This excerpt taken from the GMCR DEF 14A filed Jan 25, 2007.
The Compensation Committee of the Board is composed of outside directors, none of whom is currently or was formerly an officer or employee of the Company. The purpose of the Compensation Committee is to support the organizational performance of Green Mountain Coffee Roasters, Inc. through the alignment of executive compensation strategies, organizational development initiatives, human resources programs, and related plans. It is responsible for establishing and monitoring the compensation strategy, policies and plans for all executive officers of the Company and the compensation of the CEO. All the members of the Compensation Committee are independent under SEC rules and the NASDAQ listing requirements.
Section 162(m) of the Code generally disallows a tax deduction to public companies for certain compensation in excess of $1 million paid to a corporations chief executive officer and the four other most highly compensated executive officers. In adopting and administering executive compensation plans and arrangements, the Committee considers whether the deductibility of such compensation will be limited under Section 162(m) of the Code.
The Compensation Committees fiscal 2006 policy was to compensate the executive officers in ways that would: (1) encourage Company growth and profitability, (2) maintain market-competitive compensation, and (3) reward superior performance by the executive officers. The factors and criteria upon which the Committee determined the fiscal 2006 base compensation of its executive officers included external market benchmarking and internal assessment of each executive officers performance, experience, responsibilities and skills. The 2006 short-term bonuses were based upon the Company achieving certain earnings per share and operating profit targets. Payouts were made to senior management of the Company according to the plan.
The Committee believes that this approach aligns the interests of the Company and its stockholders.
The Compensation Committee was assisted by Bucks Consulting in its review and evaluation of executive compensation. The Chief Executive Officer recommended fiscal 2006 salary and bonus targets for each executive officer other than the Chief Executive Officer that reflected a benchmark to market, internal equity, and individual performance. The Committee accepted the recommendations.
The Committee established the salary and bonus for the Chief Executive Officer, which it also benchmarked to market compensation rates.
Submitted by the Fiscal 2006 Compensation Committee,
Barbara D. Carlini, Chair
William D. Davis
David E. Moran