This excerpt taken from the DNB DEF 14A filed Mar 24, 2005.
Compensation of Directors
Only non-employee directors receive compensation for serving on the Board.
2004 Compensation Program for Non-Employee Directors
The Companys non-employee directors compensation program consisted of equity-based awards and cash, with equity representing at least 75% of total targeted compensation. Each non-employee director received an annual grant of stock options with a nominal grant value (based on a Black-Scholes methodology) of approximately $80,000 and an annual retainer of $75,000. Of the annual retainer, $40,000 was paid in restricted stock units (payable in shares of Common Stock upon vesting) and the balance in cash. Committee chairpersons each received an additional $5,000 annual cash retainer. No separate fees were paid for attendance at Board or Committee meetings. Directors had the ability to elect to convert the Committee
chairperson retainer and the cash portion of their annual retainer into additional restricted stock units at a 10% conversion premium or to defer such cash amounts in the directors deferred compensation plan. In addition, each new non-employee director received a one-time stock option grant with a nominal grant value of $35,000 upon his or her appointment to the Board.
Looking Ahead: 2005 Compensation Program for Non-Employee Directors
During 2004, a review of the Companys non-employee directors compensation program was conducted by an independent third-party consulting organization retained by the Compensation & Benefits Committee. The review was conducted to ensure that the non-employee directors compensation program was competitive with current market practice and trends, was in keeping with the principles of good governance, and was aligned with the interests of shareholders. As a result of the review, and based on the Compensation & Benefits Committees recommendation, the Board of Directors approved a change in the total level of non-employee director compensation and the proportion of equity included in total non-employee director compensation. To remain competitive with the market and to reflect the increased work of Committee chairpersons, the cash portion of the annual retainer has been increased from $35,000 to $50,000 and the annual cash retainer paid to Committee chairpersons has been increased to $15,000. In addition, the equity portion of the non-employee directors compensation program has been modified so that stock options will make up 50% of the total value of equity (or $60,000 out of $120,000) and restricted stock units will comprise the remaining 50%. Previously, stock options comprised two-thirds of the total value of equity (or $80,000 out of $120,000) and restricted stock units made up only one-third. This change in the equity mix is intended to reflect good governance practices with respect to director compensation. As in 2004, no separate fees will be paid for attendance at Board or Committee meetings. Directors may continue to elect to convert the Committee chairperson retainer and the cash portion of their annual retainer into additional restricted stock units at a 10% conversion premium or to defer such cash amounts in the directors deferred compensation plan. Each new non-employee director is expected to receive a one-time stock option grant with a nominal grant value of $35,000 upon his or her appointment to the Board.
Other Program Features
Non-employee directors are also provided other benefits by the Company during their tenure as a director as follows: reimbursement for reasonable Company-related travel and other expenses; travel accident insurance when traveling on Company business; and participation in the Companys charitable matching gift program (up to $4,000 per calendar year).
Director Stock Ownership Guidelines
Non-employee directors are required to hold no less than 50% of all shares or restricted stock units obtained through the non-employee director compensation program throughout their tenure as a director of the Company. The establishment of these guidelines is another component of the Companys efforts to align the interests of directors and shareholders.