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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 Company’s 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
38 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 Company’s
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 Committee’s 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 Company’s 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 Company’s efforts to align the interests of directors and
shareholders.
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