This excerpt taken from the HAS DEF 14A filed Apr 6, 2009.
Actual Performance Under the 2006 Contingent Stock Performance Awards
Shares earned under the July 2006 contingent stock performance awards were earned and paid to recipients in February of 2009.
In determining the 2008 equity award target values the Committee did not feel that past equity awards should have a significant impact. However, in conjunction with the Companys stock ownership guidelines, which are described below, the Committee is reviewing each executive officers progress in achieving their targeted stock ownership level as a criterion in establishing future target equity grant levels. To the extent that an officer is not making sufficient progress toward achieving and maintaining the targeted stock ownership level, equity grants to that officer in the future may be reduced.
The Company does not manage the timing of equity grants to attempt to give participants the benefit of material non-public information. Grants are made at times when the Company believes it is not in possession of material non-public information and when major subsequent announcements are not currently anticipated. Further, all option grants are made with an exercise price at or above the average of the high and low sales prices of the Companys common stock on the date of grant.
The Committee believes the equity compensation awards to the Companys executive officers are appropriate to properly incent these officers to achieve maximum performance, and to align their interests with those of the Companys shareholders, while not incenting the executive officers to take undue risks or otherwise take actions which are contrary to the best interests of the Company.
The stock option and performance share award grants to the Companys named executive officers in 2008 are reflected in the Grants of Plan-Based Awards table that follows this report. The grant date for the Companys yearly stock performance awards and options in fiscal 2008 to officers and other eligible employees was February 13, 2008.
The Company has only infrequently used restricted stock and restricted stock units as a reward and retention mechanism. Mr. Goldner was granted 57,787 restricted stock units in connection with his promotion to President and Chief Executive Officer in May 2008. In 2008, no other executive officers received grants of restricted stock or restricted stock units.
The Company has share ownership guidelines which apply to all employees at or above the Senior Vice President level. The share ownership guidelines establish target share ownership levels which executives are expected to achieve over a five-year period and then maintain, absent extenuating circumstances which are
approved by the Companys Human Resources Department, for as long as they remain with the Company. The target ownership levels are expressed as a percentage of the executives base salary and range from 50% of yearly base salary for certain Senior Vice Presidents to 500% of base salary for the Companys Chief Executive Officer.
In making the yearly equity grants the Committee specifically approves the grants for every member of the Companys senior management team, which includes every executive officer. The Committee also approves the total equity grant pool for all other eligible employees of the Company, with the individual grants from that pool being made from a list prepared by the Companys senior management which is available for the Committees review. Other than the annual equity grants, off-cycle equity grants are made during the year generally only in the case of new hires or in connection with significant promotions. All of these off-cycle grants are also reviewed and approved by the Committee.
In addition to receipt of salary, management incentive awards and equity compensation, the Companys U.S. based officers also participate in certain employee benefit programs provided by the Company.
Beginning in 2008, the Company provides retirement benefits to it employees primarily through the 401(k) Retirement Savings Plan (the 401(k) Plan) and the Supplemental Benefit Retirement Plan (the Supplemental Plan). The Companys Pension Plan (the Pension Plan) was frozen effective December 31, 2007. The enhanced 401(k) Plan and Supplemental Plan, which are described starting on page 33 of this proxy statement, provide company matching contributions, an annual company contribution of 3% of aggregate salary and bonus and a transition contribution ranging from 1% to 9% for the years 2008 through 2012 for participants meeting certain age and service requirements. In lieu of the annual company and transition contributions, Mr. Verrecchia and Mr. Hargreaves receive certain retirement benefits discussed below. Other executive officers are eligible to participate in the 401(k) Plan and the Supplemental Plan on the same basis as all other U.S. Hasbro employees.
Executive officers hired prior to December 31, 2007, continue to participate in the Pension Plan and the pension portion of the Supplemental Plan, which is described starting on page 33 of this proxy statement, but, except for Mr. Hargreaves who is discussed below, will not accrue additional benefits after December 31, 2007, since these plans are frozen.
The Supplemental Plan is intended to provide a competitive benefit for executive officers whose employer-provided pension benefits and retirement contributions would otherwise be limited. However, the Supplemental Plan is designed only to provide the benefit which the executive would have accrued under the Companys Pension Plan and 401(k) Plan if the Code limits had not applied. It does not further enhance those benefits.
The amount of the Companys contributions to the named executive officers under both the 401(k) Plan and the Supplemental Plan (401(k)), are included in the All Other Compensation column of the Summary Compensation Table that follows this report.
Mr. Verrecchia is party to a Post-Employment Agreement with the Company which provides certain enhanced retirement benefits. The Post-Employment Agreement is described starting on page 35 of this proxy statement. In light of the significant reduction in projected retirement income resulting from the retirement program redesign, the Company elected to provide Mr. Hargreaves, who has been with the Company for 26 years, with a retirement agreement which effectively grandfathered for Mr. Hargreaves the Companys retirement program as it was in effect prior to January 1, 2008. Mr. Hargreaves retirement agreement is also described starting on page 35 of this proxy statement.
The executive officers of the Company are eligible for life insurance benefits on the terms applicable to the Companys other employees. In addition, prior to his retirement from the Company on December 31, 2008, Mr. Verrecchia was provided with executive life insurance. The cost of the Companys premiums for executive life insurance programs for Mr. Verrecchia is included in the All Other Compensation column of the Summary Compensation Table.
The Companys executive officers participate in the same medical and dental benefit plans as are provided to the Companys other employees.
Executive officers are also eligible to participate in the Companys Nonqualified Deferred Compensation Plan, which is available to all of the Companys employees who are in band 40 (director level) or above whose compensation is equal to or greater than $105,000 for 2008 ($110,000 for 2009). The Nonqualified Deferred Compensation Plan allows participants to defer compensation into various hypothetical investment vehicles, the performance of which determines the return on compensation deferred under the plan. Potential investment choices include the Companys Common Stock, as well as other equity indices. Earnings on compensation deferred by the executive officers do not exceed the market returns on the relevant investments and are the same as the returns earned by other non-executive officer employees deferring compensation into the applicable investment vehicles.
The Company reimburses designated executive officers for the cost of certain tax, legal and financial planning services they obtain from third parties provided that such costs are within the limits established by the Company. The annual limit on these costs for the Chief Executive Officer is $10,000, and for the other designated executive officers is $5,000. The cost to the Company for this reimbursement to certain of the named executive officers is included in the All Other Compensation column of the Summary Compensation Table.