the 2004 Plan in the event of a change in control event may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of the Company.
In the event of a corporate transaction (as defined below), all outstanding stock awards under the 2004 Plan may be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute for such stock awards, then (i) with respect to any such stock awards that are held by individuals then performing services for the Company or its affiliates, the vesting and exercisability provisions of such stock awards will be accelerated in full and such awards will terminate if not exercised prior to the effective date of the corporate transaction, and (ii) all other outstanding stock awards will terminate if not exercised prior to the effective date of the corporate transaction. Repurchase or forfeiture rights with respect to other stock awards, such as stock purchase awards, may be assigned to the surviving or acquiring entity (or its parent company) in the corporate transaction. If such repurchase or forfeiture rights are not assigned, then any such stock awards that are held by individuals then performing services for the Company or its affiliates will become fully vested.
For purposes of the 2004 Plan, a corporate transaction will be deemed to occur in the event of (i) a sale of all or substantially all of the consolidated assets of the Company and its subsidiaries, (ii) the sale of at least 90% of the outstanding securities of the Company, (iii) a merger or consolidation in which the Company is not the surviving corporation, or (iv) a merger or consolidation in which the Company is the surviving corporation but shares of the Companys outstanding Common Stock are converted into other property by virtue of the transaction.
The Board has the discretion to provide that a stock award under the 2004 Plan will immediately vest as to all or any portion of the shares subject to the stock award (i) upon the occurrence of certain specified change in control transactions, whether or not such stock award is assumed, continued, or substituted by a surviving or acquiring entity in the transaction, or (ii) in the event a participants service with the Company or a successor entity is terminated, actually or constructively, within a designated period following the occurrence of certain specified change in control transactions. Stock awards held by participants under the 2004 Plan will not vest on such an accelerated basis unless specifically provided by the participants applicable award agreement.
The acceleration of vesting of a stock award in the event of a corporate transaction or certain specified change in control transactions may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of the Company.
Competitive market data is an important component taken into account by the Compensation Committee in determining the amount of compensation for each element of compensation for each executive. The Compensation Committee reviews the structure of executive compensation as well as competitive data on base salary, total cash compensation, and long-term incentives for companies that the Compensation Committee views as peers in the separations science and high technology industries. The peer group evaluated with respect to fiscal 2008 and fiscal 2009 executive compensation included among many others the following companies: Bio-Rad Laboratories, Inc., Sigma-Aldrich Corp., Varian Inc., and Waters Corporation. The Compensation Committee, with management, reviews the appropriateness of the peer group each year.
The Compensation Committee approves all compensation decisions for the executive officers. Dr. Braunschweiler provides the Compensation Committee with his assessment of the performance of the Company and other executive officers, and makes recommendations for the compensation of other executive officers. No executive officer makes any decision on any element of his own compensation.
Neither the Company nor the Compensation Committee has any contractual arrangement with any compensation consultant who has a role in determining or recommending the amount or form of executive officer compensation. Periodically, the Company and the Compensation Committee have discussed with Egon Zehnder International, Inc. (EZI) the design of programs that affect executive officer compensation. EZI has provided market intelligence on compensation trends along with its general views on compensation. In the last few years, the Company has not used the services of any compensation consultant in matters affecting compensation of its senior executive officers. In the future, either the Company or the Compensation Committee may engage or seek the advice of EZI or other compensation consultants.
Section 162(m) of the Code generally limits the Companys deduction, for federal income tax purposes, to no more than $1 million of compensation paid to certain Named Executive Officers in a taxable year. Compensation above $1 million may be deducted if it is performance-based compensation. The Equity Subcommittee has determined that stock options granted under the 2004 Plan with an exercise price at least equal to the fair market value of the Companys Common Stock on the date of grant will be treated as performance-based compensation. In connection with the approval of the 2004 Plan, the Companys stockholders approved a provision that sets a limit on the maximum number of shares that can be granted subject to an option in any calendar year which enables any compensation recognized by a Named Executive Officer as a result of the grant of such a stock option to qualify as performance-based compensation and thus be deductible by the Company without regard to the $1 million limit otherwise imposed by Code Section 162(m). The Equity Subcommittee believes that it is unlikely that compensation, excluding the value of any stock options granted under the 2004 Plan, paid to any Named Executive Officer in a taxable year that is subject to the limitation will exceed $1 million.
In 2006, the Company began accounting for stock-based compensation payments in accordance with the requirements of SFAS 123R. SFAS 123R requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair value.
The Compensation Committee of the Company has reviewed and discussed with management the Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K promulgated by the SEC. Based on these discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
MR. DAVID L.ANDERSON, CHAIRMAN
MR. RODERICK MCGEARY
MR. RICCARDO PIGLIUCCI
MR. MICHAEL W. POPE
1 The material in this report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the Securities Act), or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
SUMMARY COMPENSATION TABLE
The following table summarizes, for fiscal 2008 and 2007, compensation awarded or paid to, or earned by, the Companys Chief Executive Officer, Chief Financial Officer and its three other most highly compensated executive officers at June 30, 2008 (the Named Executive Officers).
As more fully discussed in the Compensation Discussion and Analysis, the Board reviews total compensation including all cash-based compensation and stock-based compensation. Because the table below reflects the SFAS 123R value of equity awards vesting in 2008 rather than those granted in 2008, these percentages cannot be derived using the amounts reflected in the table below. The grant date fair value of the equity awards made in 2008 is reported in the Grants of Plan-Based Awards table.
As discussed further under Compensation Discussion and Analysis above, the Company maintains certain benefits in connection with the termination of executive officers when a change in control of the Company occurs, including pursuant to the Change in Control Plan and the change in control provisions of the 2004 Plan. The table below shows potential payments if a Named Executive Officer is terminated other than for cause or due to a voluntary termination after a change of control event. The amounts assume that the change of control event and termination of employment were both effective on June 30, 2008, and are estimates that reflect the amounts that would be paid and the incremental value of benefits that would be enhanced through accelerated vesting of options. The value of equity awards is based on the closing market price of $66.37 on June 29, 2008, the last trading day before year end. The table also assumes that the executive has been paid in full for salary due for the fiscal year and has no deferred compensation, pro-rated perquisites payments or accrued vacation due for the year.
The following tables provide information on grants of plan-based awards in fiscal 2008 to the Named Executive Officers.
Outstanding Equity Awards at June 30, 2008
The following table provides information regarding stock options held by the Named Executive Officers as of June 30, 2008. Other than stock purchased pursuant to our employee stock purchase plan, stock options are the only type of equity award that has been granted to the Named Executive Officers during fiscal 2008.
The following table reports information regarding stock option exercises during fiscal 2008 by the Companys Named Executive Officers.
The Companys Compensation Committee is composed of four non-employee directors: Messrs. Anderson, McGeary, Pigliucci and Pope. No current member of the Compensation Committee is an officer or employee of the Company and no executive officer of the Company serves as a member of a compensation committee of any entity that has one or more executive officers serving as a member of the Compensation Committee.
We have not engaged in any transaction, or series of similar transactions, since June 30, 2007, nor is there any currently proposed transaction, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a participant, in which the amount involved exceeds $120,000 and in which any of the Companys directors or executive officers, members of their immediate family or any stockholder who owns more than 5% of our common stock had, or will have, a direct or indirect material interest.
On January 30, 2008 the Board of Directors adopted the Related Person Transaction Policy. Pursuant to this policy each related person transaction and any material amendment or modification to a related person transaction, must be reviewed and approved or ratified by any committee of the Board of Directors composed solely of independent directors who are not interested persons in the related person transaction (Reviewing Committee) or by the members of the Board of Directors who are not interested persons in the related person transaction and that any employment relationship or transaction involving an executive officer and any related compensation must be approved by the Compensation Committee of the Board or recommended by the Compensation Committee to the Board of Directors for its approval. When reviewing, approving or ratifying a related person transaction, the Reviewing Committee will examine several things, including the approximate dollar value of the transaction and all material facts about the related persons interest in, or relationship to, the transaction. If the related person transaction involves an outside director or nominee for director, the Reviewing Committee may also consider whether the transaction would compromise the directors status as an independent director, outside director or non-employee director under rules and regulations of the Nasdaq Stock Market, the Internal Revenue Code or the Securities Exchange Act of 1934, as amended. For purposes of the policy a related person transaction means any transaction (within the meaning of Item 404(a) of Regulation S-K involving the Company and any related person that would be required to be disclosed pursuant to Item 404(a).
The Board does not know of any other matters that may come before the meeting. If any other matters are properly presented to the meeting, it is the intention of the persons named in the accompanying proxy to vote, or otherwise to act, in accordance with their best judgment on such matters.
By Order of the Board of Directors
Gina M. Christopher
September 18, 2008
A copy of the Companys Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended June 30, 2008 is available without charge upon written request to: Investor Relations, Dionex Corporation, Evelyn Posey, 501 Mercury Drive, Sunnyvale, CA 94085.