This excerpt taken from the WPI DEF 14A filed Apr 7, 2008.
The Committee has engaged Towers Perrin, an independent global professional services consulting firm, to advise the committee on matters related to chief executive officer and other executive compensation. In this capacity, Towers Perrin conducts an annual benchmark review of our compensation program for our named executive officers and provides the Committee with relevant market data and structuring alternatives to consider when making compensation decisions.
Working with Towers Perrin, the Committee compares the elements of our total compensation program against programs provided for similarly situated executives at peer companies, as discussed more fully below. The Committee generally assesses the competitiveness of our target total direct compensation (salary, bonus and equity) for our named executive officers by comparing these targets with the 50th percentile of total direct compensation paid to similarly situated executives of our peer companies.
In February and June 2007 Towers Perrin conducted 2006 competitive pay assessments, to assist us in determining competitive compensation for fiscal 2007. In February 2007, Towers Perrin conducted a pay assessment of our chief executive officers compensation using peer group proxy data. For the purposes of this assessment, the peer group companies considered by Towers Perrin and the Committee consisted of:
Based on its assessment, Towers Perrin found that for 2006 our chief executive officers (a) base salary was within the competitive range at market 50th percentile, (b) target cash compensation was above the competitive range at market 50th percentile, (c) actual total cash compensation was below the competitive range at market 50th percentile, (d) target total direct compensation was within the competitive range at market 50th percentile and (e) actual total direct compensation was below the competitive range at market 50th percentile.
Mr. Bisaros compensation was not considered in the above analysis as he joined us after Towers Perrin conducted its competitive pay assessments.
In June 2007, Towers Perrin conducted a competitive pay assessment of the compensation of our other named executive using three sources of competitive pay data in its analysis presented to the Committee: (i) a pharmaceutical industry database including many of the major pharmaceutical and biotechnology companies; (ii) a 2005 survey cut of companies with over $1 billion in annual revenues and (iii) benchmarks from proxy-reported positions in 9 selected proxy peer group companies.
For the purposes of this assessment, the peer group companies considered by Towers Perrin and the Committee consisted of:
We removed Amgen from the proxy comparisons due to revenue and market capitalization differences. Certain members of the peer group reviewed are considered to be very similar to us in terms of market capitalization, number of employees, and overall prospects for short- and long-term growth. The compensation paid by these peer group companies to their executive officers is given greater weight in setting base salaries for our named executive officers. The Committee does not rely exclusively on statistical compilations and may vary on a case-by-case basis from our compensation target objectives as dictated by the experience of the individual and market factors.
In assessing competitiveness, Towers generally considered a named executive officers compensation to be within the competitive range relative to market if (a) base salary is within plus or minus 10% of market 50th percentile, (b) total cash compensation is within plus or minus 15% of market 50th percentile and (c) total direct compensation is within plus or minus 20% of market 50th percentile. Based on its pay assessment, Towers Perrin found that for 2006, relative to market 50th percentile:
Mr. Durands compensation was not considered in the above analysis as he joined us after Towers Perrin conducted its competitive pay assessments.