Masco (MAS)

 

For comparative purposes, we generally focus on a select group of publicly traded companies. We believe these comparison companies are representative of the types of firms with which we compete for executive talent, although we believe we also compete with private equity and other non-public companies as well. The skills and responsibilities we require in our executives are generally not unique to our industries or markets. Nevertheless, a number of the representative public companies we have selected for comparison operate one or more lines of business that compete in our industries or markets. Other major factors we use to select this compensation “peer group” include revenues, net income and market capitalization. Our revenues, net income and market capitalization are generally within the mid-range of this peer group.

 

The peer companies are:

 

 

For each named executive officer, we compare the overall competitiveness of total compensation, as well as each major component of compensation and the mix of components, with the peer group. We do not target executive compensation to specific compensation levels at other companies. When we review the compensation reported by other companies, we note factors that may have influenced the compensation paid by them, such as contractual compensation commitments they may have made to their executives, their corporate financial performance and the performance of their publicly traded stock. The Committee also considers the aggregate compensation of the named executive officers as a percentage of our net income and compares our percentage to that of the peer group.

 

For comparative purposes, we generally focus on a select group of publicly traded companies. We believe these comparison companies are representative of the types of firms with which we compete for executive talent, although we believe we are increasingly competing with private equity and other non-public companies as well. The skills and responsibilities we require in our executives are generally not unique to our industries or markets. Nevertheless, a number of the representative public companies we have selected for comparison operate one or more lines of business that compete in our industries or markets, or are other manufacturing companies. Other major factors we use to select this compensation “peer group” include revenues, net income and market capitalization. Our revenues, net income and market capitalization are generally within the mid-range of those of this peer group.

 

The peer companies are:

 

 

For each named executive officer, we compare the overall competitiveness of total compensation, as well as each major component of compensation and the mix of components, with the peer group. We do not target executive compensation to specific compensation levels at other companies. When we review the compensation reported by other companies, we note factors that may have influenced the compensation paid by them, such as contractual compensation commitments they may have made to their executives, their corporate financial performance and the performance of their publicly traded stock. The Committee also considers the aggregate compensation of the named executive officers as a percentage of our net income and compares our percentage to that of the peer group.

 

For comparative purposes, we generally focus on a group of publicly traded companies. We believe these comparison companies are representative of the types of firms with which we compete for executive talent, although we believe we are increasingly competing with private equity and other non-public companies for executive talent. The skills and responsibilities we require of our executives are generally not unique to our industries or markets. However, a number of the representative public companies we have selected for comparison operate one or more lines of business that are in our industries or markets or are similar industrial companies. Other major factors we use to select this compensation “peer group” include revenues, net income and market capitalization. Our revenues, net income and market capitalization are generally within the mid-range of those of this peer group.

 

The peer companies are:

 

 

For each named executive officer, we compare our total compensation, as well as each major component of compensation and the mix of components, with the peer group for overall competitiveness. We do not target executive compensation to conform to specific compensation levels at other companies. When we review the compensation reported by other companies, we give limited consideration to factors that may have influenced the compensation paid by them, such as contractual compensation commitments they may have made to their executives, their corporate financial performance and the performance of their publicly traded stock. The Committee does consider the aggregate compensation of the named executive officers as a percentage of our net income and compares our percentage to that of the peer group.

 

We use a variety of resources in addition to publicly available data and published compensation surveys in order to establish compensation levels. Even though management utilizes the services of outside compensation experts, the Committee has exercised its authority to retain its own advisors and, accordingly, has separately engaged for the past four years Hewitt Associates, a global human resources consulting firm, to provide the Committee with independent advice on executive compensation matters. We have not requested and do not intend to request the firm to provide other services for the Company, other than the purchase of annual compensation surveys. The cost of these surveys in 2006 was $12,625. Hewitt Associates meets with the Committee in executive sessions without management, assists the Committee in its review of compensation by the peer group and advises the Committee on its implementation of our compensation philosophy. In addition, during the past year Hewitt Associates met with the full Board to discuss executive compensation issues.

 

During 2006, we continued our practice of providing to the Committee a tally sheet that comprehensively summarizes the various components of total compensation for our Chief Executive Officer, our Chief Financial Officer, the other named executive officers and selected other executives. The tally sheet, which is provided early in each calendar year, includes base salary, annual cash bonus, long-term incentive compensation, dividends on unvested shares of restricted stock, our cost for the foregoing and for perquisites and other benefits, and the annual cost under our qualified and non-qualified retirement plans.

 

Our annual cycle for reviewing the various components of compensation provides an opportunity to evaluate and recognize individual executive performance, while strengthening the link between pay and performance at least