PolyOne Corporation DEF 14A
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant
þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Under
Rule 14a-12
POLYONE
CORPORATION
(Name of Registrant as Specified In
Its Certificate)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the
appropriate box):
þ No
fee required.
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Fee computed on table below per
Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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o Fee paid previously
with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(4) Date Filed:
POLYONE
CORPORATION
Notice of 2007
Annual Meeting of
Shareholders
and Proxy Statement
POLYONE
CORPORATION
NOTICE
OF ANNUAL MEETING
OF
SHAREHOLDERS
The Annual Meeting of Shareholders of PolyOne Corporation will
be held at The Forum Conference and Education Center, 1375
E. Ninth Street, Cleveland, Ohio at 9:00 a.m. on
Thursday, May 10, 2007. The purposes of the meeting are:
1. To elect Directors;
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2.
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To ratify the appointment of Ernst & Young LLP as
PolyOne Corporations independent registered public
accounting firm for the fiscal year ending December 31,
2007; and
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3.
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To consider and transact any other business that may properly
come before the meeting.
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Shareholders of record at the close of business on
March 12, 2007 are entitled to notice of and to vote at the
meeting.
For the Board of Directors
Wendy C. Shiba
Senior Vice President, Chief Legal
Officer and Secretary
March 21, 2007
1
POLYONE
CORPORATION
PolyOne Center
33587 Walker Road
Avon Lake, Ohio 44012
PROXY
STATEMENT
Dated March 21, 2007
Our Board of Directors respectfully requests your proxy for use
at the Annual Meeting of Shareholders to be held at The Forum
Conference and Education Center, 1375 E. Ninth Street,
Cleveland, Ohio at 9:00 a.m. on Thursday, May 10,
2007, and at any adjournments of that meeting. This proxy
statement is to inform you about the matters to be acted upon at
the meeting.
If you attend the meeting, you may vote your shares by ballot.
If you do not attend, your shares may still be voted at the
meeting if you sign and return the enclosed proxy card. Common
shares represented by a properly signed card will be voted in
accordance with the choices marked on the card. If no choices
are marked, the shares will be voted to elect the nominees
listed on pages 3 through 4 of this proxy statement and to
ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2007. You may revoke your proxy
before it is voted by giving notice to us in writing or orally
at the meeting. Persons entitled to direct the vote of shares
held by the following plans will receive a separate voting
instruction card: The PolyOne Retirement Savings Plan, DH
Compounding Company Savings and Retirement Plan and Trust and
PolyOne Canada Inc. Retirement Plan. If you receive a separate
voting instruction card for one of these plans, you must sign
and return the card as indicated on the card in order to
instruct the trustee on how to vote the shares held under the
plan. You may revoke your voting instruction card before the
trustee votes the shares held by it by giving notice in writing
to the trustee.
Shareholders may also submit their proxies by telephone or over
the Internet. The telephone and Internet voting procedures are
designed to authenticate votes cast by use of a personal
identification number. These procedures allow shareholders to
appoint a proxy to vote their shares and to confirm that their
instructions have been properly recorded. Instructions for
voting by telephone and over the Internet are printed on the
proxy cards.
We are mailing this proxy statement and the enclosed proxy card
and, if applicable, the voting instruction card, to shareholders
on or about March 26, 2007. Our headquarters are located at
PolyOne Center, 33587 Walker Road, Avon Lake, Ohio 44012 and our
telephone number is
(440) 930-1000.
2
PROPOSAL 1
ELECTION OF DIRECTORS
Our Board of Directors currently consists of ten Directors. Each
Director serves for a one-year term and until a successor is
duly elected and qualified, subject to the Directors
earlier death, retirement or resignation. Our Corporate
Governance Guidelines provide that all non-employee Directors
will retire from the Board not later than the first Annual
Meeting of Shareholders following the Directors
70th birthday. In accordance with these Guidelines,
Mr. Embry will retire from the Board at the 2007 Annual
Meeting of Shareholders. Following Mr. Embrys
retirement, our Board will consist of nine Directors.
A shareholder who wishes to suggest a Director candidate for
consideration by the Compensation and Governance Committee must
provide written notice to our Secretary in accordance with the
procedures specified in Regulation 12 of our Regulations.
Generally, the Secretary must receive the notice not less than
60 nor more than 90 days prior to the first anniversary of
the date on which we first mailed our proxy materials for the
preceding years annual meeting. The notice must set forth,
as to each nominee, the name, age, principal occupations and
employment during the past five years, name and principal
business of any corporation or other organization in which such
occupations and employment were carried on, and a brief
description of any arrangement or understanding between such
person and any others pursuant to which such person was selected
as a nominee. The notice must include the nominees signed
consent to serve as a Director if elected. The notice must set
forth the name and address of, and the number of our common
shares owned by, the shareholder giving the notice and the
beneficial owner on whose behalf the nomination is made and any
other shareholders believed to be supporting such nominee.
Following are the nominees for election as Directors for terms
expiring in 2008 and a description of the business experience of
each nominee. Each of the nominees is a current member of the
Board. The reference below each Directors name to the term
of service as a Director includes the period during which the
Director served as a Director of The Geon Company
(Geon) or M.A. Hanna Company (M.A.
Hanna), each one of our predecessors. The information is
current as of March 21, 2007.
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J. Douglas Campbell
Director since 1993
Age 65
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Retired Chairman and Chief
Executive Officer of ArrMaz Custom Chemicals, Inc., a specialty
mining and asphalt additives and reagents producer.
Mr. Campbell served in this capacity from December 2003
until the company was sold in July 2006. Mr. Campbell
served as President and Chief Executive Officer and was a
Director of Arcadian Corporation, a nitrogen chemicals and
fertilizer manufacturer, from December 1992 until the company
was sold in 1997.
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Carol A. Cartwright
Director since 1994
Age 65
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Retired President of Kent State
University, a public higher education institution.
Ms. Cartwright served in this capacity from 1991 until her
retirement in July 2006. Ms. Cartwright serves on the
Boards of Directors of KeyCorp, FirstEnergy and The Davey Tree
Expert Company.
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Gale Duff-Bloom
Director since 1994
Age 67
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Retired President of Company
Communications and Corporate Image of J.C. Penney Company, Inc.,
a major retailer. Ms. Duff-Bloom served in this capacity
from June 1999 until her retirement in April 2000. From
1996-June 1999, Ms. Duff-Bloom served as President of
Marketing and Company Communications of J.C. Penney.
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Richard H. Fearon
Director since 2004
Age 51
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Executive Vice President, Chief
Financial and Planning Officer of Eaton Corporation, a global
manufacturing company, since April 2002. Mr. Fearon served
as a Partner of Willow Place Partners LLC from 2001-2002 and was
the Senior Vice President Corporate Development for
Transamerica Corporation from 1995-2000.
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Robert A. Garda
Director since 1998
Age 68
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Retired Director of
McKinsey & Company, Inc., a management consulting firm.
Mr. Garda served in this capacity from 1978-1994. He served
as an
Executive-in-Residence
of The Fuqua School of Business, Duke University, from
1997-2005, as an independent consultant from 1995-1997 and as
President and Chief Executive Officer of Aladdin Industries from
1994-1995. Mr. Garda serves on the Boards of Directors of
Edge Seal Technologies and Ryan Herco Flow Solutions.
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Gordon D. Harnett
Director since 1997
Age 64
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Retired Chairman, President and
Chief Executive Officer of Brush Engineered Materials Inc., an
international supplier and producer of high performance
engineered materials. Mr. Harnett served in this capacity
from 1991 until his retirement in May 2006. Mr. Harnett
serves on the Boards of Directors of The Lubrizol Corporation
and EnPro Industries, Inc.
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Edward J. Mooney
Director since 2006
Age 65
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Retired Chairman and Chief
Executive Officer of Nalco Chemical Company, a specialty
chemicals company. Mr. Mooney served in this capacity from
1994-2000. Mr. Mooney also served as Déléqué
Général North America, of Suez Lyonnaise
des Eaux from 2000-2001, following its acquisition of Nalco.
Mr. Mooney serves on the Boards of Directors of FMC
Corporation, FMC Technologies, Inc., Northern Trust Corporation
and Cabot Microelectronics Corporation.
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Stephen D. Newlin
Director since 2006
Age 54
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Chairman, President and Chief
Executive Officer of PolyOne since February 2006.
Mr. Newlin served as President Industrial
Sector of Ecolab, Inc., a global developer and marketer of
cleaning and sanitizing specialty chemicals, products and
services from 2003-2006. Mr. Newlin served as President and
a director of Nalco Chemical Company, a manufacturer of
specialty chemicals, services and systems, from 1998-2001 and
was Chief Operating Officer and Vice Chairman from 2000-2001.
Mr. Newlin serves on the Board of Directors of Black Hills
Corporation.
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Farah M. Walters
Director since 1998
Age 62
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Lead Director of our Board of
Directors since May 2006 and President and Chief Executive
Officer of QualHealth, LLC, a healthcare consulting firm that
designs healthcare delivery models, since 2005. From 1992 until
her retirement in June 2002, Ms. Walters was the President
and Chief Executive Officer of University Hospitals Health
System and University Hospitals of Cleveland.
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4
CORPORATE
GOVERNANCE AND BOARD MATTERS
Director
Independence
Our Corporate Governance Guidelines require that a substantial
majority of the members of our Board of Directors be
independent under the listing standards of the New
York Stock Exchange (NYSE). To be considered
independent, the Board of Directors must make an
affirmative determination that the Director has no material
relationship with us other than as a Director, either directly
or indirectly (such as an officer, partner or shareholder of
another entity that has a relationship with us or any of our
subsidiaries). In each case, the Board of Directors considers
all relevant facts and circumstances in making an independence
determination.
A Director will not be deemed to be independent if,
within the preceding three years:
(a) the Director was our employee, or an immediate family
member of the Director was either our executive officer or the
executive officer of any of our affiliates;
(b) the Director received, or an immediate family member of
the Director received, more than $100,000 per year in
direct compensation from us, other than director and committee
fees and pension or other forms of deferred compensation for
prior service (provided such compensation was not contingent in
any way on continued service);
(c) the Director, or an immediate family member of the
Director, is a current partner of Ernst & Young
LLP, our external auditor or within the last three years was a
partner or employee of Ernst & Young LLP and personally
worked on our audit during that time;
(d) the Director was employed, or an immediate family
member of the Director was employed, as an executive officer of
another company where any of our present executive officers
serve on that companys compensation committee; or
(e) the Director was an executive officer or an employee,
or an immediate family member of the Director was an executive
officer, of a company that makes payments to, or receives
payments from, us for property or services in an amount which,
in any single fiscal year, exceeds the greater of $1,000,000, or
2% of such other companys consolidated gross revenues.
An immediate family member includes a
Directors spouse, parents, children, siblings, mothers and
fathers-in-law,
sons and
daughters-in-law,
brothers and
sisters-in-law,
and anyone (other than domestic employees) who shares such
Directors home.
A Directors service as an executive officer of a
not-for-profit
organization will not impair his or her independence if, within
the preceding three years, our charitable contributions to the
organization in any single fiscal year, in the aggregate, did
not exceed the greater of $1,000,000 or 2% of that
organizations consolidated gross revenues.
The NYSE independent director listing standards also
provide that employment as an interim Chairman, Chief Executive
Officer or other officer will not disqualify a director from
being considered independent following that employment.
William F. Patient, our former Director, ceased serving as
interim Chief Executive Officer on February 21, 2006.
The Board of Directors determined that J. Douglas Campbell,
Carol A. Cartwright, Gale Duff-Bloom, Wayne R. Embry,
Richard H. Fearon, Robert A. Garda, Gordon
D. Harnett, Edward J. Mooney, William F. Patient,
and Farah M. Walters are independent under the NYSE
independent director listing standards. In making
this determination, the Board reviewed significant transactions,
arrangements or relationships that a Director might have with
our customers or suppliers.
5
Lead
Director
Our independent Directors meet regularly in executive sessions.
In 2006, the Board of Directors amended our Corporate Governance
Guidelines to allow the independent directors to designate a
lead director to preside at executive sessions. The Lead
Director acts as the key liaison between the independent
directors and the Chief Executive Officer and is responsible for
coordinating the activities of the other independent directors
and for performing various other duties as may from time to time
be determined by the independent directors. In May 2006, the
Board elected Ms. Walters to serve as the Lead Director.
Mr. Patient served as our Lead Director from February 2006
until his retirement in May 2006.
Board
Attendance
The Board met eight times during 2006, the calendar year being
our fiscal year. Each Director is expected to attend the Annual
Meeting of Shareholders. In 2006, all of our Directors attended
the Annual Meeting of Shareholders.
Committees
of the Board of Directors; Attendance
As of the date of this proxy statement, our Board has ten
directors and the following four committees: the Audit
Committee, the Compensation and Governance Committee, the
Environmental, Health & Safety Committee and the
Financial Policy Committee. The following table sets forth the
membership of the standing committees of our Board of Directors,
as of the date of this proxy statement, and the number of times
each committee met in 2006. The current function of each
committee is described below.
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Compensation &
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Environmental,
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Governance
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Health &
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Financial
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Director
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Audit Committee
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Committee
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Safety Committee
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Policy Committee
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Mr. Campbell
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X
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X
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X
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*
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Ms. Cartwright
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X
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X
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Ms. Duff-Bloom
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X
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X
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X
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Mr.
Embry(1)
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X
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X
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*
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X
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Mr. Fearon
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X
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X
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Mr. Garda
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X
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X
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Mr. Harnett
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X
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*
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X
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Mr. Mooney
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X
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X
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Mr. Newlin
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X
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X
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Ms. Walters
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X
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*
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X
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Number of Meetings
in 2006
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9
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10
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2
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5
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X Member
* Chairperson
(1) Mr. Embry will retire from the Board at the
2007 Annual Meeting of Shareholders.
The Audit Committee meets with appropriate financial and legal
personnel and independent auditors to review our corporate
accounting, internal controls, financial reporting and
compliance
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with legal and regulatory requirements. The Committee exercises
oversight of our independent auditors, internal auditors and
financial management. The Audit Committee appoints the
independent auditors to serve as auditors in examining our
corporate accounts. Our common shares are listed on the New York
Stock Exchange and are governed by its listing standards. All
members of the Audit Committee meet the financial literacy and
independence requirements as set forth in the New York Stock
Exchange listing standards. The Board of Directors has
determined that Mr. Harnett meets the requirements of an
audit committee financial expert as defined by the
Securities and Exchange Commission.
The Compensation and Governance Committee reviews and approves
the compensation, benefits and perquisites afforded our
executive officers and other highly-compensated personnel. The
Committee has similar responsibilities with respect to
non-employee Directors, except that the Committees actions
and determinations are subject to the approval of the Board of
Directors. The Committee also has oversight responsibilities for
all of our broad-based compensation and benefit programs and
provides policy guidance and oversight on selected human
resource policies and practices. To help it perform its
responsibilities, the Committee makes use of PolyOne resources,
including members of senior management in our human resources,
legal and finance departments. In addition, the Committee
directly engages the resources of Towers Perrin as an
independent outside compensation consultant (the
Consultant) to assist the Committee in assessing the
competitiveness and overall appropriateness of our executive
compensation programs. In 2006, the Committee, assisted by the
Consultant, analyzed competitive market compensation data
relating to salary, annual incentive and long-term incentive. In
analyzing competitive market data, the Committee reviewed data
from a peer group of similarly-sized U.S. chemical
companies and reviewed data from the Consultants
Compensation Data Bank and other published surveys. The
Consultant then assisted the Committee in benchmarking base
salaries and annual and long-term incentive targets to
approximate the market median. The Consultant, assisted by our
human resources department, also prepared tally sheets to
provide the Committee with information regarding our executive
officers total annual compensation, termination benefits
and wealth accumulation. More detailed information about the
compensation awarded to our executive officers in 2006 is
provided in the Compensation Discussion and Analysis
section of this proxy statement. The Consultant maintains
regular contact with the Committee and interacts with management
to gather the data needed to prepare reports for Committee
review.
The Committee recommends to the Board of Directors candidates
for nomination as Directors, and the Committee advises the Board
with respect to governance issues and directorship practices,
reviews succession planning for the Chief Executive Officer and
other executive officers and oversees the process by which the
Board annually evaluates the performance of the Chief Executive
Officer. All members of the Compensation and Governance
Committee have been determined to be independent as defined by
the New York Stock Exchange listing standards.
The Compensation and Governance Committee will consider
shareholder suggestions for nominees for election to our Board
of Directors as described on page 3. The Committee uses a
variety of methods for identifying and evaluating nominees for
Directors, including third-party search firms, recommendations
from current Board members and recommendations from
shareholders. Nominees for election to the Board of Directors
are selected on the basis of the following criteria:
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Business or professional experience;
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Knowledge and skill in certain specialty areas such as
accounting and finance, international markets, physical sciences
and technology or the polymer or chemical industry;
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Personal characteristics such as ethical standards, integrity,
judgment, leadership and the ability to devote sufficient time
to our affairs;
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Substantial accomplishments with demonstrated leadership
capabilities;
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Freedom from outside interests that conflict with our best
interests;
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The diversity of backgrounds and experience each member will
bring to the Board of Directors; and
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Our needs from time to time.
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The Committee also considers such other relevant factors as it
deems appropriate, including the current composition of the
Board, the balance of management and independent directors, the
need for Audit Committee expertise and the evaluations of other
prospective nominees. The Committee has established these
criteria that any Director nominee, whether suggested by a
shareholder or otherwise, should satisfy. A nominee for election
to the Board who is suggested by a shareholder will be evaluated
by the Committee in the same manner as any other nominee for
election to the Board. Finally, if the Committee determines that
a candidate should be nominated for election to the Board, the
Committee will present its findings and recommendation to the
full Board for approval. Edward J. Mooney, who is standing for
election by the shareholders for the first time, was recommended
as a Board member by the Committee.
In the past, the Committee has used Christian & Timbers
as a third-party search firm, at our expense, to assist in
identifying qualified nominees for the Board. The search firm
was asked to identify possible candidates who meet the minimum
and desired qualifications, to interview and screen such
candidates (including conducting appropriate background and
reference checks), to act as a liaison among the Board, the
Committee and each candidate during the screening and evaluation
process, and thereafter to be available for consultation as
needed by the Committee. The Committee did not use the services
of Christian & Timbers in 2006, but has asked them, in
2007, to assist it again in identifying potential nominees to
the Board.
The Environmental, Health and Safety Committee exercises
oversight with respect to our environmental, health, safety,
security and product stewardship policies and practices and our
compliance with related laws and regulations.
The Financial Policy Committee exercises oversight with respect
to our capital structure, borrowing and repayment of funds,
financial policies, management of foreign exchange risk and
other matters of risk management, banking relationships and
other financial matters.
The Board of Directors has adopted a written charter for each of
the standing committees of the Board of Directors. These
charters are posted and available on our investor relations
internet website at www.polyone.com under the Corporate
Governance page. Shareholders may request copies of these
charters, free of charge, by writing to PolyOne Corporation,
33587 Walker Road, Avon Lake, Ohio 44012, Attention: Secretary,
or by calling
(440) 930-1000.
The Board and each Committee conduct an annual self-evaluation.
During 2006, each incumbent Director attended at least 75% of
the meetings of the Board of Directors and of the Committees on
which he or she served.
Code of
Ethics, Code of Conduct and Corporate Governance
Guidelines
In accordance with applicable NYSE Listing Standards and
Securities and Exchange Commission Regulations, the Board of
Directors has adopted a Code of Ethics, Code of Conduct and
Corporate Governance Guidelines. These are also posted and
available on our investor relations
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internet website at www.polyone.com under the Corporate
Governance page. Shareholders may request copies of these
corporate governance documents, free of charge, by writing to
PolyOne Corporation, 33587 Walker Road, Avon Lake, Ohio 44012,
Attention: Secretary, or by calling
(440) 930-1000.
Communication
with Board of Directors
Shareholders and other interested parties interested in
communicating directly with the Board of Directors as a group,
the non-management Directors as a group, or with any individual
Director may do so by writing to the Secretary, PolyOne
Corporation, 33587 Walker Road, Avon Lake, Ohio 44012. The
mailing envelope and letter must contain a clear notation
indicating that the enclosed letter is either a
Shareholder-Board of Directors Communication or an
Interested Party-Board of Directors Communication,
as appropriate.
The Secretary will review all such correspondence and regularly
forward to the Board of Directors a log and summary of all such
correspondence and copies of all correspondence that, in the
opinion of the Secretary, deals with the functions of the Board
or Committees of the Board or that she otherwise determines
requires their attention. Directors may at any time review a log
of all correspondence we receive that is addressed to members of
the Board and request copies of any such correspondence.
Concerns relating to accounting, internal controls or auditing
matters are immediately brought to the attention of our internal
audit department and handled in accordance with procedures
established by the Audit Committee for such matters.
Director
Compensation
We pay our non-employee Directors an annual retainer of
$100,000, quarterly in arrears, consisting of a cash retainer of
$50,000 and an award of $50,000 in value of fully vested common
shares. We grant the shares quarterly and determine the number
of shares to be granted by dividing the dollar value by the
arithmetic average of the high and low stock price on the last
trading day of each quarter. We pay individual meeting fees only
as follows: fees of $2,000 for each unscheduled Board and
committee meeting attended and fees of $1,000 for participation
in each unscheduled significant telephonic Board and committee
meeting. In addition, the Chairpersons of each committee receive
a fixed annual cash retainer, payable quarterly, as follows:
$5,000 for Environmental, Health and Safety and Financial Policy
Committees and $10,000 for Audit and Compensation and Governance
Committees. We reimburse Directors for their expenses associated
with each meeting attended.
We grant each new non-employee Director at the time of his or
her initial election or appointment as a Director an award of
8,500 common shares. The share awards made to Directors are
awarded under either our Deferred Compensation Plan for
Non-Employee Directors or our 2005 Equity and Performance
Incentive Plan.
Directors who are not our employees may defer payment of all or
a portion of their compensation as a Director under our Deferred
Compensation Plan for Non-Employee Directors. A Director may
defer the compensation as cash or elect to have it converted
into our common shares at a rate equal to 125% of the cash
compensation amount. Deferred compensation, whether in the form
of cash or common shares, is held in trust for the participating
Directors. Interest is earned on the cash amounts and dividends,
if any, on the common shares deferred accrue for the benefit of
the participating Directors.
9
2006
DIRECTOR COMPENSATION
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
|
Stock
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
in
Cash(3)
|
|
|
|
Awards(4)(6)
|
|
|
|
Awards(6)
|
|
|
|
Total
|
|
Name
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
J.D. Campbell
|
|
|
$
|
62,000
|
|
|
|
$
|
50,000
|
|
|
|
|
|
|
|
|
$
|
112,000
|
|
C.A. Cartwright
|
|
|
|
56,000
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
106,000
|
|
G. Duff-Bloom
|
|
|
|
57,000
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
107,000
|
|
W.R. Embry
|
|
|
|
60,000
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
110,000
|
|
R.H. Fearon
|
|
|
|
59,000
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|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
109,000
|
|
R.A. Garda
|
|
|
|
59,000
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
109,000
|
|
G.D. Harnett
|
|
|
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68,000
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|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
118,000
|
|
E.J.
Mooney(1)
|
|
|
|
4,167
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|
|
|
|
71,359
|
(5)
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|
|
|
|
|
|
|
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75,526
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|
W.F.
Patient(2)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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F.M. Walters
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|
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67,000
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|
|
|
|
50,000
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|
|
|
|
|
|
|
|
|
117,000
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
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(1)
|
|
Mr. Mooney was elected as a
Director on December 6, 2006.
|
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(2)
|
|
Mr. Patient served as our
Chairman, President and Chief Executive Officer until his
retirement from these positions on February 21, 2006.
Mr. Patient retired as a member of our Board of Directors
on May 25, 2006. All compensation received by
Mr. Patient (including compensation for serving as a
Director) is reported in the 2006 Summary Compensation Table
contained in this proxy statement.
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(3)
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|
Non-employee Directors may defer
payment of all or a portion of their cash compensation as a
Director (cash retainer of $50,000, meeting fees, and chair
fees) under our Deferred Compensation Plan for Non-Employee
Directors. A Director may defer his or her compensation as cash
or elect to have it converted into our common shares at a rate
equal to 125% of the cash compensation amount. The following
have elected to defer all or a portion of their cash
compensation into our common shares and have received the 25%
premium on the amount deferred into stock: Mr. Campbell
($15,500 in premiums); Ms. Cartwright ($14,000 in
premiums); Ms. Duff-Bloom ($10,688 in premiums);
Mr. Embry ($7,500 in premiums); Mr. Garda ($7,375 in
premiums); Mr. Harnett ($17,000 in premiums);
Mr. Mooney ($1,042 in premiums); and Ms. Walters
($8,375 in premiums).
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(4)
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|
We pay non-employee Directors an
annual award of $50,000 in value of fully vested common shares,
which the Directors may elect to defer under our Deferred
Compensation Plan for Non-Employee Directors. We grant the
shares quarterly and determine the number of shares to be
granted by dividing the dollar value by the arithmetic average
of the high and low stock price on the last trading day of each
quarter. We used the following quarterly fair market values in
calculating the number of shares: March 31, 2006- $9.180;
June 30, 2006- $8.740; September 29, 2006- $8.360; and
December 29, 2006- $7.495.
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(5)
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Mr. Mooney received a one
time grant of 8,500 common shares upon his election to the Board
of Directors. The dollar amount recognized for financial
statement reporting purposes for fiscal year 2006 (i.e.,
the fair market value on the date of grant) is included in this
number.
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10
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(6)
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In 2006, no grants, exercises or
vesting of stock options occurred with respect to our Directors.
The number of outstanding stock options held by each
Non-Employee Director at the end of the fiscal year is set forth
in the following table. All of these options are fully
exercisable. In addition, the number of fully-vested deferred
shares held in an account for each Director at the end of the
fiscal year is set forth in the following table.
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|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Securities Underlying
|
|
|
|
Deferred
|
|
|
|
|
Unexercised Options
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|
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Shares
|
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Name
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|
|
(#)
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|
|
(#)
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J.D. Campbell
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48,000
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102,933
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C.A. Cartwright
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39,000
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68,471
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G. Duff-Bloom
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48,000
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83,559
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W.R. Embry
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39,000
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32,764
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R.H. Fearon
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15,000
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0
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R.A. Garda
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61,500
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36,892
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G.D. Harnett
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61,500
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89,115
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E.J. Mooney
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0
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9,749
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W.F. Patient
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0
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0
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F.M. Walters
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54,000
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84,698
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|
|
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|
11
BENEFICIAL
OWNERSHIP OF COMMON SHARES
The following table shows the number of our common shares
beneficially owned on March 12, 2007 (including options
exercisable within 60 days of that date) by each of our
Directors and nominees, any Director who served during 2006,
each of the executive officers named in the 2006 Summary
Compensation Table on page 29 and by all Directors and
executive officers as a group.
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Number of
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Right to
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Total
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Shares
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Acquire
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Beneficial
|
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Name
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Owned(1)
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|
Shares(3)
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|
|
Ownership
|
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J. Douglas Campbell
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|
104,989(2)
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48,000
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152,989
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Carol A. Cartwright
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87,284(2)
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39,000
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126,284
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Gale Duff-Bloom
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|
84,057(2)
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48,000
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|
|
132,057
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Wayne R. Embry
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|
43,311(2)
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39,000
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82,311
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Richard H. Fearon
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|
13,437(2)
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|
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15,000
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28,437
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Robert A. Garda
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|
|
70,786(2)
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|
|
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61,500
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|
|
|
132,286
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|
Gordon D. Harnett
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|
|
105,926(2)
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|
|
61,500
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|
|
|
167,426
|
|
Edward J. Mooney
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|
|
9,749(2)
|
|
|
|
0
|
|
|
|
9,749
|
|
Farah M. Walters
|
|
|
85,754(2)
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|
|
|
54,000
|
|
|
|
139,754
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|
Stephen D. Newlin
|
|
|
219,300
|
|
|
|
0
|
|
|
|
219,300
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William F. Patient
|
|
|
81,431
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|
|
146,000
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|
|
|
227,431
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|
W. David Wilson
|
|
|
128,976
|
|
|
|
344,136
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|
|
|
473,112
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|
Wendy C. Shiba
|
|
|
67,927
|
|
|
|
116,590
|
|
|
|
184,517
|
|
Kenneth M. Smith
|
|
|
68,487
|
|
|
|
160,892
|
|
|
|
229,379
|
|
Bernard P. Baert
|
|
|
21,000
|
|
|
|
17,072
|
|
|
|
38,072
|
|
18 Directors and executive
officers as a group
|
|
|
1,298,870
|
|
|
|
1,362,132
|
|
|
|
2,661,002
|
|
|
|
|
(1)
|
|
Except as otherwise stated in the
following notes, beneficial ownership of the shares held by each
individual consists of sole voting power and sole investment
power, or of voting power and investment power that is shared
with the spouse of the individual. It includes approximate
number of shares credited to the named executives accounts
in our Retirement Savings Plan, a tax-qualified defined
contribution plan. The number of common shares allocated to
these individuals is provided by the savings plan administrator
in a statement for the period ending December 31, 2006,
based on the market value of the applicable plan units held by
the individual. Additional common shares may have been allocated
to the accounts of participants in the savings plan since the
date of the last statements received from the plan
administrator. No Director, nominee or executive officer
beneficially owned, on March 12, 2007, more than 1% of our
outstanding common shares. As of that date, the Directors and
executive officers as a group beneficially owned approximately
2.82% of the outstanding common shares.
|
|
(2)
|
|
With respect to the Directors,
beneficial ownership includes shares held under the
Directors Deferred Compensation Plan as follows: J.D.
Campbell, 102,933 shares; C.A. Cartwright,
68,471 shares; G. Duff-Bloom, 83,559 shares; W.R.
Embry, 32,764 shares; R.H. Fearon, 0 shares; R.A.
Garda, 36,892 shares; G.D. Harnett, 89,115 shares; E.
J. Mooney, 9,749 shares; and F.M. Walters,
84,698 shares.
|
|
(3)
|
|
Includes shares the individuals
have a right to acquire on or before May 11, 2007. The
executive officers named in the table (the Named Executive
Officers) also have the right to acquire common shares
upon the exercise of vested stock-settled stock appreciation
rights as follows: Mr. Newlin, 116,600 SARs;
Mr. Wilson, 42,000 SARs; Ms. Shiba, 32,000 SARs;
Mr. Smith, 29,800 SARs; and Mr. Baert, 25,000 SARs.
The number of shares to be acquired cannot be determined because
it depends on the market value of our common shares on the date
of exercise and the applicable withholding taxes.
|
12
The following table shows information relating to all persons
who, as of March 12, 2007, were known by us to beneficially
own more than five percent of our outstanding common shares
based on information provided in Schedule 13Gs filed with
the Securities and Exchange Commission (the
Commission):
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
% of
|
|
Name and Address
|
|
Shares
|
|
|
Shares
|
|
|
Barclays Global Investors, NA
|
|
|
6,639,933
|
(1)
|
|
|
7.2
|
%
|
45 Fremont Street
San Francisco, California 94105
|
|
|
|
|
|
|
|
|
Barrow, Hanley,
Mewhinney & Strauss, Inc
|
|
|
5,992,320
|
(2)
|
|
|
6.5
|
%
|
2200 Ross Avenue,
31st Floor
Dallas, Texas
75201-2761
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP
|
|
|
5,795,047
|
(3)
|
|
|
6.2
|
%
|
1299 Ocean Avenue
Santa Monica, California 90401
|
|
|
|
|
|
|
|
|
New York Life Trust Company,
Trustee
|
|
|
5,566,350
|
(4)
|
|
|
6.0
|
%
|
51 Madison Avenue
New York, New York 10010
|
|
|
|
|
|
|
|
|
FMR Corp.
|
|
|
5,444,700
|
(5)
|
|
|
5.9
|
%
|
82 Devonshire Street
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As of January 23, 2007, based upon information contained in
a Schedule 13G filed with the Commission. Barclays Global
Investors, NA, as an investment advisor and reporting on behalf
of a group of affiliate entities, has sole voting power with
respect to 6,277,281 of these shares and has sole dispositive
power with respect to all of these shares.
|
|
(2)
|
As of February 9, 2007, based upon information contained in
a Schedule 13G/A filed with the Commission. Barrow, Hanley,
Mewhinney & Strauss, Inc. has sole voting power with
respect to 2,729,400 of these shares and has sole dispositive
power with respect to all of these shares.
|
|
|
(3) |
As of February 9, 2007, based upon information
contained in a Schedule 13G/A filed with the Commission.
Dimensional Fund Advisors LP, as an investment advisor, has
sole voting power and sole dispositive power with respect to all
of these shares.
|
|
|
(4)
|
As of February 15, 2007, based upon information contained
in a Schedule 13G/A filed with the Commission. New York Life
Trust Company, as Trustee for The PolyOne Retirement Savings
Plan and Excel Polymers Retirement Savings Plan, as a bank, has
sole voting power and sole dispositive power with respect to all
of these shares.
|
|
(5)
|
As of February 14, 2007, based upon information contained
in a Schedule 13G/A filed with the Commission. FMR Corp., as a
holding company reporting on behalf of its subsidiaries, has
sole voting power with respect to 0 of these shares and has sole
dispositive power with respect to all of these shares.
|
Share
Ownership Guidelines
We have established share ownership guidelines for our
non-employee Directors, executive officers and other elected
corporate officers to better align their financial interests
with those of shareholders by requiring them to own a minimum
level of our shares. These individuals are expected to make
continuing progress towards compliance with the guidelines and
to comply fully within five years of becoming subject to the
guidelines. These policies, as they relate to our Named
Executive Officers, are discussed in the Compensation
Discussion and Analysis section of this proxy statement.
The required share ownership level for non-employee Directors is
17,000 shares.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires that our executive officers and Directors, and
persons who own more than 10% of a registered class of our
equity
13
securities, file reports of ownership and changes in ownership
with the Commission. Executive officers, Directors and greater
than 10% shareholders are required by Commission rules to
furnish us with copies of all forms they file. Based solely on
our review of the copies of such forms received by us and
written representation from certain reporting persons, we
believe that, during 2006 and until the date of this proxy
statement, all Section 16(a) filing requirements applicable
to our executive officers, Directors and 10% shareholders were
satisfied, except for one Form 4 filing for each of our
executive officers relating to an award of stock appreciation
rights on March 8, 2007, which were made two days after the
due date. During 2006, we amended one Form 4 report that
was timely filed but that omitted, due to a technical
complication, a transaction line item relating to a purchase of
shares by Mr. Newlin (which shares were reflected in the
aggregate number of shares beneficially owned on the original
filing).
14
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Introduction
Our executive compensation programs are approved and overseen by
the Compensation and Governance Committee of the Board of
Directors (the Committee), which is composed
entirely of independent directors. The Committee has selected
and retained an independent compensation consultant, Towers
Perrin (the Consultant). The Committee works in
conjunction with the Consultant and with input from members of
senior management, principally the Chairman, President and Chief
Executive Officer, the Chief Human Resources Officer, the Chief
Financial Officer and the Chief Legal Officer.
This report contains managements discussion and analysis
of the compensation awarded to, earned by, or paid to the
following executive officers (the Named Executive
Officers)1(:
|
|
|
|
|
Stephen D. Newlin Chairman, President and Chief
Executive Officer
|
|
|
|
W. David Wilson Senior Vice President and Chief
Financial Officer
|
|
|
|
Wendy C. Shiba Senior Vice President, Chief Legal
Officer and Secretary
|
|
|
|
Kenneth M. Smith Senior Vice President, Chief Human
Resources and Chief Information Officer
|
|
|
|
Bernard P. Baert Senior Vice President &
General Manager, Colors and Engineered Materials, Europe and Asia
|
Executive
Compensation Programs Objectives and
Overview
The objectives of our executive compensation programs are to:
(1) attract, retain and motivate the management team who
leads in setting and achieving the overall goals and objectives
of our company; (2) foster a
pay-for-performance
culture by rewarding the achievement of specified financial
goals and growth of our share price; and (3) align our
goals and objectives with the interests of our shareholders by
recognizing and rewarding business results through incentive
programs.
While we believe that all components of total compensation
(which are identified in the 2006 Summary Compensation Table)
should be valued and considered when making decisions regarding
pay, the primary focus of our executive compensation program is
on base salary, annual incentive and long term incentives. We
believe that compensation opportunities should be competitive
with the industry compensation practices of the companies we
compete with for executive talent and that total compensation
should be fair to both employees and shareholders.
Our incentive programs focus on the critical performance
measures that determine our companys overall success. For
positions with significant business unit responsibilities,
incentive
(1 Mr. William
F. Patient served as PolyOnes principal executive officer
for a portion of 2006. He had been a Director and Chairman of
the Board since November 2003 and served as President and Chief
Executive Officer from October 2005 to February 21, 2006,
when Mr. Newlin became Chairman, President and Chief
Executive Officer. Mr. Patient served as Lead Director of
the Board of Directors from February 21, 2006 until his
retirement at the Annual Meeting of Shareholders on May 25,
2006. The compensation that Mr. Patient received is
disclosed in the 2006 Summary Compensation Table. He did not
participate in our annual or long-term incentive plans or
receive the perquisites generally provided to executive
officers. Consequently, the references to Named Executive
Officers in this report do not apply to Mr. Patient.
15
programs also emphasize success at the business unit level,
which often leads to Named Executive Officers at comparable
levels being paid differently across the organization. The
structure of base salary and annual and long-term incentive
opportunities is designed to reward executives for the efficient
execution of their
day-to-day
responsibilities and attainment of short term results, balanced
with the need for sustainable, long-term success.
The following table outlines the major elements of compensation
for our Named Executive Officers.
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
Element
|
|
|
Definition
|
|
|
Rationale
|
Base Salary
|
|
|
Fixed compensation
payable bi-weekly
|
|
|
Standard market
practice
Intended to pay for completing
day-to-day
job responsibilities
assigned to the position
|
Annual Incentive Plan
|
|
|
Variable, cash
compensation that is earned when pre-established annual
performance goals are achieved
|
|
|
Standard market
practice
Limits fixed expenses; payment
is required only upon
achievement of specified
goals
Builds accountability for
important annual financial goals
|
Long-Term Incentive
Plan (2 Components)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60% Cash-settled Performance Units
|
|
|
Variable, cash
compensation that is earned when
pre-established three-year financial goals are achieved
|
|
|
Multi-year incentive
is standard
market practice
Emphasizes achievement of
long-term strategic goals and
objectives
Limits fixed expenses; payment
is required only upon
achievement of specified goals
Avoids stock dilution through
cash awards
|
40%
Stock-settled
Stock Appreciation
Rights
|
|
|
Variable compensation
that vests
only if, and grows in value as, our
share price rises
Paid in PolyOne common shares
|
|
|
Multi-year incentive
is standard
market practice
Limits fixed expenses; payment
is required only upon
achievement of specified goals
Emphasizes stock price growth
Vesting conditions require
growing stock price before any
value can be realized by
participant
|
Retirement Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Defined
Contribution Plans
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Qualified 401(k)
defined
contribution plan
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The qualified defined
contribution plan is a standard
tax-qualified benefit offered to
all employees subject to
limitations on compensation and
benefits under the Internal
Revenue Code
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16
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Compensation
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Element
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Definition
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Rationale
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Nonqualified excess
401(k) defined contribution plan
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Restores benefits that
are limited
by the Internal Revenue Code
in the qualified plan for most
highly-paid executives
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Belgium Defined
Contribution Plan
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Tax-efficient defined
contribution plan
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Mr. Baert is a
participant in a
standard tax-efficient defined
contribution plan provided to
most Belgium employees
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Defined Benefit
Plans
(These plans have been closed to new participants since
formation of PolyOne)
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Qualified defined
benefit pension
plan
Nonqualified, excess defined
benefit plan
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Messrs. Wilson
and Smith are
participants in a legacy defined
benefit pension plan offered to
certain heritage employees
Restores benefits that are
limited by the Internal
Revenue Code in the qualified
plan and applies to all eligible
plan participants; as of
December 31, 2004, this
benefit has been frozen
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Post-Retirement
Medical Plan
(This plan has been
closed to new participants since formation of PolyOne)
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Capped Company-paid
subsidy of premiums for medical coverage for retirees similar to
coverage provided to active employees
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Messrs. Wilson
and Smith are
participants in a legacy post-
retirement medical plan offered
to certain heritage employees
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Perquisites
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Car allowance
Financial planning and tax
preparation
Excess liability insurance
Relocation benefits
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Standard market
practice
Relocation benefits assist
in attracting new executive
talent
Other perquisites are
modest and are typical for
executives at comparable
companies
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Setting
the Level of Compensation
We have designed our compensation programs to be competitive
with companies of comparable size and industry as well as
companies with whom we compete for executive talent. The
Committee obtains advice from the Consultant relating to
competitive salaries, annual incentives, and long-term
incentives. Management and the Committee review the specific pay
disclosures of the defined peer group of chemical companies as
well as survey data of similarly-sized chemical and other
companies, as provided by the Consultant. The Committee
discusses and considers this information when making
compensation decisions. This process is described in the
Compensation Oversight Processes section of this
report. The Committee manages compensation so as to align each
of the pay elements with market practices.
The Committee targets base salaries at the median of observed
market practice and sets annual and long-term incentive targets
(incentive as a percent of salary) to approximate the market
median. We believe the maximum potential annual incentive
payouts (no award shall be greater than double the target award)
are consistent with the typical market range around target
awards.
17
Our actual awards of performance units and stock appreciation
rights (SARs) are a product of the market data and
other considerations. In 2006:
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We delivered 60% of the assigned long-term incentive target
opportunity for a position, based upon competitive median
long-term incentive practices, in the form of cash-settled
performance units in order to avoid the dilution associated with
share-based awards.
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We delivered the remaining 40% of the assigned long-term
incentive target opportunity in the form of stock-settled SARs
because they align executive and shareholder interests and
because they help preserve cash.
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We assigned a value to a single performance unit and a single
SAR based on the Black-Scholes option pricing model. We then
determined the actual number of performance units and SARs by
dividing the targeted dollar value allocated to each element by
the value of a single performance unit and SAR, respectively.
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The following table summarizes the allocation of the
compensation opportunity at target that was granted in 2006 to
the Named Executive Officers (and not the compensation
opportunity that could be earned in 2006), based upon the
primary elements of compensation (2006 base salary, Annual
Incentive Plan 2006 target opportunity and long-term incentive
grants made in 2006, including performance units that will pay
out in 2009, if earned). The compensation opportunity is
consistent with the companys overall
pay-for-performance
philosophy. Generally, employees at more senior levels in the
organization, including the Named Executive Officers, have a
greater proportion of their compensation tied to incentive
compensation. Targeted pay opportunity levels align with the
market in each individual pay element.
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Proportionate Size of Primary Elements of Compensation
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Element
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Newlin
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Wilson
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Shiba
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Smith
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Baert
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Base Salary
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24
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%
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36
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%
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40
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%
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40
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%
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43
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%
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Annual Incentive Opportunity
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24
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%
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18
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%
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20
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%
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20
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%
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22
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%
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Long-Term Incentive Opportunity*
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52
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%
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46
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%
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40
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%
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40
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%
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35
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%
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*
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Long-term incentive relating to
the performance units for the
2006-2008
performance period would be paid in 2009, if earned. |
Benchmarking
Competitive Compensation
Each year, we analyze competitive market compensation data
relating to salary, annual incentive, and long-term incentive.
Periodically, we also analyze competitive market compensation
data relating to retirement benefits and perquisites.
In analyzing competitive market data, we draw from two
independent sources. First, we review proxy statement
disclosures of a peer group of similarly-sized
U.S. chemical companies (listed below) to establish an
estimate of market compensation for our most senior executives.
This approach provides insight into explicit company practices
at business competitors or companies facing similar operating
challenges. However, it does not provide market information for
positions below the senior management level, nor does it address
competitors for talent outside the chemical industry.
18
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Albemarle Corporation
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Eastman Chemical
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Hercules Incorporated
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Arch Chemicals, Inc.
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Company
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The Lubrizol Corporation
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A. Schulman, Inc.
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Ferro Corporation
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RPM International Inc.
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Cabot Corporation
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FMC Corporation
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Spartech Corporation
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Chemtura Corporation
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Georgia Gulf Corporation
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The Valspar Corporation
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Cytec Industries Inc.
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H.B. Fuller Company
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Note: Lyondell Chemical Company was considered a peer for the
purpose of the
2006-2008
performance unit plan, but given its growth in size over the
period it has been removed from the comparison group.
Second, we review data from Towers Perrins Compensation
Data Bank and other published surveys, as provided by the
Consultant, to augment the peer proxy analysis and provide a
more robust sense of market practices. To obtain comparability
based on company size, the data either references a specific
sample of companies or calibrates the pay of a broad sample of
companies against company size. Specific benefits of using the
survey data include:
Addresses more than just the named executive
officers;
Provides target incentive levels;
Includes similarly-sized chemical companies; and
Considers similarly-sized companies across a broad
range of industries.
This data is used as one of several inputs into
managements and the Committees deliberation on
appropriate compensation levels. Other inputs include
performance, scope of responsibilities, internal equity
considerations and other factors.
Elements
of Compensation
The following discussion provides additional details about the
main elements of compensation for the Named Executive Officers.
Base
Salary
As described above, our policy is to target base pay at the
market median but does allow actual pay levels to deviate from
target based on performance, responsibility, experience and
marketability unique to each individual. Based on data provided
by the Consultant, the salaries of the Named Executive Officers
range from 93% to 104% of the market median for comparable
positions.
Annual
Incentive
The Senior Executive Annual Incentive Plan (the Annual
Plan) was approved by shareholders in 2005 and includes a
set of performance measures that can be used in setting bonuses
under the plan. The Annual Plan determines how participants
(including all Named Executive Officers) can earn annual cash
awards. In 2006, the performance measures used for the corporate
staff participants in the Annual Plan (including
Messrs. Newlin, Wilson and Smith and Ms. Shiba) were
company operating income (53% weighting with a $90 million
performance target), company-controlled cash flow (34% weighting
with a $93.4 million performance target) and equity
investment performance (13% weighting with a 10% ROIC
performance target). The performance measures used for
Mr. Baert as a participant in the Annual Plan were business
unit operating income (53% weighting with a $28 million
performance target), company controlled cash flow (34% weighting
with a $93.4 million performance target) and revenue growth
in Asia (13% weighting with a 13% performance target).
19
The definitions of certain performance measures are as follows:
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Equity investment performance is a measure of the
Return on Invested Capital (ROIC) based on the earnings before
taxes of our equity investments in two joint ventures,
OxyVinyls, LP and Sunbelt Chlor-Alkali Partnership. Through
these equity investments, we realize a portion of the economic
benefits of a base resin producer for PVC resin, one of our
major raw materials. This performance measure was used for
Messrs. Newlin, Smith and Wilson and Ms. Shiba.
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Company-controlled cash flow is a measure of
(operating income plus depreciation and amortization) plus/minus
(changes in average working capital less capital expenditures,
interest and other expenses).
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Growth in Asia is a measure of the revenue growth
rate in Asia expressed as a percentage.
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The Committee chose these performance measures in order to
incent profitability and promote consistency in operational
performance. Goals were generally set so that individual
business units needed to exceed 2005 performance to achieve a
threshold (50% of target) level of attainment.
Consistent with our approach described above to approximate the
market median in targeting annual incentives, the 2006 target
bonus levels for the Named Executive Officers were: $700,000 for
Mr. Newlin, $177,029 for Mr. Wilson, $168,885 for
Ms. Shiba, $156,741 for Mr. Smith and an equivalent of
$174,961 for Mr. Baert (whose compensation is based in
Euros). These targeted levels are set at 100% of base salary for
Mr. Newlin and 50% of salary earned during the year for
each of the other Named Executive Officers.
Achievement of a performance goal at the threshold level would
result in payment of 50% of the targeted award for that
particular performance goal; achievement of a performance goal
at the target level would result in payment of 100% of the
targeted award for that performance goal; and, achievement at
the maximum level or greater would result in payment of 200% of
the targeted award for that goal. The awards are interpolated if
performance falls between the levels.
The Annual Plan as it applies to the Named Executive Officers is
structured to comply with Section 162(m) of the Internal
Revenue Code of 1986, as amended (the Internal Revenue
Code). In order to qualify the amounts earned under the
Annual Plan as performance-based, the Committee may
exercise discretion only to reduce an award. The Annual Plan is
structured so that achievement of the threshold level of
performance in any of the measures described above will result
in the funding of the plan at maximum. Actual awards are
calculated using the Plan formula described above and if funded
at maximum as described above, the maximum awards are reduced,
as necessary, to deliver awards that are consistent across all
of our management incentive plan participants. For a more
detailed discussion of Section 162(m) of the Internal
Revenue Code, see the Tax Considerations section of
this report.
Performance measures for the Annual Plan have been revised for
2007. The purpose of the revision was to simplify and clarify
the Plan, providing even greater focus on those metrics most
important to creating shareholder value. Specifically, we have
increased the emphasis on operating income on both a business
unit and corporate basis while continuing to focus on cash flow.
In order to emphasize controllable results of our operating
businesses, the financial impact of our equity investments will
not be included in the performance measures for the 2007 Annual
Plan.
Long-Term
Incentive
The 2005 Equity and Performance Incentive Plan was approved by
shareholders in 2005 and permits a variety of types of incentive
awards. In January 2006, long-term incentive awards were
20
granted using two vehicles. Sixty percent of the awards
value was in the form of performance units for the performance
period
2006-2008,
with the remaining 40% in the form of stock-settled SARs.
(1) Cash-Settled
Performance Units
The performance units will be paid in cash, subject to
achievement of three types of performance goals discussed below.
Each of the following performance measures are weighted equally
(i.e., at
331/3%).
The awards represented 60% of the total long-term incentive
opportunity. The performance units granted in 2006 are subject
to the following performance measures and goals for the
three-year period from January 1, 2006 through
December 31, 2008:
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Return on Invested Capital (ROIC), modified based on our
performance versus a group of chemical companies (consisting of
the same peers as reported under the Benchmarking
Competitive Compensation section of this report but
including Lyondell Chemical Company)
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Cash Flow (EBITDA plus non-cash special charges, cash
distributions from equity investments and net divestment
proceeds, less earnings from equity investments, capital
expenditures, cash taxes, cash interest, cash for restructuring
plus changes in working capital and accrued expenses)
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Ratio of Debt/EBITDA (earnings before interest,
taxes, depreciation and amortization)
The Committee selected these performance measures in order to
drive improvements in overall company profitability, promote
consistency in operational excellence and drive a reduction in
overall company debt while improving earnings. Generally, the
Committee sets the target levels for the performance measures
consistent with the levels established under the projections for
our 3-year
financial plan. The Committee believes that the budgeted levels
reflect challenging but obtainable targets. If the targeted
level of achievement for each performance measure were obtained,
this would represent a significant improvement over the levels
attained for previous years. In setting the applicable target
levels, the Committee may consider how achievement of the
performance criteria could be impacted by events expected to
occur in the coming year(s).
If we were to achieve all of these target performance levels, a
participant would earn a target-level award; if we were to
attain only the threshold performance levels, only 50% of the
target award would be earned; and if we were to attain the
maximum (or better) performance levels, the participant would
earn 200% of the target award. If our performance fell between
the threshold and target or between target and maximum, earnings
under the plans would be interpolated for the ROIC and Cash Flow
measures. There is no interpolation for the Debt/EBITDA measure.
Performance under each measure is evaluated and the awards are
determined separately (i.e., a participant can earn
performance units for performance in one, two or all three
measures).
(2) Stock-Settled
SARs
To reinforce our ongoing commitment to enhancing shareholder
returns, 40% of the long-term incentive opportunity awarded in
January 2006 to executives, including the Named Executive
Officers (other than Mr. Newlin who received a grant upon
his hire date in February 2006), consists of SARs that, when
exercised by the holder, are settled in our common shares. The
SARs granted in January to all Named Executive Officers, except
Mr. Newlin, have a base price of $6.51 and the SARs granted
in February to Mr. Newlin have a base price of $9.185. All
SARs granted in 2006 have an exercise term of seven years and
vest upon the attainment of target prices (sustained for three
consecutive trading days) for our common shares as follows: 1/3
@ $7.50; 1/3 @ $8.50 and
1/3 @
$10.00 (with a minimum vesting period of one year from the date
of grant).
21
We believe the SAR awards include more rigorous vesting
conditions than are typically seen in the market for SARs/stock
options, reinforcing our commitment to aligning pay and
performance for executives. The SARs will vest only if the stock
price hurdles mentioned above are attained and in no event will
any SARs vest sooner than one year after grant, regardless of
how our stock price performs. The SARs expire seven years after
grant, which is shorter than typical market practice.
We do not and have not otherwise backdated the
exercise or base price of any stock option or SAR. We have
reviewed the merits of setting the exercise price of an option
or base price of a SAR based on the price on the day preceding
the grant and will continue with this process. Additional
information regarding this matter can be found in the
Timing with Respect to Equity Award Grants section
of this report.
We did not make traditional long-term incentive grants for the
2004-2006
performance period. Instead, in order to provide an incentive
for senior management to achieve near-term improvement in the
price of our common shares, in December of 2003, the Committee
approved an incentive for senior leaders and key employees. The
award consisted entirely of target-priced SARs having a
three-year life and vesting upon the attainment of target prices
(sustained for three consecutive trading days) for PolyOne
common shares as follows: 1/3 @ $8.00; 1/3 @ $9.00 and 1/3 @
$10.00. The SARs had a base price equal to $6.14 and would be
settled in our common shares. These SARs expired at the end of
2006 with 2/3 of the SARs having vested and 1/3 of the SARs
being in the money but not vested due to the failure
to achieve the target prices established.
For 2007, the long-term incentive awards will maintain the same
general design as in 2006. The proportion of performance units
to SARs, however, has changed from 60% performance units and 40%
SARs to 50% performance units and 50% SARs, to better align our
interests with those of shareholders. Minor modifications have
also been made to the performance unit measures for the
2007-2009
performance period. Specifically, we have simplified the design
of the 2007 long-term incentive plan by having only one
performance unit measure which is focused on the profitability
of our operating business units, as measured by growth in
operating income. Further, in assigning a value to a single
performance unit and a single SAR (to determine the actual
number of performance units and SARs to be granted), we have
switched from the Black-Scholes option pricing model to using
several capital market assumptions by applying Towers
Perrins binomial valuation methodology.
Retirement
Benefits
We offer a defined contribution retirement benefit to all
U.S. employees through an Internal Revenue Code
tax-qualified profit sharing/401(k) plan (the Qualified
Savings Plan). The Qualified Savings Plan provides
employees with individual retirement accounts funded by
(1) an automatic Company-paid contribution of 2% of
eligible earnings for all employees, (2) a Company-paid
match on employee 401(k) contributions equal to
dollar-for-dollar
on the first 3% of earnings the employee contributes plus
$0.50 per dollar on the next 3% of earnings the employee
contributes, and (3) for certain heritage employees, an
additional automatic company-paid contribution of up to 4% of
eligible earnings (of the Named Executive Officers, only
Messrs. Smith and Wilson receive this contribution in the
amount of 3.25% and 4%, respectively). The Internal Revenue Code
limits employee contributions to $15,000 and earnings upon which
employee/company contributions are based to $220,000 in 2006.
The PolyOne Supplemental Retirement Benefit Plan (the
Nonqualified Savings Plan) is an unfunded,
nonqualified plan that provides benefits similar to the
Qualified Savings Plan, but without the Internal Revenue Code
contribution and earnings limitations. The benefits under the
22
Nonqualified Savings Plan are offset by the Qualified Savings
Plan. Together these plans are intended to provide the Named
Executive Officers with retirement income equivalent to that
provided to all other employees under the Qualified Savings
Plan. As a result, the Named Executive Officers can expect a
retirement income that replaces a portion of their income while
employed similar to that received by all other employees
participating in the Qualified Savings Plan who are not impacted
by the Internal Revenue Code limitations of the Qualified
Savings Plan.
Mr. Baert is based outside the United States and does not
participate in the Qualified Savings Plan or the Nonqualified
Savings Plan. Mr. Baert participates in a standard defined
contribution retirement benefit plan generally provided to all
Belgium employees (except that some employees hired prior to May
2003 (other than Mr. Baert) elected to remain in the
Belgium defined benefit plan previously offered as the standard
retirement plan). The plan provides employees with individual
retirement accounts funded by (1) an automatic Company paid
contribution of 5% of base pay up to a salary limit plus 15% of
base pay in excess of the salary limit, and (2) employee
contributions of 5% of base pay above that salary limit. The
salary limit, which is indexed annually, was 38,200 for
2006.
Messrs. Smith and Wilson are also eligible, along with
certain other legacy employees, to receive pension payments
under a company-funded Internal Revenue Code qualified defined
benefit pension plan as well as an unfunded, nonqualified
defined benefit pension plan (the Qualified Pension
Plan and Nonqualified Pension Plan,
respectively). In addition, upon becoming retirement eligible
(55 years of age with 10 years of service),
Messrs. Smith and Wilson will be eligible to receive
certain retiree medical benefits. These plans existed prior to
our formation in 2000 through the consolidation of The Geon
Company and M.A. Hanna Company and generally benefited all
nonunion employees of The Geon Company.
The amount of the Named Executives pension depends on a
number of factors including monthly Final Average Earnings
(FAE) and years of benefit service to us
(Benefit Service). The Qualified Pension Plan
provides a monthly lifetime benefit equal to 1.15% times FAE
times Benefit Service plus 0.45% times FAE in excess of Covered
Compensation (as defined by the Internal Revenue Code) times
Benefit Service limited to 35 years.
The Nonqualified Pension Plan is similar to the Nonqualified
Savings Plan in that it restores benefits lost in the Qualified
Pension Plan due to Internal Revenue Code limitations on
earnings and benefits. The Nonqualified Pension Plan benefit
formula is the same as the Qualified Pension Plan except without
the Internal Revenue Code qualified plan earnings limitations.
The Nonqualified Pension Plan benefit is offset by the Qualified
Pension Plan benefit.
The Qualified Pension Plan and Nonqualified Pension Plan were
frozen to new entrants effective December 31, 1999. Benefit
Service was frozen effective December 31, 2002 in both
plans. In response to Internal Revenue Code Section 409A,
the Nonqualified Pension Plan accrued benefit was temporarily
frozen effective December 31, 2004. Any future decisions
regarding the Nonqualified Pension Plan will be delayed until
final guidance relating to Section 409A of the Internal
Revenue Code is released. Earnings are not frozen in the
Qualified Pension Plan so participants, including
Messrs. Smith and Wilson, can continue to accrue additional
benefits under that plan.
Messrs. Newlin and Baert and Ms. Shiba do not
participate in a defined benefit plan.
Perquisites
We provide a limited number of perquisites to the Named
Executive Officers, which we believe are competitive with the
companies with which we compete for executive talent. These
perquisites for those Named Executive Officers based in the
United States, include a monthly car allowance,
23
reimbursement of expenses for financial planning and tax
preparation, an annual physical examination, and group insurance
providing excess liability umbrella insurance coverage in an
amount equal to $5 million. For Mr. Baert, perquisites
typical and competitive with companies in Europe include a
company provided automobile, meal and entertainment allowance,
reimbursement of expenses for financial planning and tax
preparation, and group insurance providing excess liability
umbrella insurance coverage in an amount equal to
$5 million. The specific amounts attributable to
perquisites for 2006 are disclosed in the 2006 Summary
Compensation Table.
We reimbursed Mr. Newlin for reasonable expenses related to
lodging, meals and travel between his residence and work
location (Avon Lake, Ohio) during his first 90 days of
employment. Mr. Newlin is also eligible for reimbursement
of his relocation expenses under our standard relocation plan.
During 2006, we reimbursed Mr. Newlin for expenses
associated with transporting household and personal goods to a
temporary home that he purchased near our headquarters.
We also provide other benefits such as medical, dental and life
insurance and disability coverage to each
U.S.-based
Named Executive Officer, which are identical to the benefits
provided to all other eligible U.S.-based employees. Medical,
dental and life insurance coverage for Mr. Baert is
identical to the benefits provided to all other Belgium-based
employees. We also provide vacation and paid holidays to all
employees, including the Named Executive Officers. The Named
Executive Officers are eligible for the following vacation:
Messrs. Newlin and Smith five weeks,
Mr. Wilson six weeks,
Mr. Baert 26 days, and
Ms. Shiba four weeks.
We do not provide or reimburse for personal country club
memberships for any Named Executive Officer. We do maintain a
corporate membership to a country club that is used for customer
entertainment and other business purposes. We pay the monthly
dues for this membership and incur expenses only for these
business purposes. Any personal use of this facility by a Named
Executive Officer is at the officers personal expense,
with no incremental cost to us.
Compensation
Oversight Processes
Salary
Adjustments
During the fourth quarter, the Committee reviews executive
compensation marketplace data provided by the Consultant. This
report highlights trends in executive compensation and
benchmarks our executive compensation compared to our peer group
and the market in general. In addition, the Committee reviews
tally sheets that contain information regarding the
executives total annual compensation, termination benefits
and wealth accumulation. A more detailed description of the
tally sheets is provided under the heading Review of Tally
Sheets.
In the first half of the calendar year, based upon individual
performance and results achieved, the Chief Executive Officer
recommends for the Committees review and approval specific
salary adjustments for each of the executive officers, including
the Named Executive Officers. The Chief Executive Officer makes
his recommendations in conjunction with the marketplace data and
input provided by the Consultant. The Committee sets the target
compensation at or near the median, with adjustments to account
for our specific facts and circumstances. Based upon the Chief
Executive Officers recommendation, in May 2006, the
Committee increased the salaries of the Named Executive Officers.
Mr. Newlins 2006 salary was established by the
Committee in February 2006 by the terms of his employment
agreement. The Committee considered recent compensation for the
role, reviewed marketplace data and a pro forma tally sheet
provided by their independent advisor to ensure both the
fairness and the competitiveness of the total compensation
package. In the Committees judgment, the total
compensation package, as described under the heading
Employment Agreement
24
of the Chief Executive Officer, was appropriate in order
to attract the caliber of executive the Committee was seeking.
Grants of
Plan-Based Awards
In the fourth quarter, the Committee reviews
period-to-date
performance and estimates of incentive payouts for the
in-progress performance periods. In the first quarter of the
following year, the Committee evaluates actual performance
against pre-set goals and determines earnings under
just-completed plan periods.
In addition, in the fourth quarter, the Committee and management
review competitive incentive data provided by the Consultant.
Management develops preliminary recommendations for eligibility,
award opportunities, performance measures and goals for the plan
periods to commence the subsequent year for the Committees
review. The Committee approves final terms in the first quarter
of the subsequent year.
Review of
Tally Sheets
The Committee and management have reviewed and considered tally
sheets in connection with pay deliberations. Tally sheets are
created collaboratively by the Consultant and our human
resources department.
The tally sheets provide information regarding the Named
Executive Officers total annual compensation, termination
benefits and wealth accumulation. Total annual compensation
includes: salary, annual incentive, long-term incentive,
perquisites, and retirement benefits. This information is
comparable to the amounts reported in the 2006 Summary
Compensation Table. Payments under various forms of termination
are reviewed and disclosed elsewhere in this proxy statement.
In aligning the overall program with market practices,
benchmarking against the market occurs, but is limited in scope
to the elements considered as compensation. The process of
reviewing tally sheets began in late 2006. We have committed to
annually review tally sheets and use the information in
connection with compensation related decisions.
Tax
Considerations
Cash compensation, such as base salary or annual incentive
compensation, is taxable to the recipient as ordinary income
when earned, unless deferred under a company-sponsored deferral
plan. Deferrals under tax-qualified plans, such as a 401(k)
plan, do not affect our current tax deduction. Deferrals under
supplemental executive deferral plans delay our tax deduction
until the deferred amount (and any accumulation thereon) is
paid. Stock-settled SARs are generally taxable as ordinary
income when exercised. We realize a tax deduction at that time.
The Committee does review potential tax implications before
making decisions regarding compensation.
Management and the Committee are aware of Section 162(m) of
the Internal Revenue Code, which generally limits the
deductibility of executive pay in excess of one million dollars,
and which specifies the requirements for the
performance-based exemption from this limit. The
Committee generally manages our incentive programs to qualify
for the performance-based exemption. It also reserves the right
to provide compensation that does not meet the exemption
criteria if, in its sole discretion, it determines that doing so
advances our business objectives.
25
Accounting
Considerations
When reviewing preliminary recommendations and in connection
with approving the terms of a given incentive plan period,
management and the Committee review and consider the accounting
implications of a given award, including the estimated expense
and/or
dilutive considerations. Depending upon the type of accounting
treatment associated with an incentive plan design, management
and the Committee may alter or modify the incentive award due to
the accounting treatment if the award (and the related
accounting consequences) were to adversely affect our financial
performance.
Employment
Agreement of the Chief Executive Officer
On February 13, 2006, we entered into an agreement with
Mr. Newlin, under which he agreed to serve as our Chairman,
President and Chief Executive Officer. The agreement provides
for Mr. Newlins initial base salary of $700,000, a
signing bonus of $600,000, a grant of 200,000 shares of
restricted stock, and for Mr. Newlins participation
in our various long-term incentive and benefit plans in effect
from time to time during the term of his employment.
Mr. Newlin also received a grant of a two-year cash
incentive, consisting of phantom units, with each unit being
equal in value to one share of our common stock. The phantom
units will be paid in cash, if earned, and are subject to the
achievement of specified performance goals over a two-year
period
(2006-2007).
In addition, the agreement provides for certain payments upon
termination of Mr. Newlins employment, as described
more fully in the Potential Payments Upon Termination or
Change-in-Control
section of this proxy statement.
Termination
Payments for Other Named Executive Officers
Effective May 25, 2006, the Committee approved an Executive
Severance Plan that is designed to provide severance protection
to certain officers who are expected to make substantial
contributions to our success and thereby provide for stability
and continuity of operations. Under the terms and conditions of
the Executive Severance Plan, officers are entitled to receive
Severance Payments upon their termination of employment for
reasons other than cause, death or disability. The plan details
and estimates of these payments are provided in the
Potential Payments Upon Termination or
Change-in-Control
section of this report.
The payments are to be made in compliance with Section 409A
of the Internal Revenue Code. These severance benefits are
contingent upon our receipt of a signed release of all claims
against us and signed non-compete, non-solicitation and
non-disparagement agreements.
Change in
Control Payments
We have entered into
change-in-control
(CIC) agreements with all of our elected corporate
officers, including each of the Named Executive Officers. These
agreements are designed to provide severance protection should a
change in control of PolyOne occur and the executive
officers employment is terminated either by us without
cause or by the executive for good reason (as defined in the
agreements). Generally, a change in control will be deemed to
have occurred if (1) any person becomes the beneficial
owner of 25% or more of the combined voting power of our
outstanding securities (subject to certain exceptions);
(2) there is a change in the majority of our Board of
Directors; (3) certain corporate reorganizations occur
where the existing shareholders do not retain more than 60% of
the common shares and combined voting power of the outstanding
voting securities of the surviving entity; or (4) there is
shareholder approval of a complete liquidation or dissolution of
PolyOne.
26
These agreements are intended to provide for continuity of
management in the event of a change in control. The agreements
are automatically renewed each year unless we give prior notice
of termination of the CIC agreement. The agreements provide that
covered executive officers could be entitled to certain
severance benefits. The details of the severance payment and
benefits are provided in the Potential Payments Upon
Termination or
Change-in-Control
section of this report.
In order to provide additional protection in the event of a
change in control, our 2006 equity awards and Annual Incentive
Plan provide for accelerated benefits in the event of a change
in control. In the event of a change in control and a
termination of the executives employment by us without
cause or by the executive for good reason (as defined in the
agreements), the SARs remain exercisable for their full term.
These
change-in-control
provisions affect all participants in those programs, including
the Named Executive Officers.
Compensation
Policies
Timing
with Respect to Equity Award Grants
In recent years, including 2006, the base price of SARs has been
set according to our normal practice as outlined in the 2005
Equity and Performance Incentive Plan and is based on the
average of the high and low price of our common shares on the
trading day immediately before the day the award was approved by
the Committee. This practice allows the Committee to know the
actual base price at the time of approval. Because the base
price could be different than the closing price on the day of
the grant, the pricing difference is explained in the 2006
Grants of Plan-Based Awards table in this proxy statement.
Further, if we are in possession of material information that
has not been publicly disclosed, the Committee will not grant
equity awards until all such information is available to the
public.
Stock
Ownership Guidelines
In order to better align their financial interests with those of
shareholders, we believe our executives should own a meaningful
number of our shares. We have adopted share ownership guidelines
specifying a minimum level of share ownership for all
executives, including all Named Executive Officers. The specific
levels of share ownership for the Named Executive Officers are
noted in the following table. Executives are expected to
accumulate the specified shares within five years of their
becoming subject to the policy. The applicable guidelines are
reduced after age 55 by 10% of the original level of
ownership each year for five years.
In general, shares counted toward required ownership include
shares directly held and shares vested in our benefit or
deferral plans (including phantom shares under our nonqualified
deferral plan).
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Element
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Newlin
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Wilson
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Shiba
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Smith
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Baert
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Share Ownership Target (in shares)
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290,000
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85,000
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67,500
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65,000
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48,000
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Total Share Ownership as of
3/12/07
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219,300
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144,546
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67,927
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75,538
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21,000
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Attainment Status
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75.6
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%
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170.1
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%
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100.6
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%
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116.2
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%
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43.8
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%
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Note: Ownership targets have been reduced by 10% for
Ms. Shiba and 20% for Mr. Baert, according to the
applicable guidelines pertaining to age reduction as discussed
above.
27
Repayment
of Earned Incentives upon Restatement of Financial
Results
We have has adopted a policy that is consistent with the
requirements of the Sarbanes-Oxley Act of 2002, which requires
the Chief Executive Officer and Chief Financial Officer to
reimburse us for any awards received during the twelve-month
period following the release of financial results that
subsequently require an accounting restatement due to material
noncompliance with any financial reporting requirement if they
are subject to automatic forfeiture under Section 304 of
the Sarbanes-Oxley Act of 2002.
Conclusion
Our executive compensation programs are competitive in the
marketplace and linked to our performance. These programs allow
us to attract and retain high-caliber executives. We believe the
design of our compensation plans and the relative mix of
compensation elements successfully motivates our executives and
aligns both the short-term and long-term interests of employees
and shareholders.
28
The following table sets forth the compensation for the fiscal
year ended December 31, 2006 of our principal executive
officer, former principal executive officer, principal financial
officer and our other three most highly compensated executive
officers.
2006
SUMMARY COMPENSATION TABLE
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Change in Pension
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Value and
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Non-
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Nonquali-
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Equity
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fied
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Option/
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Incentive Plan
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Deferred
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All Other
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Stock
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SAR
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Compen-
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Compensation
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Compensa-
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Name and Principal
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Salary
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Bonus(4)
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Awards
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Awards(7)
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sation(8)
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Earnings(9)
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tion
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Total
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Position
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Year
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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Stephen D. Newlin, Chairman,
President and Chief Executive
Officer(1)
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2006
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$
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589,615
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$
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600,000
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$
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505,374
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(5)
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$
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558,936
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$
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959,700
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0
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$
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103,725
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(10)
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$
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3,317,350
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William F. Patient, Former
Chairman, President and Chief Executive
Officer(2)
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2006
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68,833
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50,000
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20,833
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0
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0
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0
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0
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139,666
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W. David Wilson, Senior Vice
President and Chief Financial Officer
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2006
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354,058
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50,000
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75,561
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(6)
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158,724
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242,707
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0
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81,711
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(11)
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962,761
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Wendy C. Shiba, Senior Vice
President, Chief Legal Officer and Secretary
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2006
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337,769
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50,000
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59,052
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(6)
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120,905
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231,541
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0
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42,859
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(12)
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842,126
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Kenneth M. Smith, Senior Vice
President, Chief Human Resources and Chief Information Officer
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2006
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313,481
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50,000
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52,914
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(6)
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112,084
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214,891
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0
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59,109
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(13)
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802,479
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Bernard P. Baert, Senior Vice
President & General Manager, Colors and Engineered
Materials, Europe and
Asia(3)
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2006
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349,999
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0
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53,125
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(6)
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105,333
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219,576
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0
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69,043
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(14)
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797,076
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(1)
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Mr. Newlin was elected
Chairman, President and Chief Executive Officer, effective
February 21, 2006.
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(2)
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Mr. Patient served as our
Chief Executive Officer for a portion of 2006. He had been a
Director and Chairman of the Board since November 2003 and
served as President and Chief Executive Officer from
October 6, 2005 to February 21, 2006, when
Mr. Newlin became Chairman, President and Chief Executive
Officer. Mr. Patient did not participate in our annual or
long-term incentive plans or receive the perquisites generally
provided to our executive officers. The total compensation
received by Mr. Patient in 2006, as reflected in the 2006
Summary Compensation Table, includes: (a) salary earned for
the period of time in 2006 during which Mr. Patient served
as Chairman, President and Chief Executive Officer ($50,000);
(b) director fees paid in cash ($18,833); (c) a
one-time recognition award, as described in footnote
(4) below ($50,000); and (d) like our other
non-employee directors, an award of fully-vested PolyOne common
shares with a value of $20,833, which represents the award of
common shares with a value of $50,000 granted to the other
non-employee Directors, pro-rated for the portion of the year
for which he served as a Director.
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29
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(3)
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Mr. Baerts compensation
is based in Euros. The conversion rate used for purposes of
converting the Euros earned by Mr. Baert into dollars for
purposes of this table was 1.00 = $1.25559, which is the
conversion rate used in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006.
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(4)
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Amounts in this column include a
signing bonus of $600,000 for Mr. Newlin, a one-time
recognition award in the amount of $50,000 to each of
Ms. Shiba and Messrs. Wilson and Smith in recognition
of the additional duties and responsibilities assumed in
connection with executive and operating matters during the
CEO-transition period, and a one-time recognition award in the
amount of $50,000 to Mr. Patient in recognition of his
leadership and contributions during the CEO-transition period.
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(5)
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This reflects a restricted stock
award granted in 2006 to Mr. Newlin under our 2005 Equity
and Performance Incentive Plan (the Equity Plan) as
part of his hiring package with a compensation cost for 2006 of
$505,374. The amount reflected in the table includes the dollar
amount recognized for financial statement reporting purposes for
2006 with respect to the award computed in accordance with
Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 123 (revised 2004), Share-Based
Payment (SFAS 123(R)). Additional information
regarding the assumptions used in determining the cost reflected
in the table can be found in Note Q of the Notes to the
Consolidated Financial Statements contained in our Annual Report
on Form 10-K
for the fiscal year ended December 31, 2006. This grant is
described more fully in the narrative following the 2006 Grants
of Plan-Based Awards table in this proxy statement.
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(6)
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This reflects the compensation
cost under SFAS 123(R) in 2006 of performance shares
granted in 2005. Additional information regarding the
assumptions used in determining the costs reflected in the table
can be found in Note Q of the Notes to the Consolidated
Financial Statements contained in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006. These
performance shares are described in more detail in footnote
(5) to the 2006 Outstanding Equity Awards at Fiscal
Year-End table.
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(7)
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This column includes the grants of
target-priced, stock-settled stock appreciation rights granted
in 2006 to the Named Executive Officers under our Equity Plan.
The cost of these awards as reflected in the table was based on
the dollar amount recognized for financial statement reporting
purposes for 2006 with respect to these awards, computed in
accordance with SFAS 123(R). These grants are described
more fully in the narrative following the 2006 Grants of
Plan-Based Awards table and in the Compensation Discussion
and Analysis Elements of Compensation
Stock-Settled SARs section in this proxy statement. This
column also reflects for Messrs. Wilson, Smith and Baert
and Ms. Shiba the dollar amount recognized for financial
statement reporting purposes in 2006 with respect to awards
granted in prior years. Additional information regarding the
assumptions used in determining the costs reflected in the table
can be found in Note Q of the Notes to the Consolidated
Financial Statements contained in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006.
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(8)
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This column reflects amounts
earned by the Named Executive Officers under the Senior
Executive Annual Incentive Plan (the SEAIP). The
terms of the SEAIP are described more fully in the narrative
following the 2006 Grants of Plan-Based Awards table and in the
Compensation Discussion and Analysis Elements
of Compensation Annual Incentive section of
this proxy statement.
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(9)
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Among the Named Executive
Officers, only Mr. Wilson and Mr. Smith participate in
a company-funded qualified defined benefit pension plan and an
unfunded, nonqualified defined benefit pension plan (the
Qualified Pension Plan and Nonqualified
Pension Plan, respectively) that existed prior to our
formation in 2000 through the consolidation of The Geon Company
and M.A. Hanna Company. Although shown as $0 in the above table,
the aggregate actuarial present value of the accumulated
benefits under the Qualified Pension Plan and the Nonqualified
Pension Plan actually decreased during 2006 by $11,727 for
Mr. Wilson and by $8,412 for Mr. Smith. Above-market
or preferential earnings are not available under any of our
non-qualified deferred compensation plans.
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(10)
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Amounts under All Other
Compensation for Mr. Newlin include tax
gross-ups on
personal benefits (including a gross up on a moving allowance
described below) in the amount of $23,229, PolyOnes cash
contributions to our qualified savings plan in the amount of
$14,300, PolyOnes cash contributions under our
non-qualified retirement plan providing for benefits in excess
of the amounts permitted to be contributed under the qualified
savings plan in the amount of $22,675 and excess liability
umbrella insurance
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30
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coverage in the amount of $987.
Mr. Newlin also received perquisites in 2006, reflected in
the table, with the following incremental costs: moving
allowance ($18,155), car allowance ($12,129, based on
$1,200 per month, pro-rated), and financial planning and
tax preparation expenses ($12,250).
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(11)
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Amounts under All Other
Compensation for Mr. Wilson include tax
gross-ups on
personal benefits in the amount of $6,593, PolyOnes cash
contributions to our qualified savings plan in the amount of
$23,100, PolyOnes cash contributions under our
non-qualified retirement plan providing for benefits in excess
of the amounts permitted to be contributed under the qualified
savings plan in the amount of $27,410, excess liability umbrella
insurance coverage in the amount of $987 and the current value
of future expected retiree medical coverage in the amount of
$1,215. Mr. Wilson also received perquisites in 2006,
reflected in the table, with the following incremental costs:
car allowance ($14,400) and financial planning and tax
preparation expenses ($8,006).
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(12)
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Amounts under All Other
Compensation for Ms. Shiba include tax
gross-ups on
personal benefits in the amount of $2,336, PolyOnes cash
contributions to our qualified savings plan in the amount of
$14,300, PolyOnes cash contributions under our
non-qualified retirement plan providing for benefits in excess
of the amounts permitted to be contributed under the qualified
savings plan in the amount of $11,036 and excess liability
umbrella insurance coverage in the amount of $987.
Ms. Shiba also received perquisites in 2006, reflected in
the table, with the following incremental costs: car allowance
($12,000) and financial planning and tax preparation expenses
($2,200).
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(13)
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Amounts under All Other
Compensation for Mr. Smith include tax
gross-ups on
personal benefits in the amount of $4,370, PolyOnes cash
contributions to our qualified savings plan in the amount of
$21,450, PolyOnes cash contributions under our
non-qualified retirement plan providing for benefits in excess
of the amounts permitted to be contributed under the qualified
savings plan in the amount of $14,255, excess liability umbrella
insurance coverage in the amount of $987 and the current value
of future estimated retiree medical coverage in the amount of
$1,073. Mr. Smith also received perquisites in 2006,
reflected in the table, with the following incremental costs:
car allowance ($12,000) and financial planning and tax
preparation expenses ($4,974).
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(14)
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Amounts under All Other
Compensation for Mr. Baert include PolyOnes
cash contributions to a tax-efficient savings plan, generally
provided to all Belgium employees, in the amount of $42,644.
Mr. Baert also received perquisites in 2006, reflected in
the table, with the following incremental costs: company
provided automobile ($20,951), meal vouchers ($1,320) and
customer entertainment allowance ($4,128).
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31
2006
GRANTS OF PLAN-BASED AWARDS
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Estimated Future Payouts Under
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Estimated Future Payouts Under Non-Equity Incentive Plan
Awards(2)
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Equity Incentive Plan
Awards(4)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
Value of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Exercise or Base
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock or
|
|
|
Price of Option
|
|
|
|
|
|
Option/SAR
|
|
|
|
|
|
|
Threshold(3)
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
/SAR
Awards(6)
|
|
|
Closing Market
|
|
|
Awards(7)
|
Name
|
|
|
Grant Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
Price on Grant Date
|
|
|
($)
|
S.D.
Newlin(1)
|
|
|
*
|
|
|
$
|
350,000
|
|
|
|
$
|
700,000
|
|
|
|
$
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/06
|
|
|
|
515,250
|
|
|
|
|
1,030,500
|
|
|
|
|
2,061,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/06
|
|
|
|
384,540
|
|
|
|
|
769,080
|
|
|
|
|
1,538,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.185
|
|
|
|
|
8.90
|
|
|
|
|
651,794
|
|
|
|
|
2/21/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,768,000
|
|
W.F. Patient
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,833
|
|
W.D. Wilson
|
|
|
*
|
|
|
|
88,515
|
|
|
|
|
177,029
|
|
|
|
|
354,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
148,100
|
|
|
|
|
296,200
|
|
|
|
|
592,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.51
|
|
|
|
|
6.56
|
|
|
|
|
173,880
|
|
W.C. Shiba
|
|
|
*
|
|
|
|
84,442
|
|
|
|
|
168,885
|
|
|
|
|
337,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
113,000
|
|
|
|
|
226,000
|
|
|
|
|
452,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.51
|
|
|
|
|
6.56
|
|
|
|
|
132,480
|
|
K.M. Smith
|
|
|
*
|
|
|
|
78,370
|
|
|
|
|
156,741
|
|
|
|
|
313,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
104,850
|
|
|
|
|
209,700
|
|
|
|
|
419,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.51
|
|
|
|
|
6.56
|
|
|
|
|
123,372
|
|
B.P. Baert
|
|
|
*
|
|
|
|
87,481
|
|
|
|
|
174,961
|
|
|
|
|
349,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
87,750
|
|
|
|
|
175,500
|
|
|
|
|
351,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/4/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.51
|
|
|
|
|
6.56
|
|
|
|
|
103,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
There is no Grant Date for these
awards. This row relates to awards made under our cash-based
Senior Executive Annual Incentive Plan (the SEAIP).
|
|
(1)
|
|
Mr. Newlin was hired
February 21, 2006.
|
|
(2)
|
|
The first row of this column for
each Named Executive Officer represents the annual cash
incentive opportunity for the Named Executive Officers under the
SEAIP. The actual amount earned for 2006 under the SEAIP is
reported in the Non-Equity Incentive Plan
Compensation column of the 2006 Summary Compensation
Table. The second row of this column for each Named Executive
Officer represents the performance units awarded to each Named
Executive Officer under our 2005 Equity and Performance
Incentive Plan. Each performance unit is equal in value to
$1.00. These performance units will be paid in cash, if earned,
and are subject to achievement of specified performance goals
over a three-year performance period
(2006-2008).
The third row of this column for Mr. Newlin represents a
two-year cash incentive that was granted to Mr. Newlin in
connection with his employment agreement. This cash incentive
consists of 87,000 targeted phantom units, with each unit being
equal in value to one share of our common stock. These phantom
units will be paid in cash (based on the high-low average of our
common shares on the day immediately preceding approval of
payment), if earned, and are subject to achievement of specified
performance goals over a two-year performance period
(2006-2007).
|
|
(3)
|
|
Threshold refers to the minimum
amount payable upon reaching the threshold level of performance.
If threshold performance is not attained, the participant will
receive $0 for this award.
|
|
(4)
|
|
The numbers in this column
represent stock-settled stock appreciation rights granted to the
Named Executive Officers under our 2005 Equity and Performance
Incentive Plan, which become exercisable only upon the
achievement of target prices relating to our common stock. If
the applicable target prices are met, a portion of the total
award becomes exercisable, as explained in the following
narrative disclosure. The award of SARs provides for a single
estimated payout and, thus, the total number of stock-settled
SARs granted in 2006 is reported in the Target
column above.
|
32
|
|
|
(5)
|
|
This represents a grant of
restricted stock that Mr. Newlin received as part of his
hiring package, which fully vests on the third anniversary of
the date of grant and which accrues dividends, if any dividends
are declared on our common stock.
|
|
(6)
|
|
In setting the base price of SARs,
we have followed the practice of using the average of the high
and low sales price of our common shares on the trading day
immediately before the day the award was approved by the
Committee. This practice is in compliance with our 2005 Equity
and Performance Incentive Plan. The award of stock-settled SARs
that was granted on January 4, 2006 to the Named Executive
Officers other than Mr. Newlin was priced higher than the
average of the high and low sales price on the trading day
immediately before the date of grant ($6.51 base price vs. $6.45
average of high and low on January 3, 2006). This base
price is in compliance with the terms of our 2005 Equity and
Performance Incentive Plan, which provides that the base price
must be equal to or greater than the fair market value of our
common stock (which we have determined to be the average of the
high and low sales price) on the day preceding the date of grant.
|
|
(7)
|
|
This represents the grant date
fair value of each equity-based award, computed in accordance
with SFAS 123(R).
|
Set forth below is narrative disclosure relating to the 2006
Summary Compensation Table and the 2006 Grants of Plan-Based
Awards table.
Senior
Executive Annual Incentive Plan
Annual cash incentives were granted in 2006 under our Senior
Executive Annual Incentive Plan and are based on achievement of
performance goals relating to company operating income,
company-controlled cash flow and equity investment performance
(for the corporate staff participants) and business unit
operating income, company-controlled cash flow and revenue
growth in Asia (for Mr. Baert). Achievement of a
performance goal at the threshold level results in payment of
50% of the targeted award for that performance goal; achievement
of a performance goal at the target level results in a payment
of 100% of the targeted award for that performance goal; and,
achievement at the maximum level or greater results in payment
of 200% of the targeted award for that goal. In no event will a
Named Executive Officer receive an award that exceeds the plan
maximum of $2,000,000. If performance falls between the levels,
the award payouts are interpolated. For a more detailed
discussion of our annual incentive plan, see Compensation
Discussion and Analysis Elements of
Compensation Annual Incentive.
Cash-Settled
Performance Units
Cash-settled performance units were granted in 2006 under our
2005 Equity and Performance Incentive Plan and are based on
achievement of performance goals, over a three-year period,
relating to return on invested capital, cash flow and our ratio
of debt to EBITDA. If we achieve performance at the threshold
levels, 50% of the performance units will be earned; if we
achieve performance at the targeted levels, 100% of the
performance units will be earned; and, if we achieve performance
at the maximum levels or greater, 200% of the performance units
will be earned. If performance falls between the levels, the
number of performance units earned is interpolated for the ROIC
and cash flow measures. There is no interpolation for the
measure relating to the ratio of debt to EBITDA. Performance
under each measure is evaluated independently and awards are
determined separately for each measure. For a more detailed
discussion of the performance units granted in 2006, see
Compensation Discussion and Analysis Elements
of Compensation Cash-Settled Performance Units.
33
Stock-Settled
SARs
In 2006, our Compensation and Governance Committee granted
stock-settled SARs to the Named Executive Officers. These SARs
have a term of seven years and vest upon the attainment of
target prices (sustained for three consecutive trading days) for
PolyOne common shares as follows: 1/3 @ $7.50; 1/3 @ $8.50 and
1/3 @ $10.00. In no event may the SARs vest sooner than one year
from the date of grant. For a more detailed discussion of the
stock-settled SARs granted in 2006, see Compensation
Discussion and Analysis Elements of
Compensation Stock-Settled SARs.
Restricted
Stock Granted to Mr. Newlin
Upon his hire date, Mr. Newlin received a grant of
200,000 shares of restricted stock, which fully vest on the
third anniversary of the date of grant. The common shares
subject to the grant of restricted stock may not be transferred
or otherwise disposed of by Mr. Newlin (except by will or
the laws of descent and distribution), unless the restricted
stock becomes nonforfeitable as described herein. The common
shares subject to the grant of restricted stock were registered
in Mr. Newlins name and are fully paid and
nonassessable. From and after the date of grant, Mr. Newlin
had all of the rights of a shareholder with respect to the
shares of restricted stock granted, including the right to vote
such shares of restricted stock and receive any dividends that
may be paid thereon.
Phantom
Units Granted to Mr. Newlin
Mr. Newlin received a grant of 87,000 cash-settled phantom
units, which become earned only upon the attainment of
equally-weighted performance goals relating to our cash flow,
return on invested capital (ROIC) and debt to EBITDA ratio and
Mr. Newlin remaining in the continuous employ of PolyOne or
a subsidiary through the end of a two year performance period
(i.e., December 31, 2007). Each phantom unit is
equal in value to one common share. If we achieve performance at
the threshold levels, 50% of the units will be earned; if we
achieve performance at the targeted levels, 100% of the units
will be earned; and, if we achieve performance at the maximum
levels or greater, 200% of the units will be earned. If
performance falls between the levels, the number of units earned
is interpolated for the ROIC and cash flow levels. There is no
interpolation for the measure relating to the debt to EBITDA
ratio. Performance under each measure is evaluated independently
and awards are determined separately for each measure. Any
earned units entitle Mr. Newlin to a cash payment at the
end of the performance period equal to the number of earned
units multiplied by the average of the high and low sales prices
of our common shares on the day immediately preceding approval
of payment.
Employment
Agreements
We do not have employment agreements with any of our Named
Executive Officers, except for Mr. Newlin.
Mr. Newlins Employment Agreement is described in
detail in the Compensation Discussion and
Analysis Employment Agreement of the Chief Executive
Officer and the Potential Payments Upon Termination
or
Change-in-Control
sections of this proxy statement.
34
2006
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SAR Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
|
Payout Value
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Unearned
|
|
|
|
of Unearned
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Shares,
|
|
|
|
Shares, Units
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
Option/
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
Units or
|
|
|
|
or Other
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
SAR
|
|
|
|
Option/
|
|
|
|
Stock That
|
|
|
|
Stock That
|
|
|
|
Other Rights
|
|
|
|
Rights That
|
|
|
|
|
Options/SARs
|
|
|
|
Options/SARs
|
|
|
|
Unearned
|
|
|
|
Exercise
|
|
|
|
SAR
|
|
|
|
Have Not
|
|
|
|
Have Not
|
|
|
|
That Have
|
|
|
|
Have Not
|
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
Options/SARs
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Vested
|
|
|
|
Vested
|
|
|
|
Not Vested
|
|
|
|
Vested(6)
|
|
Name
|
|
|
Exercisable(1)
|
|
|
|
Unexercisable
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
($)
|
|
S.D. Newlin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(2)
|
|
|
|
1,500,000
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,900
|
(3)
|
|
|
|
9.1850
|
|
|
|
|
2/20/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.F. Patient
|
|
|
|
72,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
9.9375
|
|
|
|
|
1/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
10.3125
|
|
|
|
|
2/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
6.7050
|
|
|
|
|
5/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.D. Wilson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,400
|
(4)
|
|
|
|
8.9400
|
|
|
|
|
1/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,000
|
(3)
|
|
|
|
6.5100
|
|
|
|
|
1/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,800
|
(5)
|
|
|
|
178,500
|
|
|
|
|
|
8,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
9.9375
|
|
|
|
|
1/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,800
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
6.0000
|
|
|
|
|
3/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,536
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
10.3125
|
|
|
|
|
2/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
9.0000
|
|
|
|
|
9/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,100
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
8.7000
|
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,400
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
12.2200
|
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,900
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
6.0000
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.C. Shiba
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,700
|
(4)
|
|
|
|
8.9400
|
|
|
|
|
1/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,000
|
(3)
|
|
|
|
6.5100
|
|
|
|
|
1/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,600
|
(5)
|
|
|
|
139,500
|
|
|
|
|
|
2,134
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
6.0000
|
|
|
|
|
3/31/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,290
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
8.9600
|
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,400
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
12.2200
|
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,900
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
6.0000
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SAR Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
|
Payout Value
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Unearned
|
|
|
|
of Unearned
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Shares,
|
|
|
|
Shares, Units
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
Option/
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
Units or
|
|
|
|
or Other
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
SAR
|
|
|
|
Option/
|
|
|
|
Stock That
|
|
|
|
Stock That
|
|
|
|
Other Rights
|
|
|
|
Rights That
|
|
|
|
|
Options/SARs
|
|
|
|
Options/SARs
|
|
|
|
Unearned
|
|
|
|
Exercise
|
|
|
|
SAR
|
|
|
|
Have Not
|
|
|
|
Have Not
|
|
|
|
That Have
|
|
|
|
Have Not
|
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
Options/SARs
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Vested
|
|
|
|
Vested
|
|
|
|
Not Vested
|
|
|
|
Vested(6)
|
|
Name
|
|
|
Exercisable(1)
|
|
|
|
Unexercisable
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
($)
|
|
K.M. Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,600
|
(4)
|
|
|
|
8.9400
|
|
|
|
|
1/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,700
|
(3)
|
|
|
|
6.5100
|
|
|
|
|
1/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
(5)
|
|
|
|
125,003
|
|
|
|
|
|
1,800
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
9.9375
|
|
|
|
|
1/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,392
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
10.3125
|
|
|
|
|
2/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
9.0000
|
|
|
|
|
9/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,700
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
8.7000
|
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,500
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
12.2200
|
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,100
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
6.0000
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B.P. Baert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,600
|
(4)
|
|
|
|
8.9400
|
|
|
|
|
1/4/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
(3)
|
|
|
|
6.5100
|
|
|
|
|
1/3/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,733
|
(5)
|
|
|
|
125,498
|
|
|
|
|
|
3,030
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
25.1875
|
|
|
|
|
11/4/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,073
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
15.0000
|
|
|
|
|
11/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,969
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
10.6250
|
|
|
|
|
11/30/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
9.0000
|
|
|
|
|
9/4//2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
8.7000
|
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
12.2200
|
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This column shows the
fully-exercisable stock options granted to the Named Executive
Officers prior to the last fiscal year.
|
|
(2)
|
|
These shares of restricted stock
vest on the third anniversary of the date of grant.
|
|
(3)
|
|
These stock-settled stock
appreciation rights (SARs) were granted in 2006 and
vest upon the attainment of target prices (sustained for three
consecutive trading days) for our common shares as follows: 1/3
@ $7.50; 1/3 @ $8.50; and 1/3 @ $10.00. In no event may the SARs
vest sooner than one year from the date of grant.
|
|
(4)
|
|
These stock-settled SARs were
granted in 2005 and vest upon the attainment of target prices
(sustained for three consecutive trading days) for our common
shares as follows: 1/3 @ $9.84; 1/3 @ $10.73; and 1/3 @ $11.63.
|
|
(5)
|
|
These performance shares were
granted in January 2005 and are earned upon achievement of
performance goals, over the
2005-2007
performance period, relating to operating cash flow, return on
invested capital (ROIC), and level of EBITDA in relation to
debt. Each performance measure is weighted equally at
331/3%.
If we were to attain all of the targeted performance levels, a
participant would earn a target-level award. If we were to
attain only the threshold performance levels, 50% of the
targeted award would be earned and if we were to attain the
maximum or better performance levels, the participant would earn
|
36
|
|
|
|
|
200% of the targeted award. Awards
are interpolated for the ROIC and cash flow measures if
performance falls between the levels. There is no interpolation
for the level of EBITDA in relation to debt performance measure.
The numbers reflected in the table are based on achieving the
threshold level of performance for two performance measures and
the target level of performance for one performance measure.
|
|
(6)
|
|
Based on the closing market price
of our common shares on the last trading day of the 2006 fiscal
year, December 29, 2006 ($7.50).
|
2006
OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SAR Awards
|
|
|
|
Stock Awards
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
Acquired on
|
|
|
|
Value Realized
|
|
|
|
Acquired on
|
|
|
|
Value Realized
|
|
|
|
|
Exercise(1)
|
|
|
|
on
Exercise(2)
|
|
|
|
Vesting
|
|
|
|
on Vesting
|
|
Name
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
($)
|
|
S.D. Newlin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.F. Patient
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.D. Wilson
|
|
|
|
55,040
|
|
|
|
|
154,387
|
|
|
|
|
|
|
|
|
|
|
|
W.C. Shiba
|
|
|
|
16,666
|
|
|
|
|
31,332
|
|
|
|
|
|
|
|
|
|
|
|
K.M. Smith
|
|
|
|
15,600
|
|
|
|
|
50,382
|
|
|
|
|
|
|
|
|
|
|
|
B.P. Baert
|
|
|
|
16,400
|
|
|
|
|
48,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Wilson exercised 55,040
stock appreciation rights; Ms. Shiba exercised 16,666
incentive stock options; Mr. Smith exercised 15,600
incentive stock options; Mr. Baert exercised 16,400 stock
appreciation rights.
|
|
(2)
|
|
Represents the difference between
the market price of our common shares at exercise and the
exercise or base price of the options or SARs exercised.
|
37
2006
PENSION BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years
|
|
|
|
Accumulated
|
|
|
|
Payments During
|
|
|
|
|
|
|
|
Credited Service
|
|
|
|
Benefit(1)
|
|
|
|
Last Fiscal Year
|
|
Name
|
|
|
Plan Name
|
|
|
(#)
|
|
|
|
($)
|
|
|
|
($)
|
|
S.D. Newlin
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.F.
Patient(2)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.D. Wilson
|
|
|
PolyOne Merged Pension Plan
|
|
|
|
24.9
|
|
|
|
|
512,950
|
|
|
|
|
0
|
|
|
|
|
The Geon Company
Section 401(a)(17) Benefit Restoration Plan
|
|
|
|
24.9
|
|
|
|
|
582,220
|
|
|
|
|
0
|
|
W.C. Shiba
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K.M. Smith
|
|
|
PolyOne Merged Pension
Plan(3)
|
|
|
|
17.4
|
|
|
|
|
326,264
|
|
|
|
|
0
|
|
|
|
|
The Geon Company
Section 401(a)(17) Benefit Restoration
Plan(4)
|
|
|
|
17.4
|
|
|
|
|
173,694
|
|
|
|
|
0
|
|
B.P. Baert
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Present Value of Accumulated
Benefit shown in column (d) above for each plan for each
Named Executive Officer is the lump-sum value as of
December 31, 2006 of the monthly pension benefit earned as
of December 31, 2006 that would be payable under that plan
for the executives life beginning on age 62 (the
earliest age prior to the Normal Retirement Age of 65 when
benefits can commence unreduced for early retirement). Lump sum
payments are not allowed under either plan. The assumptions used
to determine the lump-sum value are a discount rate of 6.07% and
a post-retirement mortality using the RP-2000 Combined Healthy
Mortality Tables for males. No pre-retirement decrements are
assumed.
|
|
(2)
|
|
Mr. Patient was not entitled
to pension benefits as a result of his retirement as our
Chairman, President and Chief Executive Officer. Prior to his
serving in this capacity, he was entitled to, and was receiving,
earned pension benefits as a result of his service with The Geon
Company, our predecessor.
|
|
(3)
|
|
Mr. Smiths Number of
Years of Credited Service includes the 4 additional years of
pension service discussed in the narrative following the 2006
Pension Benefits table. Without the 4 additional years of
pension service, the Present Value of Accumulated Benefit would
have been $251,355 instead of the $326,264 shown in the table.
|
|
(4)
|
|
Mr. Smiths Number of
Years of Credited Service includes the 4 additional years of
pension service discussed in the narrative following the 2006
Pension Benefits table. Without the 4 additional years of
pension service, the Present Value of Accumulated Benefit would
have been $133,814 instead of the $173,694 shown in the table.
|
As a result of the continuation of a plan that existed prior to
the consolidation of Geon and M.A. Hanna, we maintain two
defined benefit plans for those employees who were with those
companies at the time of the consolidation. As of
December 31, 1999, both plans were closed to new
participants.
One plan is The PolyOne Merged Pension Plan, which provides
funded, tax-qualified benefits subject to the limits on
compensation and benefits under the Internal Revenue Code
(referred to as
38
the Qualified Plan). The other plan is The Geon
Company Section 401(a)(17) Benefit Restoration Plan, which
provides unfunded, non-qualified benefits that are in addition
to those offered under the Qualified Plan. The Benefit
Restoration Plan benefits are calculated under a formula similar
to that of the Qualified Plan, but without the compensation and
benefit limits imposed by the Internal Revenue Code on qualified
plans. The benefits under the Benefit Restoration Plan are
offset by benefits provided under the Qualified Plan. The
Qualified Plan makes available a pension that is paid from funds
in trust provided through contributions by PolyOne. Any pension
benefit provided under the Benefit Restoration Plan is paid from
our general assets.
The amount of the executives pension depends on a number
of factors including final average earnings
(FAE) and years of credited company service to
PolyOne. FAE is determined based on the highest four consecutive
calendar years of an employees earnings. Earnings include
salary, overtime pay, holiday pay, vacation pay, and certain
incentive payments including annual cash bonuses, but exclude
awards under long-term incentive programs and the match by us in
the qualified savings plans. The annual salary and bonus for the
current year for the Named Executive Officers is indicated in
the 2006 Summary Compensation Table.
Effective December 31, 2002, service under the both the
Qualified Plan and the Benefit Restoration Plan were frozen.
Effective December 31, 2004, earnings under the Benefit
Restoration Plan were frozen.
The combined Plans generally provide a benefit of 1.15% of FAE,
times all years of pension service credit, plus 0.45% of FAE in
excess of covered compensation (as defined by the
Social Security Administration) times years of pension credit up
to 35 years. In addition, those executives who were
actively at work on December 31, 1989, may receive an
additional pension service credit of up to 4 years if
actual pension service credit is less than 24 years.
Benefits become vested after 5 years of service and are
generally payable on a monthly lifetime basis starting at
age 65.
A former employee can elect to commence vested benefit payments
as early as age 55 in lieu of waiting to age 65.
However, the benefit described above is subject to reduction in
recognition of the additional payments that are received because
of early commencement. The reduction for early retirement is
determined differently depending on whether the former employee
terminated employment before or after attaining age 55. If
an employee terminates employment on or after age 55 and
commences his or her benefit before age 62, the benefit
payments would be reduced by 0.5% per month. If an employee
terminates employment before age 55 and commences his or
her benefit before age 65, the reduction is more severe and
is determined on an actuarially equivalent basis. No reduction
will occur if an employee (1) terminates employment on or
after age 55 and commences his or her benefit on or after
age 62 or (2) terminates employment before age 55
and commences his or her benefit at age 65.
The normal form of payment provides that an employee will
receive his or her benefit on a lifetime payment with a minimum
of 60 monthly payments guaranteed. Married participants
receive payments in an actuarially equivalent 50% Joint and
Survivor form. Other actuarially equivalent monthly lifetime
forms of payments are available if elected by the participant
with spousal agreement if married. Lump sum payments are not
available.
In general, if a married, vested participant dies prior to
commencing his pension benefit then the spouse is eligible to
receive the benefit that would have otherwise been payable had
the participant terminated employment on the day he died,
survived to his Normal Retirement Date and elected a 50% Joint
and Survivor form of payment and then immediately died. The 50%
Joint and Survivor provides the surviving spouse with monthly
lifetime payments at the participants Normal Retirement
Age equal to 50% of the benefit that otherwise would have been
payable. Payments can
39
commence prior to the participants Normal Retirement Age
but may be reduced for early commencement.
2006
NONQUALIFIED DEFERRED COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
Registrant
|
|
|
|
Aggregate
|
|
|
|
Aggregate
|
|
|
|
Aggregate
|
|
|
|
|
Contributions in
|
|
|
|
Contributions in
|
|
|
|
Earnings
|
|
|
|
Withdrawals/
|
|
|
|
Balance at Last
|
|
|
|
|
Last
FY(1)
|
|
|
|
Last
FY(2)
|
|
|
|
in Last
FY(3)
|
|
|
|
Distributions
|
|
|
|
FYE(4)
|
|
Name
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
S.D. Newlin
|
|
|
$
|
20,377
|
|
|
|
$
|
22,675
|
|
|
|
$
|
413
|
|
|
|
|
|
|
|
|
$
|
40,100
|
|
W.F. Patient
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W.D. Wilson
|
|
|
|
49,442
|
|
|
|
|
27,410
|
|
|
|
|
49,814
|
|
|
|
|
|
|
|
|
|
502,595
|
|
W.C. Shiba
|
|
|
|
9,633
|
|
|
|
|
11,036
|
|
|
|
|
16,409
|
|
|
|
|
|
|
|
|
|
190,406
|
|
K. M. Smith
|
|
|
|
7,803
|
|
|
|
|
14,255
|
|
|
|
|
11,388
|
|
|
|
|
|
|
|
|
|
151,941
|
|
B.P. Baert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These amounts reflect actual
amounts earned by the executives in 2006, which amounts have
been deferred on a voluntary basis. The full amounts reflected
in column (b) are included in the 2006 Summary Compensation
Table as Salary, except for $4,364 relating to Mr. Wilson,
which was reported in the Bonus column of the 2005
Summary Compensation Table.
|
|
(2)
|
|
This column contains contributions
by us in the last fiscal year under our non-qualified retirement
plan, the PolyOne Supplemental Retirement Benefit Plan, which
provides for benefits in excess of amounts permitted to be
contributed under our qualified retirement plan, as follows:
(a) our cash contributions in amounts equal to 100% on the
first 3% of employee contributions plus 50% on the next 3% of
employee contributions (the Company Match);
(b) a retirement contribution by us in an amount equal to
2% of eligible earnings (the Retirement
Contribution); and (c) for Messrs. Smith and
Wilson only (as our heritage employees), an additional automatic
company-paid contribution in the amount of 3.25% and 4%,
respectively (the Transition Contribution).
Messrs. Baert and Patient do not currently participate in
this plan or any other non-qualified deferred compensation plan.
The following table breaks out the contributions made by us in
2006 under each of the types of contributions described above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Contribution
|
|
Newlin
|
|
|
Patient
|
|
|
Wilson
|
|
|
Shiba
|
|
|
Smith
|
|
|
Baert
|
|
|
Company Match
|
|
$
|
15,283
|
|
|
|
|
|
|
$
|
14,833
|
|
|
$
|
7,225
|
|
|
$
|
5,852
|
|
|
|
|
|
Retirement Contribution
|
|
|
7,392
|
|
|
|
|
|
|
|
4,192
|
|
|
|
3,811
|
|
|
|
3,201
|
|
|
|
|
|
Transition Contribution
|
|
|
0
|
|
|
|
|
|
|
|
8,385
|
|
|
|
0
|
|
|
|
5,202
|
|
|
|
|
|
|
|
|
|
|
All of these amounts are included
in the All Other Compensation column of the 2006
Summary Compensation Table.
|
|
(3)
|
|
Because amounts included in this
column do not include above-market or preferential earnings,
none of these amounts are included in the Change in
Pension Value and Nonqualified Deferred Compensation
Earnings column of the 2006 Summary Compensation Table.
|
|
(4)
|
|
A portion of the balance reflected
in the table represents amounts earned by the executives, which
they have elected to defer on a voluntary basis. The following
amounts included in the Aggregate Balance at Last
FYE column were reported in the 2006 Summary Compensation
Table or in the Summary Compensation Table for previous years
since our formation in 2000 (in the Salary,
Bonus, Non-Equity Incentive Plan
Compensation, or the All Other Compensation
columns): Mr. Newlin: $40,100; Mr. Wilson: $345,830;
Ms. Shiba: $152,938; and Mr. Smith: $102,121. Certain
of the Named Executive Officers also have balances in frozen
non-qualified deferred compensation plans sponsored by our
predecessor companies, Geon and M.A. Hanna. These plans are The
Geon Company Section 401(a)(17) Benefit Restoration Plan
and the M.A. Hanna Company Supplemental Retirement Benefit Plan.
These amounts are reflected in the table.
|
We currently offer participation in a non-qualified deferred
compensation retirement plan, called the PolyOne Supplemental
Retirement Benefit Plan. This plan is an unfunded, nonqualified
40
plan that provides benefits similar to our Qualified Savings
Plan, but without Internal Revenue Code contribution and
earnings limitations. The Named Executive Officers are permitted
to elect to defer up to 15% of their salary and annual bonus
into the plan. The amounts deferred are credited to accounts
selected by the executive that mirror the investment
alternatives available in our qualified retirement plan, except
that participants cannot elect the PolyOne stock fund with
respect to amounts deferred under the non-qualified plan. Each
Named Executive Officer who is a participant in the supplemental
plan is 100% vested in that portion of his or her account that
is attributable to elective deferrals, the Transition
Contribution (as defined above) and the Company Match (as
defined above). Further, Named Executive Officers who are
participants in the plan are vested in the Retirement
Contribution (as defined above) upon three years of service. A
Named Executive Officers vested accounts will commence to
be paid to such executive within 30 days of the date of the
executives termination of employment with us in the form
of payment selected by the executive (lump sum payment or
payment in installments over a period not exceeding
10 years) on an election form received by us.
The PolyOne Supplemental Retirement Benefit Plan and the frozen
legacy plans are subject to the rules of Section 409A of
the Internal Revenue Code, which restricts the timing of
distributions. Thus, payment, or commencement of payment, to the
Named Executive Officers of their accounts may need to be
delayed by six months from such executives
separation from service with us.
POTENTIAL
PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
Our Named Executive Officers employment may be terminated
under several possible scenarios. In certain of these scenarios,
our plans, agreements, arrangements or typical practices would
provide severance benefits in varying amounts to the executive.
We do not have employment agreements with any of our Named
Executive Officers, other than Mr. Newlin. We do have
Management Continuity Agreements with each of our Named
Executive Officers, which provide for specified benefits upon a
termination of employment following a change in control and each
of our Named Executive Officers, other than Mr. Newlin,
participate in our newly-approved Executive Severance Plan.
Further, our plans, agreements and arrangements may provide for
specified benefits upon a change in control (or for acceleration
of such benefits). Severance and other benefits that are payable
upon a termination of employment
and/or upon
a change in control are described below. The tables following
the narrative discussion summarize the amounts payable upon
termination or a change in control under certain circumstances,
assuming that the executives employment terminated on
December 31, 2006.
Management
Continuity Agreements
Messrs. Newlin, Wilson, Smith, Baert and Ms. Shiba are
parties to management continuity agreements with us (the
Continuity Agreements). The purpose of the
Continuity Agreements is to encourage the individuals to carry
out their duties in the event of the possibility of a
change of control of PolyOne. The Continuity
Agreements do not provide any assurance of continued employment
unless there is a change of control. Generally, a change of
control is deemed to have occurred if:
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|
|
|
|
any person becomes the beneficial owner of 25% or more of the
combined voting power of our outstanding securities (subject to
certain exceptions);
|
|
|
|
there is a change in the majority of our Board of Directors;
|
41
|
|
|
|
|
certain corporate reorganizations occur where the existing
shareholders do not retain more than 60% of the common shares
and combined voting power of the outstanding voting securities
of the surviving entity; or
|
|
|
|
there is shareholder approval of a complete liquidation or
dissolution of PolyOne.
|
The Continuity Agreements generally provide for the continuation
of employment of the individuals (for a period of 2 or
3 years, depending on the executive) in the same positions
and with the same responsibilities and authorities that they
possessed immediately prior to the change of control and with
the same benefits and level of compensation.
If a change of control occurs and the Named Executive
Officers employment is terminated by us or a successor for
reasons other than cause or is terminated
voluntarily by the individual for good reason,
generally the Continuity Agreements provide that the individual
would be entitled to receive:
|
|
|
|
|
at the election of the executive, continued payments of base
salary for a period of up to two or three years, depending on
the executive, or a lump sum payment of two or three years of
base salary, depending on the executive;
|
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|
|
a payment of up to two or three times (depending on the
executive) the executives targeted annual incentive amount
in effect prior to the change of control;
|
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|
|
the continuation of all employee health and welfare benefits for
up to two or three years (depending on the executive);
|
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|
|
financial planning services for one year;
|
|
|
|
a payment based on the difference between what the executive is
entitled to receive under certain retirement plans and what the
executive would have received under such retirement plans if he
or she had accumulated two or three (depending on the executive)
additional years of service under such plans;
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|
|
a lump sum payment equal to the company contributions required
to be made to certain retirement plans on behalf of the
executive for the year of the change of control or the year of
termination; and
|
|
|
|
a tax
gross-up for
any excise tax due under the Internal Revenue Code for any
payments or distributions made under the agreements.
|
All of the above severance benefits would be paid to the
executive in accordance with, and at times permitted by,
Section 409A of the Internal Revenue Code.
Under the terms of the Continuity Agreements, cause
is defined generally to include: (1) following notice and
an opportunity to cure, the willful and continued failure of the
executive to substantially perform his or duties, which causes
material and demonstrable injury to the company; or (2) the
willful engaging by the executive in other gross misconduct
materially and demonstrably injurious to the company.
Further, under the terms of the Continuity Agreements,
good reason is defined generally to include:
|
|
|
|
|
changes in duties, responsibilities, reporting relationships and
status that constitute a material demotion;
|
42
|
|
|
|
|
the assignment of duties or responsibilities that are materially
inconsistent with, or materially and adversely change, the
executives positions, duties, responsibilities or
reporting relationships and status;
|
|
|
|
a reduction in base salary or target incentive;
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|
|
the failure to continue employee benefits or perquisites on a
substantially equivalent basis;
|
|
|
|
the requirement to change the principal location of the
executives work, which results in an additional commute of
more than 50 miles;
|
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|
|
the requirement for increased travel (one-third more) away from
the executives office;
|
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|
|
the failure of a successor to assume the Continuity
Agreement; or
|
|
|
|
a termination of employment that does not comply with the
Continuity Agreement.
|
For the Chief Executive Officer, Chief Financial Officer and
Chief Legal Officer, good reason also includes their
election to terminate employment for any reason during the
30-day
period immediately following the first anniversary of the change
of control.
To the extent a payment or benefit that is paid or provided
under a Continuity Agreement would also be paid or provided
under the terms of another plan, program, agreement or
arrangement, such applicable plan, program, agreement or
arrangement shall be deemed to have been satisfied by the
payment made or benefit provided under the Continuity Agreement.
In addition, in order to receive payment and benefits under the
Continuity Agreement, the Named Executive Officer must execute a
release of claims against us and is subject to confidentiality,
non-compete and non-solicitation covenants for two or three
years (depending on the executive).
Employment
Agreement with Mr. Newlin
We have entered into a letter agreement with Stephen D. Newlin,
pursuant to which Mr. Newlin agreed to serve as our
Chairman, President and Chief Executive Officer. The agreement
provides that if (i) Mr. Newlins employment is
terminated by us without serious cause (as defined in our
Employee Transition Plan), (ii) Mr. Newlin is not
otherwise entitled to receive benefits under his Continuity
Agreement (discussed above) and (iii) Mr. Newlin
agrees to standard non-compete and non-solicitation covenants
for a period of 36 months following the date of
termination, Mr. Newlin will be entitled to 36 months
of salary continuation, car allowance and financial planning/tax
preparation allowance, a pro-rated annual incentive amount as
earned for the year in which the termination of employment
occurs and 18 months of continuation in our medical and
dental plans (but not life insurance, short-term disability or
long-term disability) and an amount equal to the financial
equivalent of six additional months of continuation in such
medical and dental plans.
If Mr. Newlins employment is involuntarily terminated
without serious cause prior to February 21, 2009,
Mr. Newlin is entitled to an additional cash payment, which
payment increases each year during the three-year period. If
Mr. Newlin is terminated on or following February 21,
2009, there is no additional cash payment.
Executive
Severance Plan
On May 25, 2006, our Compensation and Governance Committee
approved the adoption of the PolyOne Corporation Executive
Severance Plan (the Severance Plan). The Severance
Plan provides for severance payments to our executive officers
and other elected officers upon certain terminations of
employment.
43
For the Named Executive Officers other than Mr. Newlin, the
Severance Plan provides that, if we terminate the employment of
a Named Executive Officer for any reason other than cause, the
Named Executive Officer will be entitled to receive:
|
|
|
|
|
salary continuation payments in an amount equal to two times the
Named Executive Officers base salary;
|
|
|
|
a pro rata payment of his or her annual bonus for the year of
termination;
|
|
|
|
continued participation in our medical, dental and vision plans
for two years; and
|
|
|
|
fees for outplacement benefits for a period of 12 months.
|
We do not have to make payments to any Named Executive Officer
under the Severance Plan if he or she is entitled to receive
payment under a Continuity Agreement discussed above. In
addition, in order to receive payment and benefits under the
Severance Plan, the Named Executive Officer must execute a
release of claims against us and is subject to confidentiality,
non-compete, non-solicitation and non-disparagement covenants
during the two-year severance period.
Senior
Executive Annual Incentive Plan
The PolyOne Senior Executive Annual Incentive Plan (the
SEAIP) provides opportunities to our key executives
to receive incentive compensation as a reward for high levels of
performance above the ordinary performance standards compensated
by base salary, without limiting our ability to deduct that
expenditure for federal income tax purposes. Currently, all of
our Named Executive Officers participate in the SEAIP. The SEAIP
provides that, if a change in control occurs, we are required to
pay each participant an interim lump-sum cash payment equal to
the product of the number of months that have elapsed in the
calendar year prior to the change in control and one-twelfth of
the participants target annual incentive award in effect
prior to the change in control. We have the obligation to make a
final payment under the terms of the SEAIP for the plan year in
which the change in control occurs, but may offset the amount of
any interim payment made.
Under the SEAIP, a change in control is deemed to have occurred
if:
|
|
|
|
|
any person becomes the beneficial owner of 20% or more of the
combined voting power of our outstanding securities (subject to
certain exceptions);
|
|
|
|
there is a change in the majority of our Board of Directors;
|
|
|
|
certain corporate reorganizations occur where the existing
shareholders do not retain more than 60% of the common shares
and combined voting power of the outstanding voting securities
of the surviving entity; or
|
|
|
|
there is shareholder approval of a complete liquidation or
dissolution of PolyOne.
|
Equity/Long-Term
Incentive Awards
Each of the agreements evidencing outstanding awards of
restricted stock, stock options, stock appreciation rights,
performance shares and performance units provides that the
vesting of such award will accelerate upon a change in control.
For this purpose a change in control is defined, in
some instances, the same as in the SEAIP and, in other
instances, the same as in the Continuity Agreements.
44
Retirement
Benefits
Our defined benefit retirement benefit plan, applicable only to
Messrs. Smith and Wilson also has provisions relating to
the termination of the participants employment with us.
These payments are described more fully in the disclosure
provided in connection with the 2006 Pension Benefits table
contained in this proxy statement.
Mr. Patient
Termination Payments
Mr. Patient retired as our Chairman, President and Chief
Executive Officer on February 21, 2006. He continued to
serve as a member of our Board of Directors until he retired
from that position on May 25, 2006. Mr. Patient did
not receive any payments or benefits from us specifically in
connection with his termination of service with PolyOne. As a
former employee of The Geon Company (our predecessor),
Mr. Patient has been receiving and will continue to receive
the same pension benefit amounts and medical coverage he started
receiving on August 1, 1999 as a retiree of Geon. The
following termination scenarios do not apply to Mr. Patient
since his triggering event has already occurred.
Payments
and Benefits Upon Termination As of the End of
Fiscal Year 2006
The following tables summarize the amounts payable upon
termination under specified circumstances or upon a change in
control. The data in the tables assumes that each triggering
event listed in the tables occurred on December 31, 2006
and that the stock price for our common shares is $7.50, the
closing sales price of our common shares on December 29,
2006.
45
STEPHEN
D. NEWLIN
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|
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|
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|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
Retirement(1)
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
(No CIC; or,
|
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|
|
Termination
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
without Cause or
|
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|
|
|
Following a CIC,
|
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|
with Cause
|
|
|
|
|
|
|
|
Termination
|
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|
|
for Good Reason
|
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|
|
|
without Good
|
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|
(Including
|
|
|
|
|
|
|
|
without Cause
|
|
|
|
(Following a
|
|
|
|
|
Reason)
|
|
|
|
Following a CIC)
|
|
|
|
Death/Disability
|
|
|
|
(No CIC)
|
|
|
|
CIC)
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
Cash Severance Benefit
(salary continuation, multiple of annual incentive payments and
additional cash payment for termination prior to
2/21/09)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
2,600,003
|
|
|
|
$
|
4,700,003
|
|
Annual Incentive for Year of
Termination
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
959,700
|
|
|
|
|
959,700
|
|
Cash LTIP-Vesting of Performance
Units
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
343,500
|
(2)
|
|
|
|
0
|
|
|
|
|
1,030,500
|
|
LTIP-Vesting of Phantom Units
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
326,250
|
|
|
|
|
0
|
|
|
|
|
652,500
|
|
Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Restricted Stock
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,500,000
|
|
|
|
|
0
|
|
|
|
|
1,500,000
|
|
- Performance Shares (LTIP)
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|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
- Unexercisable Stock
Options/SARs
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
(3)
|
|
|
|
0
|
|
|
|
|
0
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Continuation of Medical,
Dental and Vision Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
20,425
|
|
|
|
|
30,637
|
|
- Continuation of Other
Benefits (car allowance; other welfare benefits)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
43,200
|
|
|
|
|
22,857
|
|
- Financial Planning
Services(4)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
39,000
|
|
|
|
|
13,000
|
|
- Outplacement Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
- Additional Company
Contribution for Defined Contribution Plans Under the Management
Continuity Agreement
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
273,000
|
|
Excise Tax Gross Up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,103,837
|
|
SUB-TOTAL
(Benefits Triggered Upon a Termination of Employment)
|
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|
0
|
|
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|
|
0
|
|
|
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|
2,169,750
|
|
|
|
|
3,662,328
|
|
|
|
|
12,286,034
|
|
PLAN BALANCES/VESTED BENEFITS
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|
|
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|
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|
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|
|
|
|
|
|
|
|
|
Defined Contribution Plan(s)
Balances (includes the Retirement Savings Plan and the
Supplemental Retirement Benefit
Plan)(5)
|
|
|
|
65,677
|
|
|
|
|
65,677
|
|
|
|
|
65,677
|
|
|
|
|
65,677
|
|
|
|
|
65,677
|
|
Present Value of Accrued Pension
Benefit
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
TOTAL
(Includes Benefits that are Vested and Currently Payable to the
Executive)
|
|
|
|
65,677
|
|
|
|
|
65,677
|
|
|
|
|
2,235,427
|
|
|
|
|
3,728,005
|
|
|
|
|
12,351,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Retirement is generally defined as
the executives attainment of age 55 with
10 years of service.
|
|
2 |
|
Assumes achievement of performance
goals at the target level of performance.
|
|
3 |
|
Assumes a constant share price of
$7.50, the closing sales price of our common shares on
December 29, 2006.
|
|
4 |
|
Assumes the executive takes
advantage of the maximum amount of available financial planning
services.
|
|
5 |
|
Includes amounts disclosed in the
Aggregate Balance at Last FYE column of the 2006
Nonqualified Deferred Compensation table.
|
46
W. DAVID
WILSON
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|
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|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
Termination or
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
Retirement(1)
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
without Cause
|
|
|
|
|
(No CIC; or,
|
|
|
|
with Cause
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
or for Good
|
|
|
|
|
Following a
|
|
|
|
(Including
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Reason
|
|
|
|
|
CIC, without
|
|
|
|
Following a
|
|
|
|
|
|
|
|
without Cause
|
|
|
|
(Following a
|
|
|
|
|
Good Reason)
|
|
|
|
CIC)
|
|
|
|
Death/Disability
|
|
|
|
(No CIC)
|
|
|
|
CIC)
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
Cash Severance Benefit
(salary continuation, multiple of annual incentive payments)
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
0
|
|
|
|
$
|
717,000
|
|
|
|
$
|
1,613,250
|
|
Annual Incentive for Year of
Termination
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
242,707
|
|
|
|
|
242,707
|
|
Cash LTIP-Vesting of Performance
Units
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
98,733
|
(2)
|
|
|
|
0
|
|
|
|
|
296,200
|
|
Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Restricted Stock
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
- Performance Shares (LTIP)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
178,500
|
|
|
|
|
0
|
|
|
|
|
267,750
|
|
- Unexercisable Stock
Options/SARs
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
13,860
|
(3)
|
|
|
|
0
|
|
|
|
|
62,370
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Continuation of Medical,
Dental and Vision Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
22,465
|
|
|
|
|
33,697
|
|
- Continuation of Other
Benefits (other welfare benefits)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
17,182
|
|
- Financial Planning
Services(4)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
10,000
|
|
- Outplacement Benefits
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
9,500
|
|
|
|
|
0
|
|
- Additional Company
Contribution for Defined Contribution Plans Under the Management
Continuity Agreement
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
169,390
|
|
Excise Tax Gross Up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,023,226
|
|
SUB-TOTAL
(Benefits Triggered Upon a Termination of Employment)
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
291,093
|
|
|
|
|
991,672
|
|
|
|
|
3,735,772
|
|
PLAN BALANCES/VESTED BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Contribution Plan(s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances (includes the Retirement
Savings Plan and the Supplemental Retirement Benefit
Plan)(5)
|
|
|
|
967,075
|
|
|
|
|
967,075
|
|
|
|
|
967,075
|
|
|
|
|
967,075
|
|
|
|
|
967,075
|
|
Present Value of Accrued Pension
Benefit(6)
|
|
|
|
855,373
|
|
|
|
|
855,373
|
|
|
|
|
427,670 / 855,373
|
(7)
|
|
|
|
855,373
|
|
|
|
|
855,373
|
|
TOTAL
(Includes Benefits that are Vested and Currently Payable to the
Executive)
|
|
|
|
1,822,448
|
|
|
|
|
1,822,448
|
|
|
|
|
1,685,838 / 2,113,541
|
(7)
|
|
|
|
2,814,120
|
|
|
|
|
5,558,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Retirement is generally defined as
the executives attainment of age 55 with
10 years of service.
|
|
2 |
|
Assumes achievement of performance
goals at the target level of performance.
|
|
3 |
|
Assumes a constant share price of
$7.50, the closing sales price of our common shares on
December 29, 2006.
|
|
4 |
|
Assumes the executive takes
advantage of the maximum amount of available financial planning
services.
|
|
5 |
|
Includes amounts disclosed in the
Aggregate Balance at Last FYE column of the 2006
Nonqualified Deferred Compensation table.
|
|
6 |
|
The numbers shown in the table are
illustrative only because lump sum payments are not available.
|
|
7 |
|
The first number represents
payments received upon death and the second number represents
payments received upon disability.
|
47
WENDY C.
SHIBA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
Retirement(1)
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
(No CIC; or,
|
|
|
|
Termination
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
without Cause or
|
|
|
|
|
Following a CIC,
|
|
|
|
with Cause
|
|
|
|
|
|
|
|
Termination
|
|
|
|
for Good Reason
|
|
|
|
|
without Good
|
|
|
|
(Including
|
|
|
|
|
|
|
|
without Cause
|
|
|
|
(Following a
|
|
|
|
|
Reason)
|
|
|
|
Following a CIC)
|
|
|
|
Death/Disability
|
|
|
|
(No CIC)
|
|
|
|
CIC)
|
|
|