WOLVERINE WORLD WIDE INC /DE/
10-Ks and 10-Qs
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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 Pursuant to Section 240.14a-12
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 Pursuant to Section 240.14a-12
WOLVERINE
WORLD WIDE, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Payment of Filing Fee (check the appropriate box): | ||||
| þ | No fee required. | |||
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |||
| 1) | Title of each class of securities to which transaction applies: | |||
| 2) | Aggregate number of securities to which transaction applies: | |||
| 3) | 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): | |||
| 4) | Proposed maximum aggregate value of transaction: | |||
| 5) | Total fee paid: | |||
| o | Fee paid previously with preliminary materials. | |||
| o | 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. | |||
| 1) | Amount Previously Paid: | |||
| 2) | Form, Schedule or Registration Statement No.: | |||
| 3) | Filing Party: | |||
| 4) | Date Filed: | |||
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE
NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
Table of Contents
Notice of 2011
Annual Meeting of Stockholders
and
Annual Meeting of Stockholders
and
Proxy Statement
Table of Contents
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Stockholders to be held on
April 21, 2011.
Wolverine’s Proxy Statement for the 2011 Annual Meeting
of Stockholders and the Annual Report to Stockholders for the
fiscal year ended January 1, 2011, are available at
www.wolverineworldwide.com/2011annualmeeting.
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Table of Contents
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
March 11, 2011
Dear Stockholder,
You are invited to attend the 2011 Annual Meeting of
Stockholders which will be held on Thursday, April 21,
2011, at the Company’s headquarters in Rockford, Michigan.
The annual meeting will begin with an introduction of management
attendees and directors, followed by voting on the matters set
forth in the accompanying notice of annual meeting and proxy
statement and any other business matters properly brought before
the meeting. The meeting will adjourn for a presentation on the
Company’s business operations, and then resume for a report
on the voting.
Whether or not you plan to attend, you can ensure that your
shares are represented at the meeting by promptly voting and
submitting your proxy by telephone or by Internet, or by
completing, signing, dating and returning your proxy form in the
enclosed envelope.
Sincerely,
Blake W. Krueger
Chairman
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CONTENTS
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Audit Committee Pre-Approval Policy
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Audit and Non-Audit Fees
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Table of Contents
10:00 a.m., April 21, 2011
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
March 11, 2011
To our Stockholders:
We invite you to attend Wolverine’s Annual Meeting of
Stockholders at Wolverine’s headquarters located at 9341
Courtland Drive, N.E., Rockford, Michigan, on Thursday,
April 21, 2011, at 10:00 a.m. Eastern Daylight
Time. The annual meeting will begin with an introduction of
management attendees and directors, after which stockholders
will:
| (1) | vote on the election of the three director nominees named in the proxy statement for three-year terms expiring in 2014; | |
| (2) | vote on the ratification of the Audit Committee’s appointment of Ernst & Young LLP as the Company’s independent auditor for the fiscal year 2011; | |
| (3) | vote on an advisory resolution approving compensation for the Company’s named executive officers; | |
| (4) | vote on how frequently the Company should seek future advisory votes on compensation of its named executive officers; and | |
| (5) | transact other business that may properly come before the meeting. |
The meeting will adjourn for a presentation on the
Company’s business operations, then resume for a report on
the voting results. You can vote at the meeting and any
adjournment of the meeting if you were a stockholder of record
on March 1, 2011.
By Order of the Board of Directors
Kenneth A. Grady, Secretary
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
We are furnishing you this proxy statement and enclosed proxy
card in connection with the solicitation of proxies by the Board
of Directors of Wolverine World Wide, Inc. to be used at the
Annual Meeting of Stockholders of the Company. Distribution of
this proxy statement and enclosed proxy card to stockholders is
scheduled to begin on or about March 11, 2011.
You can ensure that your shares are voted at the meeting by
submitting your instructions by telephone or by Internet, or by
completing, signing, dating and returning your proxy form in the
enclosed envelope. Submitting your instructions or proxy by any
of these methods will not affect your right to attend and vote
at the meeting. We encourage stockholders to submit proxies in
advance. A stockholder who gives a proxy may revoke it at any
time before it is exercised by voting in person at the annual
meeting, by delivering a subsequent proxy or by notifying the
inspectors of election in writing of such revocation. In order
to vote any shares at that meeting that are held for you in a
brokerage, bank or other institutional account, you must obtain
a proxy from that entity and bring it with you to hand in with
your ballot.
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Table of Contents
The Company’s Board of Directors (the “Board” or
“Board of Directors”) consists of 11 directors.
Wolverine’s Amended and Restated By-laws
(“By-laws”) divide the Board into three classes as
nearly equal in number as possible. Each class serves a
three-year term of office. At each annual meeting, the term of
one class expires. Subject to exceptions approved by the Board,
directors must retire and resign from the Board at the Annual
Meeting of Stockholders following their 72nd birthday. The Board
prides itself on its ability to recruit and retain directors who
have the highest personal and professional integrity, have
demonstrated exceptional ability and judgment and are effective
in serving the stockholders’ long-term interests. The
Board’s Governance Committee acts as the nominating
committee. The Committee, in anticipation of upcoming director
elections and other potential or expected Board vacancies,
searches for qualified individuals and recommends candidates for
director openings to the full Board. At the Company’s
expense, the Committee may retain a search firm or other
external parties to assist it in identifying candidates. The
Committee delegates
day-to-day
management and oversight of the external parties to the Chief
Executive Officer (“CEO”) and the Company’s
Senior Vice President of Human Resources. The Committee
considers candidates suggested by directors, senior management
and stockholders, and evaluates all candidates in the same
manner. Stockholders may recommend individuals as potential
director candidates by communicating with the Committee through
one of the Board communication mechanisms described under the
heading “Stockholders Communications Policy.”
Stockholders that wish to recommend a director candidate must
comply with the procedures set forth in the By-laws, posted on
the Company’s website. Ultimately, the Board selects the
Company nominees for election at each annual meeting.
Board
Composition
As stated in the Company’s Corporate Governance Guidelines,
Wolverine seeks to achieve diversity in its Board membership by
assembling a group of directors that have a broad range of
skills, expertise, knowledge and contacts to benefit the
Company’s business. The Governance Committee and the Board
annually assess the current
make-up of
the Board, considering diversity across many dimensions, and the
Committee uses this assessment when defining the criteria for a
director search. The Committee, along with the Board, assesses
the effectiveness of the diversity objective when reviewing
Board composition. Among other things, the Board has determined
that it is important to have individuals with the following
skills and experiences on the Board:
| » | Footwear, apparel and retail experience. The Company’s business focuses on the international marketing and sale of footwear and apparel, both in wholesale and retail markets. The Company has identified expanding its apparel and retail businesses as two important growth initiatives. The Board believes it is important to have directors with experience in the footwear, apparel and retail industries to provide insights into these and other areas that are critical to the Company’s success. | |
| » | Leadership experience. The Board believes that directors with significant leadership experience, including CEO experience, provide it with special insights, including organization development and leadership practices, and those individuals with this experience help the Company in identifying and developing its own leadership talent. They demonstrate a practical understanding of organizations, process, strategy, risk management and the methods to drive change and growth. These individuals also provide the Company with a valuable network of contacts and relationships. | |
| » | Global experience. The Company’s products are sold in more than 190 countries and territories, reflecting the global nature of its business. In fiscal year 2010, approximately 38% of the Company’s revenues came from outside the U.S. and more than 90% of the Company’s products were sourced from outside the U.S. The Board believes it is important to have directors who are familiar with the challenges and opportunities faced by a global business. | |
| » | Finance experience. The Company uses various financial metrics in managing its overall operations and the operations of its business units. Accurate financial tracking and reporting is critical to the Company and its stockholders. Experience as members of audit committees of other boards of |
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| directors also gives directors insight into best audit committee practices. The Board believes that understanding finance and financial reporting processes is important for all directors, and that several should qualify as audit committee financial experts. |
| » | Public and private company experience. The Company has been publicly traded since 1965. Although operating as part of a public company, brand leaders also are expected to bring the entrepreneurial spirit of private company leadership to drive growth in their business units. The Board believes it is important to have directors who are familiar with the regulatory requirements and environment for publicly held corporations, and to have directors who have experience applying an entrepreneurial focus to building a company or business unit. | |
| » | Government experience. A portion of the Company’s business involves government contracting, and the Company interacts with domestic and foreign governments routinely. The Board recognizes the importance of working constructively with governments around the world, and believes it is helpful to have directors who have experience in or working with government. |
The specific qualifications and experience of the individual
director nominees and directors are set forth below under
“Item 1: Election of Directors.” The Committee
also considers an individual’s relative skills, background
and characteristics, their exemplification of the highest
standards of personal and professional integrity, independence
under New York Stock Exchange (“NYSE”) listing
standards and the Company’s Director Independence
Standards, potential contribution to the composition and culture
of the Board, and ability and willingness to actively
participate in the Board and committee meetings and to otherwise
devote sufficient time to Board duties.
| ITEM 1: | ELECTION OF DIRECTORS – TERMS EXPIRING IN 2014 |
Three directors will be elected at the annual meeting on
April 21, 2011, for three-year terms expiring at the annual
meeting of stockholders to be held in 2014 or until their
respective successors, if any, have been elected and are
qualified. The Company’s nominees include two independent
directors, as determined by the Board under the applicable rules
for companies whose securities are traded on NYSE and the
Company’s independence standards, and the Company’s
CEO, who is not an independent director. All director nominees
currently serve on the Board and were elected by the
stockholders at the Company’s 2008 annual meeting. The
Company does not know of any reason why any nominee would be
unable to serve as a director. However, if a nominee is unable
to serve or is otherwise unavailable for election, the incumbent
directors may or may not select a substitute nominee. If the
directors select a substitute nominee, the Company will vote the
shares represented by all valid proxies for the substitute
nominee (unless you give other instructions).
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WILLIAM K. GERBER
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Director since 2008
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Age 57 | ||||
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Managing Director of Cabrillo Point Capital LLC
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Mr. Gerber’s experience includes public company,
finance and accounting, apparel and retail industry, corporate
leadership, international operations and public company officer
and director experience. Mr. Gerber is Managing Director of
Cabrillo Point Capital LLC, a private investment fund. He has
held that position since 2008. From 1998 to 2007,
Mr. Gerber was Executive Vice President and Chief Financial
Officer of Kelly Services, Inc., a publicly traded global
staffing solutions company with operations in more than 35
countries. In this role, Mr. Gerber was responsible for
investor relations, mergers and acquisitions and purchasing in
addition to core Chief Financial Officer functions. In addition
to Mr. Gerber’s 10 years of experience as Chief
Financial Officer of Kelly Services, Inc., he has 15 years
of experience in various finance roles, including Vice
President, Finance, and Vice President, Corporate Controller,
for Limited Brands, Inc., a publicly traded company in the
apparel and retail industry. Mr. Gerber is a director of
and Chairman of the Audit Committees of AK Steel Holding
Corporation and Kaydon Corporation.
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Table of Contents
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BLAKE W. KRUEGER
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Director since 2006
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Age 57 | ||||
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Chairman, Chief Executive Officer and President of Wolverine
World Wide, Inc.
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Mr. Krueger’s experience includes footwear, apparel
and retail industry, corporate leadership, branded marketing,
international operations, legal, and public company officer and
board experience. Mr. Krueger has more than 15 years
of experience as an executive officer of Wolverine, including
nearly four years as Chief Executive Officer with responsibility
for all aspects of the business, including international
operations, brand management, apparel and accessories and retail
development, footwear wholesale, manufacturing, sourcing,
corporate governance, human resources and mergers and
acquisitions. Mr. Krueger is currently Chairman of
Wolverine, a position he assumed in January 2010, and Chief
Executive Officer and President of Wolverine, positions he
assumed in April 2007. From October 2005 until April 2007,
Mr. Krueger served as President and Chief Operating Officer
of Wolverine. From 2004 to October 2005, he served as Executive
Vice President and Secretary of Wolverine and President of the
Heritage Brands Group. From 2003 to 2004, Mr. Krueger
served as Executive Vice President and Secretary of Wolverine
and President of the Caterpillar Footwear Group. He has also
previously served as Executive Vice President, General Counsel
and Secretary of Wolverine with various responsibilities
including the human resources, retail, business development,
accessory licensing, mergers and acquisitions, and legal areas.
During the preceding five years, Mr. Krueger was, but no
longer is, a director of Professionals Direct, Inc.
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MICHAEL A. VOLKEMA
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Director since 2005
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Age 55 | ||||
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Chairman of Herman Miller, Inc.
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Mr. Volkema’s experience includes corporate
leadership, branded marketing, international operations, public
company officer and board experience and public company finance
and accounting experience through audit committee service.
Mr. Volkema has more than 20 years of experience as a
senior executive in the home and office furnishings industry,
including nine years as Chief Executive Officer of Herman
Miller, Inc., a leading designer and manufacturer of furnishings
for the office and home, and a publicly traded company with
international, branded operations. Mr. Volkema has been
Chairman of Herman Miller, Inc. since 2000. Mr. Volkema
became President and Chief Executive Officer of Herman Miller in
1995 and held those positions until 2003 and 2004, respectively.
Mr. Volkema has more than 20 collective years of experience
on public company boards, including nine years as Chairman of
the Board at Herman Miller, Inc., and including service on
public company compensation and audit committees. During the
preceding five years, Mr. Volkema was, but no longer is, a
director of Champion Enterprises, Inc. and Applebee’s
International, Inc.
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Board
Recommendation
The Board recommends that you vote “FOR” the
election of the above nominees for terms expiring in 2014.
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JEFFREY M. BOROMISA
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Director since 2006
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Age 56 | ||||
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Retired Executive Vice President of Kellogg International,
President of Latin America; Senior Vice President of Kellogg
Company, and member of Kellogg Company’s Global Leadership
Team
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Mr. Boromisa’s experience includes public company
officer, finance and accounting, corporate leadership, branded
marketing and international operations experience. This
experience includes service as Chief Financial Officer and in
other senior finance roles and in senior roles involving
executive management, brand management, marketing and
international operations, during his more than 25 year
career at Kellogg Company, a publicly traded, multinational
company and leading global cereal, snack and specialty foods
company. Mr. Boromisa was Executive Vice President of
Kellogg International, President of Latin America; Senior Vice
President of Kellogg Company, and a member of Kellogg
Company’s Global Leadership Team from 2008 through March
2009. From 2006 until 2008, Mr. Boromisa served as
Executive Vice President of Kellogg International, President of
Asia Pacific and Senior Vice President of the Kellogg Company,
as well as serving as a member of Kellogg Company’s Global
Leadership Team. From 2004 until 2006, he was Senior Vice
President and Chief Financial Officer of Kellogg Company. In
2002, Mr. Boromisa was promoted to Senior Vice President,
Corporate Controller and Chief Financial Officer of Kellogg
International. Mr. Boromisa served as Vice President and
Corporate Controller of Kellogg Company from November 1999 until
2002. In 1997, he was promoted to Vice President —
Purchasing of Kellogg North America, and from 1981 to 1997,
served Kellogg Company in various financial positions.
Mr. Boromisa also is a director at Haworth, Inc., a
privately held, international, office furniture design and
manufacturing company.
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DAVID T. KOLLAT
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Director since 1992
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Age 72 | ||||
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President and Chairman of 22, Inc.
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Mr. Kollat’s experience includes apparel and retail
industry, branded marketing, corporate leadership, public
company officer and board experience and public company finance
and accounting experience through audit committee service.
Mr. Kollat has been President and Chairman of 22, Inc., a
company specializing in research and management consulting for
retailers and consumer goods manufacturers, since 1987. In
addition to his marketing and management experience as President
and Chairman of 22, Inc., Mr. Kollat has 11 years of
experience as Executive Vice President, Marketing, and a member
of the executive committee of Limited Brands, Inc., a publicly
traded company operating in the apparel and retail industry, and
three years at Limited Brands, Inc. as President of
Victoria’s Secret Direct. Mr. Kollat has 80 collective
years of experience serving on public company boards, including
experience on audit (13 years), compensation
(14 years), governance (7 years) and finance
(8 years) committees of public company boards.
Mr. Kollat is Lead Director of Wolverine and currently
serves as a director of Limited Brands, Inc.; Big Lots, Inc.;
and Select Comfort Corporation. In 2009, prior to
Mr. Kollat’s re-election as a director, the Board
decided to waive the Company’s age 72 resignation
requirement for Mr. Kollat, allowing him to serve an
additional term ending in 2013.
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DAVID P. MEHNEY
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Director since 1977
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Age 71 | ||||
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President of The KMW Group, Inc.
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Mr. Mehney’s experience includes corporate leadership,
branded marketing and international operations experience.
Mr. Mehney has been President of The KMW Group, Inc. since
1966. The KMW Group, Inc. and its subsidiaries import and
distribute medical products in the United States, Canada, Europe
and Asia and distribute marine products in Michigan.
Mr. Mehney’s experience with The KMW Group, Inc.
includes establishing foreign-owned brands in the United States
market and the distribution of sourced products in the United
States, Canada, Europe and Asia. Mr. Mehney has been
associated with Wolverine’s business and industry for more
than 30 years as a member of Wolverine’s Board of
Directors.
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TIMOTHY J. O’DONOVAN
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Director since 1993
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Age 65 | ||||
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Retired Chairman of the Board and Chief Executive Officer of
Wolverine World Wide, Inc.
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Mr. O’Donovan’s experience includes footwear,
apparel and retail industry, corporate leadership, branded
marketing, international operations, public company officer and
board experience and public company finance and accounting
experience through audit committee service.
Mr. O’Donovan has more than forty years of experience
with Wolverine, including two years as non-executive Chairman of
the Board and seven years as Chief Executive Officer, with
responsibility for all aspects of the business, including
international operations, brand management, apparel and
accessories and retail development, footwear wholesale,
manufacturing, sourcing, corporate governance, human resources
and mergers and acquisitions. Mr. O’Donovan is a
former Chairman of the Board of Wolverine, and served in that
position from April 2005 through December 2009. In April 2007,
Mr. O’Donovan retired as Chief Executive Officer of
Wolverine, a position which he held since April 2000.
Mr. O’Donovan served Wolverine as its Chief Executive
Officer and President from April 2000 until April 2005, and as
Chief Operating Officer and President from 1996 until April
2000. Before 1996, Mr. O’Donovan was Executive Vice
President of Wolverine. Mr. O’Donovan has more than 25
collective years of experience on public company boards and
service on both audit (four years) and compensation (five years)
committees of public company boards. Mr. O’Donovan is
currently a director of Spartan Stores, Inc. and Kaydon
Corporation.
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ALBERTO L. GRIMOLDI
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Director since 1994
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Age 69 | ||||
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Chairman of Grimoldi, S.A.
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Mr. Grimoldi’s experience includes footwear, apparel
and retail industry experience, corporate leadership,
international operations, government and branded marketing
experience. Mr. Grimoldi has more than 25 years of
experience in the footwear and retail industries with Grimoldi,
S.A., a publicly traded company in Argentina that sells footwear
and apparel in both wholesale and retail markets.
Mr. Grimoldi has been Chairman of Grimoldi, S.A. since
1986. Mr. Grimoldi has significant additional international
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operations and finance experience in the private sector, including as a member
of the Advisory Board of Ford Motor Company and as Vice Chairman
of Banco Privado de Inversiones, S.A., an investment bank, as
well as leadership and finance experience earned while in
government service in Argentina as Undersecretary of Foreign
Trade, Undersecretary of Economics and Labor, Secretary of
Industry and a member of the board of the Central Bank of
Argentina.
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JOSEPH R. GROMEK
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Director since 2008
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Age 64 | ||||
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President, Chief Executive Officer and a Director of The
Warnaco Group, Inc.
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Mr. Gromek’s experience includes footwear, apparel and
retail industry, corporate leadership, international operations,
public company officer and branded marketing experience.
Mr. Gromek has more than 30 years of experience
managing and marketing brands and 40 years of experience in
the retail and apparel industry, including 14 years as a
chief executive officer. Since 2003, Mr. Gromek has served
as President, Chief Executive Officer and a Director of The
Warnaco Group, Inc., a publicly traded company which designs,
sources, manufactures, markets, retails, licenses and
distributes a broad line of intimate apparel, sportswear and
swimwear worldwide. As Chief Executive Officer of The Warnaco
Group, Inc., Mr. Gromek oversees extensive U.S. and
international branded operations and points of distribution.
Mr. Gromek also served as Chief Executive Officer of Brooks
Brothers, Inc. from 1996 until 2002.
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BRENDA J. LAUDERBACK
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Director since 2003
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Age 60 | ||||
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Retired President of the Wholesale and Retail Group of Nine
West Group, Inc.
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Ms. Lauderback’s experience includes footwear, apparel
and retail industry, corporate leadership, branded marketing,
international operations, public company board and public
company finance and accounting experience through audit
committee service. Ms. Lauderback has more than
25 years of experience in the retail industry and more than
20 years of footwear, apparel, and accessories industry
experience. From 1995 until her retirement in 1998,
Ms. Lauderback was president of the Wholesale and Retail
Group of Nine West Group, Inc., a footwear wholesaler and
distributor. She previously was the President of the Wholesale
Division of U.S. Shoe Corporation, a footwear manufacturer and
distributor, a position that included responsibility for offices
in China, Italy and Spain, and was a Vice President/General
Merchandise Manager of Dayton Hudson Corporation, a retailer.
Ms. Lauderback has more than 35 collective years of
experience on public company boards and collective experience of
more than 20 years on audit, compensation and governance
committees of public company boards and is chair of three
governance committees. Ms. Lauderback is a director of Big
Lots, Inc.; Denny’s Corporation and Select Comfort
Corporation. During the preceding five years,
Ms. Lauderback also was, but no longer is, a director of
Irwin Financial Corporation.
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SHIRLEY D. PETERSON
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Director since 2005
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Age 69 | ||||
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Retired Partner of Steptoe & Johnson LLP
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Ms. Peterson’s experience includes legal, financial
and executive management experience from both the public and
private sectors, public company board, government and public
company finance and accounting experience through
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audit
committee service. Ms. Peterson has diverse management
experience in various private and public sector roles, including President of
Hood College, Assistant Attorney General of the Tax Division for
the U.S. Department of Justice, Commissioner of the Internal
Revenue Service and more than 20 years in private law
practice as a tax attorney at the law firm Steptoe &
Johnson LLP. From 1995 until her retirement in 2000,
Ms. Peterson served as President of Hood College of
Frederick, Maryland. Ms. Peterson has more than 30
collective years of experience on public company boards,
including experience on boards of companies with significant
international, retail, brand development, manufacturing and
sourcing operations, as well as more than 20 collective years of
experience serving on public company audit committees and more
than 30 collective years of experience serving on public company
governance committees, with an additional 13 years of
experience serving on the governance committee of the DWS
Fund Complex. Ms. Peterson is currently a director of
The Goodyear Tire & Rubber Company and of AK Steel
Holding Corporation. During the preceding five years,
Ms. Peterson also was, but no longer is, a director of
Federal-Mogul Corporation and Champion Enterprises, Inc., and
was a director or trustee of various funds within the DWS
Fund Complex.
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12
Table of Contents
GOVERNANCE
PRINCIPLES
The Board’s Corporate Governance Guidelines (including the
Director Independence Standards) and the Charter for each Board
standing committee (Audit, Compensation and Governance); the
Company’s Certificate of Incorporation; By-laws; Code of
Conduct & Compliance and its Accounting and Finance
Code of Ethics all are available on the Wolverine website at
http://www.wolverineworldwide.com/investor-relations/corporate-governance/.
The Board and committees annually review and update these and
other key governance documents.
The Board and each standing committee conduct an annual
self-assessment. Each director also evaluates the performance of
the other directors as part of the Board self-assessment. The
Lead Director, working with the Governance Committee, reviews
the Board self-assessment with directors following the end of
each fiscal year. The committee Chairpersons review the
committee self-assessments with their respective committee
members and discuss them with the Board. The Lead Director, also
with the Governance Committee, develops and implements
guidelines evaluating all directors standing for nomination and
re-election.
Risk
Oversight
The Board oversees the Company’s risk management and
mitigation activities directly through presentations by and
discussions with the CEO, Chief Financial Officer
(“CFO”), General Counsel, brand and department
leaders, and other members of management. The Company’s
management Risk Advisory Committee, consisting of the CFO and
other senior level functional executives, meets periodically and
leads management’s risk management and mitigation
processes, which include reviews of long-term strategic and
operational planning; executive development and evaluation;
regulatory and litigation compliance; financial reporting and
control; and information technology and security. The Director
of Internal Audit coordinates management’s
day-to-day
risk management and mitigation processes and reports directly to
the CFO and to the Audit Committee. The Director of Internal
Audit also reviews with the Audit Committee quarterly and the
full Board annually management’s risk assessments and
mitigation strategies for significant risks. The Board also has
delegated the following risk management and mitigation oversight
responsibilities to its standing committees, which meet
regularly to review and discuss risk topics and then report to
the full Board:
| » | The Audit Committee oversees the Company’s risk policies and processes relating to its financial statements and financial reporting processes, credit risks, and liquidity risks; and reviews the Company’s policies and systems with respect to risk assessment and risk management. The Committee discusses with management and the independent auditors significant risks or exposures and the steps taken by management to resolve them. The Committee also oversees the Company’s procedures for the receipt, retention and treatment of complaints relating to accounting and auditing matters and oversees the Company’s management of legal and regulatory compliance systems. | |
| » | The Compensation Committee monitors the risks associated with management resources; organization structure; succession planning, hiring, development and retention processes; and reviews and evaluates the effects the Company’s compensation structure may have on risk decisions. | |
| » | The Governance Committee oversees risks related to the Company’s governance structure and processes and risks arising from related person transactions. |
Risk
Considerations in Compensation Programs
The Company reviewed its employee compensation programs to
assess whether any of those programs included incentives that
created risks likely to have a material adverse impact on the
Company. As part of this review, the Company compiled
comprehensive information about the Company’s incentive
plans,
13
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including identifying all incentive plans, reviewing the
Company’s compensation philosophy, evaluating key incentive
plan design features, and reviewing historic payout levels and
pay mix. The Compensation Committee reviewed the executive
compensation programs, with management’s assistance, and
managers from the Company’s human resources and legal
departments reviewed the non-executive compensation programs.
Board
Leadership
The Company’s CEO currently also serves as the Chairman of
the Board and, since 1993, the Company has had an independent
Lead Director who functions in many ways similar to how an
independent Chairman would function. This long-established
structure provides the Board with independent oversight of the
CEO’s leadership. The Board believes that it should decide
whether to separate the roles of Chairman and CEO based upon the
Company’s circumstances at the time and considers the
Board’s leadership structure as part of the succession
planning process. The Company’s business currently focuses
on the development of footwear and apparel, and its retail
business. Because the Company does not operate multiple,
unrelated business segments and given the size of the Company,
the Board believes that separating the Chairman and CEO roles at
this time would add unnecessary complexity to the organization
structure without adding materially to Board oversight of the
CEO function. The Company’s independent directors annually
select an independent Lead Director. As outlined in the
Corporate Governance Guidelines, the duties of the Lead Director
include:
| » | reviewing and approving the agenda and scheduling for Board and committee meetings; | |
| » | overseeing and approving information sent to the Board; | |
| » | presiding over executive sessions of the independent directors and having the authority to call executive sessions; | |
| » | serving as a liaison between the Chairman and the independent directors; | |
| » | presiding over Board meetings in the absence of the Chairman; and | |
| » | consulting and communicating with stockholders, as appropriate. |
Director
Independence
The Board annually assesses the independence of all directors.
The Board currently has eight independent directors out of
eleven directors, representing a substantial majority (more than
72%) of the Board. These independent directors meet periodically
each year in executive session. All of the Board’s
committees are comprised entirely of independent directors. The
Board believes that this structure provides for meaningful and
effective oversight of management by the independent directors.
No director qualifies as “independent” unless the
Board affirmatively determines that the director is independent
under the Company’s Director Independence Standards and the
listing standards of the NYSE. For over 15 years, Wolverine
has not had more than two active or former management employees
as directors. When determining whether a director is
independent, the Board considers the factors identified below
and such other factors that the Board deems relevant. The
Director Independence Standards define an “Independent
Director” as a director who:
| » | is not, and has not been within the last three years, an employee of the Company; | |
| » | does not have, and has not had within the last three years, an immediate family member employed as an executive officer of the Company; | |
| » | has not received, and has not had an immediate family member receive during any twelve-month period within the last three years, any direct compensation from the Company in excess of $120,000 (other than compensation for Board service; compensation received by the director for former service as an interim Chairman, CEO or other executive officer; compensation received by the director’s immediate family member for service as a non-executive employee; or pension and |
14
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| other forms of deferred compensation for prior service if such compensation is not contingent in any way on continued service); |
| » | is not a current employee or partner of a firm that is the Company’s internal or external auditor (“Company Auditor”); | |
| » | has not been, and has not had an immediate family member who has been within the last three years, a partner or employee of a Company Auditor and personally worked on the Company’s audit within that time; | |
| » | has not had an immediate family member who is (i) a current partner of a Company Auditor, or (ii) a current employee of a Company Auditor who personally works on Wolverine’s audit; | |
| » | is not, and has not been within the last three years, part of an interlocking directorate in which a current executive officer of Wolverine serves or served on the compensation committee of another company where the director or the director’s immediate family member concurrently serves or served as an executive officer; | |
| » | does not have, and has not had within the last three years, an immediate family member who is or has been part of an interlocking directorate in which a current executive officer of Wolverine serves or served on the compensation committee of another company where the director or the director’s immediate family member concurrently serves or served as an executive officer; | |
| » | is not an employee, majority owner or person in control of another company that has made payments to, or received payments from, Wolverine for property or services in an amount which, in any of the last three fiscal years, exceeds the lesser of $250,000 or 10% of the other company’s consolidated gross revenues; | |
| » | does not have an immediate family member who is an executive officer of another company that has made payments to, or received payments from, Wolverine for property or services in an amount which, in any of the past three fiscal years, exceeds the greater of $1,000,000 or 2% of the other company’s consolidated gross revenues; | |
| » | is not an executive officer, trustee or board member of a tax exempt organization to which Wolverine has made in the past three fiscal years contributions that, in any single fiscal year, exceeded the greater of $50,000 or 2% of the non-profit organization’s, foundation’s or educational institution’s consolidated gross revenues; and | |
| » | has not had any other direct or indirect relationship with Wolverine, which the Board determines is material. |
“Immediate Family Member” covers spouses, parents,
children, siblings, in-laws, and any person (other than domestic
employees) sharing the household of any director, nominee for
director, executive officer, or significant stockholder of a
company.
Under these standards, and in conformity with the listing
standards of the NYSE, the Board has determined that the
following directors are independent: Jeffrey M. Boromisa,
William K. Gerber, Joseph R. Gromek, David T. Kollat, Brenda J.
Lauderback, David P. Mehney, Shirley D. Peterson, and Michael A.
Volkema. Mr. Krueger is not independent because he
currently is the Company’s CEO and President.
Mr. Grimoldi is not independent because he is the Chairman
and 35% owner of a company that made payments to Wolverine in
excess of $1,000,000 per year in the last three years.
Mr. O’Donovan is not independent because he serves as
a director of a foundation board and the Company contributes to
the foundation. In evaluating Mr. Mehney’s
independence, the Board considered the transactions between a
company partly owned by Mr. Mehney’s son and the
Company, as set forth in the “Certain Relationships and
Related Transactions” section.
15
Table of Contents
Board of
Directors and Committees
The stockholders elect the Board to oversee Company management.
The Board delegates authority to the CEO and senior management
to pursue the Company’s mission, and oversees the
CEO’s and senior management’s conduct of the
Company’s business. In addition to its general oversight
function, the Board reviews and assesses the Company’s
strategic and business planning, senior management’s
approach to addressing significant risks, and has additional
responsibilities including, but not limited to, the following:
| » | reviewing and approving the Company’s key objectives and strategic business plans and monitoring implementation of those plans and the Company’s success in meeting identified objectives; | |
| » | reviewing the Company’s financial objectives and major corporate plans, business strategies and actions; | |
| » | selecting, evaluating and compensating the CEO and overseeing CEO succession planning; | |
| » | providing advice and oversight regarding the selection, evaluation, development and compensation of senior management; | |
| » | reviewing significant risks confronting the Company and alternatives for their mitigation; and | |
| » | assessing whether adequate policies and procedures are in place to safeguard the integrity of the Company’s business operations and financial reporting, and to promote compliance with applicable laws and regulations, and monitoring management’s administration of those policies and procedures. |
During 2010, the Board held eight meetings. The Company expects
directors to attend every meeting of the Board and the
committees on which they serve and attend the annual meeting of
stockholders. In 2010, each director then serving on the Board
attended the 2010 Annual Meeting of Stockholders and all
directors attended at least 75% of the meetings of the Board and
the committees on which they served. The following table
identifies the current committee members of each of the
Board’s three standing committees and the number of
meetings each committee held in 2010.
| Name | Audit | Compensation | Governance | |||||||||||
|
Jeffrey M. Boromisa
|
X | * | ||||||||||||
|
William K. Gerber
|
X | X | ||||||||||||
|
Alberto L. Grimoldi
|
||||||||||||||
|
Joseph R. Gromek
|
X | X | ||||||||||||
|
David T. Kollat
|
X | |||||||||||||
|
Blake W. Krueger
|
||||||||||||||
|
Brenda J. Lauderback
|
X | X | * | |||||||||||
|
David P. Mehney
|
||||||||||||||
|
Timothy J. O’Donovan
|
||||||||||||||
|
Shirley D. Peterson
|
X | X | ||||||||||||
|
Michael A. Volkema
|
X | * | X | |||||||||||
|
Number of Meetings
|
12 | 7 | 5 | |||||||||||
* Current
Committee Chairperson
Audit Committee. The Board has determined that each
Audit Committee member is “independent” as defined by
NYSE rules and the Sarbanes-Oxley Act of 2002, as applicable to
audit committee members, and that all satisfy the NYSE
“financial literacy” requirement. Mr. Boromisa
and Mr. Gerber are “audit committee financial
experts” under SEC rules. The Audit Committee:
| » | represents and assists the Board in fulfilling its oversight responsibility regarding Wolverine’s financial reporting and accounting process; | |
| » | appoints, retains, compensates, oversees, evaluates and, if appropriate, terminates the independent auditors; |
16
Table of Contents
| » | annually reviews the performance, effectiveness, objectivity and independence of the independent auditors and Wolverine’s internal audit function; | |
| » | obtains and reviews the independent auditors’ internal quality control report and other reports required by applicable rules, regulations and standards; | |
| » | assesses auditor independence; | |
| » | establishes procedures for the receipt, retention and treatment of complaints regarding accounting and auditing matters; | |
| » | meets to review with management and Wolverine’s independent auditor Wolverine’s financial statements, including disclosures in Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are included in Wolverine’s reports on Form 10-Q and Form 10-K; | |
| » | reviews Wolverine’s policies and systems with respect to risk assessment and risk management and discusses significant risks or exposures with management and the independent auditors; | |
| » | discusses with internal auditors and the independent auditors the overall scope and plans for their respective audits; | |
| » | oversees Wolverine’s legal and regulatory compliance systems; | |
| » | reviews and discusses the adequacy and effectiveness of Wolverine’s internal control over financial reporting and disclosure controls and procedures; and | |
| » | establishes policies and procedures relating to the engagement of the independent auditors, including pre-approval policies and procedures. |
Compensation Committee. The Board has determined
that each Compensation Committee member is
“independent” as defined by NYSE rules. None of the
members of the Compensation Committee was, during the 2010
fiscal year, an officer or employee of Wolverine or formerly an
officer of Wolverine. No executive officer has served or
currently serves on the board of directors or compensation
committee of any other entity with executive officers who have
served or will serve on the Company’s Board or Compensation
Committee. The Compensation Committee:
| » | assists the Board of Directors in discharging its responsibilities relating to executive compensation and fulfilling its responsibilities relating to Wolverine’s compensation and benefit programs and policies; | |
| » | oversees the overall compensation structure, policies and programs, and assesses whether the compensation structure establishes appropriate incentives for management and employees; | |
| » | administers and makes recommendations with respect to incentive compensation plans, including stock option and other equity-based incentive plans; | |
| » | reviews and approves the compensation of elected corporate officers and other executives, including bonuses and equity compensation; | |
| » | oversees the Company’s management of any material risk associated with its compensation structure, policies and programs; | |
| » | reviews and approves corporate and personal goals and objectives relevant to CEO compensation, evaluates the performance of the CEO in light of these goals and objectives, and, together with the other independent directors, approves the compensation of the CEO based on the evaluation; | |
| » | reviews and discusses with management Wolverine’s Compensation Discussion and Analysis and related disclosures required by the rules of the SEC and recommends to the Board of Directors whether such disclosures should be included in the annual report and proxy statement; | |
| » | reviews and approves the design of benefit plans pertaining to executives; |
17
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| » | reviews and recommends employment agreements and severance arrangements for executives, including change in control provisions, plans or agreements; and | |
| » | establishes stock ownership guidelines for directors and executive officers and monitors compliance with the guidelines. |
See the “Compensation Discussion and Analysis” section
below for more information regarding the Compensation
Committee’s processes and procedures.
Governance Committee. The Board has determined that
each Governance Committee member is “independent” as
defined by NYSE rules. The Governance Committee:
| » | assists the Board of Directors in fulfilling its responsibilities on matters and issues related to the Company’s corporate governance practices; | |
| » | in conjunction with the Board of Directors, establishes qualification standards for membership on the Board of Directors and its committees; | |
| » | leads the search for individuals qualified to become members of the Board of Directors, reviews the qualifications of candidates for election to the Board of Directors and assesses the contributions and independence of incumbent directors eligible to stand for reelection to the Board; | |
| » | establishes procedures for the consideration of candidates for the Board of Directors recommended for the Committee’s consideration by the Company’s stockholders; | |
| » | selects and recommends to the Board of Directors the Company’s nominees for election or reelection by the stockholders at the annual meeting, and to fill vacancies and newly created directorships on the Board of Directors; | |
| » | develops and recommends to the Board of Directors corporate governance guidelines, reviews the guidelines on an annual basis, and recommends any changes to the guidelines as necessary; | |
| » | establishes and recommends to the Board guidelines, in accordance with applicable rules and regulations, to be applied when assessing the “independence” of directors; | |
| » | considers applicable rules, regulations and disclosure obligations regarding the presence of an “audit committee financial expert” on the Audit Committee and recommends to the Board of Directors actions to address such requirements; | |
| » | reviews and approves related person transactions, as defined in applicable SEC rules, and establishes policies and procedures for the review, approval and ratification of related person transactions; | |
| » | annually reviews the compensation of directors for service on the Board of Directors and committees and makes recommendations to the Board of Directors regarding such compensation; | |
| » | recommends to the Board of Directors key executives to serve as corporate officers; | |
| » | annually reviews and makes recommendations to the Board of Directors concerning the structure, composition and functioning of the Board of Directors and its committees and recommends to the Board of Directors, directors to serve as committee members and chairpersons; | |
| » | reviews and recommends to the Board of Directors retirement and other tenure policies for directors; | |
| » | reviews directorships in other public companies held by or offered to directors and senior officers of the Company; | |
| » | reviews and assesses channels through which the Board of Directors receives information, and the quality and timeliness of information received; and | |
| » | develops and recommends to the Board of Directors for its approval an annual self-evaluation process for the Board and its committees, and oversees the evaluation process. |
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Code of
Conduct & Compliance and Accounting and Finance Code
of Ethics
The Board has adopted a Code of Conduct & Compliance
for the Company’s directors, officers and employees. The
Board also has adopted an Accounting and Finance Code of Ethics
(“Accounting and Finance Code”). This Accounting and
Finance Code focuses on the financial reporting process and
applies to the Company’s CEO, CFO and Corporate Controller.
The Company will disclose, in accordance with all applicable
laws and regulations, amendments to, or waivers from, its Code
of Conduct & Compliance or its Accounting and Finance
Code.
Stockholder
Communications Policy
Stockholders and other interested parties may communicate with
members of Wolverine’s Board through various links provided
on Wolverine’s website at
www.wolverineworldwide.com/investor-relations/corporate-governance/,
or by sending correspondence to the Board, a specific Board
committee or a director (including the Lead Director)
c/o Secretary,
Wolverine World Wide, Inc., 9341 Courtland Drive, N.E.,
Rockford, Michigan 49351. The Secretary reviews all
communications to determine whether the contents include a
message to a specific director and will provide a summary and
copies of all correspondence (other than solicitations for
services, products or publications) to the applicable directors
at each regularly scheduled meeting. The Secretary will alert
individual directors to items that warrant a prompt response
from the individual director prior to the next regularly
scheduled meeting. The Secretary will route items warranting
prompt response, but not addressed to a specific director, to
the applicable committee chairperson. You may submit any
suggestions, concerns or reports of misconduct at Wolverine or
complaints or concerns regarding Wolverine’s financial
statements and accounting, auditing, internal control and
reporting practices on www.WolverineReportLine.com (anonymously,
if desired) or by writing to the Audit Committee
c/o the
Secretary at the above address.
Wolverine’s director compensation philosophy is to pay
compensation competitive with compensation paid by companies of
similar size in the same industries, same region and with whom
Wolverine competes for director candidates. Each year, the
Governance Committee, with input from management, reviews
director compensation and compares it to market data for
companies of similar size in the same industries, and companies
of similar size in the geographic region of Wolverine’s
headquarters. The following table provides information
concerning the compensation of the Company’s non-employee
directors for its fiscal year ended January 1, 2011
(“fiscal year 2010”). Mr. Krueger does not
receive any compensation for his services as a director in
addition to his compensation as CEO.
|
Fees |
||||||||||||||
|
Earned |
||||||||||||||
|
or Paid in |
Option |
|||||||||||||
|
Cash1 |
Awards2 |
Total |
||||||||||||
| Name | ($) | ($) | ($) | |||||||||||
|
Jeffrey M. Boromisa
|
$ | 122,500 | $ | 28,916 | $ | 151,416 | ||||||||
|
William K. Gerber
|
$ | 122,125 | $ | 28,916 | $ | 151,041 | ||||||||
|
Alberto L. Grimoldi
|
$ | 102,000 | $ | 28,916 | $ | 130,916 | ||||||||
|
Joseph R. Gromek
|
$ | 114,000 | $ | 28,916 | $ | 142,916 | ||||||||
|
David T. Kollat
|
$ | 137,000 | $ | 28,916 | $ | 165,916 | ||||||||
|
Brenda J. Lauderback
|
$ | 127,000 | $ | 28,916 | $ | 155,916 | ||||||||
|
David P. Mehney
|
$ | 102,000 | $ | 28,916 | $ | 130,916 | ||||||||
|
Timothy J. O’Donovan
|
$ | 99,000 | $ | 28,916 | $ | 127,916 | ||||||||
|
Shirley D. Peterson
|
$ | 122,000 | $ | 28,916 | $ | 150,916 | ||||||||
|
Michael A. Volkema
|
$ | 122,000 | $ | 28,916 | $ | 150,916 | ||||||||
| 1 | Represents cash payments received or deferred by directors in fiscal year 2010. Directors may defer director fees and receive stock units pursuant to the Deferred Compensation Plan. The following table shows the Fees |
19
Table of Contents
| Earned or Paid in Cash separated into amounts received in cash, the cash amounts Directors voluntarily deferred, and amounts required to be deferred under the annual equity retainer that will be paid out in stock: |
|
Cash Amounts |
||||||||||||||
|
Cash Amounts |
Deferred Through |
|||||||||||||
|
Voluntarily |
Annual Equity |
|||||||||||||
| Name | Fees Paid in Cash | Deferred | Retainers | |||||||||||
|
Jeffrey M. Boromisa
|
— | $ | 82,500 | $ | 40,000 | |||||||||
|
William K. Gerber
|
$ | 82,125 | — | $ | 40,000 | |||||||||
|
Alberto Grimoldi
|
— | $ | 62,000 | $ | 40,000 | |||||||||
|
Joseph R. Gromek
|
— | $ | 74,000 | $ | 40,000 | |||||||||
|
David T. Kollat
|
$ | 97,000 | — | $ | 40,000 | |||||||||
|
Brenda J. Lauderback
|
$ | 65,250 | $ | 21,750 | $ | 40,000 | ||||||||
|
David P. Mehney
|
— | $ | 62,000 | $ | 40,000 | |||||||||
|
Timothy J. O’Donovan
|
$ | 59,000 | — | $ | 40,000 | |||||||||
|
Shirley D. Peterson
|
$ | 82,000 | — | $ | 40,000 | |||||||||
|
Michael A. Volkema
|
$ | 82,000 | — | $ | 40,000 | |||||||||
| 2 | Represents the aggregate grant date fair value of stock options granted to non-employee directors in fiscal year 2010, calculated in accordance with FASB Accounting Standard Codification (“ASC”) Topic 718. Listed below are the aggregate outstanding option awards held by non-employee directors at the end of fiscal year 2010. For valuation assumptions, see the Stock-Based Compensation footnote to Wolverine’s Consolidated Financial Statements for fiscal year 2010. |
|
Option Awards |
||||||
|
Outstanding at |
||||||
|
January 1, 2011 |
||||||
| Name | (#) | |||||
|
Jeffrey M. Boromisa
|
22,160 | |||||
|
William K. Gerber
|
18,315 | |||||
|
Alberto Grimoldi
|
46,248 | |||||
|
Joseph R. Gromek
|
17,733 | |||||
|
David T. Kollat
|
46,428 | |||||
|
Brenda J. Lauderback
|
22,464 | |||||
|
David P. Mehney
|
46,428 | |||||
|
Timothy J. O’Donovan*
|
329,020 | |||||
|
Shirley D. Peterson
|
31,027 | |||||
|
Michael A. Volkema
|
26,327 | |||||
| * |
The Company granted
Mr. O’Donovan 317,596 of these stock options when he was an executive officer of the Company. |
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Table of Contents
For fiscal year 2010, the Company compensated non-employee
directors as follows:
| Cash | Options | Stock Units | ||||||
|
Newly Appointed or Elected Director
|
$0 | Number of options equal to $180,000 divided by closing market price of the Company’s common stock on date of initial election or appointment1 | ||||||
|
Annual Director Fee
|
$35,000 | Number of options equal to three times annual cash retainer divided by closing market price of the Company’s common stock on date of Annual Meeting2 | Number of stock units equivalent to $40,000 determined by dividing the dollar grant amount by the closing market price of the Company’s common stock on the date of the grant2 | |||||
|
Board Meeting Attendance
Fee4
|
$3,000 | |||||||
|
Committee Meeting Attendance
Fee4
|
$1,000 | |||||||
|
Audit Committee Chairperson Annual
Fee5
|
$7,500 | |||||||
|
Compensation Committee Chairperson Annual
Fee5
|
$5,000 | |||||||
|
Governance Committee Chairperson Annual
Fee5
|
$5,000 | |||||||
|
Lead Director Annual
Fee6
|
$70,000 | |||||||
| 1 | For fiscal year 2011, the Company increased the number of new director stock options to an amount equal to $210,000. | |
| 2 | For fiscal year 2010, each non-employee director received 3,334 options granted under the Stock Incentive Plan of 2010. These options were fully vested on the grant date and have a term of 10 years. The exercise price of options granted is equal to the closing market price of Wolverine’s common stock on the date each option is granted. | |
| 3 | For fiscal year 2010, one grant was made in April 2010, at the time of the Company’s Annual Stockholder Meeting. Stock units are fully vested on the grant date and are credited under the Amended and Restated Outside Directors’ Deferred Compensation Plan (the “Deferred Compensation Plan”). The terms of the Deferred Compensation Plan and stock units are described below. For fiscal year 2010, the Company credited each non-employee director with an aggregate of 1,270 stock units. For fiscal year 2011, the Company increased the number of stock units to an amount equal to $50,000. | |
| 4 | The fees include teleconference meetings. Beginning in 2011, directors will receive an annual meeting fee for Board meetings ($15,000), annual meeting fees for Committees ($10,000 Audit, $7,000 each for Compensation and Governance). Directors also will receive, for each meeting during the year in excess of the trigger listed below, an additional per-meeting fee: |
|
Meeting |
||||||||||
| Trigger | Fee | |||||||||
|
Board
|
10 | $ | 3,000 | |||||||
|
Audit
|
15 | $ | 1,000 | |||||||
|
Compensation
|
10 | $ | 1,000 | |||||||
|
Governance
|
10 | $ | 1,000 | |||||||
| 5 | Beginning in 2011, the Audit Committee Chairperson and Compensation Committee Chairperson annual fees each increase to $15,000 and the Governance Committee Chairperson annual fee increases to $10,000. | |
| 6 | Lead Director Annual Fee is in lieu of the annual cash retainer. The Lead Director also receives the standard director fee for attendance at Board meetings and the annual grant of stock options, but does not receive attendance fees for committee meetings. |
Wolverine also pays director expenses associated with attending
Board and committee meetings and other Wolverine functions, and
industry functions such as trade shows. It also pays spouse
travel expenses in connection with international Board strategic
planning meetings, which typically happen every other year, but
did not pay any such expenses in 2010. In addition, the Company
provides office space and administrative assistance to directors
who visit the Company’s headquarters or other locations.
From
time-to-time,
Wolverine provides directors with samples of Wolverine products
of nominal value for review and assessment. Wolverine reimburses
directors for some approved expenses relating to director
education. Directors who are also employees of Wolverine or any
of its subsidiaries do not receive an annual cash or equity
retainer and do not receive compensation for attendance at Board
or committee meetings.
21
Table of Contents
Deferred Compensation Plan. In 2008, Wolverine
adopted the Deferred Compensation Plan, a supplemental
nonqualified deferred compensation plan for directors who are
not employees of Wolverine or its subsidiaries. Wolverine
continues to maintain a separate non-employee director deferred
compensation plan that applies to benefits accrued under that
plan before January 1, 2005. The Deferred Compensation Plan
permits all non-employee directors to defer 25%, 50%, 75% or
100% of their director fees. Deferred compensation is deemed to
be invested in Wolverine common stock. If a director elects to
defer director fees, Wolverine establishes an account on its
books for such director. Wolverine credits such account with a
number of stock units equal to the amounts deferred and annual
equity retainer amounts described above, divided by the closing
market price of common stock on the payment date. The Company
also credits director accounts with dividend equivalents in the
form of additional stock units.
Upon a director’s termination of service or such later date
as a director selects, the Company distributes accumulated stock
units in the director’s account in shares of Wolverine
common stock. The distribution is a single, lump-sum payment, or
is annual installment payments over a period of up to
20 years (10 years under the prior plan). The Company
converts each stock unit to one share of Wolverine common stock.
Upon a “change in control”, the Company distributes to
the director, in a single lump sum payment, Wolverine common
stock in a number of shares equal to the stock units credited to
a director’s account. The Deferred Compensation Plan
defines “change in control” as:
| » | the acquisition by any person, or by more than one person acting as a group, of more than 50% of either (i) the then outstanding shares of common stock of Wolverine or (ii) the total fair market value of Wolverine; | |
| » | the acquisition by any person, or more than one person acting as a group, during the 12-month period from and including the date of the most recent acquisition, of ownership of 30% or more of the outstanding common stock of Wolverine; | |
| » | the replacement of a majority of the individuals who constitute the Board during any 12-month period by directors whose appointment or election is not endorsed by a majority of the directors prior to the date of the appointment or election; or | |
| » | the acquisition, during any 12-month period ending on the date of the most recent acquisition, by any person of assets from Wolverine having a gross fair market value of at least 40% of the gross fair market value of all the assets of Wolverine immediately before the acquisition. |
Non-Employee
Director Stock Ownership Guidelines
Through stock ownership guidelines, the Company requires that
each non-employee director maintain a stock ownership level
(including stock units under the Deferred Compensation Plan, but
excluding stock options) equal to five times the non-employee
director cash retainer to align further the interests of these
individuals with the stockholders. Each non-employee director
must meet the ownership requirement by the end of the fifth year
after he or she becomes subject to the guidelines. All
non-employee directors who have been Wolverine directors for at
least five years meet the ownership requirement.
22
Table of Contents
Five Percent
Stockholders
The following table sets forth information as to those holders
known to Wolverine to be the beneficial owners of more than five
percent of Wolverine’s outstanding shares of common stock
as of December 31, 2010:
| Amount and Nature of Beneficial Ownership of Common Stock | |||||||||||||||||||||||
|
Shared Voting |
|||||||||||||||||||||||
|
Sole |
and |
Total |
|||||||||||||||||||||
|
Name and Address |
Sole Voting |
Investment |
Investment |
Beneficial |
Percent |
||||||||||||||||||
|
of Beneficial Owner |
Power |
Power | Power |
Ownership |
of Class5 |
||||||||||||||||||
|
BlackRock,
Inc.1
|
3,733,991 | 3,733,991 | 0 | 3,733,991 | 7.5 | % | |||||||||||||||||
|
40 East
52nd
Street
New York, NY 10022 |
|||||||||||||||||||||||
|
Royce & Associates
LLC2
|
3,660,024 | 3,660,024 | 0 | 3,660,024 | 7.4 | % | |||||||||||||||||
|
745 Fifth Avenue
New York, NY 10151 |
|||||||||||||||||||||||
|
NFJ Investment Group
LLC3
|
2,766,600 | 2,793,700 | 0 | 2,793,700 | 5.6 | % | |||||||||||||||||
|
2100 Ross Avenue,
Suite 700 Dallas, TX 75201 |
|||||||||||||||||||||||
|
The Vanguard Group,
Inc.4
|
64,174 | 2,452,867 | 64,174 | 2,517,041 | 5.1 | % | |||||||||||||||||
|
100 Vanguard boulevard
Malvern, PA 19355 |
|||||||||||||||||||||||
| 1 | Based on information set forth in a Schedule 13G filed on February 9, 2011. The Schedule 13G indicates that BlackRock, Inc. beneficially owns, in the aggregate, 3,733,991 shares of Wolverine common stock. | |
| 2 | Based on information set forth in a Schedule 13G/A filed on January 26, 2011. The Schedule 13G/A indicates that Royce & Associates LLC beneficially owns, in the aggregate, 3,660,024 shares of Wolverine common stock. | |
| 3 | Based on information set forth in a Schedule 13G/A filed on February 14, 2011, filed jointly by NFJ Investment Group LLC and Allianz Global Investors Capital LLC. The Schedule 13G/A indicates that NFJ Investment Group and Allianz Global Investors Capital beneficially own, in the aggregate, 2,793,700 shares of Wolverine common stock. | |
| 4 | Based on information set forth in a Schedule 13G filed on February 10, 2011. The Schedule 13G indicates that The Vanguard Group, Inc., beneficially owns, in the aggregate, 2,517,041 shares of Wolverine common stock. The Schedule 13G also indicates that The Vanguard Group, Inc. has shared dispositive power over the 64,174 shares listed in the Sole Voting Power column. | |
| 5 | As of March 1, 2011, based on 49,628,313 shares outstanding on that date. |
23
Table of Contents
Stock
Ownership by Management
The following table sets forth the number of shares of common
stock beneficially owned as of March 1, 2011, by each of
the Company’s director nominees, directors and named
executive officers and all of the Company’s directors and
executive officers as a group.
| Amount and Nature of Beneficial Ownership of Common Stock1 | |||||||||||||||||||||||
|
Sole Voting |
|||||||||||||||||||||||
|
and/or |
Shared Voting |
Total |
|||||||||||||||||||||
|
Investment |
or Investment |
Beneficial |
Percent |
||||||||||||||||||||
| Name of Beneficial Owner | Power2 | Power3 | Stock Options4 | Ownership4 | of Class5 | ||||||||||||||||||
|
Jeffrey M. Boromisa
|
2,000 | - | 22,160 | 24,160 | * | ||||||||||||||||||
|
William K. Gerber
|
1,000 | - | 18,315 | 19,315 | * | ||||||||||||||||||
|
Donald T. Grimes
|
82,754 | 37,434 | 120,188 | * | |||||||||||||||||||
|
Alberto L. Grimoldi
|
18,077 | - | 40,749 | 58,826 | * | ||||||||||||||||||
|
Joseph R. Gromek
|
10,000 | 17,733 | 27,733 | * | |||||||||||||||||||
|
David T.
Kollat6
|
98,851 | - | 46,428 | 146,279 | * | ||||||||||||||||||
|
Blake W. Krueger
|
476,732 | 339,453 | 816,185 | 1.6 | % | ||||||||||||||||||
|
Brenda J. Lauderback
|
5,100 | - | 22,464 | 27,564 | * | ||||||||||||||||||
|
Pamela L. Linton
|
50,926 | - | 33,167 | 84,093 | * | ||||||||||||||||||
|
Michael F. McBreen
|
64,043 | 29,734 | 93,777 | * | |||||||||||||||||||
|
David P.
Mehney7
|
67,009 | 73,889 | 46,428 | 187,326 | * | ||||||||||||||||||
|
Timothy J. O’Donovan
|
323,523 | 52,668 | 329,020 | 704,941 | 1.4 | % | |||||||||||||||||
|
Shirley D. Peterson
|
3,000 | - | 18,219 | 21,219 | * | ||||||||||||||||||
|
Michael A. Volkema
|
5,000 | 26,327 | 31,327 | * | |||||||||||||||||||
|
James D. Zwiers
|
96,663 | - | 75,602 | 172,265 | * | ||||||||||||||||||
|
All directors and executive officers as a group
(18 people)
|
1,377,524 | 126,557 | 1,177,242 | 2,681,323 | 5.3 | % | |||||||||||||||||
| * | Represents beneficial ownership of less than 1%. | |
| 1 | The numbers of shares stated are based on information provided by each person listed and include shares personally owned of record and shares that, under applicable regulations, are considered to be otherwise beneficially owned. | |
| 2 | These numbers include restricted shares and performance shares held, which are subject to forfeiture if the terms of the award are not satisfied. | |
| 3 | These numbers include shares over which the listed person is legally entitled to share voting or investment power by reason of joint ownership, trust or other contract or property right and shares held by spouses, children or other relatives over whom the listed person may have influence by reason of such relationship. | |
| 4 | The numbers represent shares that may be acquired within 60 days after March 1, 2011, by the exercise of stock options granted under Wolverine’s various stock option plans. These numbers are also included in the Total Beneficial Ownership column. | |
| 5 | As of March 1, 2011, based on 49,628,313 shares outstanding on that date plus the number of stock options exercisable by the specified person(s) within 60 days of March 1, 2011, as indicated in the “Stock Options” column. | |
| 6 | Includes 61,883 shares pledged by Mr. Kollat as security for a loan. | |
| 7 | Includes 23,000 shares pledged by Mr. Mehney as security for a loan. |
24
Table of Contents
This section of the proxy statement provides an overview and
analysis of Wolverine’s executive compensation program and
policies, the material compensation decisions made about fiscal
year 2010 compensation, and the material factors considered in
making those decisions. It is divided into six parts:
| » | Executive Summary | |
| » | Compensation Philosophy and Objectives | |
| » | NEO Compensation Program Components | |
| » | 2010 Compensation Decisions | |
| » | Compensation Consultant and Market Comparisons | |
| » | Other Compensation Policies and Practices |
This section refers only to the compensation of Wolverine’s
“named executive officers” (“NEOs”) unless
noted otherwise:
| » | Blake W. Krueger, Chairman, Chief Executive Officer and President | |
| » | Donald T. Grimes, Senior Vice President, Chief Financial Officer and Treasurer | |
| » | Pamela L. Linton, Senior Vice President of Global Human Resources | |
| » | Michael F. McBreen, President, Global Operating Group | |
| » | James D. Zwiers, Senior Vice President and President, Outdoor Group |
Executive
Summary
Operating performance of footwear, apparel and retail businesses
generally improved in fiscal year 2010 over fiscal year 2009,
but the Company still faced a challenging global business
environment. The Board and the Company’s Chairman, CEO and
President, Blake W. Krueger, addressed the challenges by
establishing a structure to encourage continued improvement in
the Company’s performance and the performance of individual
business units. Under Mr. Krueger’s leadership,
management acted on that initiative and delivered the following
results:
| » | revenue for fiscal year 2010 was $1.249 billion, 13.4% above fiscal year 2009 revenue of $1.101 billion, reflecting strong organic growth from all of the operating divisions; |
| » | the Company ended fiscal year 2010 with $150.4 million of cash and cash equivalents and interest-bearing debt of only $1.0 million; |
| » | diluted earnings per share for fiscal year 2010 were $2.11 per share compared to $1.24 per share for fiscal year 2009; |
| » | the Company declared cash dividends of $0.44 per share in fiscal year 2010, equal to the total dividends declared in fiscal year 2009; and |
| » | the Company repurchased approximately 1,795,000 shares of common stock in fiscal year 2010 for approximately $51.2 million and repurchased approximately 406,000 shares in fiscal year 2009 for approximately $5.6 million. |
25
Table of Contents
For fiscal year 2010, the Company achieved record performances
in annual revenue and earnings per share. In addition, over the
past five years, the Company’s performance, based on
cumulative total stockholder return, has exceeded the S&P
SmallCap Index and the S&P Footwear Index, as shown in the
following table.
Five Year Cumulative Total Return Summary
NEO compensation for fiscal year 2010, and in the case of the
long-term incentive bonuses for the three year period ending
fiscal year 2010, reflected the Company’s strong fiscal
year 2010 financial performance and cumulative return to
stockholders over the past three years despite the global
economic challenges:
| » | each NEO received more than 55% of his or her compensation in performance-based compensation; | |
| » | approximately 15%-20% of each NEO’s compensation was tied to long-term performance, more closely aligning those NEOs’ interests with those of stockholders; | |
| » | each NEO’s bonus opportunity was capped at 200% of his or her Target Percentage for that opportunity, limiting the incentive to take risks that could have a material adverse impact on the Company; and | |
| » | each NEO’s Annual Bonus and 3-Year Bonus was linked to performance metrics established at the beginning of the bonus period and not changed. |
Compensation
Philosophy and Objectives
Wolverine’s compensation philosophy is to provide
competitive salaries and incentives to achieve superior
financial performance. The Board’s Compensation Committee
oversees the Company’s executive compensation program. The
Committee reviews and approves NEO compensation, other than the
CEO’s compensation, which it approves together with the
Board’s other independent directors. The NEO compensation
program has four primary objectives:
| » | attract and retain talented NEOs who will lead Wolverine and achieve and inspire superior performance; | |
| » | provide incentives for achieving specific near-term individual, business unit and corporate goals and reward the attainment of those goals at pre-established levels; | |
| » | provide incentives for achieving longer-term financial goals and to reward attaining those goals at pre-established levels; and | |
| » | align the interests of NEOs with those of the stockholders through incentives based on increasing stockholder value. |
26
Table of Contents
The program balances fixed compensation (base salaries) with
performance-based compensation (annual bonuses and long-term
incentives), and rewards annual performance while maintaining
emphasis on longer-term objectives. The program also blends
cash, non-cash, long- and short-term compensation components,
and current and future compensation components. The Committee
considers qualitative and quantitative factors when setting
compensation. Each NEO’s compensation mix and
cash-to-equity
ratio depends on his or her responsibilities, experience,
skills, and potential to affect Wolverine’s overall
performance. In general, an NEO’s compensation and the
proportion of compensation that is variable increases as the
NEO’s level of responsibilities increases. The Committee
believes the CEO has the broadest scope of responsibilities and
typically approves higher compensation for the CEO than for any
other NEO. The Board believes this executive compensation
philosophy has successfully generated sustained superior
performance over the long term. The mix of compensation
components for 2010 did not change significantly from the mix
for 2009. The following table shows for fiscal year 2010 each
NEO’s base salary, annual bonus and cash payout under the
2008-2010
period for the
3-Year Bonus
Plan as a percentage of the total of those three components:
|
2010 |
||||||||||||||
|
2010 |
Annual Bonus |
2010 Long-Term |
||||||||||||
| Name | Base Salary | Paid* | Incentive Bonus Paid | |||||||||||
|
Krueger
|
27.3 | % | 52.5 | % | 20.2 | % | ||||||||
|
Grimes
|
40.0 | % | 43.2 | % | 16.8 | % | ||||||||
|
Linton
|
45.1 | % | 38.6 | % | 16.3 | % | ||||||||
|
McBreen
|
45.1 | % | 38.3 | % | 16.6 | % | ||||||||
|
Zwiers
|
42.2 | % | 40.7 | % | 17.1 | % | ||||||||
* Includes
Individual Performance Bonus.
NEO Compensation
Program Components
| Pay Element | What the Pay Element Rewards | Purpose of the Pay Element | ||
|
Base Salary
|
» Core responsibilities, years of service with
the Company and experience in similar positions at other
companies, skills, and knowledge
|
» Provide a regular and stable source of income
to NEOs
|
||
|
Annual Incentive
Compensation
|
» Achieving specific corporate business
objectives over which the NEO has reasonable control
» Achieving specific division business objectives over which the NEO has reasonable control » Achieving specific personal objectives |
» Focus NEOs on specific annual goals that
contribute to Wolverine’s long-term success
» Provide annual performance-based cash compensation » Align participants on important annual performance metrics |
||
|
Long Term Incentive
Compensation
|
» Focusing on long-term corporate business
objectives
» Focusing on driving long-term stockholder value » Continuing employment with the Company during the vesting period |
» More closely align NEOs’ interests with
stockholders’ interests
» Reward NEOs for building stockholder value » Encourage long-term investment in Wolverine by participating NEOs » Retain NEOs |
||
27
Table of Contents
| Pay Element | What the Pay Element Rewards | Purpose of the Pay Element | ||
|
Supplemental Employee Retirement
Plan
|
» Focusing on long-term corporate business
objectives
» Continuing long-term employment with the Company during the five-year vesting period and long-term value accumulation period |
» Provide retirement benefits that NEO
participants would have received under the broad-based plan in
the absence of the IRS limits
» Provide retirement security » Attract and retain NEOs |
||
|
Retirement and Welfare
Benefits
|
» The other retirement and welfare benefits are
part of Wolverine’s broad-based total compensation program
available to full-time employees of the Company.
|
» Encourage long-term commitment to Wolverine by
NEOs and assist Wolverine in attracting and retaining talented
NEOs.
|
||
2010 Compensation
Actions
Base
Salary
As part of approving an NEO’s base salary, the Compensation
Committee considers the scope of his or her responsibilities,
years of service with the Company and in similar positions at
other companies, skills, and knowledge. The Committee also
considers market conditions, economic conditions, and
Wolverine’s compensation philosophy. For NEOs who are
promoted and Wolverine employees who are promoted to NEO
positions, the Committee approves the NEO’s base salary
after considering the above factors. For NEOs hired from outside
the Company, the Committee sets the NEO’s base salary,
based on management’s arms-length negotiation with the NEO.
After hiring or promotion, the Committee approves changes to an
NEO’s base salary to reflect increased experience, changes
in responsibilities, years of service, and market information.
The CEO provides input to all these decisions, except in the
case of his own compensation. The Committee, with
management’s assistance, reviews NEO base salaries
approximately every 12 months. In setting each NEO’s
base salary for 2010, the Committee considered, in addition to
the factors listed above, the NEO’s current base salary,
total direct compensation, target percent increases for the
Company’s employees as a group, and market data. These
factors are considered by the Committee subjectively, and no
single factor or combination of factors was determinative in
setting each NEO’s base salary. Base salary increases for
the other NEOs were consistent with base salary increases for
the Company’s employees generally. Mr. Zwiers’
and Mr. McBreen’s base salary increases also reflected
the Committee’s evaluation of their respective
responsibility levels compared to their base salary levels. For
2010, the Committee approved base salary increases for the NEOs
as follows:
| Name | 2010 Base Salary | 2009 Base Salary | ||||||||
|
Krueger
|
$ | 775,000 | $ | 735,000 | ||||||
|
Grimes
|
$ | 400,000 | $ | 385,000 | ||||||
|
Linton
|
$ | 302,000 | $ | 292,000 | ||||||
|
McBreen
|
$ | 350,000 | $ | 325,000 | ||||||
|
Zwiers
|
$ | 400,000 | $ | 340,000 | ||||||
Annual
Incentive Compensation
Each NEO has the opportunity to earn an annual bonus
(“Annual Bonus”) under the Annual Bonus Plan and a
discretionary bonus (“Individual Performance Bonus”)
under the Individual Performance Bonus Plan. The Committee
believes these annual incentive compensation opportunities
should stay competitive with comparable opportunities at
companies of similar size to Wolverine and companies with whom
Wolverine competes to hire NEOs.
28
Table of Contents
Early each year, the Committee sets Annual Bonus performance
criteria, with input from the CEO, based on performance criteria
for the Company, a business unit, or a combination. The specific
criteria for each NEO depend on which parts of the business the
NEO reasonably influences and his or her experience level. Early
each year, the Committee certifies actual performance achieved
with respect to the prior year criteria. The Annual Bonus Plan
authorizes the Committee to adjust downwards Annual Bonuses
determined according to the performance criteria. The Committee
did not make any such adjustments to the NEO 2010 Annual
Bonuses. In addition, the CEO recommends, and the Committee
approves, an Individual Performance Bonus for each NEO other
than the CEO. The Committee determines the CEO’s Individual
Performance Bonus. In any given year, an NEO might earn one,
both, or neither of the bonuses.
Also early each year, the Committee sets the CEO’s
Individual Performance Bonus personal objectives and the CEO
sets the other NEOs’ personal objectives. Personal
objectives may include elements such as executing strategies
supporting Wolverine’s vision, developing employees,
supporting social and environmental responsibility, growing new
business initiatives and driving operational excellence.
Performance under the Individual Performance Bonus Plan is
evaluated subjectively, generally based on qualitative factors.
At the same time, the Committee sets an annual incentive
compensation target percentage for each NEO, expressed as a
percentage of the NEO’s base salary (the “Target
Percentage”). It considers market data regarding annual
bonus levels and annual bonuses as a percentage of total direct
compensation, experiences with job candidates during
compensation negotiations, and each NEO’s experience level
and responsibilities compared to other NEOs. The Committee
considers these factors subjectively, and no single factor or
combination of factors was determinative in setting each
NEO’s Target Percentage. In 2010, the Committee increased
each NEO’s Target Percentage following this review. The
Committee increased Mr. Krueger’s target percentage to
100% for fiscal year 2010 from 75% from fiscal year 2009 because
it believed it was appropriate to compensate Mr. Krueger at
a higher level given his responsibilities as CEO.
Generally, the Committee sets higher Target Percentages for
individuals with greater influence on profits and sales. This
puts a larger percentage of NEOs total potential cash
compensation “at risk.” At “target”
performance under both Plans, an NEO could receive 100% of his
or her Target Percentage bonus opportunity. For 2010, each
NEO’s total bonus opportunity under the Plans ranged from
0% to 200% of his or her Target Percentage. This range was
consistent with the 2009 opportunity.
The Committee based the 2010 Annual Bonus for each NEO on actual
performance on the criteria, weighted the criteria by the
applicable percentages, and then multiplied the result by the
Target Percentage. The Committee based the 2010 Individual
Performance Bonus on each NEO’s performance compared to his
or her personal objectives, weighted by the applicable
percentage, and then multiplied the result by the Target
Percentage.
|
Annual Incentive Compensation |
|||||||||||||||||||||||||||||||||||||||||||||||
| Component as a Percentage of Target Percentage | |||||||||||||||||||||||||||||||||||||||||||||||
|
Annual Bonus Percentage By |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Company or Business Unit as a Percentage of Target Percentage
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Total |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Individual |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Performance |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Total 2010 |
Bonus as a |
||||||||||||||||||||||||||||||||||||||||||||||
|
Actual Annual |
2010 |
2009 |
Percentage of |
Global |
|||||||||||||||||||||||||||||||||||||||||||
|
Incentive |
Target |
Target |
Target |
Operations |
Human |
Outdoor |
Retail |
||||||||||||||||||||||||||||||||||||||||
| Name | Compensation1 | Percentage | Percentage | Percentage | Company2 | Group3 | Resources4 | Group5 | Group5 | ||||||||||||||||||||||||||||||||||||||
|
Krueger
|
$ | 1,477,067 | 100 | % | 75 | % | 15 | % | 85 | % | |||||||||||||||||||||||||||||||||||||
|
Grimes
|
$ | 428,647 | 55 | % | 45 | % | 15 | % | 85 | % | |||||||||||||||||||||||||||||||||||||
|
Linton
|
$ | 256,353 | 45 | % | 40 | % | 15 | % | 65 | % | 20 | % | |||||||||||||||||||||||||||||||||||
|
McBreen
|
$ | 292,634 | 50 | % | 40 | % | 15 | % | 20 | % | 65 | % | |||||||||||||||||||||||||||||||||||
|
Zwiers
|
$ | 373,894 | 50 | % | 40 | % | 15 | % | 20 | % | 50 | % | 15 | % | |||||||||||||||||||||||||||||||||
| 1 | Includes the NEO’s Annual Bonus payout and the Individual Performance Bonus payout. |
29
Table of Contents
| 2 | The Committee approved revenue and pre-tax earnings performance criteria for the Company, as described below under “2010 Annual Bonuses.” | |
| 3 | The Committee approved a combination of metrics as performance criteria for the Global Operations Group: actual expenses compared to 2010 planned targets (Distribution, 10%); pre-tax profit and net sales (Leathers, 10%); cost variances compared to the 2010 planned targets (Owned Manufacturing, 10%); and actual expenses, speed-to-market, and product costs compared to 2010 planned targets (Sourcing, 35%). | |
| 4 | The Committee approved actual Department expenses compared to projected expenses in the Human Resources Department’s fiscal year 2010 operating plan as the 2010 performance criterion for the Human Resources Department. | |
| 5 | The Committee approved revenue and pre-tax earnings as the performance criteria for each of the Outdoor Group and the Retail Group. |
2010 Annual
Bonuses
The Compensation Committee set fiscal year 2010 revenue and
pre-tax earnings as the Company’s 2010 performance
criteria, using four performance levels: threshold (50% payout),
target (100% payout), goal (150% payout) and stretch (200%
payout). Revenue is weighted 35% and pre-tax earnings 65% of the
Company component (as shown in the above table) of the annual
incentive compensation opportunity. The Committee selected these
criteria, with input from management, because it believed there
is a strong relationship between performance on these financial
measures and stockholder value. The Committee set the 2010
performance levels following discussion with management and a
review of the Company’s operating plan, historical
performance, and economic conditions facing the Company.
|
Performance Level |
||||||||
| (% of Target Payout)1 | Revenue2 | Pre-tax Earnings2 | ||||||
|
Threshold (50%)
|
$1,117.0 Million | $ | 124 Million | |||||
|
Target (100%)
|
$1,157.0 Million | $ | 134 Million | |||||
|
Goal (150%)
|
$1,175.0 Million | $ | 140 Million | |||||
|
Stretch (200%)
|
$1,193.0 Million | $ | 146 Million | |||||
| 1 | The maximum payout an NEO can receive is 200% of the payment earned at his or her Target Percentage, even if performance is above stretch, and an NEO would receive 0% of his or her Target Percentage if performance is below threshold. | |
| 2 | Not including the effect of acquisitions, divestitures, accounting changes, restructuring, or other special charges or extraordinary items excluded by the Compensation Committee. |
The Committee also approved performance criteria based on
revenue and pre-tax earnings for the Outdoor Group, and the
Retail Group, and actual Department expenses compared to
projected expenses in the Human Resources Department’s
fiscal year 2010 operating plan for the Human Resources
Department. The Committee approved a combination of metrics as
performance criteria for the Global Operations Group: actual
expenses compared to 2010 planned targets (Distribution, 10%);
pre-tax profit and net sales (Leathers, 10%); cost variances
compared to the 2010 planned targets (Owned Manufacturing, 10%);
and actual expenses,
speed-to-market,
and product costs compared to 2010 planned targets (Sourcing,
35%). The Committee also approved four performance levels for
each business unit performance criteria: threshold (50% payout),
target (100% payout), goal (150% payout) and stretch (200%
payout). These metrics are used to determine a portion of the
bonus awarded to Messrs. McBreen and Zwiers and
Ms. Linton. The performance levels for the business unit
performance criteria were set at substantially similar
difficulty levels as the levels set for the Company performance
criteria. The Committee approved target performance goals for
the business units at levels that it believed the units could
achieve under strong management performance, based on a review
of each business unit’s historical performance and its
fiscal year 2010
30
Table of Contents
operating plan. The following table shows historical achievement
levels for the business unit performance criteria, for those
years when the performance criteria were the same as the 2010
performance criteria:
| 2010 | 2009 | 2008 | 2007 | 2006 | ||||||
|
Global Operations Group
|
Between goal and stretch |
N/A | N/A | N/A | N/A | |||||
|
Human Resources Department
|
Between goal and stretch |
Above stretch |
N/A | N/A | N/A | |||||
|
Outdoor Group
|
Above stretch |
Between goal and stretch |
Between goal and stretch |
Between goal and stretch |
Above stretch |
|||||
|
Retail Group
|
Above stretch |
Above stretch |
Between threshold and target |
Below threshold |
Between target and goal |
|||||
Wolverine’s fiscal year 2010 revenue was
$1.249 billion which exceeded the stretch performance
level, resulting in a payout of 200% of target for this
performance measure. Wolverine’s pre-tax earnings for
fiscal year 2010 were $146.3 million adjusted for
restructuring and other transition costs and the one-time gain
on the sale of Wolverine Procurement, Inc. assets
($143.2 million before the adjustments), which exceeded the
stretch performance level, resulting in a payout of 200% of
target for this performance measure. The Outdoor Group’s
revenue of $491.1 million exceeded stretch (which
corresponds to a payout of 200% of target), and its performance
on pre-tax earnings exceeded stretch (which corresponds to a
payout of 200% of target), resulting in an overall payout of
200% of target. The Global Operations Group’s performance
was above stretch for Distribution, between goal and stretch for
Leathers, above stretch for Owned Manufacturing, and between
target and goal for Sourcing, resulting in an overall payout of
164% of target. The Retail Group’s performance was above
stretch on both revenue and pre-tax earnings, resulting in a
payout of 200% of target. The Human Resource Department’s
performance was between goal and stretch on actual Department
expenses compared to projected expenses in the Department’s
2010 operating plan, resulting in an overall payout of 186% of
target. For 2010, the Company paid the NEOs the following
bonuses under the Annual Bonus Plan:
|
Annual Bonus |
||||||||||
|
Opportunity |
Annual Bonus |
|||||||||
|
(as a % of an NEO’s |
Percentage |
|||||||||
| Name | Target Percentage) | Earned | Annual Bonus Paid* | |||||||
|
Krueger
|
0 – 200% | 200% | $1,304,423 | |||||||
|
Grimes
|
0 – 200% | 200% | $371,303 | |||||||
|
Linton
|
0 – 200% | 197% | $225,970 | |||||||
|
McBreen
|
0 – 200% | 173% | $253,800 | |||||||
|
Zwiers
|
0 – 200% | 200% | $330,192 | |||||||
| * | Not including Individual Performance Bonus. |
2010
Individual Performance Bonuses
The Individual Performance Bonus payout ranges from 0% to 200%
of an NEO’s Target Percentage:
| Personal Objectives Score | 2010 Payout Level | |||
|
95-100%
|
200% | |||
|
90-95%
|
175% | |||
|
80-90%
|
150% | |||
|
70-80%
|
100% | |||
|
60-70%
|
50% | |||
|
Less than 60%
|
0% | |||
The Committee approves Individual Performance Bonuses for NEOs
other than the CEO, based on the CEO’s recommendation, and
the Committee and the independent directors of the Board approve
the Individual
31
Table of Contents
Performance Bonus for the CEO. The Committee and the independent
directors of the Board met with the CEO at the end of the year
to evaluate his performance compared to his personal objectives
set at the beginning of the year. At the end of the year, NEOs
other than the CEO provide to the CEO self-evaluations of their
performance against their personal objectives for the year. The
CEO evaluates NEOs’ performance against their personal
objectives and recommends to the Compensation Committee an
Individual Performance Bonus award for each NEO. The CEO
provides his self-evaluation to the Compensation Committee and
the other independent directors of the Board, and the
Compensation Committee and other independent directors approve
an Individual Performance Bonus for the CEO. The personal
objectives are specific to each NEO and are subjective. The
personal objectives for the NEOs were: Mr. Krueger
(employee development, revenue growth, new business development,
consumer-direct business expansion, and apparel and accessories
business expansion); Mr. Grimes (employee development,
investor relations, new business development, and information
systems enhancement); Ms. Linton (employee development,
enhancing organization structure, process improvements);
Mr. McBreen (operations performance, streamlining supply
chain management, employee development); and Mr. Zwiers
(revenue growth, retail business expansion). For 2010, the
Compensation Committee (and the independent directors, as
applicable) approved the following NEO Individual Performance
Bonuses:
|
2010 |
||||||||||||||
|
Individual |
||||||||||||||
|
Performance Bonus |
2010 |
|||||||||||||
|
Opportunity |
Individual Performance |
2010 |
||||||||||||
|
(as a % of an NEO’s |
Bonus Percentage |
Discretionary |
||||||||||||
| Name | Target Percentage) | Awarded | Bonus Paid* | |||||||||||
|
Krueger
|
0 – 200 | % | 150 | % | $172,644 | |||||||||
|
Grimes
|
0 – 200 | % | 175 | % | $57,344 | |||||||||
|
Linton
|
0 – 200 | % | 150 | % | $30,383 | |||||||||
|
McBreen
|
0 – 200 | % | 150 | % | $38,834 | |||||||||
|
Zwiers
|
0 – 200 | % | 150 | % | $43,702 | |||||||||
* Does not include Annual Bonus.
Long-Term
Incentive Compensation
Each NEO has the opportunity to earn long-term incentive
compensation in the form of (1) cash or performance shares,
(2) stock option grants, and (3) restricted stock
awards.
Long-Term
Incentive Cash and Performance Share Bonuses
Each NEO has the opportunity to earn long-term incentive
compensation under the Company’s Long-Term Incentive Plan
(“LTIP”), stock incentive plans, or both based on
performance criteria covering three-year periods
(“3-Year
Bonus”). The Compensation Committee believes that NEO
long-term incentive compensation opportunities should stay
competitive with comparable opportunities at companies of
similar size to Wolverine and companies with whom Wolverine
competes to hire NEOs. Early in the first year of each
three-year period, the Committee approves the three-year period
performance criteria. Early in the year following the end of the
three-year period, the Committee certifies actual performance
compared to the period performance criteria, and makes any
adjustments it feels are appropriate as permitted by the
applicable plans. Under the LTIP and the stock incentive plans,
the Committee may adjust the bonuses downward.
32
Table of Contents
3-Year
Cash Bonus (Fiscal
2008-2010)
The Committee established two performance criteria for the
2008-2010
performance period: (1) total shareholder return ranking
within Wolverine’s Peer Group (as defined on page 36),
and (2) fully diluted earnings per share:
|
TSR Ranking |
||||||
|
Against Peer |
Percentage of Target |
|||||
| Group | Payout | |||||
|
1st
|
200 | % | ||||
|
2nd
|
175 | % | ||||
|
3rd
|
150 | % | ||||
|
4th
|
125 | % | ||||
|
5th
|
100 | % | ||||
|
6th
|
75 | % | ||||
|
7th
|
50 | % | ||||
|
8th-14th
|
0 | % | ||||
|
Aggregate |
||||
|
Performance Level |
EPS for the |
|||
|
(Percentage of Target |
2008-2010 |
|||
| Payout) | Period* | |||
|
Threshold (50%)
|
$ | 5.52 | ||
|
Target (100%)
|
$ | 5.73 | ||
|
Goal (150%)
|
$ | 5.96 | ||
|
Maximum (200%)
|
$ | 6.42 | ||
| * | Not including the effect of acquisitions, divestitures, accounting changes, restructuring, or other special charges or extraordinary items excluded by the Compensation Committee. |
The Committee believed these criteria would balance the
NEOs’ focus on near-term profitability with longer-term
shareholder value. The Committee evaluated Wolverine’s
performance against these criteria and certified that
Wolverine’s performance on the earnings per share criterion
was $5.95 (adjusted to exclude restructuring and other
transition and non-recurring costs and the one-time gain on the
sale of the Wolverine Procurement, Inc. assets), falling between
target and goal performance levels, and on the total shareholder
return criterion Wolverine’s performance rank was 6th,
resulting in a weighted average payout level of 111.4%. The NEOs
received the following cash
3-Year
Bonuses for the
2008-2010
performance period:
| Name | 3-Year Bonus | |||||
|
Krueger
|
$567,071 | |||||
|
Grimes*
|
$167,273 | |||||
|
Linton
|
$108,412 | |||||
|
McBreen*
|
$127,089 | |||||
|
Zwiers
|
$157,599 | |||||
| * | Messrs. Grimes’ and McBreen’s 3-Year Bonuses were prorated to reflect that they started employment with the Company after the beginning of the performance period. |
3-Year
Performance Share Bonus (Fiscal
2010-2012)
The Committee evaluated each NEO’s long-term incentive
payout opportunity. It considered market data; the
Company’s recruiting experiences; each NEO’s
experience and responsibilities; and competition with other
footwear, apparel and retail companies for candidates. The
Committee considers these factors subjectively, and no single
factor or combination of factors was determinative for any NEO.
The Committee decided to set the NEOs’ Target Percentage
(expressed as a percentage of the NEO’s base salary,
similar to the Annual Bonus) for the
3-Year Bonus
opportunity, as follows:
|
2010-2012 |
2009-2011 |
|||||||
| Name | Percent | Percent | ||||||
|
Krueger
|
75 | % | 70 | % | ||||
|
Grimes
|
50 | % | 45 | % | ||||
|
Linton
|
35 | % | 35 | % | ||||
|
McBreen
|
45 | % | 40 | % | ||||
|
Zwiers
|
50 | % | 40 | % | ||||
33
Table of Contents
In 2009, the Compensation Committee replaced cash payouts with
equity payouts for the
3-Year Bonus
opportunity (“performance shares”). In the Summary
Compensation Table, this change affects the amounts reported in
the Stock Awards and Non-Equity Incentive Plan Compensation
columns for 2009 and 2010. The Stock Awards column includes, for
2009 and 2010, the full grant date fair value of the performance
share awards at expected payout levels for the
2009-2011
and
2010-2012
performance periods, respectively. In addition, the Non-Equity
Incentive Plan Compensation column includes, for 2009 and 2010,
the cash payouts for the
2007-2009
and
2008-2010
performance periods, respectively. As a result, those columns
show for 2009 the actual payouts received by the NEO for the
2007-2009
performance period and the grant date fair value of the
performance share awards granted for the
2009-2011
performance period. The columns show for 2010 the actual payouts
received by the NEO for the
2008-2010
performance period and the grant date fair value of the
performance share awards for the
2010-2012
performance period. After 2010, this reporting of two
3-Year Bonus
awards for each year is expected to end. The following table is
an alternate form of presentation of NEO total compensation that
shows the difference between the 2010 total compensation for
each NEO as reported in the Summary Compensation Table (which
includes the grant date fair value of the 2010 performance share
grants) and the 2010 total compensation for each NEO as reported
in the Summary Compensation Table adjusted to exclude the grant
date fair value of the 2010 performance share grants. This table
is not required by the rules relating to executive compensation
disclosures and is not a substitute for information required by
Item 402 of SEC
Regulation S-K,
but rather it is intended to provide additional information that
stockholders may find useful:
|
2010 |
2010 Total |
|||||||||
|
Total Compensation |
Compensation |
|||||||||
|
With Performance |
Without Performance |
|||||||||
| Name | Share Grants1 | Share Grants2 | Difference3 | |||||||
|
Krueger
|
$6,323,366 | $5,560,691 | $ | 762,675 | ||||||
|
Grimes
|
$1,673,986 | $1,411,561 | $ | 262,425 | ||||||
|
Linton
|
$1,135,724 | $997,024 | $ | 138,700 | ||||||
|
McBreen
|
$1,270,950 | $1,064,275 | $ | 206,675 | ||||||
|
Zwiers
|
$1,657,163 | $1,394,738 | $ | 262,425 | ||||||
| 1 | Represents the 2010 total compensation for each NEO as reported in the Summary Compensation Table (which includes the grant date fair value of performance share grants awarded in 2010). | |
| 2 | Represents the 2010 total compensation for each NEO as reported in the Summary Compensation Table, adjusted to exclude the grant date fair value of performance share grants awarded in 2010. | |
| 3 | Represents the difference between the amounts reported in the second and third columns. |
In addition, in 2009 starting with the
2009-2011
performance period, the Committee also replaced the total
shareholder return criterion with a business value added
criterion (“BVA”).
In 2010, the Committee granted performance shares and weighted
the earnings per share criterion at 65% of the total payout and
weighted the BVA performance criterion at 35% of the payout of
the three-year performance share bonus for the
2010-2012
performance period, which was consistent with the 2009
performance share grant.
BVA reflects changes in after-tax operating profit and asset
management. The Committee believed focusing NEOs’ interests
on increasing BVA would align their interests more closely with
stockholder interests, and that BVA is superior to TSR in
measuring management’s long-term influence over the
Company’s performance. The Committee defined BVA as a
measurement that equals the operating income for a fiscal year
reduced by (i) a provision for income taxes equal to the
operating income multiplied by the Company’s total
effective tax rate for the same fiscal year; and (ii) a
capital charge equal to a two-point average of “net
operating assets” at the beginning and end of a fiscal year
(with “net operating assets” defined as the net of
trade receivables (net of reserves), inventory (net of
reserves), other current assets, property, plant and equipment,
trade payables and accrued liabilities), multiplied by 10%. The
Committee intended the level of difficulty in attaining
threshold, target, goal and stretch performance levels it set
for the
2010-2012
performance period to be substantially similar to the level of
difficulty in attaining the performance levels for the
2009-2011
performance period.
34
Table of Contents
In February 2010, the Committee awarded performance shares to
each NEO with a value equal to the maximum bonus payout the NEO
could earn as the
3-Year Bonus
for the
2010-2012
performance period. The Committee granted the awards under the
Company’s Amended and Restated 2005 Stock Incentive Plan.
The award details are in the table “Grants of Plan-Based
Awards” on page 41. The Company accrues, but does not
pay, dividends on the performance shares during the performance
period. Early in the year following the end of the
2010-2012
performance period, the Committee will certify the
Company’s performance compared to the performance criteria,
and make any adjustments it feels are appropriate as permitted
by the applicable plans. The restrictions on none, some or all
of the performance shares awarded to each NEO will lapse at that
time, and the NEO will receive accrued dividends only on the
shares actually earned. The Committee retains the discretion to
pay bonus amounts in excess of the 200% level if the performance
of any one or more NEOs justifies a higher bonus level.
Stock Option
Grants and Restricted Stock Awards
The Compensation Committee believes that NEO stock ownership
benefits stockholders. The Company has granted stock options and
awarded restricted stock to NEOs and other executives for many
decades. The Committee administers the stock incentive plans for
stock option grants and restricted stock awards. It approves the
amount of and terms applicable to all grants and awards (except
for grants to the CEO, which the Committee approves together
with the other independent directors). In addition to annual
grants and awards, the Committee may approve special grants or
awards to NEOs, such as a grant or award to a new hire or for a
promotion.
When granting equity awards, the Committee considers the
NEO’s position, responsibilities, service years,
performance, previous equity grants, and market information.
Management provides input to the Committee regarding equity
award decisions. The Committee compares NEO equity awards to
market information as part of evaluating NEO total long-term
incentive compensation at target to broader compensation trends.
In general, the Committee gives more weight to position and
responsibilities.
A stock option’s exercise price is the fair market value of
the Company’s common stock, and the fair market value is
the closing price of the Company’s common stock on the
grant date. The Committee grants annual equity awards at its
regularly scheduled February meeting. The independent directors
of the Board approve equity grants to the CEO at the same time.
A stock option grant typically vests one-third each year over
three years. The restrictions on restricted stock awards
typically lapse 25% on each of the third and fourth anniversary
and 50% on the fifth anniversary of the award.
The total value of the equity award to each NEO (the combined
total grant date fair value for the stock options and restricted
stock (not including the performance share awards) is based on
the total value of the prior year’s equity award at the
time of the award, increased by a percentage determined by the
Committee. In 2010, the Committee used the percentage ranges of
base salary set out in the table below as guidelines for the
total value of the equity award as a percentage of each
NEO’s base salary. The ranges used as guidelines did not
change from 2009. The actual total value of the equity award was
determined using a percentage increase over the prior
year’s award. When setting the percentage increase, the
Committee considered the amount of the prior year’s total
equity award to each NEO, the percentage of the NEO’s total
compensation that would be reflected by the equity award, the
change in total compensation for the NEO compared to the prior
year, and equity awards to each NEO in recent years, and whether
the total value of the equity award fell within the guidelines,
but no single factor or combination of factors was determinative
in setting the percentage increase. For 2010, the Committee used
a 3% increase in the total
35
Table of Contents
value of the equity award for each of the NEOs. The “Grants
of Plan-Based Awards” table on page 41 shows the
actual grants and awards for 2010.
|
2010 |
2010 |
|||||||
|
Actual % of Base |
% of Base Salary |
|||||||
| Name | Salary Awarded | Guideline Range | ||||||
|
Krueger
|
148.9 | % | 130-170% | |||||
|
Grimes
|
86.6 | % | 80-110% | |||||
|
Linton
|
74.6 | % | 50-80% | |||||
|
McBreen
|
81.9 | % | 50-80% | |||||
|
Zwiers
|
81.9 | % | 50-80% | |||||
The restricted stock award, not including performance shares,
was approximately 60%, and the stock option grants were
approximately 40%, of the combined value of the equity awarded
to each NEO. These were the same approximate percentages as in
2009 and in the past five years. The Committee believed this mix
was appropriate based on the fact that restricted stock promotes
retention and stock options incentivize stock price performance.
Compensation
Consultant and Market Comparisons
In 2009, the Compensation Committee engaged Towers
Watson & Co. (“Towers Watson”) to provide
general market data that management and the Compensation
Committee used in evaluating 2010 compensation levels. Towers
Watson provided general market data and did not advise or make
recommendations with respect to the amount or form of executive
or director compensation for 2010. The Company retained Towers
Watson in 2010 to provide advice and recommendations with
respect to the amount and form of executive compensation for
2011. The Company also retained Towers Watson to provide
actuarial services in 2010.
For 2010, the Company used the following peer group (the
“Peer Group”):
|
Brown Shoe Co. Inc.
|
Jones Apparel Group Inc. | Steven Madden, Ltd. | ||||
|
Collective Brands, Inc.
|
K-Swiss, Inc. | Timberland Co. | ||||
|
Columbia Sportswear Co.
|
Kenneth Cole Productions Inc. | |||||
|
Deckers Outdoor Corp.
|
Rocky Brands, Inc. | |||||
|
Genesco Inc.
|
Skechers USA Inc. | |||||
The Committee uses survey and Peer Group information as a market
check, but survey and Peer Group information are not material
factors in setting NEO compensation. The Committee believes that
compensation levels in the footwear, apparel and retail
industries typically exceed levels reported in general industry
surveys. The Committee also considers information the Company
learns through recruiting NEOs and the experience levels and
responsibilities of NEOs prior to joining the Company, as
reference points in setting NEO compensation.
Other
Compensation Policies and Practices
Equity Grant
Practices
The dates of the Compensation Committee’s and Board’s
February meetings, at which annual grants are made, generally
are scheduled at least one year in advance. The Compensation
Committee also has delegated to the CEO the authority to award
restricted stock and grant stock options to employees, other
than himself and other NEOs, during the Company’s 2011
fiscal year to recognize outstanding performance by employees.
The restricted stock awards may not exceed 17,000 shares in
aggregate and the stock options 10,580 options in aggregate.
36
Table of Contents
NEO Stock
Ownership Guidelines
Through stock ownership guidelines, the Company requires that
NEOs maintain a minimum stock ownership level (including, for up
to 50% of the applicable ownership requirement, restricted stock
awards and performance shares but not stock options) to align
further the interests of these individuals with the stockholders.
| Covered Positions | Guideline | |
|
CEO
|
5x Annual Base Salary | |
|
Other NEOs
|
2x Annual Base Salary | |
Each NEO must meet the ownership requirement by the end of the
fifth year after he or she becomes subject to the guidelines.
All NEOs who have been with Wolverine for at least five years
meet the ownership requirement.
Perquisites
The Company provides limited perquisites to NEOs in order to
provide a competitive total compensation package. These include
reimbursement for basic tax, financial planning and estate
planning services. The Company does not provide gross ups to the
NEOs for the taxes due on the value of the perquisites.
Retirement and
Welfare Benefits
The NEOs participate in Wolverine’s medical and dental
plans and receive life and disability insurance. Subject to
variations to account for requirements in local jurisdictions,
variances in local compensation structure (for example, as
applicable to Wolverine’s employees in the United Sates
versus certain overseas offices), and to requirements under
collective bargaining agreements, all Wolverine employees
receive the same health and welfare benefit opportunities. The
NEOs also participate in the Wolverine Employees’ Pension
Plan (a defined benefit plan) and the Wolverine World Wide, Inc.
409A Supplemental Executive Retirement Plan (an unfunded,
non-qualified plan). For a description of the benefits under
Wolverine’s retirement plans, see “Pension Plans and
2010 Pension Benefits” below.
Impact of
Accounting and Tax Treatments on Compensation
Section 162(m) of the Internal Revenue Code provides that
publicly held companies may not deduct compensation paid to the
CEO and the three next most highly-paid executive officers
(other than the CFO) in excess of $1,000,000 annually, with
certain exceptions for qualified “performance-based”
compensation. Wolverine has obtained stockholder approval of the
Annual Bonus Plan, the LTIP, and its stock incentive plans, to
permit certain amounts payable under these plans to qualify as
“performance-based” compensation for purposes of
Section 162(m). Incentives under these plans, other than
time-based restricted stock awards, were not included in the
$1,000,000 limit for purposes of calculating Wolverine’s
deduction for compensation paid to its NEOs for 2010. Wolverine
does not require all of its compensation programs to be fully
deductible under Section 162(m) because Wolverine believes
it is important to preserve flexibility in administering
compensation programs in a manner designed to promote varying
corporate goals. Wolverine may pay certain compensation that
does not qualify as performance-based compensation.
Post-Employment
Compensation
Each NEO is party to an Executive Severance Agreement that
provides for certain payments and benefits upon termination of
employment after a change in control of Wolverine. The Board
believes Executive Severance Agreements will promote management
stability during the transition period accompanying a change in
control. Each NEO is eligible to receive compensation if his or
her employment is terminated within two years
(Messrs. Grimes, McBreen, Zwiers and Ms. Linton) or
three years (Mr. Krueger) following a change in control of
Wolverine. The Compensation Committee believes this “double
trigger” requirement of (1) change in control, and
(2) termination of employment, is appropriate because a
change in control does not materially harm an NEO unless the
Company also terminates his or her employment. None of the
37
Table of Contents
Executive Severance Agreements requires an NEO to mitigate
payments by seeking employment, but they do reduce compensation
paid during the fourth and later months after termination by an
amount equal to any other compensation earned by the NEO during
that period. An NEO does not receive payment under the Executive
Severance Agreement if his or her employment terminates:
| • | due to death or retirement in accordance with Wolverine’s policy or as otherwise agreed; | |
| • | for cause or disability; or | |
| • | by resignation of the NEO for other than “good reason,” which includes the assignment of duties inconsistent with the NEO’s status as a senior executive officer or the duties performed by the NEO immediately before a change in control, a reduction in the NEO’s annual base salary or relocation of the NEO. |
All NEOs also may be eligible under Wolverine’s retirement
plans or equity plans to receive certain payments and benefits
upon termination of employment or in connection with a change in
control. The Compensation Committee believes that such
single-trigger accelerated vesting is appropriate, because by
protecting a significant component of the NEO’s total
compensation the acceleration of equity vesting
(1) mitigates potential conflicts of interest that might
arise between the NEOs and the stockholders, and (2) serves
as a substantial incentive for those NEOs to obtain the highest
possible value for the stockholders if the Company becomes an
acquisition target. The Compensation Committee also retains the
discretion to modify or eliminate the accelerated vesting.
Mr. Krueger also is party to a Separation Agreement under
which he receives certain payments and benefits if the Company
terminates his employment other than for “cause” or if
he terminates his employment for “good reason.” The
Compensation Committee determined upon appointing
Mr. Krueger as CEO that given the Company’s strategic
initiatives the Board had asked him to lead, it was appropriate
for the Company to enter into a separation arrangement. You will
find information on benefits payable to Mr. Krueger and
each other NEO and the specific elements comprising the payment
under the Separation Agreement, Executive Severance Agreements,
and other retirement and equity plans of Wolverine, in the
“Potential Payments Upon Termination or Change in
Control” section of this proxy statement.
The Compensation Committee has reviewed and discussed with
management the information provided under the heading
“Compensation Discussion and Analysis.” Based on this
review and discussion, the Compensation Committee recommended to
the Board of Directors that the Company include the Compensation
Discussion and Analysis section in this proxy statement and
incorporate it by reference into the Company’s Annual
Report on
Form 10-K.
Respectfully submitted,
Michael A. Volkema (Chairperson), William K. Gerber, Joseph R.
Gromek, David T. Kollat
38
Table of Contents
2010 SUMMARY
COMPENSATION TABLE
|
Change in |
||||||||||||||||||||
|
Pension Value |
||||||||||||||||||||
|
and |
||||||||||||||||||||
|
Nonqualified |
||||||||||||||||||||
|
Name and |
Non-Equity |
Deferred |
||||||||||||||||||
|
Principal |
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
|||||||||||||||
| Position | Year | Salary1 | Bonus1,2 | Awards3,8 | Awards4 | Compensation1,5,8 | Earnings6 | Compensation7 | Total8 | |||||||||||
|
Blake W.
|
2010 | $767,308 | $172,644 | $1,437,675 | $452,264 | $1,871,494 | $1,605,769 | $16,212 | $6,323,366 | |||||||||||
|
Krueger,
|
2009 | $735,000 | $124,031 | $1,591,179 | $409,584 | $1,360,231 | $1,568,139 | $12,792 | $5,800,596 | |||||||||||
|
Chairman, CEO
and President |
2008 | $728,269 | $117,980 | $501,000 | $335,736 | $1,144,545 | $537,240 | $11,592 | $3,376,362 | |||||||||||
|
Donald T.
|
2010 | $397,115 | $57,344 | $467,425 | $138,267 | $538,576 | $61,859 | $13,400 | $1,673,986 | |||||||||||
|
Grimes, Senior
|
2009 | $385,000 | $38,981 | $510,665 | $127,995 | $337,971 | $43,539 | $45,970 | $1,490,121 | |||||||||||
|
Vice President,
CFO, Treasurer and Chief |
2008 | $222,115 | $20,990 | $155,540 | $107,819 | $156,322 | $11,392 | $138,943 | $813,121 | |||||||||||
|
Accounting
|
||||||||||||||||||||
|
Officer9,10
|
||||||||||||||||||||
|
Pamela L. Linton,
|
2010 | $300,077 | $30,383 | $271,200 | $91,951 | $334,382 | $100,096 | $7,635 | $1,135,724 | |||||||||||
|
Senior Vice
|
2009 | $292,000 | $30,660 | $309,588 | $81,064 | $251,165 | $82,369 | $9,776 | $1,056,622 | |||||||||||
|
President, Global
Human |
2008 | $282,308 | $22,867 | $137,775 | $89,530 | $170,301 | $39,409 | $7,750 | $749,937 | |||||||||||
|
Resources10
|
||||||||||||||||||||
|
Michael F.
|
2010 | $345,192 | $38,834 | $354,175 | $103,530 | $380,889 | $38,577 | $9,753 | $1,270,950 | |||||||||||
|
McBreen,
President, Global |
2009 | $325,000 | $29,250 | $383,110 | $89,567 | $180,432 | $27,476 | $21,549 | $1,056,414 | |||||||||||
|
Operations
|
||||||||||||||||||||
|
Group10,11
|
||||||||||||||||||||
|
James D. Zwiers,
|
2010 | $388,462 | $43,702 | $467,425 | $138,267 | $487,791 | $112,175 | $19,341 | $1,657,163 | |||||||||||
|
Senior Vice
|
2009 | $327,308 | $29,458 | $382,708 | $92,290 | $331,731 | $111,020 | $14,066 | $1,288,581 | |||||||||||
|
President and
President, Outdoor Group |
2008 | $283,462 | $50,512 | $137,775 | $89,530 | $179,259 | $10,896 | $10,395 | $761,829 | |||||||||||
| 1 | Includes any amounts deferred under the Company’s qualified 401(k) plan. | |
| 2 | Includes amounts earned under the Individual Performance Bonus Plan. | |
| 3 | Includes restricted stock grants and performance share grants. Restricted stock was valued in the table above using the closing market price of Wolverine common stock on the NYSE on the date of grant. Performance shares granted in 2010 were valued in the table above using the closing market price of Wolverine common stock on the NYSE on the date of grant assuming performance between target (100% payout) and goal (150% payout) level. Under FASB ASC Topic 718, the Company used target (100% payout) performance level assumptions for financial reporting purposes at the time of the 2010 performance share grant. The aggregate grant date fair value of performance shares granted in 2010, assuming payout at maximum (stretch) performance, for each NEO (and, in parenthesis, the grant date fair value of performance share grants for 2010 using maximum (stretch) performance assumptions plus grant date fair value of restricted stock grants for 2010) would have been: $1,197,725 ($1,872,725) for Mr. Krueger; $412,125 ($617,125) for Mr. Grimes; $217,800 ($350,300) for Ms. Linton; $324,550 ($472,050) for Mr. McBreen; and $412,125 ($617,125) for Mr. Zwiers. For additional valuation assumptions, see the “Stock-Based Compensation” heading under Note 1 to Wolverine’s Financial Statements for the fiscal year ended January 1, 2011. | |
| 4 | Represents the aggregate grant date fair value of stock options granted in the years shown, calculated in accordance with FASB ASC Topic 718. Stock options were valued using the Black-Scholes model. For additional valuation assumptions, see the Stock-Based Compensation heading under Note 1 to Wolverine’s Consolidated Financial Statements for the fiscal year ended January 1, 2011. | |
| 5 | Includes the amounts, listed in the table below, which the NEOs earned in 2010 and the Company paid in February 2011 for the 3-Year Bonus with a performance period ending in 2010, and amounts the NEOs earned in 2010 and the Company paid in February 2011 under the Annual Bonus Plan. |
39
Table of Contents
|
Total Non-Equity |
||||||||||||||
|
3-Year Bonus |
2010 Annual Bonus Plan |
Incentive Plan |
||||||||||||
| Name | (2008-2010) | Payout | Compensation | |||||||||||
|
Krueger
|
$567,071 | $1,304,423 | $1,871,494 | |||||||||||
|
Grimes
|
$167,273 | $371,303 | $538,576 | |||||||||||
|
Linton
|
$108,412 | $225,970 | $334,382 | |||||||||||
|
McBreen
|
$127,089 | $253,800 | $380,889 | |||||||||||
|
Zwiers
|
$157,599 | $330,192 | $487,791 | |||||||||||
| 6 | All amounts in this column reflect the aggregate change in the actuarial present value of the NEOs’ accumulated benefits under the Wolverine Employees’ Pension Plan and Wolverine World Wide, Inc. 409A Supplemental Executive Retirement Plan. The amounts in the table were determined using assumptions consistent with those used in Wolverine’s Consolidated Financial Statements for fiscal year 2010. See the “Pension Plan and 2010 Pension Benefits” section starting on page 44. The changes in the pension and SERP amounts from 2009 to 2010 are the result of changes in the NEOs’ years of service and various accounting assumptions, and are unrelated to any compensation decision by the Compensation Committee in 2010. | |
| 7 | The amounts listed in this column for 2010 include Wolverine’s matching contributions to the accounts of the NEOs under Wolverine’s 401(k) Money Accumulation Plan, payments made by Wolverine for the premiums on certain life insurance policies, and tax and estate planning services in the amounts listed in the table below. |
|
Life Insurance |
Tax and Estate |
|||||||||||||
| Name | 401(k) Match | Premiums | Planning | |||||||||||
|
Krueger
|
$7,350 | $3,842 | $5,020 | |||||||||||
|
Grimes
|
$7,350 | - | $6,050 | |||||||||||
|
Linton
|
$7,350 | - | $285 | |||||||||||
|
McBreen
|
$7,350 | $2,403 | - | |||||||||||
|
Zwiers
|
$7,350 | $2,851 | $9,140 | |||||||||||
| 8 | The Company changed its 3-Year Bonus program from a cash-based program to a performance share-based program in 2009. Because of this change, the amounts reported as compensation for each NEO in 2009 and 2010 include awards for two three-year periods. Each NEO’s 2010 compensation includes his or her: 2008-2010 awards, which were earned in 2010 and paid in cash (reported in the “Non-Equity Incentive Plan Compensation” column); and 2010-2012 awards, which were issued as performance share grants in 2010 (reported in the “Stock Awards” column). Restrictions on the shares issued under the 2010 performance share grant will lapse in 2013, if at all, based on the Company’s performance in the 2010-2012 period. Excluding the grant date fair market value of the 2010 performance share grant, total compensation for 2010 for each NEO would be as follows: $5,560,691 for Mr. Krueger; $1,411,561 for Mr. Grimes; $997,024 for Ms. Linton; $1,064,275 for Mr. McBreen; and $1,394,738 for Mr. Zwiers. | |
| 9 | Effective May 27, 2008, the Board of Directors appointed Donald T. Grimes as Senior Vice President, Chief Financial Officer, Treasurer and Chief Accounting Officer. | |
| 10 | Mr. Grimes, Ms. Linton and Mr. McBreen are not yet vested in their benefits under the Wolverine Employees’ Pension Plan or Wolverine World Wide, Inc. 409A Supplemental Executive Retirement Plan, but the amount reported under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” assumes that each is fully vested. | |
| 11 | Mr. McBreen’s employment with Wolverine began in June 2008. |
40
Table of Contents
GRANTS OF
PLAN-BASED AWARDS IN FISCAL 2010
The following table provides information concerning each grant
of an award made to the NEOs in fiscal year 2010:
|
All Other |
All Other |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Stock |
Option |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Awards: |
Awards: |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Number |
Number |
Exercise |
||||||||||||||||||||||||||||||||||||||||||||||
|
Estimated Possible Payouts |
Estimated Possible |
of |
of |
or Base |
Grant |
|||||||||||||||||||||||||||||||||||||||||||
|
Under Non-Equity Incentive |
Payouts under Equity |
Shares |
Securities |
Price of |
Date |
|||||||||||||||||||||||||||||||||||||||||||
| Plan Awards1 | Incentive Plan Awards2 |
of Stock |
Underlying |
Option |
Fair |
|||||||||||||||||||||||||||||||||||||||||||
|
Award |
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Units3 |
Options4 |
Awards5 |
Value6 |
|||||||||||||||||||||||||||||||||||||
| Name | Type | Date | ($) | ($) | ($) | (Number) | (Number) | (Number) | (Number) | (Number) | ($/Share) | ($) | ||||||||||||||||||||||||||||||||||||
|
Krueger
|
Annual Bonus | $329,375 | $658,750 | $1,317,500 | ||||||||||||||||||||||||||||||||||||||||||||
| FY10-FY12 Performance Shares | 2/10/10 | 11,977 | 23,955 | 47,909 | $762,675 | |||||||||||||||||||||||||||||||||||||||||||
| Stock Option | 2/10/10 | 66,400 | $25.00 | $452,264 | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock | 2/10/10 | 27,000 | $675,000 | |||||||||||||||||||||||||||||||||||||||||||||
|
Grimes
|
Annual Bonus | $93,500 | $187,000 | $374,000 | ||||||||||||||||||||||||||||||||||||||||||||
| FY10-FY12 Performance Shares | 2/10/10 | 4,212 | 8,243 | 16,485 | $262,425 | |||||||||||||||||||||||||||||||||||||||||||
| Stock Option | 2/10/10 | 20,300 | $25.00 | $138,267 | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock | 2/10/10 | 8,200 | $205,000 | |||||||||||||||||||||||||||||||||||||||||||||
|
Linton
|
Annual Bonus | $57,758 | $115,515 | $231,030 | ||||||||||||||||||||||||||||||||||||||||||||
| FY10-FY12 Performance Shares | 2/10/10 | 2,178 | 4,356 | 8,712 | $138,700 | |||||||||||||||||||||||||||||||||||||||||||
| Stock Option | 2/10/10 | 13,500 | $25.00 | $91,951 | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock | 2/10/10 | 5,300 | $132,500 | |||||||||||||||||||||||||||||||||||||||||||||
|
McBreen
|
Annual Bonus | $74,375 | $148,750 | $297,500 | ||||||||||||||||||||||||||||||||||||||||||||
| FY10-FY12 Performance Shares | 2/10/10 | 3,246 | 6,491 | 12,982 | $206,675 | |||||||||||||||||||||||||||||||||||||||||||
| Stock Option | 2/10/10 | 15,200 | $25.00 | $103,530 | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock | 2/10/10 | 5,900 | $147,500 | |||||||||||||||||||||||||||||||||||||||||||||
|
Zwiers
|
Annual Bonus | $85,000 | $170,000 | $340,000 | ||||||||||||||||||||||||||||||||||||||||||||
| FY10-FY12 Performance Shares | 2/10/10 | 4,121 | 8,243 | 16,485 | $262,425 | |||||||||||||||||||||||||||||||||||||||||||
| Stock Option | 2/10/10 | 20,300 | $25.00 | $138,267 | ||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock | 2/10/10 | 8,200 | $205,000 | |||||||||||||||||||||||||||||||||||||||||||||
| 1 | Estimated payout levels relating to each NEO’s participation in the Annual Bonus Plan. For a description of this Plan and the payout under it, see pages 28-32. | |
| 2 | Estimated payout levels of performance shares granted under the Amended and Restated Stock Incentive Plan of 2005 relating to each NEO’s participation in the 3-Year Bonus (Fiscal 2010-2012). Following the end of the 2010-2012 performance period, restrictions may lapse on some, all or none of the performance shares depending upon the Company’s achievement of the relevant performance criteria. The Company accrues, but does not pay, dividends on the performance shares during the performance period. At the end of the performance period, the Company will pay to the NEO the accrued dividends (if any) on the performance shares for which the restrictions lapse. For a description of this Plan and the payout under it, see pages 32-35. | |
| 3 | The Company awarded restricted stock awards under the stockholder-approved stock incentive plans for all NEOs. The restrictions on 25% of the shares received under the awards reflected in this column normally lapse on the third anniversary of the date of the award, with the restrictions on an additional 25% of the shares lapsing on the fourth anniversary and the restrictions with respect to the remaining 50% of the shares lapsing on the fifth anniversary. All restrictions on shares of restricted stock lapse upon an NEO’s death, disability or voluntary termination after attaining age 62 or age 50 with seven years of service. In the event of a change in control, as described under the “Benefits Upon a Change in Control Only” heading on page 48, restrictions lapse on all shares. Holders of restricted stock are entitled to receive dividends and to vote. |
41
Table of Contents
| 4 | The Company granted stock options under the Amended and Restated Stock Incentive Plan of 2005 for all NEOs. Stock options granted to NEOs vest ratably over three years beginning on the first anniversary of the grant date and have a term of ten years. Stock option vesting may accelerate upon certain events, including retirement, death, disability or a change in control of Wolverine. | |
| 5 | The exercise price is equal to the closing market price of shares of Wolverine common stock on the date of grant. | |
| 6 | Represents the grant date fair value for stock options, and award date fair value for performance share and restricted stock awards, made in fiscal year 2010, computed as described in footnotes 3 and 4 to the Summary Compensation Table. |
OUTSTANDING
EQUITY AWARDS AT 2010 FISCAL YEAR-END
The following table provides information concerning unexercised
options and stock awards that have not vested for each NEO
outstanding as of January 1, 2011:
| Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||
|
Equity |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Incentive |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Equity |
Plan |
||||||||||||||||||||||||||||||||||||||||||||||
|
Incentive |
Awards: |
||||||||||||||||||||||||||||||||||||||||||||||
|
Plan |
Market |
||||||||||||||||||||||||||||||||||||||||||||||
|
Awards: |
or Payout |
||||||||||||||||||||||||||||||||||||||||||||||
|
Number |
Value of |
||||||||||||||||||||||||||||||||||||||||||||||
|
of Unearned |
Unearned |
||||||||||||||||||||||||||||||||||||||||||||||
|
Market |
Shares, |
Shares, |
|||||||||||||||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Value of |
Units |
Units or |
||||||||||||||||||||||||||||||||||||||||||
|
Securities |
Securities |
Shares or |
Shares or |
or Other |
Other |
||||||||||||||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Units of |
Units of |
Rights |
rights |
||||||||||||||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Option |
Stock |
Stock That |
That Have |
That |
|||||||||||||||||||||||||||||||||||||||||
|
Options |
Options |
Exercise |
Option |
That Have |
Have Not |
Not |
Have |
||||||||||||||||||||||||||||||||||||||||
|
Exercisable |
Unexercisable1 |
Price |
Expiration |
Not
Vested2 |
Vested3 |
Vested4 |
Not Vested |
||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | (#) | (#) | ($) | Date | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||||||||||||||||
|
Krueger
|
Various | 106,650 | $3,400,002 | ||||||||||||||||||||||||||||||||||||||||||||
| Various | 111,730 | $3,561,952 | |||||||||||||||||||||||||||||||||||||||||||||
| 12/27/2004 | 6,010 | - | $20.73 | 3/4/2011 | |||||||||||||||||||||||||||||||||||||||||||
| 12/14/2004 | 1,081 | - | $20.50 | 2/13/2012 | |||||||||||||||||||||||||||||||||||||||||||
| 2/12/2003 | 22,500 | - | $10.51 | 2/12/2013 | |||||||||||||||||||||||||||||||||||||||||||
| 2/14/2002 | 2,474 | - | $10.29 | 2/14/2012 | |||||||||||||||||||||||||||||||||||||||||||
| 2/18/2004 | 23,063 | - | $15.37 | 2/18/2014 | |||||||||||||||||||||||||||||||||||||||||||
| 4/22/2004 | 24,180 | - | $17.91 | 3/4/2011 | |||||||||||||||||||||||||||||||||||||||||||
| 10/25/2004 | 15,030 | - | $20.08 | 2/11/2013 | |||||||||||||||||||||||||||||||||||||||||||
| 10/25/2004 | 24,153 | - | $20.08 | 2/13/2012 | |||||||||||||||||||||||||||||||||||||||||||
| 2/9/2005 | 26,200 | - | $23.04 | 2/8/2015 | |||||||||||||||||||||||||||||||||||||||||||
| 12/14/2004 | 967 | - | $20.50 | 3/4/2011 | |||||||||||||||||||||||||||||||||||||||||||
| 12/27/2004 | 6,303 | - | $20.73 | 2/17/2014 | |||||||||||||||||||||||||||||||||||||||||||
| 12/27/2004 | 2,269 | - | $20.73 | 2/18/2014 | |||||||||||||||||||||||||||||||||||||||||||
| 2/15/2006 | 26,650 | - | $22.47 | 2/14/2016 | |||||||||||||||||||||||||||||||||||||||||||
| 2/7/2007 | 36,896 | - | $30.26 | 2/6/2017 | |||||||||||||||||||||||||||||||||||||||||||
| 4/19/2007 | 6,700 | - | $29.47 | 4/18/2017 | |||||||||||||||||||||||||||||||||||||||||||
| 2/6/2008 | 40,000 | 20,000 | $25.05 | 2/5/2018 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2009 | 32,000 | 64,000 | $17.11 | 2/9/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2010 | - | 66,400 | $25.00 | 2/9/2020 | |||||||||||||||||||||||||||||||||||||||||||
|
Grimes
|
Various | 25,700 | $819,316 | ||||||||||||||||||||||||||||||||||||||||||||
| Various | 37,976 | $1,210,675 | |||||||||||||||||||||||||||||||||||||||||||||
| 5/27/2008 | 10,667 | 5,333 | $28.28 | 5/26/2018 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2009 | 10,000 | 20,000 | $17.11 | 2/9/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2010 | - | 20,300 | $25.00 | 2/9/2020 | |||||||||||||||||||||||||||||||||||||||||||
|
Linton
|
Various | 18,800 | $599,344 | ||||||||||||||||||||||||||||||||||||||||||||
| Various | 20,868 | $665,272 | |||||||||||||||||||||||||||||||||||||||||||||
| 2/6/2008 | 10,667 | 5,333 | $25.05 | 2/5/2018 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2009 | 6,334 | 12,666 | $17.11 | 2/9/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2010 | - | 13,500 | $25.00 | 2/9/2020 | |||||||||||||||||||||||||||||||||||||||||||
|
McBreen
|
Various | 20,400 | $650,352 | ||||||||||||||||||||||||||||||||||||||||||||
| Various | 29,108 | $927,963 | |||||||||||||||||||||||||||||||||||||||||||||
| 7/9/2008 | 10,667 | 5,333 | $23.04 | 7/8/2018 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2009 | 7,000 | 14,000 | $17.11 | 2/9/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2010 | - | 15,200 | $25.00 | 2/9/2020 | |||||||||||||||||||||||||||||||||||||||||||
42
Table of Contents
| Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||
|
Equity |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Incentive |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Equity |
Plan |
||||||||||||||||||||||||||||||||||||||||||||||
|
Incentive |
Awards: |
||||||||||||||||||||||||||||||||||||||||||||||
|
Plan |
Market |
||||||||||||||||||||||||||||||||||||||||||||||
|
Awards: |
or Payout |
||||||||||||||||||||||||||||||||||||||||||||||
|
Number |
Value of |
||||||||||||||||||||||||||||||||||||||||||||||
|
of Unearned |
Unearned |
||||||||||||||||||||||||||||||||||||||||||||||
|
Market |
Shares, |
Shares, |
|||||||||||||||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Value of |
Units |
Units or |
||||||||||||||||||||||||||||||||||||||||||
|
Securities |
Securities |
Shares or |
Shares or |
or Other |
Other |
||||||||||||||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Units of |
Units of |
Rights |
rights |
||||||||||||||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Option |
Stock |
Stock That |
That Have |
That |
|||||||||||||||||||||||||||||||||||||||||
|
Options |
Options |
Exercise |
Option |
That Have |
Have Not |
Not |
Have |
||||||||||||||||||||||||||||||||||||||||
|
Exercisable |
Unexercisable1 |
Price |
Expiration |
Not
Vested2 |
Vested3 |
Vested4 |
Not Vested |
||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | (#) | (#) | ($) | Date | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||||||||||||||||
|
Zwiers
|
Various | 26,425 | $842,429 | ||||||||||||||||||||||||||||||||||||||||||||
| Various | 32,253 | $1,028.226 | |||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2003 | 5,675 | - | $10.51 | 2/11/2013 | |||||||||||||||||||||||||||||||||||||||||||
| 2/18/2004 | 6,525 | - | $15.37 | 2/18/2014 | |||||||||||||||||||||||||||||||||||||||||||
| 12/20/2004 | 94 | - | $20.80 | 3/4/2011 | |||||||||||||||||||||||||||||||||||||||||||
| 12/20/2004 | 228 | - | $20.50 | 2/13/2012 | |||||||||||||||||||||||||||||||||||||||||||
| 12/20/2004 | 1,606 | - | $20.80 | 2/17/2014 | |||||||||||||||||||||||||||||||||||||||||||
| 12/14/2004 | 114 | - | $20.50 | 3/4/2011 | |||||||||||||||||||||||||||||||||||||||||||
| 12/9/2005 | 8,600 | - | $23.04 | 2/8/2015 | |||||||||||||||||||||||||||||||||||||||||||
| 2/15/2006 | 8,600 | - | $22.47 | 2/14/2016 | |||||||||||||||||||||||||||||||||||||||||||
| 2/7/2007 | 7,600 | - | $30.26 | 2/6/2017 | |||||||||||||||||||||||||||||||||||||||||||
| 2/6/2008 | 10,667 | 5,333 | $25.05 | 2/5/2018 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2009 | 6,334 | 12,666 | $17.11 | 2/9/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 4/22/2009 | 667 | 1,333 | $21.79 | 4/21/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 2/10/2010 | - | 20,300 | $25.00 | 2/9/2020 | |||||||||||||||||||||||||||||||||||||||||||
| 1 | All unexercisable options become exercisable on the vesting date. The normal vesting period for options is one-third of the shares on each of the first three anniversaries of the date of the grant. Full vesting occurs on the third anniversary date of the grant. Stock option vesting may accelerate upon certain events, including retirement, death, disability or a change in control of Wolverine, as further described in the “Grants of Plan Based Awards” section. | |
| 2 | The following table sets forth the vesting dates for the unvested restricted stock awards of each NEO as of January 1, 2011: |
|
Named |
||||||||||
|
Executive |
Number of Shares to |
|||||||||
| Officer | Vesting Date | Vest | ||||||||
|
Krueger
|
2/6/2011 | 5,000 | ||||||||
| 2/7/2011 | 3,475 | |||||||||
| 2/15/2011 | 7,500 | |||||||||
| 4/19/2011 | 575 | |||||||||
| 2/6/2012 | 5,000 | |||||||||
| 2/7/2012 | 6,950 | |||||||||
| 2/10/2012 | 10,000 | |||||||||
| 4/19/2012 | 1,150 | |||||||||
| 2/6/2013 | 10,000 | |||||||||
| 2/10/2013 | 16,750 | |||||||||
| 2/10/2014 | 26,750 | |||||||||
| 2/10/2015 | 13,500 | |||||||||
|
Grimes
|
5/27/2011 | 1,375 | ||||||||
| 2/10/2012 | 3,000 | |||||||||
| 5/27/2012 | 1,375 | |||||||||
| 2/10/2013 | 5,050 | |||||||||
| 5/27/2013 | 2,750 | |||||||||
| 2/10/2014 | 8,050 | |||||||||
| 2/10/2015 | 4,100 | |||||||||
43
Table of Contents
|
Named |
||||||||||
|
Executive |
Number of Shares to |
|||||||||
| Officer | Vesting Date | Vest | ||||||||
|
Linton
|
2/6/2011 | 1,375 | ||||||||
| 2/6/2012 | 1,375 | |||||||||
| 2/10/2012 | 2,000 | |||||||||
| 2/6/2013 | 2,750 | |||||||||
| 2/10/2013 | 3,325 | |||||||||
| 2/10/2014 | 5,325 | |||||||||
| 2/10/2015 | 2,650 | |||||||||
|
McBreen
|
7/9/2011 | 1,375 | ||||||||
| 2/10/2012 | 2,250 | |||||||||
| 7/9/2012 | 1,375 | |||||||||
| 2/10/2013 | 3,725 | |||||||||
| 7/9/2013 | 2,750 | |||||||||
| 2/10/2014 | 5,975 | |||||||||
| 2/10/2015 | 2,950 | |||||||||
|
Zwiers
|
2/6/2011 | 1,375 | ||||||||
| 2/7/2011 | 675 | |||||||||
| 2/15/2011 | 1,700 | |||||||||
| 2/6/2012 | 1,375 | |||||||||
| 2/7/2012 | 1,350 | |||||||||
| 2/10/2012 | 2,000 | |||||||||
| 4/22/2012 | 250 | |||||||||
| 2/6/2013 | 2,750 | |||||||||
| 2/10/2013 | 4,050 | |||||||||
| 4/22/2013 | 250 | |||||||||
| 2/10/2014 | 6,050 | |||||||||
| 4/22/2014 | 500 | |||||||||
| 2/10/2015 | 4,100 | |||||||||
| 3 | The dollar values are calculated using a per share stock price of $31.88, the closing price of Wolverine common stock as of the end of fiscal year 2010. | |
| 4 | Following the end of the applicable three year performance period, restrictions may lapse on some, all or none of the performance shares depending upon the Company’s achievement of the relevant performance criteria. |
OPTION EXERCISES
AND STOCK VESTED IN FISCAL 2010
| Option Awards | Stock Awards | |||||||||||||||
|
Number of |
Number of |
|||||||||||||||
|
Shares |
Value |
Shares |
Value |
|||||||||||||
|
Acquired |
Realized |
Acquired |
Realized |
|||||||||||||
|
on |
on |
on |
on |
|||||||||||||
|
Exercise |
Exercise |
Vesting |
Vesting* |
|||||||||||||
| (#) | ($) | (#) | ($) | |||||||||||||
|
Krueger
|
38,856 | $265,857 | 13,100 | $331,598 | ||||||||||||
|
Grimes
|
- | - | - | - | ||||||||||||
|
Linton
|
- | - | - | - | ||||||||||||
|
McBreen
|
- | - | - | - | ||||||||||||
|
Zwiers
|
429 | $2,728 | 3,225 | $80,844 | ||||||||||||
| * | The Company calculates the dollar values using the closing price of Wolverine common stock on the date of vesting. |
PENSION PLANS AND
2010 PENSION BENEFITS
Wolverine maintains the following defined benefit retirement
plans covering NEOs: (1) the Wolverine Employees’
Pension Plan (“Pension Plan”), which is a funded and
tax-qualified defined benefit plan under the Internal Revenue
Code that covers eligible employees, and (2) the Wolverine
World Wide, Inc. 409A Supplemental Executive Retirement Plan
(“SERP”), which is an unfunded non-qualified plan that
covers individuals recommended by the CEO and approved by the
Compensation Committee for participation in the
44
Table of Contents
SERP. The following describes the material features of the
pensions plans presented in the “Pension Benefits”
table.
Qualified Pension
Plan
NEOs vest in the Pension Plan after five years of qualifying
service. Subject to the limitations imposed by the Internal
Revenue Code, the Pension Plan generally pays an NEO a monthly
benefit in an amount equal to a percentage of the NEO’s
final average monthly earnings multiplied by his or her number
of years of service. The Pension Plan caps years of service at
25. The percentages are 2.4% for Mr. Krueger and 2.0% for
Messrs. Grimes, McBreen and Zwiers and Ms. Linton.
“Earnings” as used in this formula generally includes
base salary and annual bonus, less social security allowance,
and is capped at $245,000, the IRS limit applicable to
tax-qualified plans for 2010.
Upon retirement, an NEO participant may elect to receive the
benefit in the form of a life annuity, 5- or
10-year
certain annuities, or joint and 50% or joint and 100% survivor
annuities. The payments are actuarially adjusted based on the
election. Any election, other than an election to receive life
annuity benefits, reduces the monthly benefit payable. The
“normal” retirement age under the plan is age 65.
None of the NEOs are eligible to begin drawing early retirement
benefits under the Pension Plan.
Supplemental
Executive Retirement Plan
Wolverine offers NEOs the opportunity to participate in the
SERP, which provides retirement benefits above amounts available
under the Company’s tax-qualified pension programs. An
NEO’s SERP benefit generally equals the difference between
the NEO’s retirement benefit under Pension Plan and the
benefits the NEO would have received if there were no cap on
earnings when calculating the pension plan benefit. The SERP
caps years of service at 25. The SERP also allows a retired NEO
who has five years of service to draw earlier (beginning at
age 55) and on different terms than under the Pension
Plan. An NEO’s earnings percentage multiplier is the same
under the SERP as it is under the Pension Plan. The Compensation
Committee may grant additional deemed years of service to an
NEO, subject to the cap of 25 years. Under
Mr. Krueger’s compensation arrangement as CEO, he is
credited with an additional deemed year of service under the
SERP for each year he serves as CEO until he reaches the
25-year cap.
The full benefit of any additional years of deemed service is
paid under the SERP.
If a retired NEO draws the SERP benefit prior to age 65,
the reduction factor is 0.333% for each month prior to
age 60, and 0.1666% for each month between age 60 and
age 65. As of the end of fiscal year 2010, Mr. Krueger
was the only NEO eligible to retire and begin drawing early
retirement benefits under the SERP.
SERP benefits are paid monthly, and the SERP has a lump sum
payment option in the event of death or termination of
employment after a change in control. The SERP also includes a
disability benefit and a death benefit payable to the NEO’s
designated beneficiary if the NEO dies before retiring. The SERP
provides for lump sum payments to participating NEOs if, within
two years (Messrs. Grimes, McBreen, Zwiers and
Ms. Linton) or three years (Mr. Krueger) after a
change in control the NEO resigns for good reason or is
terminated by Wolverine other than for cause or due to death or
disability.
The SERP also contains non-competition, confidentiality and
employee non-solicitation provisions in favor of Wolverine.
Under the SERP non-competition provisions, an NEO is not
entitled to any benefit payment if, prior to the date on which
such benefit payment is due, the participant enters into certain
relationships with a competing business. If the NEO’s
employment is terminated for serious misconduct or if Wolverine
cannot collect under an insurance policy purchased to
fund SERP benefits for certain reasons, the Company may
terminate an NEO’s benefits under the SERP. Wolverine may
terminate the SERP or stop further accrual of SERP benefits for
a participating NEO at any time, but termination will not affect
previously accrued benefits.
45
Table of Contents
Pension Benefits
in Fiscal Year 2010
The following table provides for each NEO certain information
concerning each plan that provides for payments or other
benefits at, following, or in connection with retirement:
|
Payments |
||||||||||||||
|
Number |
Present |
During |
||||||||||||
|
of Years |
Value of |
Last |
||||||||||||
|
Credited |
Accumulated |
Fiscal |
||||||||||||
|
Plan |
Service |
Benefit1 |
Year |
|||||||||||
| Name | Name | (#) | ($) | ($) | ||||||||||
|
Krueger
|
Pension Plan | 15 | $624,324 | - | ||||||||||
| SERP2 | 22 | $4,577,365 | - | |||||||||||
|
Grimes
|
Pension Plan3 | 3 | $62,100 | - | ||||||||||
| SERP3 | 3 | $54,756 | - | |||||||||||
|
Linton
|
Pension Plan3 | 3 | $135,380 | - | ||||||||||
| SERP3 | 3 | $86,495 | - | |||||||||||
|
McBreen
|
Pension Plan3 | 3 | $53,755 | - | ||||||||||
| SERP3 | 3 | $19,255 | - | |||||||||||
|
Zwiers
|
Pension Plan | 13 | $195,712 | - | ||||||||||
| SERP | 13 | $151,588 | - | |||||||||||
| 1 | These values are as of January 1, 2011, and are calculated assuming the participants will commence their benefits at age 65 (in the form of the annuity elected by the NEO) and use the 2010 PPA static mortality tables and a 5.94% interest rate. | |
| 2 | The present value of Mr. Krueger’s accumulated benefit under the SERP has increased by $1,655,081 as a result of three additional service years that were granted to him under the SERP in 1996 in recognition of his service as a member of Wolverine’s executive team for three years before becoming a participant in the SERP, and four additional deemed years of service granted as part of Mr. Krueger’s CEO compensation. The present value of Mr. Krueger’s SERP benefit would be $2,922,284 if 15 service years was used to calculate his benefit. | |
| 3 | Messrs. Grimes, McBreen and Ms. Linton are not vested in the pension plan or the SERP. The amount in the table was calculated using the assumption that each of them was fully vested. |
Wolverine has entered into an Executive Severance Agreement with
each of the NEOs that provides certain rights including the
right to receive payments in the event of a termination of
employment in connection with a change in control. The Company
also has entered into an agreement with Mr. Krueger
regarding certain termination benefits in the event of
termination of his employment under certain circumstances.
Benefits
Triggered by Termination for Cause or Voluntary
Termination
An NEO is not entitled to receive any additional forms of
severance payments or benefits upon termination for cause or
upon the NEO’s voluntary decision to terminate employment
with Wolverine prior to being eligible for retirement.
Benefits
Triggered by Termination Other Than for Cause or by the NEO for
Good Reason
Mr. Krueger entered into a Separation Agreement on
March 13, 2008, which states that upon termination of his
employment other than termination by Wolverine for Cause or
termination by Mr. Krueger without Good Reason, as such
terms are defined in the Separation Agreement, Wolverine will
pay Mr. Krueger the following payments in exchange for a
general release in favor of Wolverine: (1) continued base
salary for 18 months (reduced by payments he receives if he
is employed by a Competing Business, as defined in the
Separation Agreement); (2) a lump sum pro rata portion of
the annual incentive bonus and the long-term bonus for all
uncompleted performance periods based on actual corporate
performance for the applicable
46
Table of Contents
performance periods; (3) a lump sum pro rata portion of the
annual discretionary bonus relating to personal performance
objectives; (4) retiree medical benefits for
Mr. Krueger, his spouse and dependents for a period
starting on the day after the termination date and ending on the
last day of the 18th month following the month in which the
termination date falls; and (5) with respect to any
triggering termination occurring before Mr. Krueger’s
60th birthday, either a waiver of the three-year
non-competition clause in the SERP or a lump sum payment of
36 months’ base salary. Mr. Krueger also will be
paid any annual incentive bonus and long-term incentive bonus
earned but not paid prior to his termination.
“Cause” generally is defined in
Mr. Krueger’s Separation Agreement to mean:
(1) any act or omission knowingly undertaken or omitted
with the intent of causing material damage to Wolverine;
(2) any intentional act involving fraud, misappropriation
or embezzlement, that causes material damage to Wolverine;
(3) repeated willful failure to substantially perform any
of his significant duties as reasonably directed by the Board of
Directors of Wolverine; (4) a conviction (including any
plea of guilty or nolo contendere) of any criminal act that
(a) results in the executive serving prison time and not
being able to perform the normal duties of his position for more
than thirty (30) days; or (b) causes material damage
to Wolverine; or (5) chronic or habitual use or consumption
of drugs or alcohol that causes material damage to Wolverine.
“Good Reason” generally is defined in
Mr. Krueger’s Separation Agreement to mean: (1) a
material reduction in base compensation, including a reduction
in base salary or opportunities under Wolverine’s bonus
plans or equity plans (other than those implemented for the
executive team as a whole); (2) a material reduction in
authority, duties, or responsibilities; (3) a requirement
to report to a Company officer or employee instead of reporting
directly to the Board of Directors; or (4) certain
relocations, other than those related to a change in the
location of Wolverine’s headquarters affecting a majority
of the executive team.
Benefits
Triggered Upon a Change in Control
Benefits Upon Termination Following a Change in
Control. Under the Executive Severance Agreements
entered into with the NEOs, payments and benefits are triggered
when Wolverine terminates employment without “cause”
or when an executive terminates employment for “good
reason” within two years (Messrs. Grimes, McBreen,
Zwiers and Ms. Linton) or three years (Mr. Krueger)
following a change in control of Wolverine.
Wolverine pays the lump sum severance payment under the
Executive Severance Agreement, and the payment is composed of
the following: (1) unpaid base salary, benefit awards
(including both cash and stock) and bonus payments that have
been earned; (2) in lieu of a bonus payment under the
Annual Bonus Plan, an amount equal to the number of days the NEO
was employed by Wolverine in the year of termination divided by
the number of days in the year multiplied by 100% of the greater
of either (a) the bonus awarded to the NEO under an Annual
Bonus Plan for the preceding year or (b) the average paid
to the NEO over the preceding two-year period under an Annual
Bonus Plan; (3) in lieu of payments under the various
three-year performance periods, an amount equal to the bonus the
NEO would have received based on actual and assumed performance
measures, multiplied by the number of days the NEO participated
in the performance period prior to the termination, divided by
the total number of days in the performance period (in
determining the earnings per share or other performance measures
that can be determined annually for any year subsequent to the
year of termination, performance will equal the level required
to attain the maximum goal under the three year plan for that
year); (4) either two (Messrs. Grimes, McBreen, Zwiers
and Ms. Linton) or three (Mr. Krueger) times the sum
of (a) the NEO’s highest annual rate of base salary
during the
12-month
period prior to termination; and (b) the greater of the
average amount earned by the NEO during the previous two years
or the previous year under the Annual Bonus Plan; (5) 100%
of the positive spread for any options held by the NEO whether
or not vested; (6) an excise tax
gross-up
adjustment; and (7) the present value of an additional
three years of deemed service under the retirement plans. Upon a
termination of employment in connection with a change of
control, Wolverine will maintain for up to six months the
employee benefit plans, programs or arrangements that the NEO
was entitled to participate in immediately prior to the
termination date. Wolverine will provide outplacement services
through the last day of the second calendar year following the
calendar year of termination. The
47
Table of Contents
Compensation Committee has determined that Wolverine will not
provide excise tax
gross-up
payments in future employment agreements.
“Change in control” under the Executive Severance
Agreements generally means certain changes in composition of the
Board of Directors, certain acquisitions of 20% or more of
Wolverine’s common stock or combined outstanding voting
power of Wolverine, and other specified reorganizations,
mergers, consolidations, liquidations, dissolutions or
distributions of substantial assets (unless such transactions
result in the creation of an entity in which at least 50% of the
common stock and combined voting power is owned by the owners of
record prior to the transaction, no single stockholder owns more
than 20% of the combined voting power and a majority of the
board remains unchanged).
“Cause” is defined under the Executive Severance
Agreements to generally mean the willful and continued failure
to substantially perform duties or willfully engaging in gross
misconduct that is injurious to Wolverine.
“Good Reason” is defined under the Executive Severance
Agreements generally to mean: (1) any materially adverse
change in position, duties, responsibilities or title or any
removal, involuntary termination or failure to re-elect an
officer; (2) a reduction in annual base salary;
(3) any relocation or requirement to substantially increase
business travel; (4) the failure to continue providing any
executive incentive plans or bonus plans; (5) the failure
to continue any employee benefit plan or compensation plan
unless a comparable plan is available; (6) the failure to
pay any salary, bonus, deferred compensation or other
compensation; (7) the failure to obtain an assumption
agreement from any successor; (8) any purported termination
of the employment which is not effected in a manner prescribed
by the Executive Severance Agreement; or (9) any other
material breach by Wolverine or a successor of its obligations
under the Executive Severance Agreement.
Benefits Upon a Change in Control Only. Under the
stockholder-approved equity plans, upon a change in control of
Wolverine, all of each NEO’s outstanding stock options
become immediately exercisable in full and will remain
exercisable during their remaining term, regardless of whether
the NEO remains in the employ or service of Wolverine. The
Compensation Committee may determine that one or all of the NEOs
shall receive cash in an amount equal to the positive spread
amount. In addition, all other outstanding incentive awards of
the NEOs, including shares of restricted stock, become
immediately and fully vested and non-forfeitable upon a change
in control of Wolverine. Change in control for this purpose
generally means certain changes in the composition of the Board
of Directors, certain acquisitions of 20% of Wolverine’s
common stock and other specified reorganizations, mergers,
consolidations, liquidations, dissolutions or dispositions of
substantial assets.
Benefits
Triggered by Retirement, Death or Permanent Disability
Pension Plan. In the event of death before
retirement, the Pension Plan provides the surviving spouse of a
vested NEO participant a death benefit equal to the qualified
pre-retirement survivor annuity as defined in the Internal
Revenue Code (generally 50% of the participant’s accrued
normal retirement benefit). This benefit is paid annually to the
surviving spouse beginning when the NEO participant would have
turned 60 and continues for the life of the surviving spouse.
For NEO participants with at least three years of service as of
December 31, 2003, and who have at least 10 years of
service and are employed by Wolverine at the time of death, the
amount of the survivor benefit under the Pension Plan is
calculated as though the NEO participant had continued as an
employee of Wolverine until age 65 at the compensation
level as of the date of death and the benefit begins upon the
date of death, unreduced for early commencement. The survivor
benefit for NEO participants who meet all the criteria set forth
in the preceding sentence, but who die when they are not
employed by Wolverine are entitled to a joint and survivor
benefit commencing upon the date of death, unreduced for early
commencement.
SERP. If an NEO dies before beginning to receive
benefits under the SERP, Wolverine must (based on the current
elections by all of the NEOs) pay the beneficiary a lump sum
death benefit equal to the present value of the benefit computed
as if the NEO participant had retired on the date of death, had
begun receiving benefits at age 55 and had continued to
receive benefits for the remainder of the participant’s
life expectancy. If the participant dies after beginning to
receive benefit payments, benefits cease unless the
48
Table of Contents
NEO participant was receiving benefits in the form of one of the
joint and survivor annuity optional elections under the plan or
had elected benefits in a form that provides for a continuation
of benefits.
If an NEO becomes totally and permanently disabled, the SERP
provides a disability benefit equal to 60% of the normal
retirement accrued benefit based upon years of service up to the
date that the NEO participant became disabled through the date
the NEO participant reaches age 65 (at which point, the NEO
participant would begin drawing full SERP benefits) or is no
longer disabled.
Incentive Compensation Plans. Upon termination of
employment at least six months after the beginning of a fiscal
year due to death, disability or early or normal retirement, an
NEO is entitled to receive a pro rata portion of any Annual
Bonus award earned under the Annual Bonus Plan based on the
NEO’s service during such fiscal year. The Annual Bonus is
payable at the same time and in the same manner as awards are
paid to other NEOs for the fiscal year. Under the LTIP and for
performance shares, upon death, disability or early or normal
retirement, an NEO will be eligible to receive a pro rata
portion of any award payable under each open performance cycle
for which the NEO served at least 12 months. If an award is
payable at the end of the performance period, the award is
prorated for service during the applicable performance cycle.
Any prorated award is payable at the time awards are paid to
other NEOs.
Stock Incentive Plans. Upon death, disability or
early or normal retirement of the NEO, the restrictions
applicable to his or her shares of restricted stock (excluding
performance shares) terminate automatically and stock options
vest in full if held for more than one year or, if employed for
less than one year after the grant, on a percentage basis based
on months employed after the grant divided by 12. An NEO is
eligible for early retirement under the stock incentive plans
upon voluntarily terminating employment after attaining
age 50 with seven years of service. Upon death, disability
or early or normal retirement of the NEO, the restrictions on
performance shares lapse on a prorated basis, based on months
employed in the performance period and actual Company
performance during the performance period.
Description of
Restrictive Covenants that Apply During and After Termination of
Employment
The SERP contains non-competition, confidentiality and employee
non-solicitation provisions in favor of Wolverine. Under the
non-competition provisions of the SERP, the NEO participant will
not be entitled to any benefit payment if, prior to the date on
which such benefit payment is due, the NEO participant enters
into certain relationships with a competing business.
Estimated
Payments on Termination or Change in Control
The following table summarizes the potential payments and
benefits payable to each of Wolverine’s NEOs upon a change
in control or termination of employment in connection with each
of the triggering events set forth in the table, assuming in
each situation that the termination of employment or change in
control of Wolverine took place on January 1, 2011. The
amounts described below are in addition to benefits that are
generally available to the Company’s employees such as
distributions under the Company’s 401(k) savings plan,
disability or life insurance benefits and accrued vacation. Due
to the many factors that affect the nature and amount of any
benefits provided upon the termination events discussed below,
any actual amounts paid or distributed to NEOs may be different.
Factors that may affect these amounts include timing during the
year of the occurrence of the event, Wolverine’s stock
price and the NEO’s age.
The value of the accelerated vesting of unvested equity-based
compensation awards was computed using the closing market price
($31.88) of Wolverine’s common stock on December 31,
2010, the last business day in the fiscal year. The value for
unvested restricted stock is computed by multiplying $31.88 by
the number of unvested shares of restricted stock held by the
NEO. The value of unvested stock options equals the difference
between the exercise price of each option and $31.88. No value
was attributed to accelerated vesting of a stock option if its
exercise price was greater than $31.88.
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Table of Contents
| Termination Event and Payments/Benefits | Krueger | Grimes | Linton | McBreen | Zwiers | |||||||||||||||
| Termination by Company for Cause or Voluntary Termination | - | - | - | - | - | |||||||||||||||
| Termination by Company Other Than for Cause or by Executive for Good Reason | $4,159,0061 | - | - | - | - | |||||||||||||||
| Change in Control Termination2 | ||||||||||||||||||||
|
Executive Severance
Agreement3
|
$20,367,655 | $4,548,405 | $3,370,076 | $3,191,004 | $4,797,853 | |||||||||||||||
|
Benefits under Executive Severance
Agreement4
|
$48,836 | $46,891 | $46,736 | $46,390 | $48,772 | |||||||||||||||
|
Stock Incentive
Plans5
|
$4,938,714 | $1,273,579 | $915,725 | $1,008,852 | $1,219,044 | |||||||||||||||
|
Lump sum payment under the
SERP6
|
$11,782,099 | $357,702 | $407,126 | $222,607 | $461,827 | |||||||||||||||
| Death | ||||||||||||||||||||
|
SERP7
|
$7,492,387 | $266,265 | $301,827 | $175,290 | - | |||||||||||||||
|
Pension
Plan8
|
$852,778 | - | - | - | $882,081 | |||||||||||||||
|
Stock Incentive
Plans5
|
$4,719,115 | $1,206,753 | $872,095 | $960,084 | $1,152,219 | |||||||||||||||
|
Earned Incentive
Compensation9
|
$2,804,255 | $854.544 | $509,840 | $621,232 | $742,943 | |||||||||||||||
| Disability | ||||||||||||||||||||
|
SERP10
|
$6,738,727 | $282,942 | $265,677 | $203,841 | $503,609 | |||||||||||||||
|
Stock Incentive
Plans5
|
$4,719,115 | $1,206,753 | $872,095 | $960,084 | $1,152,219 | |||||||||||||||
|
Earned Incentive
Compensation9
|
$2,804,255 | $854,544 | $509,840 | $621,232 | $742,943 | |||||||||||||||
| Retirement | ||||||||||||||||||||
|
SERP11
|
See fn 11 | See fn 11 | See fn 11 | See fn 11 | See fn 11 | |||||||||||||||
|
Pension
Plan11
|
See fn 11 | See fn 11 | See fn 11 | See fn 11 | See fn 11 | |||||||||||||||
|
Stock Incentive
Plans5, 12
|
$4,719,115 | - | - | - | - | |||||||||||||||
|
Earned Incentive
Compensation12
|
$2,804,255 | - | - | - | - | |||||||||||||||
| Change in Control Only | ||||||||||||||||||||
|
Stock Incentive
Plans5
|
$4,938,714 | $1,273,579 | $915,725 | $1,008,852 | $1,219,044 | |||||||||||||||
| 1 | The estimate for Mr. Krueger assumes that the Company waives the non-compete clause in Mr. Krueger’s SERP and assumes target performance under the 2009-2011 performance period and 2010-2012 performance period. Actual payout or vesting, if any, would be determined and made at the end of the period. Performance shares assumed to vest for purposes of the estimate for the 2009-2011 and 2010-2012 periods were valued at $31.88, the closing price of the Company’s stock on the last business day of 2010. The amount reflected in the table also includes an estimated cost of $10,313 for retiree medical benefits for 18 months and the estimated cost of $25,000 for out-placement services. | |
| 2 | Payments would be triggered after termination of employment under certain circumstances within two years (Messrs. Grimes, McBreen, Zwiers and Ms. Linton) or three years (Mr. Krueger) following a change in control. The timing of the payment would be delayed to the extent earlier payment would trigger Section 409A of the Tax Code. | |
| 3 | Includes amounts payable in cash under the terms of the Executive Severance Agreement, excluding the value of the cash payout to each NEO of the option spread for already vested options. See the “Outstanding Equity Awards at Fiscal Year-End” table above for more information regarding each NEO’s vested options as of January 1, 2011. The value of unvested options and time-vested restricted shares that vest upon a change in control under the terms of the Company’s stock incentive plans are included in the Stock Incentive Plans row. | |
| 4 | These estimates assume that Wolverine maintains the benefit plans for a period of one year after termination and the out-placement services for a period beginning with the date of termination and ending on the last day of the second calendar year following the calendar year in which the date of termination occurred. | |
| 5 | Reflects the value of unvested stock options and shares of restricted stock that would vest because of the event. Restricted shares are valued and the option spread determined using a value of $31.88 per share, the closing price of the Company’s stock on the last business day of fiscal year 2010. | |
| 6 | Amounts in this row reflect the entire lump sum benefit payable to each NEO, including any accumulated benefit. For a description of the SERP, see “Supplemental Executive Retirement Plan” under the heading “Pension Plans and 2010 Pension Benefits.” The timing of the payment would be delayed to the extent earlier payment would trigger Section 409A of the Tax Code. | |
| 7 | Amounts in this row reflect the entire lump sum death benefit payable to a participating NEO’s beneficiary, including any accumulated benefit. |
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| 8 | Amounts reflect the net present value of the annuity paid to the surviving spouse calculated using the same discount rate and mortality assumptions used in the Pension Benefits table. In accordance with the terms of the Pension Plan, the death benefit for Messrs. Krueger and Zwiers was calculated as though the NEO had continued as an employee of Wolverine until age 65 at the compensation level as of the date of death. Mr. Grimes, Mr. McBreen and Ms. Linton were not vested in the Pension Plan as of January 1, 2011, so no death benefit would be payable to any surviving spouse. | |
| 9 | Under the Annual Bonus Plan, the LTIP and the terms of performance share awards, each NEO may be eligible to receive a pro rata portion of any award if employment is terminated as a result of the event. The amount reported represents actual payout under the Annual Bonus Plan for fiscal year 2010, actual payout under the 2008-2010 performance cycle of the LTIP, and for the 2009-2011 and 2010-2012 performance cycles, an estimated value of performance shares that would vest at the end of the performance period. Performance shares would vest on a prorated basis based on actual Company performance. For purposes of this estimate, the calculation uses target performance and a $31.88 stock price, the closing stock price at the end of fiscal year 2010. | |
| 10 | Amounts in this row reflect the net present value of the annuity using the same discount rate and mortality assumptions used in the Pension Benefits table and assuming the NEO drew the disability benefit until age 65 and then the normal retirement benefit. | |
| 11 | See the Pension Benefits table and associated footnotes. The Pension Benefits table describes the general terms of each pension plan in which the NEOs participate, the years of credited service and the present value of each NEO’s accumulated pension benefit assuming payment begins at age 65. | |
| 12 | Mr. Krueger is the only NEO who was retirement eligible at fiscal year end. |
AUDIT COMMITTEE
REPORT
The Audit Committee of the Board of Directors consists of four
directors who are independent under the Company’s Director
Independence Standards, the NYSE listed company standards, and
applicable SEC standards. The Audit Committee represents and
assists the Board in fulfilling its oversight responsibility
regarding the integrity of Wolverine’s financial statements
and the financial reporting and accounting process, the systems
of internal accounting and financial controls, the performance
of the internal audit function and the independent auditors, the
qualifications and independence of the independent auditors, the
annual independent audit of Wolverine’s financial
statements, and compliance with legal and regulatory
requirements. The Audit Committee is directly responsible in its
capacity as a committee of the Board for appointing, retaining,
compensating, overseeing, evaluating and terminating (if
appropriate) Wolverine’s independent auditors.
Wolverine’s management has primary responsibility for the
financial statements and the financial reporting process,
including the application of accounting and financial
principles, the preparation, presentation and integrity of the
financial statements, and the systems of internal controls and
other procedures designed to promote compliance with accounting
standards and applicable laws and regulations. Wolverine’s
independent auditors are responsible for expressing an opinion
on the conformity of Wolverine’s financial statements with
generally accepted accounting principles and for auditing the
effectiveness of Wolverine’s internal control over
financial reporting.
The Audit Committee has taken steps to provide assurances
regarding Audit Committee composition and procedures, the
independence of Wolverine’s outside auditors and the
integrity of Wolverine’s financial statements and
disclosures. These steps include: (i) reviewing the Audit
Committee Charter; (ii) reviewing the Accounting and
Finance Code; (iii) maintaining an Accounting and Auditing
Complaint Procedure to allow employees, stockholders and the
public to report concerns regarding Wolverine’s financial
statements, internal controls and disclosures; and
(iv) reviewing procedures for the Audit Committee to
pre-approve all audit and non-audit services provided by
Wolverine’s independent auditors.
As part of its supervisory duties, the Audit Committee has
reviewed Wolverine’s audited financial statements for the
fiscal year ended January 1, 2011, and has discussed those
financial statements with Wolverine’s management, internal
financial staff, and the internal auditors and independent
auditors with and without management present. The Audit
Committee has also reviewed and discussed the following with
Wolverine’s management, the financial staff, and the
internal auditors and independent auditors with and without
management present:
| • | accounting and financial principles and significant assumptions, estimates and matters of judgment used in preparing the financial statements; | |
| • | allowances and reserves for accounts receivable, inventories and taxes; |
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| • | accounting for acquisitions, pension plans and equity-based compensation plans; | |
| • | goodwill impairment analysis; and | |
| • | other significant financial reporting issues and practices. |
The Audit Committee has discussed with Wolverine’s
independent auditors the results of the independent
auditors’ examinations and the judgments of the independent
auditors concerning the quality, as well as the acceptability,
of Wolverine’s accounting principles and such other matters
that it is required to discuss with the independent auditors
under applicable rules, regulations or generally accepted
auditing standards, including the matters required to be
discussed by applicable rules of the Public Company Accounting
Oversight Board (“PCAOB”). In addition, the Audit
Committee has received from the independent auditors the written
disclosures and the letter required by the applicable
requirements of the PCAOB regarding the independent
auditor’s communications with the Audit Committee
concerning independence rules and has discussed their
independence from Wolverine and Wolverine’s management with
them, including a consideration of the compatibility of
non-audit services with their independence, the scope of the
audit and the scope of all fees paid to the independent auditors
during the year. After and in reliance upon the reviews and
discussions described above, the Audit Committee recommended to
Wolverine’s Board of Directors that the audited financial
statements for the fiscal year ended January 1, 2011, be
included in Wolverine’s Annual Report on
Form 10-K
for the year then ended to be filed with the Securities and
Exchange Commission.
Respectfully submitted,
Jeffrey M. Boromisa (Chairperson), William K. Gerber, Brenda J.
Lauderback, Shirley D. Peterson
INDEPENDENT
AUDITOR
Wolverine’s Audit Committee has adopted a policy under
which the Audit Committee must approve all audit and non-audit
services provided by Ernst & Young LLP and which
prohibits Ernst & Young LLP from providing any
non-audit services that are prohibited by the SEC or the PCAOB.
The Company’s Audit Committee provides categorical
pre-approval before the beginning of each fiscal year for
routine and recurring services, with specific service
descriptions and budgets. All audit services, internal
control-related services, and other services not within the
specifically pre-approved service descriptions and budgets
require engagement-specific pre-approval. With certain
exceptions (such as pre-approval of audit services), the Audit
Committee may delegate engagement-specific pre-approval to one
or more Committee members. Management must communicate to the
Audit Committee at its next regularly scheduled meeting any
services approved by a Committee member. Wolverine’s Audit
Committee pre-approved all fees paid to Ernst & Young
LLP for services performed in 2010 and 2009.
The aggregate fees billed by Ernst & Young LLP for
audit and non-audit services were:
| 2010 | 2009 | |||||||||
|
Audit
Fees1
|
$1,011,100 | $991,075 | ||||||||
|
Audit Related
Fees2
|
- | - | ||||||||
|
Total Audit and Audit Related
|
$1,011,100 | $991,075 | ||||||||
|
Tax
Fees3
|
||||||||||
|
Tax Compliance
|
$383,819 | $506,520 | ||||||||
|
Tax Planning & Advisory
|
$82,090 | $430,240 | ||||||||
|
Total Tax Fees
|
$465,909 | $936,760 | ||||||||
|
All Other
Fees4
|
- | - | ||||||||
|
Total Fees
|
$1,477,009 | $1,927,835 | ||||||||
| 1 | “Audit Fees” are comprised of fees for the annual audit, reviews of the financial statements included in Wolverine’s Form 10-Q filings, audit of internal control over financial reporting, foreign statutory audits and consultations concerning accounting matters associated with the annual audit. |
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| 2 | “Audit Related Fees” are comprised of fees for assurance and related services that were reasonably related to the performance of the audit or a review of the financial statements and that are not reported as Audit Fees above, including accounting research, and employee benefit plan audits. | |
| 3 | “Tax Fees” are fees for tax compliance, tax advice and tax planning. | |
| 4 | “All Other Fees” are fees for any services not included in the first three categories. |
Wolverine’s Audit Committee has adopted a policy
restricting the Company’s hiring of current or former
partners or employees of the Company’s independent auditors.
ITEM 2: RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee has reappointed Ernst & Young LLP
as independent auditors for the current fiscal year. As a matter
of good corporate governance, the Audit Committee has determined
to submit its appointment of Ernst & Young LLP to the
Company’s stockholders for ratification. If this
appointment is not ratified by the holders of a majority of
shares present or represented at the annual meeting and entitled
to vote on the matter, the Audit Committee will review its
future selection of an independent registered public accounting
firm. Even if the appointment is ratified, the Audit Committee
in its discretion may select different independent auditors any
time during the year if it determines that such a change would
be in the best interests of the Company and the Company’s
stockholders.
The Audit Committee reviewed Ernst & Young LLP’s
performance prior to appointing them as the independent
auditors, and considered the:
| • | historical and recent performance of Ernst & Young LLP on the Company’s audit, including the quality of the engagement team and Ernst & Young LLP’s experience, client service, responsiveness and technical expertise; | |
| • | PCAOB report of selected Ernst & Young LLP audits; | |
| • | Ernst & Young LLP’s financial strength and performance; | |
| • | appropriateness of fees charged; and | |
| • | Ernst & Young LLP’s familiarity with the Company’s accounting policies and practices and internal control over financial reporting. |
Ernst & Young LLP, a registered public accounting
firm, was the Company’s independent auditor for the year
ended January 1, 2011. Representatives of Ernst &
Young LLP are expected to be present at the annual meeting, will
have an opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate
questions from stockholders.
Board
Recommendation
The Board recommends that you vote “FOR”
ratification of the Audit Committee’s selection of the firm
of Ernst & Young LLP, Grand Rapids, Michigan, as
independent auditor for the Company for the fiscal year 2011.
ITEM 3: ADVISORY
RESOLUTION ON EXECUTIVE COMPENSATION
The Company is asking its stockholders to indicate their support
for Wolverine’s NEO compensation, as described in this
proxy statement. This proposal, commonly known as a
“say-on-pay”
proposal, gives the Company’s stockholders the opportunity
to express their view on compensation for the Company’s
NEOs. The
say-on-pay
vote is advisory and, therefore, not binding on the Company, the
Compensation Committee or the Board. The Board and Compensation
Committee value the opinions of Wolverine’s stockholders
and will review and consider the voting results when making
future decisions regarding the Company’s executive
compensation program.
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Table of Contents
As described above in the “Compensation Discussion and
Analysis” section of this proxy statement, the Compensation
Committee has structured the executive compensation program to
achieve the following key objectives:
| » | attract and retain talented NEOs who will lead Wolverine and achieve and inspire superior performance; | |
| » | provide incentives for achieving specific near-term individual, business unit and corporate goals and reward the attainment of those goals at pre-established levels; | |
| » | provide incentives for achieving longer-term financial goals and to reward attaining those goals at pre-established levels; and | |
| » | align the interests of NEOs with those of the stockholders through incentives based on increasing stockholder value. |
The executive compensation program achieves these objectives, in
part, by:
| » | balancing fixed compensation (base salaries) with performance-based compensation (annual bonuses and long-term incentives); | |
| » | rewarding annual performance while maintaining emphasis on longer-term objectives; and | |
| » | blending cash, non-cash, long- and short-term compensation components, and current and future compensation components. |
In 2010, the Company performed strongly, achieving record
performances in annual revenue and earnings per share. The stock
price increased to $31.88 at the end of fiscal 2010 from $27.22
at the end of fiscal 2009. Over the past five years, the
Company’s performance, based on cumulative total
stockholder return, has outperformed the S&P SmallCap 600
Index and S&P 600 Footwear Index.
The Company urges stockholders to read the “Compensation
Discussion and Analysis” beginning on page 25 of this
proxy statement, which describes in more detail how the
Company’s executive compensation policies and procedures
operate and are designed to achieve the Company’s
compensation objectives. The Company also encourages
stockholders to read the Summary Compensation Table and other
related compensation tables and narrative, appearing on pages 39
through 44, which provide detailed information on the
compensation of the Company’s NEOs. The Compensation
Committee and the Board of Directors believe that the policies
and procedures articulated in the “Compensation Discussion
and Analysis” are effective in achieving the Company’s
goals and that the compensation of the Company’s NEOs
reported in this proxy statement has supported and contributed
to the Company’s recent and long-term success.
In accordance with recently adopted Section 14A of the
Exchange Act, and as a matter of good corporate governance, the
Company asks stockholders to approve the following advisory
resolution at the 2011 Annual Meeting of Stockholders:
RESOLVED, that the stockholders of Wolverine World Wide,
Inc. (the “Company”) approve, on an advisory basis,
the compensation of the Company’s named executive officers
disclosed in the Compensation Discussion and Analysis, the
Summary Compensation Table and the related compensation tables,
notes and narrative in the Proxy Statement for the
Company’s 2011 Annual Meeting of Stockholders.
Board
Recommendation
The Board recommends that you vote “FOR” approval
of the advisory resolution on executive compensation.
ITEM 4: ADVISORY
VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION
Pursuant to recently adopted Section 14A of the Exchange
Act, the Company is asking its stockholders to vote on whether
future advisory votes on executive compensation of the nature
reflected in Item 3 above
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Table of Contents
should occur every year, every two years or every three years.
You may cast your vote on your preferred voting frequency by
choosing the option of one year, two years, three years or
abstain from voting when you vote. Stockholders are not voting
to approve or disapprove the Board’s recommendation. This
advisory vote on the frequency of future advisory votes on
executive compensation is non-binding on the Board of Directors.
The Board may decide that it is in the best interests of the
Company’s stockholders and the Company to hold an advisory
vote on executive compensation on a more or less frequent basis
and may vary its practice based on factors such as discussions
with stockholders and the adoption of material changes to
compensation programs.
Board
Recommendation
The Board recommends that you vote for conducting future
advisory votes on executive compensation once “EVERY THREE
YEARS.”
RELATED PARTY
MATTERS
Certain
Relationships and Related Transactions
Wolverine has entered into agreements with Grimoldi, S.A., an
Argentinean corporation of which Mr. Alberto L. Grimoldi, a
director of Wolverine, is chairman and a 35% shareholder. The
agreements grant Grimoldi, S.A. the exclusive rights to
distribute and sell footwear products in Argentina under the
Hush
Puppies®,
Caterpillar®,
and
Patagonia®
brand names, and footwear and apparel under the
Merrell®
brand name. Grimoldi, S.A. or its subsidiary purchases products,
samples, footwear components, advertising materials and
miscellaneous items from Wolverine or pays Wolverine royalties
and certain sublicense fees based on sales or purchases of
products in Argentina. Grimoldi, S.A. was obligated to pay
Wolverine purchase prices, royalties, sublicense fees, service
fees and interest relating to purchases made or royalties and
fees incurred in fiscal year 2010 totaling $3,748,208. All of
the transactions described above occurred pursuant to continuing
contractual arrangements between Wolverine and Grimoldi, S.A.
Wolverine expects similar transactions to occur between
Grimoldi, S.A. and Wolverine and its subsidiaries during 2011.
The Governance Committee reviewed and approved or ratified this
transaction in accordance with Wolverine’s related person
transactions policy (described below under “Related Person
Transactions Policy”).
In the ordinary course of its business, Wolverine purchases
promotional merchandise for use in connection with the sale of
its products. In fiscal year 2010, Wolverine purchased
promotional merchandise from Bullseye Group, LLC totaling
$161,136. One-third of Bullseye Group, LLC is owned by Daniel
Mehney, the son of David P. Mehney, a director of Wolverine.
Wolverine anticipates purchasing promotional materials from
Bullseye Group, LLC in 2011.
The Governance Committee reviewed and approved or ratified each
of these transactions in accordance with Wolverine’s
related person transactions policy, as described below.
Related Person
Transactions Policy
Wolverine’s Board adopted written policies and procedures
regarding related person transactions. They require the
Governance Committee to review and either approve or disapprove
the Company entering into
55
Table of Contents
any Interested Transactions (defined below). If advance approval
is not feasible, then the Governance Committee must review and
ratify the Interested Transaction at its next meeting.
|
Interested
Transaction |
Any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: | |||||||
| (1) | the aggregate amount involved is or is expected to exceed $100,000 since the beginning of Wolverine’s last completed fiscal year; | |||||||
| (2) | Wolverine is a participant; and | |||||||
| (3) |
any Related Person (defined below) has or will have a direct or
indirect interest (other than solely as a result of being a
director or less than ten percent beneficial owner of another
entity). |
|||||||
|
Related Person
|
Any: | |||||||
| (a) | person who is or was at any point during the last fiscal year for which Wolverine filed a Form 10-K and proxy statement, an executive officer, director or nominee for election as a director; | |||||||
| (b) | greater than five percent beneficial owner of Wolverine’s common stock; or | |||||||
| (c) |
immediate family
member*
of any of the foregoing. |
|||||||
| * | Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee). |
The Governance Committee considers whether the Interested
Transaction is on terms no less favorable than terms generally
available to an unaffiliated third-party under the same or
similar circumstances, the extent of the Related Person’s
interest in the transaction, and other factors that it deems
relevant. No director participates in any discussion or approval
of an Interested Transaction for which he or she is a Related
Person, except to provide all material information to the
Governance Committee.
The following Interested Transactions are pre-approved under the
policies and procedures:
| (a) | any transaction with another company where a Related Person’s only relationship is as an employee, director or beneficial owner of less than ten percent of that company’s shares, if the aggregate amount involved does not exceed the greater of $1,000,000, or two percent of that company’s total revenues. |
| (b) | any charitable contribution by Wolverine to a charitable organization where a Related Person is an employee, if the aggregate amount involved does not exceed the lesser of $100,000, or two percent of the charitable organization’s total annual receipts. |
ADDITIONAL
INFORMATION
Stockholders
List
A list of stockholders entitled to vote at the meeting will be
available for review by Wolverine stockholders at the office of
Kenneth A. Grady, Secretary and General Counsel of Wolverine,
located at 9341 Courtland Drive, N.E., Rockford, Michigan 49351,
during ordinary business hours for the
10-day
period before the meeting.
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Table of Contents
Director and
Officer Indemnification
The Company indemnifies its directors and NEOs to the fullest
extent permitted by law so that they will be free from undue
concern about personal liability in connection with their
service to the Company.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires its directors and NEOs, and persons who beneficially
own more than 10% of the outstanding shares of the
Company’s common stock, to file reports of ownership and
changes in ownership of shares of common stock with the
Securities and Exchange Commission. Directors, NEOs and greater
than 10% beneficial owners are required by Securities and
Exchange Commission regulations to furnish Wolverine with copies
of all Section 16(a) reports they file. Based on its review
of the copies of such reports received by it, or written
representations from certain reporting persons that no reports
on Form 5 were required for those persons for fiscal year
2010, except as set forth below, the Company believes that
during fiscal year 2010 its officers and directors filed the
required reports under Section 16(a) on a timely basis. On
June 21, 2010, Ms. Pamela L. Linton filed a
Form 4 reporting her surrender of 556 shares of
Wolverine common stock on January 15, 2009, to pay taxes
due upon the vesting of restricted shares owned by
Ms. Linton. The Form 4 also adjusts the total number
of shares beneficially owned to account for this transaction.
Stockholder
Proposals for Inclusion in Next Year’s Proxy
Statement
Pursuant to SEC
Rule 14a-8,
some stockholder proposals may be eligible for inclusion in
Wolverine’s 2012 proxy statement and proxy card. Any such
stockholder proposals must be submitted in writing to the
Secretary of Wolverine no later than the close of business on
November 12, 2011. You should address all stockholder
proposals to the attention of Kenneth A. Grady, Secretary,
Wolverine, 9341 Courtland Drive, N.E., Rockford, Michigan 49351.
Other Stockholder
Proposals for Presentation at Next Year’s Annual
Meeting
The By-laws require that any stockholder proposal that is not
submitted for inclusion in next year’s proxy statement
under SEC
Rule 14a-8,
but is instead sought to be presented directly at the 2012
Annual Meeting of Stockholders, must be received at the
Company’s principal executive offices by the close of
business not less than 90 days nor more than 120 days
prior to the first anniversary of the 2011 Annual Meeting. As a
result, proposals, including director nominations, submitted
pursuant to these provisions of the By-laws must be received
between December 23, 2011, and the close of business on
January 22, 2012. You should address a proposal to Kenneth
A. Grady, Secretary, Wolverine World Wide, Inc., 9341 Courtland
Drive N.E., Rockford, Michigan 49351, and include the
information and comply with the requirements set forth in those
By-laws, which the Company has posted on its website. SEC rules
permit management to vote proxies in its discretion in certain
cases if the stockholder does not comply with this deadline, and
in certain other cases notwithstanding the stockholder’s
compliance with this deadline.
Voting
Securities
Stockholders of record at the close of business on March 1,
2011, will be eligible to vote at the meeting. The
Company’s voting securities consist of its $1.00 par
value common stock, and there were 49,628,313 shares
outstanding and entitled to vote on the record date. Each share
outstanding on the record date will be entitled to one vote on
each director nominee and one vote on each other matter.
Treasury shares are not voted. Individual votes of stockholders
are kept private, except as appropriate to meet legal
requirements. Access to proxies and other individual stockholder
voting records is limited to the independent inspectors of
election and certain employees of the Company and its agents who
acknowledge in writing their responsibility to comply with this
policy of confidentiality.
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Vote Required for
Election and Approval
A plurality of the shares voted is required to elect directors.
This means that the nominees who receive the most votes will be
elected. In counting votes on the election of directors, only
votes cast “for” or “withheld” affect the
outcome. All other matters require for approval the favorable
vote of a majority of shares present or represented at the
meeting and entitled to vote on the applicable matter.
With respect to the election of directors, abstentions and
broker non-votes will not be counted as votes cast and therefore
will have no effect. With respect to all other matters to be
voted on at the annual meeting, abstentions will have the same
effect as votes “against” the matter, and broker
non-votes, if any, will have no effect. Generally, broker
non-votes occur when shares held by a broker in “street
name” for a beneficial owner are not voted with respect to
a particular proposal because (1) the broker has not
received voting instructions from the beneficial owner, and
(2) the broker lacks discretionary voting power to vote
those shares. Brokers do not have discretionary authority with
respect to any of the proposals except for the ratification of
the independent registered public accounting firm.
Voting Results of
the Annual Meeting
The Company will announce preliminary voting results at the
annual meeting and publish final results in a
Form 8-K
within four business days following the meeting. If final
results are not known within four business days of the annual
meeting, then the Company will file a
Form 8-K
with the preliminary results and file an amended
Form 8-K
within four business days of the availability of the final
results.
Attending the
Annual Meeting
You may vote shares held directly in your name as the
stockholder of record in person at the annual meeting. If you
choose to vote in person, please bring the enclosed proxy card
and proof of identification. Even if you plan to attend the
annual meeting in person, Wolverine recommends that you vote
your shares in advance as described below so that your vote will
be counted if you later decide not to attend the annual meeting.
You may vote shares held in “street name” through a
brokerage account or by a bank or other nominee in person if you
obtain a proxy from the record holder giving you the right to
vote the shares.
Manner for Voting
Proxies
The shares represented by all valid proxies received by
telephone, by Internet or by mail will be voted in the manner
specified. Where the shareholder has not indicated a specific
choice, the shares represented by all valid proxies received
will be voted in accordance with the Board’s
recommendations as follows: (1) for each of the nominees
for directors named earlier in this proxy statement,
(2) for ratification of the appointment of the independent
auditor, (3) for the advisory vote on executive
compensation, and (4) every three years with respect to the
advisory vote on the frequency of an advisory vote on executive
compensation. The Board has not received timely notice of any
matter that may come before the annual meeting. However, should
any matter not described above be properly presented at the
annual meeting, the persons named in the proxy form will vote in
accordance with their judgment as permitted.
Revocation of
Proxies
A stockholder who gives a proxy may revoke it at any time before
it is exercised by voting in person at the annual meeting, by
delivering a subsequent proxy or by notifying the inspectors of
election in writing of such revocation. If your Wolverine shares
are held for you in a brokerage, bank or other institutional
account, you must obtain a proxy from that entity and bring it
with you to hand in with your ballot, in order to be able to
vote your shares at the meeting.
Solicitation of
Proxies
The Company will pay the expenses of solicitation of proxies for
the annual meeting. Solicitations may be made in person or by
telephone, by officers and employees of the Company, or by
nominees or other
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fiduciaries who may mail materials to or otherwise communicate
with the beneficial owners of shares held by the nominees or
other fiduciaries. Upon request, the Company will reimburse
brokers, dealers, banks and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding material to
beneficial owners of the Company’s common stock. The
Company has engaged Georgeson Inc. at an estimated cost of
$8,000, plus expenses and disbursements, to assist in
solicitation of proxies.
Delivery of
Documents to Stockholders Sharing an Address
If you are the beneficial owner, but not the record holder, of
shares of Wolverine stock, your broker, bank or other nominee
may only deliver one copy of this proxy statement and the
Company’s 2010 Annual Report to multiple stockholders who
share an address, unless that nominee has received contrary
instructions from one or more of the stockholders. The Company
will deliver promptly, upon written or oral request, a separate
copy of this proxy statement and its 2010 Annual Report to a
stockholder at a shared address to which a single copy of the
documents was delivered. A stockholder who wishes to receive a
separate copy of the proxy statement and annual report, now or
in the future, should submit this request by writing to
Wolverine World Wide, Inc., 9341 Courtland Drive N.E., Rockford,
Michigan 49351, Attn: Investor Relations or by calling
(616) 866-5500
and asking for Investor Relations. Beneficial owners sharing an
address who are receiving multiple copies of proxy materials and
who wish to receive a single copy of such materials in the
future should make a request directly to their broker, bank or
other nominee.
Access to Proxy
Statement and Annual Report
Wolverine’s financial statements for the fiscal year ended
January 1, 2011, are included in the Company’s 2010
Annual Report, which the Company is providing to stockholders at
the same time as this proxy statement. Wolverine’s Proxy
Statement for the 2011 Annual Meeting of Stockholders and the
Annual Report to Stockholders for the fiscal year ended
January 1, 2011, are available at
www.wolverineworldwide.com/2011annualmeeting. If you have not
received or do not have access to the 2010 Annual Report, write
to Wolverine World Wide, Inc., 9341 Courtland Drive N.E.,
Rockford, Michigan 49351, Attn: Investor Relations or call
(616) 866-5500
and ask for Investor Relations, and the Company will send a copy
to you without charge.
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Table of Contents
IMPORTANT ANNUAL MEETING INFORMATION
Electronic Voting Instructions
You can vote by Internet or
telephone!
Available 24 hours a day, 7 days a week!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose
one of the two voting methods outlined below to
vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must
be received by 11:59 p.m., Eastern Daylight Time, on
April 20, 2011.
|
Vote by Internet
•
Log on to the Internet and go to www.investorvote.com/www • Follow the steps outlined on the secured website. |
|
|
Vote by telephone
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. •
Follow the instructions provided by the recorded message. |
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. |
x | |||||||||
▼
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD
ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
A
Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals
2 and 3 and FOR 3 YRS on Proposal 4. |
|
| + |
|||||||||||||||||||
| 1. | Election of Directors: | For | Withhold | For | Withhold | For | Withhold | ||||||||||||
01 - William K. Gerber
|
o | o | 02 - Blake W. Krueger | o | o | 03 - Michael A. Volkema | o | o | |||||||||||
| For | Against | Abstain | For | Against | Abstain | |||||||||||||
|
|
||||||||||||||||||
|
2. |
Proposal to ratify the appointment of Ernst & Young LLP as independent auditors for fiscal year 2011. | o | o | o | 3. |
An advisory resolution on executive compensation. | o | o | o | |||||||||
| 3 Yrs | 2 Yrs | 1 Yr | Abstain | |||||||||||||||
4.
|
An advisory vote on the frequency of future advisory votes on executive compensation. | o | o | o | o | |||||||||||||
B Non-Voting Items |
|||
Change of Address — Please print new address below. |
|||
|
C |
Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | |
IMPORTANT - Please sign exactly as your name(s) appears on this Proxy. When signing on behalf
of a corporation, partnership, estate or trust, indicate title or capacity of person signing. If
shares are held jointly, each holder must sign.
Date (mm/dd/yyyy) — Please print date below.
|
Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||
| / / |
| n | 1 U P X | + |
Table of Contents
WOLVERINE WORLD WIDE, INC.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
Rockford, Michigan 49351
Wolverine World Wide, Inc. will be holding its Annual Meeting of Stockholders on April 21, 2011.
The enclosed Notice of 2011 Annual Meeting of Stockholders provides information regarding the
matters that are expected to be voted on at the meeting. Your vote is important to us. Even if you
plan to attend the meeting, please read the enclosed materials and vote through the Internet, by
telephone or by mailing the Proxy Card below.
Telephone and Internet Voting.
On the reverse side of this card are instructions on how to vote through the Internet or by
telephone. Please consider voting through one of these methods. Your vote is recorded as if you
mailed in your Proxy. We believe voting through the Internet or by telephone is convenient, and it
also saves money.
Thank you in advance for your participation in our 2011 Annual Meeting.
Wolverine World Wide, Inc.
6
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
6
Proxy — WOLVERINE WORLD WIDE, INC.
This proxy is solicited on behalf of the Board of Directors
The undersigned stockholder hereby appoints Blake W. Krueger and Donald T. Grimes, and each
of them, each with full power of substitution, as proxies to represent the undersigned stockholder
and to vote all shares of Common Stock of Wolverine World Wide, Inc. that the stockholder would be
entitled to vote on all matters that properly come before the Annual Meeting of Stockholders to be
held at the Company’s headquarters located at 9341 Courtland Drive N.E., Rockford, Michigan,
49351, on Thursday, April 21, 2011, at 10 a.m. Eastern Daylight Time, and any adjournment of that
meeting.
If this Proxy is properly executed, the shares represented by this Proxy will be voted as
specified. If no specification is made, the shares represented by this Proxy will be voted for
the election of all nominees named on this Proxy as directors, for approval of Proposals 2 and 3
identified on this Proxy and for three years with respect to Proposal 4 identified on this Proxy.
The shares represented by this Proxy will be voted in the discretion of the proxies on any other
matters that may properly come before the meeting.
PLEASE DO NOT VOTE BY MORE THAN ONE METHOD. THE LAST VOTE RECEIVED WILL BE THE OFFICIAL VOTE.
DO NOT RETURN THIS PROXY IF YOU ARE VOTING BY THE INTERNET OR BY TELEPHONE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
TABLE OF CONTENTS
NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERSPROXY STATEMENTDIRECTORSn Item 1 Election of DirectorsCONTINUING DIRECTORS TERMS EXPIRING IN 2013CONTINUING DIRECTORS TERMS EXPIRING IN 2012CORPORATE GOVERNANCENON-EMPLOYEE DIRECTOR COMPENSATION IN FISCAL YEAR 2010SECURITIES OWNERSHIP OF OFFICERS AND DIRECTORS AND CERTAIN BENEFICIAL OWNERSCOMPENSATION DISCUSSION AND ANALYSISCOMPENSATION COMMITTEE REPORT2010 SUMMARY COMPENSATION TABLEGRANTS OF PLAN-BASED AWARDS IN FISCAL 2010OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR-ENDOPTION EXERCISES AND STOCK VESTED IN FISCAL 2010PENSION PLANS AND 2010 PENSION BENEFITSPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLAUDIT COMMITTEE REPORTINDEPENDENT AUDITORn Item 2 Ratification of Appointment of Independent Registered Public Accounting Firmn Item 3 Advisory Resolution on Executive Compensationn Item 4 Advisory Vote on the Frequency of Future Advisory Votes on Executive CompensationRELATED PARTY MATTERSADDITIONAL INFORMATION