DEF 14A
UNITED STATES
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.
)
Filed by the Registrant
x
Filed by a Party other than the Registrant
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Check the appropriate box:
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o Preliminary
Proxy Statement |
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o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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x Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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King Pharmaceuticals, 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):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
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(1) |
Title of each class of securities to which
transaction applies:
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Aggregate number of securities to which
transaction applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) |
Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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(1) |
Amount Previously Paid:
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(2) |
Form, Schedule or Registration Statement No.:
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King
Pharmaceuticals,®
Inc.
501 Fifth Street
Bristol, TN 37620
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Brian A.
Markison
Chairman of the Board, President
and Chief Executive Officer
April 23,
2009
To the Shareholders of
King Pharmaceuticals,
Inc.:
You are cordially invited to attend the annual meeting of
shareholders of King Pharmaceuticals, Inc., to be held on
June 4, 2009 at 9:00 a.m. Eastern Daylight Time,
at The Umstead Hotel, 100 Woodland Pond, Cary, North Carolina
27513. At the meeting, you will be asked to:
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elect three Class I directors and two Class II
directors to serve until the 2010 annual meeting of shareholders
or until their successors have been duly elected and qualified;
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ratify the appointment of PricewaterhouseCoopers LLP as the
companys independent registered public accounting firm for
the fiscal year ending December 31, 2009;
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consider and act upon a non-binding shareholder proposal
requesting the adoption of a majority voting standard in the
election of directors; and
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consider and act upon any other matters which properly come
before the annual meeting or any adjournment of the meeting.
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The Securities and Exchange Commission rules allow us to furnish
proxy materials to our shareholders through the Internet. We are
pleased to take advantage of these rules and believe that they
enable us to provide our shareholders with the information that
they need while lowering the cost of delivery and reducing the
environmental impact of our annual meeting.
In connection with the meeting, we have mailed you a Notice of
Availability of Proxy Materials, which provides instructions on
how to obtain a proxy statement and a form of proxy through the
Internet or, if you wish, in printed form.
Your vote is very important. Whether or not you plan to attend
the meeting, please promptly vote using the available Internet
or telephone voting systems or, if you have obtained a printed
proxy card, by completing, signing, dating and returning your
proxy card by mail. Instructions for using these alternatives
are enclosed. I urge you to vote as soon as possible.
Detailed information relating to Kings activities and
operating performance during 2008 is contained in our annual
report. The annual report is available for viewing at the
website indicated on the Notice of Availability of Proxy
Materials, but it is not a part of the proxy soliciting
material. If you would like to obtain a printed copy of the
annual report, please see the instructions contained on the
Notice of Availability of Proxy Materials.
Very truly yours,
Brian A. Markison
Chairman of the Board,
President and Chief Executive Officer
TABLE OF
CONTENTS
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KING
PHARMACEUTICALS, INC.
501 Fifth Street
Bristol, Tennessee 37620
To Be Held June 4, 2009
The annual meeting of shareholders of King Pharmaceuticals, Inc.
will be held on Thursday, June 4, 2009 at 9:00 a.m.,
Eastern Daylight Time, at The Umstead Hotel, 100 Woodland Pond,
Cary, North Carolina 27513, for the following purposes:
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1.
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Election of Class I and Class II
Directors. To elect three Class I directors
and two Class II directors to serve until the 2010 annual
meeting of shareholders or until their successors have been duly
elected and qualified.
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2.
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Ratification of Independent Registered Public Accounting
Firm. To ratify the appointment of
Pricewater-houseCoopers LLP as the companys independent
registered public accounting firm for the fiscal year ending
December 31, 2009.
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3.
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Non-Binding Shareholder Proposal. To consider
and act upon a non-binding shareholder proposal requesting the
adoption of a majority voting standard in the election of
directors.
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4.
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Other Business. To transact such other
business as may properly come before the meeting or any
adjournment of the meeting.
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Only those shareholders of record at the close of business on
March 30, 2009 are entitled to notice of, and to vote at,
the annual meeting and any adjournment thereof. On that day,
247,813,828 shares of common stock were outstanding. Each
share entitles the holder to one vote.
BY ORDER OF THE BOARD OF DIRECTORS
James W. Elrod
Chief Legal Officer and Secretary
April 23, 2009
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting, please
promptly vote using the available Internet voting system or, if
you have obtained a printed proxy card, by calling the telephone
number that appears on your proxy card or by completing,
signing, dating and returning your proxy card by mail.
Instructions for using these alternatives are enclosed.
ADMISSION
TO THE MEETING
If you wish to attend the shareholders meeting, you
will be required to present your Notice of Availability of Proxy
Materials. You and one guest may attend the meeting. You and any
guest will also be required to present valid photographic
identification in order to enter the meeting.
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KING
PHARMACEUTICALS, INC.
501 Fifth Street
Bristol, Tennessee 37620
PROXY
STATEMENT
For 2009 Annual Meeting of Shareholders
The Board of Directors of King Pharmaceuticals, Inc.
(King or the company) requests that you
allow your common stock to be represented at the 2009 annual
meeting of shareholders by the proxies named on the enclosed
proxy card. The Notice of Availability of Proxy Materials was
sent to you in connection with this request and was mailed to
all shareholders beginning on or about April 23, 2009.
INFORMATION
ABOUT THE ANNUAL MEETING
Why
did you provide me this proxy statement?
We have made these proxy materials available to you through the
Internet, or, upon your request, have delivered printed versions
of these materials to you by mail. We are furnishing this proxy
statement in connection with the solicitation by our Board of
Directors of proxies to be voted at the 2009 annual meeting of
shareholders. This proxy statement, along with the accompanying
Notice of Annual Meeting of Shareholders, describes the purposes
of the meeting and the information you need to know to vote at
the meeting.
When
is the annual meeting?
The meeting will be held on Thursday, June 4, 2009 at
9:00 a.m. Eastern Daylight Time.
Where
will the annual meeting be held?
The meeting will be held at The Umstead Hotel, 100 Woodland
Pond, Cary, North Carolina 27513.
What
items will be voted on at the meeting?
You will be voting on the following matters:
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1.
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Election of Class I and Class II
Directors. To elect three Class I directors
and two Class II directors to serve until the 2010 annual
meeting of shareholders or until their successors have been duly
elected and qualified.
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2.
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Ratification of Independent Registered Public Accounting
Firm. To ratify the appointment of
PricewaterhouseCoopers LLP as the companys independent
registered public accounting firm for the fiscal year ending
December 31, 2009.
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3.
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Non-Binding Shareholder Proposal. To consider
and act upon a non-binding shareholder proposal requesting the
adoption of a majority voting standard in the election of
directors.
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4.
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Other Business. To transact such other
business as may properly come before the meeting or any
adjournment of the meeting.
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Who
can vote?
You are entitled to vote your common stock if our records show
that you held your shares as of the close of business on the
record date, March 30, 2009. Each shareholder is entitled
to one vote for each share of common stock held on that date. On
the record date, there were 247,813,828 shares of common
stock outstanding and entitled to vote.
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How do
I vote by proxy?
You may choose one of the following ways to vote by proxy:
Vote by Internet: You may vote using the
Internet site listed on the Notice of Availability of Proxy
Materials. This site will give you the opportunity to make your
selections and confirm that your voting instructions have been
followed. Internet voting procedures authenticate your identity
by use of a unique control number found on the Notice. To vote
through the Internet, you must subscribe to one of the various
commercial services that offer access to the Internet. Costs
normally associated with electronic access, such as usage and
telephone charges, will be borne by you. King does not charge
any separate fees for access to the Internet voting web site.
Vote by Telephone: Registered and most
beneficial shareholders can also vote by telephone (toll-free
for calls originating in the United States). To do so, you must
obtain the voting telephone number by either visiting the
Internet site listed on the Notice of Availability Proxy
Materials or by requesting printed proxy materials. Instructions
for obtaining printed materials appear on the Notice of
Availability of Proxy Materials. You may then vote by calling
the voting telephone number, entering your unique control number
(listed on your Notice of Availability Proxy Materials) and
following the simple recorded instructions. Note that requests
for printed proxy materials must be received by May 21,
2009.
Vote by Mail: If you choose to vote by mail,
you must request printed proxy materials. Instructions for
obtaining these materials appear on the Notice of Availability
of Proxy Materials. Once you receive your proxy card, simply
mark it and then sign, date and return it in the envelope
provided. Note that requests for printed proxy materials must be
received by May 21, 2009.
If you hold your shares beneficially in street name through a
nominee (such as a bank or broker), you may be able to vote by
telephone or the Internet as well as by mail. You should follow
the instructions you receive from your nominee to vote these
shares.
How
long do I have to vote?
If you choose to cast your vote using the Internet or by
telephone, you must do so by 11:59 p.m., Eastern Daylight
Time, on Wednesday, June 3, 2009, the day before the annual
meeting. Votes submitted by mail must be received prior to the
annual meeting. If you hold your shares beneficially in street
name through a nominee, you should follow the instructions you
receive from your nominee.
What
are my voting options?
For the election of directors, you may vote for (1) all of
the nominees, (2) none of the nominees, or (3) all of
the nominees except those you designate. For the other
proposals, you may vote For or
Against or you may Abstain
from voting.
What
are the Boards recommendations?
The Board recommends that you vote:
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For the election of all of its nominees for
Class I and Class II director,
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For the ratification of the appointment of
PricewaterhouseCoopers LLP as the companys independent
registered public accounting firm for the fiscal year ending
December 31, 2009, and
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Against the non-binding shareholder proposal
requesting the adoption of a majority voting standard in the
election of directors.
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If you return a signed proxy card but do not specify how you
want to vote your shares, we will vote them according to the
recommendations of the Board described above.
If any matters other than those set forth above are properly
brought before the annual meeting, the individuals named on your
proxy card may vote your shares in accordance with the
recommendations of management.
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How do
I change or revoke my proxy?
You can change or revoke your proxy at any time before it is
voted at the annual meeting by:
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submitting another proxy in writing, by telephone or via the
Internet as of a more recent date than that of the proxy first
given,
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attending the annual meeting, where you can revoke your proxy
and vote in person, or
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sending written notice of revocation to our Assistant Secretary,
William L. Phillips III, at 501 Fifth Street, Bristol,
Tennessee 37620.
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If you choose to change or revoke your vote via the Internet or
by telephone, you must do so by 11:59 p.m., Eastern
Daylight Time, on Wednesday, June 3, 2009, the day before
the annual meeting. Changes or revocations submitted by mail
must be received prior to the annual meeting.
Will
my shares be voted if I do not vote by proxy?
If your shares are registered in your name or if you have stock
certificates, they will not be voted if you do not vote at the
meeting in person or as described above under How do I
vote by proxy?
If your shares are held in street name through a
nominee (such as a bank or broker) and you do not provide voting
instructions to the nominee that holds your shares, the nominee
has the discretionary authority to vote your unvoted shares on
certain matters. A broker non-vote arises when a
broker, financial institution or other holder of record that
holds shares in street name does not receive instructions from a
beneficial owner and does not have the discretionary authority
to vote on a particular item. Under current New York Stock
Exchange rules, brokers have discretionary authority to vote on
the proposal regarding the election of directors and the
proposal regarding the ratification of the appointment of our
independent registered public accounting firm. Brokers do not
have discretionary authority to vote on the non-binding
shareholder proposal requesting the adoption of a majority
voting standard in the election of directors.
We encourage you to provide voting instructions to your nominee.
Doing so will ensure that your shares will be voted in the
manner you desire.
Who
will count the votes?
A representative from Broadridge Financial Solutions, Inc. will
count the votes and serve as our inspector of election. The
inspector of election will be present at the meeting.
How
many votes are required?
If a quorum is present at the annual meeting:
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the director nominees will be elected by a plurality of the
votes cast in person or by proxy at the meeting,
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ratification of the appointment of the independent registered
public accounting firm will require that the affirmative votes
of the shares of common stock present or represented by proxy at
the meeting exceed the opposing votes,
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approval of the non-binding shareholder proposal requesting the
adoption of a majority voting standard in the election of
directors will require that the affirmative votes of the shares
of common stock present or represented by proxy at the meeting
exceed the opposing votes, and
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approval of other matters submitted to the shareholders will
require that the affirmative votes of the shares of common stock
present or represented by proxy at the meeting exceed the
opposing votes.
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What
constitutes a quorum for the meeting?
A majority of the outstanding shares of common stock, present or
represented by proxy, constitutes a quorum. A quorum is
necessary to conduct business at the annual meeting. You are
part of the quorum if you have voted by proxy.
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Abstentions, broker non-votes and votes withheld from director
nominees count as shares present at the meeting for
purposes of determining a quorum. Abstentions and broker
non-votes do not count in the voting results and have no effect
on the result of the vote on the proposal to elect directors,
the proposal to ratify the appointment of the independent
registered public accounting firm or the
non-binding
shareholder proposal requesting the adoption of a majority
voting standard in the election of directors, so long as a
quorum is present.
Who
pays for the solicitation of proxies?
We will pay the cost of preparing, printing and mailing material
in connection with this solicitation of proxies. In addition to
solicitation by mail, regular employees of King and paid
solicitors may make solicitations personally and by telephone or
otherwise. We will, upon request, reimburse brokerage firms,
banks and others for their reasonable out-of-pocket expenses in
forwarding proxy materials to beneficial owners of stock or
otherwise in connection with this solicitation of proxies. We
have retained Georgeson Inc. to assist in the solicitation for a
fee of approximately $8,000 plus reasonable out-of-pocket
expenses.
When
are 2010 shareholder proposals due?
Proposals by shareholders to be considered for inclusion in the
materials related to solicitation of proxies by the Board of
Directors for the annual meeting in 2010 must be received by our
Assistant Secretary, William L. Phillips III, at 501 Fifth
Street, Bristol, Tennessee 37620, no later than 120 days
prior to the date that is one year from the date on which the
Notice of Availability of Proxy Materials was first mailed to
shareholders, April 23, 2009. The use of certified mail,
return receipt requested, is advised. To be eligible for
inclusion, a proposal must also comply with
Rule 14a-8
and all other applicable provisions of Regulation 14A under
the Securities Exchange Act of 1934, as amended.
Shareholder proposals not submitted for inclusion in the Board
of Directors proxy statement but which are received not
less than sixty nor more than ninety days prior to the date of
the 2010 annual meeting may be eligible to be presented at the
meeting. If less than seventy days notice or public
disclosure of the date of the 2010 annual meeting is given or
made to shareholders, notice of a shareholder proposal, to be
timely, must be received by the Assistant Secretary not later
than the close of business on the tenth day following the date
on which notice of the date of the 2010 annual meeting is mailed
or public disclosure of the date is made. Shareholder proposals
which are received outside of these required periods will be
considered untimely. The Chairman may exclude an untimely
proposal from consideration or, if the proposal is considered,
any proxy given pursuant to the Boards solicitation of
proxies will be voted in accordance with the recommendation of
management.
CORPORATE
GOVERNANCE
We are committed to effective corporate governance and believe
it is important to our long-term performance and ability to
create value for our shareholders. Our Board of Directors has
adopted Corporate Governance Guidelines which are available at
www.kingpharm.com by first choosing Investors
and then Governance, and they are also available to
any shareholder who requests a copy from our Assistant
Secretary, William L. Phillips III, 501 Fifth Street,
Bristol, Tennessee 37620.
INFORMATION
ABOUT THE BOARD OF DIRECTORS
Nominees
for Election as Class I Directors (Terms to Expire in
2010)
R. Charles Moyer, Ph.D., age 63, has
served as a director since December 2000. Dr. Moyer
presently serves as Dean of the College of Business at the
University of Louisville. He is Dean Emeritus of the Babcock
Graduate School of Management at Wake Forest University, having
served as Dean from 1996 until his retirement from this position
in August 2003, and as a professor from 1988 until 2005.
Dr. Moyer held the GMAC Insurance Chair of Finance at Wake
Forest University. Prior to joining the faculty at Wake Forest
in 1988, Dr. Moyer was Finance Department Chairman at Texas
Tech University. Dr. Moyer earned his Doctorate in Finance
and Managerial Economics from the University of Pittsburgh in
1971, his Master of Business Administration degree from the
University of Pittsburgh in 1968 and his Bachelor of Arts degree
in Economics from Howard University in 1967.
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D. Greg Rooker, age 61, has served as a
director since October 1997. Mr. Rooker is the former owner
and President of Family Community Newspapers of Southwest
Virginia, Inc., Wytheville, Virginia, which consisted of six
community newspapers and a national monthly motor sports
magazine. He retired from this position in 2000. He is a
co-founder of The Jason Foundation and Brain Injury Services of
SWVA, Inc., each a non-profit organization providing services to
brain injury survivors. Mr. Rooker serves as
Secretary/Treasurer of The Jason Foundation and as a member of
the Board of Directors of Brain Injury Services of SWVA, Inc.
Mr. Rooker graduated from Northwestern University with a
degree in Journalism in 1969.
Ted G. Wood, age 71, has served as a director
since August 2003 and as Lead Independent Director since May
2007. Mr. Wood was the Non-Executive Chairman from May 2004
until May 2007. He is retired from The United Company in
Bristol, Virginia, where he served as Vice Chairman from January
2003 until August 2003. He previously served as President of the
United Operating Companies from 1998 to 2002. Mr. Wood was
previously a director of King from April 1997 to May 2000. From
1992 to 1993, he was President of Boehringer Mannheim
Pharmaceutical Corporation in Rockville, Maryland. From 1993 to
1994, he was President of KV Pharmaceutical Company in
St. Louis, Missouri. From 1975 to 1991, he was employed by
SmithKline Beecham Corporation where he served as President of
Beecham Laboratories from 1988 to 1989 and Executive Vice
President of SmithKline from 1990 to 1991. Mr. Wood is also
a member of the board of directors of Alpha Natural Resources,
Inc., a publicly-held corporation. He graduated from the
University of Kentucky with a Bachelor of Science degree in
Commerce in 1960. In 1986 he completed the Advanced Management
Program at Harvard University.
Nominees
for Election as Class II Directors (Terms to Expire in
2010)
Earnest W. Deavenport, Jr., age 71, has
served as a director since May 2000. In 2002, he retired as
Chairman of the Board and Chief Executive Officer of Eastman
Chemical Company, Kingsport, Tennessee, where he was employed in
various capacities since 1960. He was Chairman of the National
Association of Manufacturers in 1998 and is currently a member
of the National Academy of Engineering. Mr. Deavenport is
also a member of the boards of directors of Zep, Inc. and
Regions Financial Corporation, each a publicly-held company.
Mr. Deavenport graduated from the Massachusetts Institute
of Technology with a Master of Science degree in Management in
1985 and from Mississippi State University with a Bachelor of
Science degree in Chemical Engineering in 1960.
Elizabeth M. Greetham, age 59, has served as
a director since November 2003. She retired as the Chief
Executive Officer and President of ACCL Financial Consultants
Ltd. in December 2007. From 1998 until 2004 she was a director
of DrugAbuse Sciences, Inc. and served as its Chief Executive
Officer from August 2000 until 2004 and as Chief Financial
Officer and Senior Vice President, Business Development from
April 1999 to August 2000. Prior to joining DrugAbuse Sciences,
Inc., Ms. Greetham was a portfolio manager with Weiss,
Peck & Greer, an institutional investment management
firm, where she managed the WPG Life Sciences Funds, L.P., which
invests in select biotechnology stocks. She was previously a
consultant to F. Eberstadt & Co. In total,
Ms. Greetham has over 25 years of experience as a
portfolio manager and health care analyst in the United States
and Europe. Ms. Greetham earned a Master of Arts (Honours)
degree in Economics from the University of Edinburgh, Scotland
in 1971.
Incumbent
Directors Class III (Terms to Expire in
2010)
Philip A. Incarnati, age 55, has served as a
director since November 2006. He has served as President and
Chief Executive Officer of McLaren Health Care Corporation, an
integrated health care system, since 1989. Before joining
McLaren, Mr. Incarnati held top-level executive positions
with the Wayne State University School of Medicine, Detroit
Receiving Hospital and University Health Center, and Horizon
Health System. Mr. Incarnati also serves on the board of
Medical Staffing Network, Inc., a publicly-traded company, and
on the boards of two privately-held companies, PHNS, Inc. and
Reliant Renal Care Inc. Mr. Incarnati earned both a
Bachelors Degree and a Masters Degree in management
and finance from Eastern Michigan University (EMU). He has been
a member of the EMU Board of Regents since 1992, when he was
appointed by then-Michigan Governor John Engler, serving as its
Chairman from 1995 until 2005.
Gregory D. Jordan, Ph.D., age 57, has
served as a director since June 2001. He has served as President
of King College in Bristol, Tennessee since 1997, having joined
the King College faculty in 1980. He received his Bachelor of
Arts degree from Belhaven College in 1973; his Master of Arts
and Divinity degrees from Trinity Evangelical Divinity School in
1976 and 1977, respectively; his Doctorate in Hebraic and
Cognate Studies from Hebrew Union College Jewish Institute of
5
Religion in 1987; and his Master of Business Administration
degree from the Babcock Graduate School of Management at Wake
Forest University in 2004.
Brian A. Markison, age 49, was elected as
Chairman of the Board in May 2007. He has served as President
and Chief Executive Officer and a director since July 2004. He
joined King as Chief Operating Officer and served in that
position from March 2004 until July 2004. Previously,
Mr. Markison held various positions with Bristol-Myers
Squibb beginning in 1982, most recently as President of
Bristol-Myers Squibbs Oncology, Virology and Oncology
Therapeutics Network businesses. Between 1998 and 2001, he
served variously as Senior Vice President,
Neuroscience/Infectious Disease; President,
Neuroscience/Infectious Disease/Dermatology; and Vice President,
Operational Excellence and Productivity. He also held various
sales and marketing positions. Mr. Markison is a member of
the Board of Directors of Immunomedics, Inc., a publicly-held
corporation. He graduated from Iona College in 1982 with a
Bachelor of Science degree.
Role of
the Board
Pursuant to Tennessee law, our business, property and affairs
are managed under the direction of our Board of Directors. The
Board has responsibility for establishing broad corporate
policies and for the overall performance and direction of King
Pharmaceuticals, Inc., but is not involved in day-to-day
operations. Members of the Board keep informed of our business
by participating in Board and committee meetings, by reviewing
analyses and reports sent to them regularly, and through
discussions with our executive officers and independent
registered public accounting firm.
Board
Structure
We currently have eight directors, divided into three groups:
Class I directors, Class II directors and
Class III directors. Formerly, each class of directors was
elected to serve until the third annual meeting of shareholders
following its election. At the 2007 annual meeting of
shareholders, Kings shareholders approved an amendment to
our charter to provide for the annual election of directors,
commencing with the Class I directors whose terms expired
in 2008. This change means that the Class I and
Class II directors who are elected at the 2009 annual
meeting will serve until the 2010 annual meeting of shareholders
or until their successors are duly elected and qualified, unless
they earlier resign or are removed. Class III directors are
expected to complete their original three-year terms, which
expire as of the 2010 annual meeting of shareholders. As of the
annual meeting in 2010, all directors will stand for election
annually.
Independent
Directors
The Board has determined that the following directors are
independent from the company under the independence standards of
the New York Stock Exchange: Earnest W. Deavenport, Jr.,
Elizabeth M. Greetham, Philip A. Incarnati, Gregory D. Jordan,
R. Charles Moyer, D. Greg Rooker and Ted G. Wood.
2008
Board Meetings
In 2008, the Board met twenty-three times. All directors
attended at least 75% of the aggregate of all of the Board
meetings and meetings held by committees of which they were
members.
Board
Committees
The Board has appointed an Audit Committee, a Compensation and
Human Resources Committee and a Nominating and Corporate
Governance Committee, each member of which has been determined
by our Board of Directors to be independent of King pursuant to
the listing standards of the New York Stock Exchange
(NYSE). Each of these committees operates pursuant
to a written charter adopted by our Board of Directors. Each
charter is available through our website,
www.kingpharm.com, by first choosing
Investors and then Governance, and each
is also available to any shareholder who requests a copy from
our Assistant Secretary, William L. Phillips III, 501 Fifth
Street, Bristol, Tennessee 37620. The Board has also formed a
Risk Committee composed of all directors.
The Audit Committee currently consists of R. Charles Moyer
(Chair), Elizabeth M. Greetham, Philip A. Incarnati and D. Greg
Rooker. The Audit Committee has the authority and
responsibility, among other obligations, to select, retain,
compensate, terminate and oversee the work of our independent
registered public accounting firm; to assess the qualifications
and independence of our independent registered public accounting
firm; to pre-approve auditing, audit-related and permitted non-
6
auditing services rendered by our independent registered public
accounting firm; to discuss with the independent registered
public accounting firm the results of the annual audit and
quarterly reviews of financial statements; to review and
evaluate managements conduct of Kings financial
reporting processes (including the development and maintenance
of systems of internal accounting and financial control); to
oversee Kings compliance with certain legal and regulatory
requirements; to oversee the performance of Kings internal
audit function, which is a responsibility of the Compliance
Office; to monitor compliance with Kings investment
policy; and to make reports to the Board periodically with
respect to its work. The Board of Directors has determined that
each member of the Audit Committee meets the independence,
experience and other qualification requirements of the NYSE and
the Securities and Exchange Commission (SEC) and
that Dr. Moyer and Ms. Greetham, each of whom serves
on the Audit Committee, are audit committee financial
experts, as defined by the rules of the Securities and
Exchange Commission. None of the Committees members serves
on more than three public company audit committees. The Audit
Committee met seven times during 2008. For additional
information regarding the Audit Committee, please see the Report
of the Audit Committee of the Board of Directors that begins on
page 10.
The Compensation and Human Resources Committee, which currently
consists of Earnest W. Deavenport, Jr. (Chair), Gregory D.
Jordan and Ted G. Wood, has the authority and responsibility,
among other obligations, to establish and periodically review a
general compensation philosophy for the executive officers; to
annually review and approve the corporate goals and objectives
upon which the compensation of the chief executive officer
(CEO) is based, evaluate the CEOs performance
in light of these goals and objectives and determine the
CEOs compensation; to review and approve the
recommendations of the CEO with regard to the compensation and
benefits of the executive officers; in conjunction with the
Nominating and Corporate Governance Committee, to review
annually and make recommendations to the Board with respect to
the compensation (including any equity-based compensation) of
non-employee directors; to oversee the talent management
process, including an annual review of plans for executive
officer succession; and to oversee regulatory compliance with
respect to compensation matters. In 2008, the Committee was
advised with respect to executive compensation matters by an
independent outside consultant, James F. Reda &
Associates, LLC, retained by the Committee. The Compensation and
Human Resources Committee met seven times during 2008. For
additional information regarding the Compensation and Human
Resources Committee and compensation matters generally, please
see the Compensation Discussion and Analysis and related
information that begins on page 13.
The Nominating and Corporate Governance Committee currently
consists of Gregory D. Jordan (Chair), Earnest W.
Deavenport, Jr. and R. Charles Moyer. The Nominating and
Corporate Governance Committee has the authority and
responsibility, among other obligations, to locate, evaluate and
recommend to the Board persons to be nominated for election or
appointment as a director; to recommend to the Board a chair and
members for each of the Boards committees; to assist the
Board and its Committees in the development and implementation
of performance evaluation processes; to review annually our
Corporate Governance Guidelines and recommend to the Board any
changes that the Committee determines to be necessary or
desirable; to assist the Board with the orientation of new
directors and continuing education for existing directors; in
conjunction with the Compensation and Human Resources Committee,
to annually review and make recommendations to the Board with
respect to the compensation (including equity-based
compensation) of non-employee directors; and to examine annually
the independence from King of each non-employee director and
deliver to the Board the results of its review. The Nominating
and Corporate Governance Committee met four times during 2008.
The Nominating and Corporate Governance Committee may consider,
in evaluating potential director nominees, any of the following
factors, or other factors, which it determines to be relevant:
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Character and integrity.
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Educational background.
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Business or professional experience, including experience with
financial statements, financial reporting, internal controls,
executive compensation, corporate governance, employee benefits,
manufacturing and regulatory issues or other relevant areas of
experience.
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Familiarity with the principal operations of publicly-traded
United States companies.
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Current or prior relationships with King Pharmaceuticals, Inc.
or any of its subsidiaries.
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The correlation between the candidates experience and the
Committees evaluation of present and future needs of the
Board.
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7
If reviewing the qualifications of an incumbent director, the
Committee also considers the past performance of the incumbent
director.
Shareholders may recommend candidates to the Committee by
submitting a written recommendation to the Chief Legal Officer,
501 Fifth Street, Bristol, Tennessee 37620. The Chief Legal
Officer will direct all such correspondence to the Committee.
In order for a written shareholder recommendation to be
evaluated by the Committee, it must include all information
about the candidate that is required to be disclosed in a
solicitation of proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934,
as amended. The written recommendation must also be accompanied
by the candidates written consent to be named in a proxy
statement as a nominee, if recommended by the Committee and
nominated by the Board, and to serve as a director if appointed
or elected. Additional information about the candidate may be
requested by the Committee from time to time, either from the
recommended person or from the recommending shareholder.
The shareholder must also disclose, with the written
recommendation, the number of shares of Kings common stock
beneficially owned by the shareholder, the percentage of all
outstanding common stock which the shares represent and the
period of time the shareholder has beneficially owned the
shares. If the shareholder is part of a group of shareholders
that is making the recommendation, the shareholder must also
disclose the names of the other members of the group and, for
each member of the group, the number of shares of Kings
common stock beneficially owned by the member, the percentage of
all outstanding common stock which the shares represent and the
period of time the member has beneficially owned the shares.
Once the Committee has received all required or requested
information regarding a particular shareholder-recommended
candidate, the Committee will evaluate that candidate according
to its established evaluation practices and, based on the
results of that evaluation, will determine whether to recommend
the candidate to the Board for nomination for election or
appointment as a director.
The procedure described above does not preclude a shareholder of
record from making nominations of directors to be considered at
an annual meeting, provided such nominations are in accordance
with Kings bylaws as then in effect.
From time to time, the Committee has retained and paid a
consultant to assist it in the process of identifying or
evaluating Board candidates. No candidates have been recommended
to serve on the Board of Directors by a shareholder or group of
shareholders who beneficially owned more than 5% of our common
stock.
The Risk Committee currently consists of all directors and is
chaired by Mr. Markison. This Committee is responsible for
oversight of Kings risk management processes; risk
assessments; risk mitigation activities; the adoption of risk
tolerances; and the activities and reports of managements
Enterprise Risk Management Committee, which uses an enterprise
risk management approach to the management of material risks.
This approach is designed to identify, assess, mitigate and
manage material risks, and supports the Boards corporate
governance goals and the efforts of management to achieve
strategic objectives.
Non-Management
Directors
The Boards non-management directors regularly meet
separately from the Board as a whole. Kings Corporate
Governance Guidelines provide that the Chairman of the Board, if
independent of King, shall serve as presiding director at
meetings of the non-management directors. If the Chairman is not
an independent director, then the non-management directors
annually elect one of their members to serve as Lead Independent
Director. Mr. Markison, Kings President and Chief
Executive Officer, was appointed as Chairman of the Board in May
2007. Mr. Wood was elected at the same time to serve as
Lead Independent Director, and he was re-elected in May 2008.
The duties of the Lead Independent Director include: meeting
regularly with the Chairman; advising the Chairman as to an
appropriate schedule of Board meetings; consulting with the
Chairman in establishing agendas for Board meetings and
consulting with the chair of each Committee in establishing
agendas for Committee meetings; facilitating communications with
other members of the Board; acting as the presiding director at
meetings of the non-management directors; serving as a
non-voting member of each committee on which he does not serve
as a regular member; serving as a point of contact for
shareholders who wish to contact the Company other than through
its management; directing the
8
provision of any materials to the Board that he or she
determines to be necessary for the independent directors to
effectively and responsibly perform their duties; coordinating
the Boards annual self-evaluation process; and other
duties as prescribed from time to time by Kings Corporate
Governance Guidelines.
CODE OF
CONDUCT AND ETHICS
The Board has adopted a Corporate Code of Conduct and Ethics
which applies to all of our directors, officers and employees.
The Code appears on our website, www.kingpharm.com and is
available to any shareholder who wishes to have a copy (by
request to the Assistant Secretary, William L. Phillips III,
501 Fifth Street, Bristol, Tennessee 37620). To the extent
permitted by the SEC and the NYSE regulations, we intend to
disclose information as to any amendments to the Code and any
waivers from provisions of the Code for our principal executive
officer, principal financial officer, and certain other officers
by posting the information on our website.
COMMUNICATION
WITH THE BOARD OF DIRECTORS
Interested parties may contact the Board of Directors:
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by sending correspondence to the attention of the Assistant
Secretary, William L. Phillips III, King Pharmaceuticals, Inc.,
501 Fifth Street, Bristol, Tennessee 37620;
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by sending email to Board@kingpharm.com; or
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by calling
(888) 440-5464
and leaving a voicemail message.
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Communications should specify whether they are intended for all
directors, all non-management directors, only the Chairman, or
only the Lead Independent Director. Any message which does not
specify its intended recipients will be treated as if intended
for the entire Board. All messages will be reviewed by
Kings Legal Department and its Compliance Office and any
message deemed by either department to be substantive will be
forwarded to the intended recipients.
Kings Corporate Governance Guidelines provide that
directors are expected to attend and participate in annual
meetings of shareholders, subject to unavoidable conflicts. All
directors attended the 2008 annual meeting of shareholders.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Review of
Related Party Transactions
Our Corporate Code of Conduct and Ethics provides that no
director, officer or employee of King shall permit his or her
decisions with respect to the company to be influenced by any
interest in, or personal relationship, personal contact or
agreement with, Kings suppliers, contractors, customers or
others doing business with King. Further, members of a
directors, officers or employees family are
prohibited from receiving compensation, commissions or gifts
from any company or organization that deals with King if such
receipt could reasonably be construed to influence the
directors, officers or employees decisions
with regard to Kings business. Actual or potential
conflict of interest transactions are required to be reported to
and reviewed by our Legal Department or our Compliance Office
before they take place. Any change or waiver of these standards
for a director or executive officer may be made only by the
Board of Directors (with the interested director abstaining) and
must be promptly disclosed as required by law or NYSE rules.
Further, for any transaction in which a director or officer of
King has a direct or indirect interest, King follows the
requirements of the Tennessee Business Corporation Act, which
requires that:
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the transaction must be fair to King,
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the material facts of the transaction and the directors or
officers interest must be disclosed or known to the Board
of Directors,
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the Board of Directors must authorize, approve, or ratify the
transaction, and
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if the transaction requires the approval of shareholders, the
material facts of the transaction and directors or
officers interest must be disclosed or known to the
shareholders entitled to vote, and the shareholders authorize,
approve, or ratify the transaction.
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9
In addition to being required to report potential conflict
transactions to the Legal Department or the Compliance Office
before they take place, directors and all executive officers
complete an annual questionnaire regarding their relationship
with King and with other entities and persons who have a
relationship with King, if any, whether for-profit businesses,
non-profit or charitable organizations, civic groups or other
entities or persons. These questionnaires are reviewed by the
Legal Department, which advises the Board about any significant
information reported.
Transactions
with Related Parties
Since the beginning of the last fiscal year, we are aware of no
related party transactions between us and any of our directors,
executive officers, 5% shareholders or their family members or
other persons which required disclosure under Item 404 of
Regulation S-K
under the Securities Exchange Act of 1934.
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following Report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other company filing under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent the company specifically incorporates
this Report by reference therein.
The Audit Committee is typically appointed by the Board
immediately following the annual meeting of shareholders. Since
the time of the May 2008 annual meeting, R. Charles Moyer
(Chair), Elizabeth M. Greetham, Philip A. Incarnati and D. Greg
Rooker have served on the Audit Committee. The Board of
Directors has determined that each member of the Audit Committee
meets the independence, experience and other qualification
requirements of the NYSE and the SEC. None of the
Committees members serves on more than three public
company audit committees.
The Audit Committee operates pursuant to a written charter
adopted by the Board of Directors which is available on our
website, www.kingpharm.com. The charter is also available
to any shareholder by request to the Assistant Secretary,
William L. Phillips III, 501 Fifth Street, Bristol,
Tennessee 37620.
Management is responsible for internal controls and the
financial reporting process. The independent registered public
accounting firm is responsible for performing an audit of our
financial statements and our systems of internal control, in
accordance with the standards of the Public Company Accounting
Oversight Board (United States), and for expressing an opinion
about those statements and controls based upon its audit. The
Audit Committee, on behalf of the Board, monitors and reviews
the performance of the independent registered public accounting
firm and the quality and integrity of internal accounting,
auditing and financial reporting practices. The Audit
Committees other chief duties include:
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exercising sole authority to retain, compensate, terminate and
oversee the work of our independent registered public accounting
firm,
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pre-approving audit, audit-related and permitted non-audit
services rendered by our independent registered public
accounting firm,
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reviewing and discussing with management and the independent
registered public accounting firm the annual audited financial
statements and quarterly unaudited financial statements, and
determining whether to recommend to the Board that the audited
financial statements be included in our Annual Report on
Form 10-K,
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discussing earnings press releases, as well as financial
information and earnings guidance provided to analysts or rating
agencies, and reviewing such information, to the extent
reasonably practicable, prior to its release or distribution,
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reviewing and approving the written charter and annual work
plans of the Compliance Office and reviewing the plans for, and
results of, internal audits,
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receiving reports from the Corporate Compliance Officer of any
allegation regarding accounting, internal control or auditing
matters or any other substantial compliance issue,
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establishing and maintaining hiring policies with respect to
employees or former employees of the independent auditors,
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assessing the independent registered public accounting
firms independence from us, and
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periodically reporting to the Board regarding the Audit
Committees activities.
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10
During 2008, the Audit Committee met seven times and regularly
held separate executive sessions with the independent registered
public accounting firm, PricewaterhouseCoopers LLP
(PricewaterhouseCoopers), and also with the Chief
Financial Officer, the Corporate Compliance Officer, the Vice
President for Internal Audit and among the Audit Committee
members. There were also numerous informal meetings and
communications among the Chair, various Audit Committee members,
the independent registered public accounting firm and members of
management.
The Audit Committee has reviewed and discussed with management
the audited financial statements for the year ended
December 31, 2008. The Audit Committee has also discussed
with PricewaterhouseCoopers the matters required to be discussed
by Statement on Auditing Standards No. 61,
(Communication with Audit Committees) as amended, as
adopted by the Public Company Accounting Oversight Board (United
States) in Rule 3200T, and, with and without management
present, discussed and reviewed the results of the independent
registered public accounting firms examination of
Kings financial statements and internal control over
financial reporting. The Audit Committee has also discussed with
the independent registered public accounting firm the quality of
Kings accounting policies.
The Audit Committee has obtained from PricewaterhouseCoopers a
formal written statement describing all relationships between
the independent registered public accounting firm and King that
might bear on the accounting firms independence. This
statement conforms to Independence Standards Board Standard
No. 1, as amended, Independence Discussions with
Audit Committees as adopted by the Public Company
Accounting Oversight Board (United States) in Rule 3600T.
The Audit Committee has also discussed with
PricewaterhouseCoopers any relationships that may impact its
objectivity and independence. The Audit Committee has also
considered whether provision of the services described under the
section Audit Fees is compatible with maintaining
the independence of the independent registered public accounting
firm.
In October 2005, as part of the settlement of a government
pricing investigation, the company entered into a five-year
corporate integrity agreement (the CIA) with the
Office of Inspector General of the United States Department of
Health and Human Services. In December 2005, the Audit Committee
approved managements recommendation to appoint
PricewaterhouseCoopers to serve as the independent review
organization (IRO) in connection with the
requirements of the CIA. PricewaterhouseCoopers acted as IRO
during 2008. In late 2008, the Audit Committee approved the
provision by PricewaterhouseCoopers of due diligence and
integration assistance services to King in connection with
Kings acquisition of Alpharma Inc. The Audit Committee has
considered whether the service of PricewaterhouseCoopers as IRO,
and its provision of due diligence and integration assistance
services in connection with the Alpharma acquisition, are
compatible with maintaining the independence of the independent
registered public accounting firm. The Audit Committee is
satisfied that PricewaterhouseCoopers is independent of King.
Based upon the results of the inquiries and actions discussed
above, in reliance upon information from management and the
independent registered public accounting firm, and subject to
the limitations of its role, the Audit Committee recommended to
the Board that the audited financial statements be included in
the Annual Report on
Form 10-K
for the year ended December 31, 2008 for filing with the
SEC.
The Audit Committee has appointed PricewaterhouseCoopers as our
independent registered public accounting firm for 2009. In the
event the shareholders do not ratify the appointment of
PricewaterhouseCoopers as our independent registered public
accounting firm, the Audit Committee will reconsider its
appointment.
The Members of the Audit Committee
of the Board of Directors
R. Charles Moyer, Chair
Elizabeth M. Greetham
Philip A. Incarnati
D. Greg Rooker
11
KING
STOCK OWNERSHIP
The following table sets forth certain information regarding the
ownership of the common stock as of April 10, 2009 for
(i) each person who owns more than 5% of the common stock,
(ii) each director, nominee for director and executive
officer of King, and (iii) all executive officers and
directors of King as a group.
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Beneficial Ownership of
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Common Stock (1)
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Percentage
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Number of
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Outstanding
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Executive Officers, Directors and 5% Shareholders
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Shares
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Shares
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Brian A. Markison (2)
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1,072,285
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*
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Joseph Squicciarino (3)
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375,364
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*
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James W. Elrod (4)
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217,173
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*
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Stephen J. Andrzejewski (5)
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290,111
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*
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Frederick Brouillette, Jr. (6)
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249,355
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*
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Eric J. Bruce (7)
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195,064
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*
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Eric G. Carter (8)
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164,534
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*
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Earnest W. Deavenport, Jr. (9)
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81,154
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*
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Elizabeth M. Greetham (10)
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37,698
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*
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Philip A. Incarnati (11)
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23,000
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*
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Gregory D. Jordan (12)
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66,321
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*
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R. Charles Moyer (13)
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71,887
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*
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D. Greg Rooker (14)
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134,895
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*
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Ted G. Wood (15)
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86,254
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*
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All executive officers and directors as a group
(14 persons) (16)
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3,065,095
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1.2
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%
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Barclays Global Investors, NA (17)
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14,314,384
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5.3
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%
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*
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Less than 1%.
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(1)
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Unless otherwise indicated,
beneficial ownership consists of sole voting and investing power
based on 247,890,140 shares issued and outstanding as of
April 10, 2009. Options to purchase shares which are
exercisable or become exercisable within 60 days of
April 10, 2009 and restricted stock units convertible into
common stock within 60 days of April 10, 2009 are
deemed to be outstanding for the purpose of computing the
percentage of outstanding shares owned by each person to whom a
portion of such options relate but are not deemed to be
outstanding for the purpose of computing the percentage owned by
any other person.
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(2)
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Includes 138,789 shares held
individually, 549,696 shares issuable upon the exercise of
options and 383,800 shares of restricted stock.
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(3)
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Includes 63,641 shares held
individually, 63,463 shares issuable upon the exercise of
options and 248,260 shares of restricted stock.
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(4)
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Includes 30,235 shares held
individually, 52,208 shares issuable upon the exercise of
options and 134,730 shares of restricted stock.
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(5)
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Includes 21,202 shares held
individually, 139,989 shares issuable upon the exercise of
options and 128,920 shares of restricted stock.
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(6)
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Includes 27,667 shares held
individually, 149,578 shares issuable upon the exercise of
options and 72,110 shares of restricted stock.
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(7)
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Includes 47,015 shares held
individually, 39,989 shares issuable upon the exercise of
options and 108,060 shares of restricted stock.
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(8)
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Includes 1,111 shares held
individually, 18,393 shares issuable upon the exercise of
options and 145,030 shares of restricted stock.
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(9)
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Includes 14,294 shares held
individually, 53,333 shares issuable upon the exercise of
options and 13,527 restricted stock units convertible into
common stock within 60 days of April 10, 2009. Does
not include 44,845 shares of King phantom stock held
through the deferred compensation plan for non-employee
directors.
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(10)
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Includes 12,794 shares held
individually and 24,904 shares issuable upon the exercise
of options within 60 days of April 10, 2009. Does not
include 13,527 shares of restricted stock units, the
vesting of which will occur on a date six months after
Ms. Greethams departure from the board of directors.
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(11)
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Includes 9,473 shares held
individually and 13,527 restricted stock units convertible into
common stock within 60 days of April 10, 2009.
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(12)
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Includes 12,794 shares held
individually, 40,000 shares issuable upon the exercise of
options and 13,527 restricted stock units convertible into
common stock within 60 days of April 10, 2009.
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(13)
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Includes 5,027 shares held
individually, 53,333 shares issuable upon the exercise of
options and 13,527 restricted stock units convertible into
common stock within 60 days of April 10, 2009.
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(14)
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Includes 60,212 shares held
individually, 1,350 shares held by The Jason Foundation and
73,333 shares issuable upon the exercise of options within
60 days of April 10, 2009. Does not include
13,527 shares of restricted stock units, the vesting of
which will occur on a date six months after
Mr. Rookers departure from the board of directors.
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(15)
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Includes 59,460 shares held
individually and 26,794 shares issuable upon the exercise
of options within 60 days of April 10, 2009. Does not
include 13,527 shares of restricted stock units, the
vesting of which will occur on a date six months after
Mr. Woods departure from the board of directors.
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(16)
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Includes 1,285,013 shares
subject to options exercisable, and 54,108 restricted stock
units convertible into common stock, within 60 days of
April 10, 2009.
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(17)
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Based on Schedule 13G filed with
the U.S. Securities and Exchange Commission by Barclays
Global Investors, NA and its affiliates. The address of
Barclays Global Investors, NA is 400 Howard Street, San
Francisco, California 94105.
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12
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
of Our Compensation Program
The fundamental goal of our compensation program is to build
long-term shareholder value. In order to accomplish that goal,
we must attract and retain exceptionally talented and capable
executives, and we must provide those executives with incentives
that motivate and reward them for achieving Kings
immediate and longer-term operational, financial and scientific
goals and strategic objectives. To this end, our executive
compensation is guided by the following key principles:
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that executive compensation should depend upon measures of
company and individual performance;
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that the interests of executives should be closely aligned with
those of shareholders through equity-based compensation; and
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that compensation should be appropriate and fair in comparison
to the compensation provided to similarly situated executives
within other publicly-traded pharmaceutical companies of
Kings size and complexity.
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Vital to our compensation program are the decisions of, and
guidance from, the Compensation and Human Resources Committee of
our Board of Directors (which we refer to, for purposes of this
analysis, as the Committee). The Committee is
composed entirely of directors who are independent of King under
the independence standards established by the NYSE, the
securities exchange where our common stock is traded. The
Committee operates pursuant to a written charter adopted by the
Board. If you would like to review the Committees charter,
it is freely available on our website, www.kingpharm.com,
by first choosing Investors and then
Governance. It is also available to any shareholder
who requests a copy from our Assistant Secretary, William L.
Phillips III, 501 Fifth Street, Bristol, Tennessee 37620.
The Committee has the authority and responsibility to establish
and periodically review our executive compensation principles,
described above. Importantly, the Committee also has sole
responsibility for determining the corporate goals and
objectives upon which the compensation of the Chief Executive
Officer (the CEO) is based, for evaluating (in
consultation with all non-management directors) the CEOs
performance in light of these goals and objectives and for
determining the CEOs compensation, including his
equity-based compensation.
The Committee also reviews and approves the recommendations of
the CEO with regard to the compensation and benefits of other
executive officers. In accomplishing this responsibility, the
Committee meets regularly with the CEO, approves cash and equity
incentive objectives of the executive officers, reviews with the
CEO the accomplishment of these objectives and approves the base
salary and other elements of compensation for the executive
officers. The Committee has full discretion to modify the
recommendations of the CEO in the course of its approval of
executive officer compensation.
The Committee also annually reviews, and makes recommendations
to the Board about, the compensation of non-employee directors,
a function it performs in conjunction with the Boards
Nominating and Corporate Governance Committee.
Our Incentive Plan, approved by shareholders in May 2005,
provides for the grant of various equity awards, such as stock
options, restricted stock and performance share units, as well
as cash incentive awards, to Kings employees and
directors. The Committee is responsible for administering this
Plan and it has sole authority to make awards to the CEO or any
other executive officer. Our Board of Directors has sole
authority to make grants to directors under the Incentive Plan.
In conjunction with its responsibilities related to executive
compensation, the Committee also oversees the talent management
process, reviews plans for executive officer succession and
performs various other functions.
The Committee consults regularly with an independent outside
compensation consulting firm retained by the Committee. As it
makes decisions about executive compensation, the Committee
frequently obtains data from its consultant and from third party
surveys regarding current compensation practices and trends
among United States companies in general and pharmaceutical and
biosciences companies in particular, and reviews this
information with its consultant. The Committee also discusses
various other compensation matters with its consultant, both
during the course of the Committees regular meetings and
in private meetings. In addition, the Chairman of the Committee
is in regular
13
contact with the consultant and with management outside of
Committee meetings regarding matters being considered or
expected to be considered by the Committee.
During 2008, the Committee was advised by James F.
Reda & Associates, LLC, an independent executive
compensation consulting firm. James F. Reda &
Associates did not provide any other services to King.
Throughout the discussion that follows the individuals who
served as Chief Executive Officer and Chief Financial Officer
during 2008, as well as the other individuals included in the
Summary Compensation Table on page 27, are referred to as
the named executive officers. At some points in the
discussion we also refer more generally to our executive
officers, the larger group of executives whose
compensation requires the approval of the Committee under the
terms of its charter.
Our 2008
Compensation Program
In 2008, the Committees approach to compensation was
intended to focus our executives on accomplishing Kings
short-term, longer-term and strategic goals and had as its
ultimate objective sustained growth in shareholder value. This
approach was intended to compensate executives at levels at or
near the median levels of compensation offered by other
pharmaceutical companies similar in size to King and with whom
we compete for executive talent. The Committee believes that
retention of key talent is critical to Kings success.
In making decisions about the elements of 2008 compensation, the
Committee not only considered available market information about
each element but also, for each executive, aggregate
compensation. Base salary provided core compensation to
executives, but it was accompanied by:
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the potential for incentive-based cash compensation based upon
our 2008 financial results,
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various forms of equity compensation, among them one grant based
upon 2008 financial results relative to pre-established internal
targets and another based upon our total shareholder return,
relative to other companies in our industry, during 2008, 2009
and 2010,
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various benefits and perquisites, and
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the potential for post-termination compensation under certain
circumstances.
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14
Summary
of 2008 Compensation Elements
The table below provides detailed information regarding each
element of the 2008 compensation program.
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Compensation Element Overview
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Purpose of the Compensation Element
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Base Salary
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Base salary pays for competence in the executive role. An
executives salary level depends on the scope of his or her
responsibilities, individual performance, experience and the
relationship to amounts paid to similarly situated executives at
peer companies.
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To provide competitive fixed compensation based on sustained
performance in the executives role and competitive market
practice.
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Short-Term
Incentives
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Executive Management Incentive Award (EMIA) (Cash)
The EMIA program rewards, with cash awards, annual achievement
of overall corporate financial objectives. In 2008, these
objectives were tied to Kings achievement of predetermined
2008 earnings per share and/or revenue targets.
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To motivate and focus our executive team on the achievement of
our annual performance goals.
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Long-Term
Incentives
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Stock Options Stock options reward sustained stock price appreciation and encourage executive retention during a three-year vesting term and a ten-year option life.
Performance Share Units (PSUs) (One-Year Performance Period + Two-Year Vesting Period)
One-Year PSUs encourage achievement of annual earnings per share targets and encourage executive retention over the additional two-year vesting period.
Participants may earn either 0% or between 50% and 200% of a targeted number of PSUs based on Kings performance against annual earnings per share targets. Earned units are paid in common stock at the end of an additional two-year period if the executive remains employed by King. The potential value of a participants units increases and decreases according to Kings stock price performance during the three-year life of the PSUs.
Performance Share Units (Three-Year Performance Period) Three-Year PSUs reward achievement of Kings three-year total shareholder return (stock price appreciation plus dividends) for the period 2008 through 2010 versus the returns of companies in the Dow Jones U.S. Pharmaceuticals Index.
Participants may earn either 0% or between 50% and 200% of a targeted number of PSUs based on Kings three-year total shareholder return performance relative to the performance of companies in the Index. The potential value of a participants units increases and decreases according to Kings relative total shareholder return during the three-year life of the PSUs.
Restricted Stock Restricted stock rewards sustained stock price appreciation and encourages executive retention during its three-year vesting term.
The potential value of participants restricted stock increases and decreases according to Kings stock price performance during the vesting period.
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We strive to deliver a balanced long-term incentive portfolio to
executives, focusing on:
(a) share price appreciation,
(b) retention,
(c) internal financial objectives, and
(d) performance relative to other
companies in our industry.
The primary objectives of the design are:
to align management interests with those
of shareholders,
to increase managements potential
for stock ownership opportunities (all long-term awards are
earned in shares of common stock),
to attract and retain excellent
management talent, and
to reward growth of the business,
increased profitability, and sustained shareholder value.
The overall value of target grants for each executive was
determined by multiplying the executives base salary by a
percentage that approximates the median percentage used for
similarly situated executives in comparable companies.
The estimated relative grant values of the elements of the 2008
long-term awards are as follows:
Stock Options 30%
Perf. Share Units One-Year
35%
Perf. Share Units
Three-Year 15%
Restricted Stock 20%
We believe that the weighting of these incentives gives
appropriate emphasis to each of the various goals of the 2008
compensation program.
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15
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Compensation Element Overview
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Purpose of the Compensation Element
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Benefits
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In General Executives participate in employee benefit plans available to all employees of King, including health, life insurance and disability plans. The cost of these benefits is partially borne by the employee. More highly compensated employees, such as the named executive officers, pay a greater percentage of benefit costs than do other employees.
401(k) Plan Executives may participate in Kings 401(k) retirement savings plan, which is available to all employees. In 2008, the company matched employees contributions to the plan, up to 5% of their base salary, subject to regulatory limits. Employees pay the fees associated with participating in the 401(k) plan.
Non-Qualified Deferred Compensation Plan Executives may participate in Kings Non-Qualified Deferred Compensation Plan, which is generally available to persons holding the title of Vice President or a more senior title. King matches contributions to this plan to the extent that deferrals reduce matching contributions otherwise available under the 401(k) plan.
Life Insurance King provides life insurance benefits to all employees. The coverage amount for executives is $500,000 and premiums paid for coverage above $50,000 are treated as imputed income to the executive.
Disability Insurance King provides short-term and long-term disability insurance to all employees. In 2008, if a named executive officer had been disabled, he would have received short-term disability payments equal to 100% of his base salary for up to 26 weeks. If the disability lasted longer than 26 weeks, he would have received long-term disability payments of 60% of base salary, not to exceed $15,000 per month.
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These benefits are designed to attract and retain employees and
provide security for their health and welfare and retirement
needs. We believe that these benefits are reasonable,
competitive and consistent with Kings overall executive
compensation program.
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16
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Compensation Element Overview
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Purpose of the Compensation Element
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Perquisites
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King does not utilize perquisites or personal benefits
extensively. The few perquisites that are provided complement
other compensation vehicles and enable the company to attract
and retain key executives. These perquisites include:
financial planning services, which cost the company
approximately $11,000 per executive in 2008, and
limited personal use of corporate aircraft.
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We believe these benefits better allow us to attract and retain superior employees for key positions, allow our executive team to work more efficiently and limit distractions from Kings business.
Financial planning services (a) allow our executive team to optimize the value of their compensation and our benefit programs, (b) facilitate a balanced investment strategy, and (c) allow the executive team to stay focused on Kings business issues by reducing time spent on personal financial matters.
The Committee is responsible for determining the general parameters for personal use of corporate aircraft by executives, and the Committee regularly reviews such usage, including usage by the Chief Executive Officer. Further, each use of a corporate aircraft by an executive for personal purposes (1) requires the specific approval of the Chief Executive Officer, (2) is only allowed if it would not interfere with Kings operations, and (3) results in imputed income to the executive according to Internal Revenue Code and Department of Transportation requirements. The incremental cost of aircraft use by the named executive officers to the company is included in column (i) of the Summary Compensation table and the additional table detailing All Other Compensation beginning on page 27.
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17
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Compensation Element Overview
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Purpose of the Compensation Element
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Post-
Termination
Pay
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Severance Plan
Kings Severance Pay Plan: Tier I is designed to pay
severance benefits to an executive for a qualifying separation.
It is also designed to pay an enhanced benefit for a qualifying
separation in connection with a change of control. It applies to
all named executive officers.
For the CEO, the Severance Pay Plan: Tier I provides for a
payment, upon the occurrence of certain termination events, of
two times the sum of (1) base salary and (2) an amount
equal to his target cash incentive award, and three times this
sum upon the occurrence of certain termination events following
a change in control. In addition, the payment would include
compensation for any earned but unused vacation days.
For the other named executive officers, the Severance Pay Plan:
Tier I provides for a payment, upon the occurrence of certain
termination events, of one and one-half times the sum of (1)
base salary and (2) an amount equal to the officers target
cash incentive award, and two times this sum upon the occurrence
of certain termination events following a change in control. In
addition, the payment would include compensation for any earned
but unused vacation days.
For additional information regarding the Severance Pay Plan:
Tier I see the section entitled Post-Termination
Payments beginning on page 34.
Offer Letters
Typically, a named executive officer will agree to the terms
of an offer letter in connection with the acceptance of a
position at King. Offer letters have sometimes contained
provisions related to severance matters, as does the offer
letter related to Mr. Markisons appointment as CEO. For
information regarding the terms of this offer letter, please see
the section entitled Post-Termination Payments
beginning on page 34.
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The Severance Pay Plan: Tier I is intended to allow executives
to concentrate on making decisions in the best interests of King
(or any successor organization in the event that a change of
control is to occur). These severance benefits also reflect the
fact that it may be difficult for such executives to find
comparable employment within a short period of time and are
therefore intended to alleviate an executives concerns
about the loss of his or her position without cause.
We regularly use offer letters in connection with the hiring of
new employees. These letters have contained provisions related
to post-termination pay and benefits when necessary to provide
short-term employment security to newly-hired executives.
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The use of the above compensation tools enables King to
reinforce its compensation philosophy as well as to strengthen
its ability to attract and retain high-performing executive
officers. The Committee believes that this combination of
programs provides an appropriate mix of fixed and variable pay,
balances short-term operational performance with long-term
shareholder value creation, and encourages executive recruitment
and retention.
18
Market
Data and Our Comparator Group
In determining 2008 compensation for the named executive
officers, the Committee relied on market data provided by its
consultant, James F. Reda & Associates. This
information was principally related to a group of 19 comparator
companies similar in size to King (we refer to this group of
companies as the Comparator Group). This group had
median 2007 revenues of $1.8 billion. Information on these
companies was derived from publicly-available information
appearing in their proxy statements, supplemented with
pharmaceutical industry information from published and
proprietary third-party survey sources. The members of the
Comparator Group for 2008 were:
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Allergan, Inc.
Alpharma Inc.
Barr Pharmaceuticals, Inc.
Biogen Idec Inc.
Biovail Corporation
Celgene Corporation
Cephalon Inc.
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Endo Pharmaceuticals Holdings, Inc.
Forest Laboratories, Inc.
Genzyme Corporation
Gilead Sciences, Inc.
Hospira, Inc.
The Medicines Company
Mylan, Inc.
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Par Pharmaceutical Companies, Inc.
Sepracor Inc.
Valeant Pharmaceuticals International
Warner Chilcott Limited
Watson Pharmaceuticals, Inc.
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We plan to evaluate the Comparator Group on an annual basis and
revise it as necessary to ensure that it continues to be
appropriate for benchmarking our executive compensation program.
In evaluating appropriate compensation program designs, the
Committee also considered the approaches employed by larger
pharmaceutical companies, but information related to these
companies was not used in making decisions about the amount of
compensation to be provided to any executive officer.
Base
Salary
Base salaries for the named executive officers are intended to
approximate median salaries for similarly situated executives
among Comparator Group companies. A number of additional factors
are considered, however, in determining base salary, such as the
executives individual performance, his or her experience
and tenure, internal compensation consistency, the need to
attract new, talented executives, and the companys overall
annual budget. Base salaries are generally reviewed on an annual
basis. Typically, the Committee reviews base salaries of the
executive officers to allow adjustments to occur as of the
beginning of the year. The only exception to this pattern is the
CEO, whose base salary was reviewed by the Committee in March
2008 following the analysis, by all non-management members of
the board of directors, of his performance during the prior year.
Mr. Markisons base salary was increased by $40,000 to
$990,000, effective March 25, 2008, which is lower than the
median base salary of the chief executive officers among our
Comparator Group. Mr. Squicciarinos base salary was
increased by $40,566 to $552,000, effective January 1,
2008. Mr. Elrods base salary was increased by $56,300
to $431,500, effective January 1, 2008.
Mr. Bruces and Mr. Andrzejewskis base
salaries were each increased by $15,800 to $411,000 effective
January 1, 2008.
2008
Executive Management Incentive Award
Design
In February 2008, the Committee approved the 2008 Executive
Management Incentive Award (or EMIA) program. This
program allowed executive officers the opportunity to earn cash
awards upon the accomplishment of predetermined 2008 earnings
per share and revenue objectives. The relative weighting of
these objectives for each executive depended upon the
executives ability to affect the accomplishment of the
objective. Shown below are the weights of the various goals for
each named executive officer.
19
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Objective Weighting
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Joseph
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Stephen J.
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Squicciarino
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Andrzejewski
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Eric J. Bruce
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Brian A. Markison
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Chief Financial
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Chief Commercial
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President,
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James W. Elrod
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Objective
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President and CEO
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Officer
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Officer
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Alpharma Animal Health
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Chief Legal Officer
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Earnings Per Share
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75
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%
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100
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%
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25
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%
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100
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%
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100
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%
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Revenues
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25
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%
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0
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%
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75
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%
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0
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%
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0
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%
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Based on market data provided by its consultant, the Committee
formulated potential EMIA awards which approximated the
50th percentile
among Comparator Group companies, expressed as percentages of
base salary. Actual payouts depended upon the degree to which
objectives were accomplished as well as the weight accorded to
each objective, as described above. The table below shows the
overall potential payout amounts for each of the named executive
officers, expressed as percentages of base salary.
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Joseph
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Stephen J.
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Performance Level
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Brian A. Markison
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Squicciarino
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Andrzejewski
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Eric J. Bruce
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James W. Elrod
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Maximum / Outstanding
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200
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%
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140
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%
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120
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%
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120
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%
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120
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%
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Target
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100
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%
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70
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%
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60
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%
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60
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%
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60
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%
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Threshold
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50
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%
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35
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%
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30
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%
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30
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%
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30
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%
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Below threshold
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0
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%
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0
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%
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0
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%
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0
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%
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0
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%
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The Committee also determined that, if earnings per share and
revenue results were between the threshold and target
objectives, or between the target and maximum objectives,
straight-line interpolation would be applied to determine the
appropriate payout percentage.
As discussed above, each named executive officers
objectives for 2008 included company revenue
and/or
earnings per share targets. The Committee reviewed and approved
these targets in February 2008 following discussions with
management, a review of our historical results, consideration of
the various circumstances facing the company during 2008 and
taking into account the expectations of our annual plan. The
2008 revenue and earnings per share EMIA targets approved by the
Committee are detailed in the table below.
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Objective
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Threshold
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Target
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Stretch
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Revenues*
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$1.310 billion
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$1.455 billion
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$1.601 billion
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Earnings per share*
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$0.82
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$0.96
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$1.06
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*
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For purposes of determining
achievement of the EMIA targets, these measures exclude certain
categories of non-recurring items that the Committee believes do
not reflect the performance of Kings core continuing
operations. The Committee identified the categories of items to
be excluded at the same time it set the EMIA targets and
reviewed each of them in early 2009 as part of the process of
determining the degree to which the objectives were achieved.
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All payouts to executive officers under the 2008 EMIA were
contingent upon the Committees review and certification of
the degree to which King achieved the 2008 EMIA financial
objectives. The program provided that no payout for any
objective would occur in the event that the company failed to
achieve at least 60% of target earnings per share.
The 2008 EMIA program provided that the Committee could, in its
discretion: reduce or eliminate any EMIA in the event it
determined it to be in the best interests of the company to do
so; delay payment of any EMIA and adjust the amount of the
payment based on a reasonable rate of interest or an actual
predetermined investment; or amend or terminate the EMIA program.
Results
In February 2009, the Committee reviewed Kings 2008
financial results for purposes of the EMIA program. The
Committee determined that, based upon the companys
financial performance, the stretch target was achieved for the
earnings per share objective, and that a result between the
target and stretch objectives was achieved for the revenues
objective.
The results under the 2008 EMIA program were, however,
significantly and positively affected by factors which had not
been anticipated in the companys business plan, and which
were largely outside managements control. Because of these
factors, management recommended that the Committee use its
authority under the program to reduce the payout under both the
earnings per share and revenues objectives to the target payout
level. The Committee considered
20
managements recommendation and accepted it, determining
that the adjusted payout of both the earnings per share and
revenues objectives under the 2008 EMIA program would reflect
target performance.
The table below shows the amounts which would have been paid to
the named executive officers based upon the results of the 2008
EMIA program, as well as the amounts actually paid following the
Committees reduction of the payouts, as described above.
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2008 EMIA Payout
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2008 EMIA Payout
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Unadjusted
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Actual
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Officer
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(Dollars)
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(Percent of Salary)
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(Dollars)
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(Percent of Salary)
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Brian A. Markison
President and Chief Executive Officer
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$
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1,961,640
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200
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%
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$
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980,820
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100
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%
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Joseph Squicciarino
Chief Financial Officer
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$
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772,800
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140
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%
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$
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386,400
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70
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%
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Stephen J. Andrzejewski
Chief Commercial Officer
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$
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493,200
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120
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%
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$
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246,600
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60
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%
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Eric J. Bruce
President, Alpharma Animal Health
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$
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493,200
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120
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%
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$
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246,600
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60
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%
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James W. Elrod
Chief Legal Officer and Secretary
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$
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517,800
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120
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%
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$
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258,900
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60
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%
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The awards made to named executive officers under the 2008 EMIA
program are also reflected in column (g) of the Summary
Compensation Table on page 27.
2008 Long
Term Incentive Awards (LTIA)
Design
The Committee believes that long-term equity incentives are an
important part of a complete compensation package because they
focus executives on achieving Kings long-term goals, align
the interests of executives with those of shareholders,
encourage sustained stock performance and help to retain
executives.
In March 2008, the Committee granted four different types of
incentive awards to executives, each designed to emphasize
particular elements of the companys immediate and
long-term objectives and to retain key executives. We refer to
these four grants collectively as the 2008 Long Term Incentive
Awards (LTIA). The four types of grants were:
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stock options, becoming exercisable over three years (33%, 33%
and 34% on each anniversary) and having a total term of ten
years,
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shares of restricted stock, vesting in full three years from the
date of grant,
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one-year performance share units, the exact number of which
could be 0% or between 50% and 200% of a target number,
depending upon Kings 2008 earnings per share performance
(applying the same financial targets as discussed above
regarding the EMIA), then subject to a two-year holding period,
after which each PSU is to be paid with one share of common
stock (One-Year PSUs), and
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three-year performance share units, to be paid in common stock
at the end of three years, with the number of shares to be paid
being 0% or between 50% and 200% of a target number, depending
upon Kings total shareholder return over the years 2008
through 2010 as compared to the total shareholder return of the
stocks making up the Dow Jones U.S. Pharmaceutical Index
(Three-Year PSUs).
|
The Committee assessed the appropriate overall value of these
equity grants to executives by reviewing survey results and
other market data provided by its consultant. This information
included the value of equity grants made to similarly situated
executives among the Comparator Group. The overall value of LTIA
grants for each executive was determined by multiplying the
executives base salary by a percentage that approximates
the median percentage used for similarly situated executives in
the Comparator Group. These percentages were 300% of base salary
for Mr. Markison, 200% for Mr. Squicciarino and 140%
for Mr. Andrzejewski, Mr. Bruce and Mr. Elrod.
Mr. Markisons percentage was lower than for similarly
situated Chief Executive Officers within the Comparator Group.
21
In determining the overall value of LTIA grants, the Committee
also considered the potential value of equity compensation
relative to other elements of compensation for each named
executive officer. It likewise assessed the appropriate
distribution of value among the four grant types, as well as the
corporate objectives each type of grant was intended to
encourage executives to address (please see the section above
called Summary of 2008 Compensation Elements and the
sections below called Performance Share Units and
Stock Options and Restricted Stock for more
information about the purposes of each grant type). Based on
consideration of these issues, the Committee determined that 30%
of the estimated equity grant value should be in the form of
stock options, 20% should be in the form of restricted stock,
35% should be derived from One-Year PSUs (assuming target
performance) and the remaining 15% should be in the form of
Three-Year PSUs (assuming target performance).
Performance
Share Units
Each executive officer had the opportunity to earn One-Year
PSUs, the exact number of which depended upon Kings
accomplishment of 2008 earnings per share objectives (the same
as discussed above regarding the 2008 EMIA program, beginning on
page 19). The Committee determined for each executive officer a
target number of One-Year PSUs, taking into account the value of
the PSUs relative to other elements of the 2008 LTIA program,
relative to the executives base salary and overall
compensation. The target numbers of One-Year PSUs for the named
executive officers appear in the table below.
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Officer
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Target One-Year PSUs
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Brian A. Markison
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100,630
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Joseph Squicciarino
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37,410
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Stephen J. Andrzejewski
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19,500
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Eric J. Bruce
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19,500
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James W. Elrod
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20,470
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Under the terms of the One-Year PSUs, achievement of objectives
would result in payouts as follows, with performance falling
between defined objective levels determined by interpolation
between the defined levels.
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Payout
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Performance Level
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(as a percentage of Target)
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Maximum / Outstanding or greater
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200
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%
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Target
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100
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%
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Threshold
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50
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%
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Below Threshold
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0
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%
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Each executive officer similarly has the opportunity to earn
Three-Year PSUs, the exact number of which depends upon
Kings total shareholder return for the years 2008 through
2010 relative to the companies making up the Dow Jones
U.S. Pharmaceutical Index. The Committee determined for
each executive officer a target number of Three-Year PSUs,
taking into account the value of the PSUs relative to other
elements of the 2008 LTIA program, relative to the
executives base salary and overall compensation. The
target numbers of Three-Year PSUs for the named executive
officers appear in the table below.
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Officer
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Target Three-Year PSUs
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Brian A. Markison
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43,130
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Joseph Squicciarino
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16,030
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Stephen J. Andrzejewski
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8,360
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Eric J. Bruce
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8,360
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James W. Elrod
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8,770
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22
Under the terms of the Three-Year PSUs, achievement of
objectives would result in payouts as follows, with performance
falling between defined objective levels determined by
interpolation between the defined levels.
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Kings Total Shareholder Return Percentile Rank
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Payout
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among Dow Jones U.S. Pharmaceuticals Index Companies
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(as a percentage of Target)
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>70th percentile
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200
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%
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70th percentile
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200
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%
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50th percentile
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100
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%
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30th percentile
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50
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%
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<30th percentile
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0
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%
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In February 2009, the Committee reviewed the 2008 financial
results for purposes of determining the payout of the 2008
One-Year PSUs. The Committee determined, based upon the
companys financial performance, that the stretch objective
was achieved for the earnings per share objective upon which
these PSUs were based. Based upon the achievement of the stretch
performance goal, the Committee determined that the number of
PSUs granted to each executive officer was 200% of the target
number of PSUs previously established for that officer. These
PSUs are now subject to a restricted period which ends on
December 31, 2010. These awards are detailed in column
(e) in the Summary Compensation Table and also in the
Grants of Plan Based Awards table, each below. The Committee has
determined that subsequent grants of One-Year PSUs will provide
a mechanism by which the Committee may reduce the number of PSUs
to be awarded based on the results of the performance period if
the Committee determines it to be in Kings best interest
to do so.
Kings cumulative total shareholder return performance in
2008, 2007 and 2006 for the Three-Year PSUs granted in 2006
placed it in the
30.5th percentile
relative to the companies of the Dow Jones Pharmaceutical Index,
resulting in a payout under the 2006 Three-Year PSU awards of
51.25% of the target number of shares for each executive
officer. For more information about the payout of the 2006
Three-Year PSUs, please see page 33.
Kings total shareholder return performance for 2008 for
the 2008 Three-Year PSU placed it in the
78th percentile
relative to the companies of the Dow Jones Pharmaceutical Index.
If this percentile represented Kings performance during
the entire performance period for the 2008 Three-Year PSUs, the
payout under these awards would be 200% of the target number of
shares. Kings cumulative total shareholder return
performance in 2007 for the Three-Year PSUs granted in 2007
placed it in the
35th percentile
relative to the companies of the Dow Jones Pharmaceutical Index.
If this percentile represented Kings performance during
the entire performance period for the 2007 Three-Year PSUs, the
payout under these awards would be 62.5% of the target number of
shares.
Stock
Options and Restricted Stock
The stock options and restricted stock granted as part of the
2008 LTIA were designed to reward sustained stock price
appreciation and to encourage executive retention during a
three-year vesting term and, in the case of stock options, a
ten-year option life. Grants of stock options and restricted
stock were not contingent upon any conditions. Stock options
become exercisable approximately in thirds on the first three
anniversaries of the date of grant. Restricted stock vests in
full on the third anniversary of the date of grant. For more
information about these stock option and restricted stock
awards, please see 2008 Grants of Plan Based Awards
on page 29.
Perquisites
and Other Benefits
We provide named executive officers with perquisites and other
personal benefits that we believe are reasonable and consistent
with our overall compensation program to better enable us to
attract and retain superior employees for key positions. The
Committee periodically reviews the levels of perquisites and
other personal benefits provided to named executive officers.
During 2008, King matched employees contributions to the
King Pharmaceuticals, Inc. 401(k) Retirement Savings Plan, up to
5% of an employees base salary, subject to regulatory
limits. Contributions by the named executive officers were
matched in this way, subject to the limitations of the Plan and
applicable law. The named executive officers are also provided
financial planning assistance, the costs of which (approximately
$11,000 per executive in 2008) are
grossed-up
for income tax purposes.
23
The Committee is responsible for determining the general
parameters for personal use of corporate aircraft by executives,
and the Committee regularly reviews such usage, including usage
by the Chief Executive Officer. The Committee has adopted a
policy permitting limited personal use of corporate aircraft by
the named executive officers and others. Personal use must not
conflict with the needs of the company and each use must be
specifically approved by the Chief Executive Officer. Personal
flights are treated as income to the employee pursuant to the
Standard Industry Fare Level standards established by the
U.S. Department of Transportation. The incremental cost to
King of personal aircraft use by the named executive officers is
included in column (i) of the Summary Compensation table
and the additional tables detailing All Other
Compensation beginning on page 27.
King provides life insurance coverage to all employees. For the
named executive officers this insurance would, in the event of
death, pay $500,000 to designated beneficiaries. Premiums paid
for coverage above $50,000 are treated as imputed income to the
executive. King also provides short-term and long-term
disability insurance to all employees. For the named executive
officers this insurance would, in the event of disability,
provide short-term disability payments equal to 100% of the
officers base salary for up to 26 weeks. If the
disability lasted longer than 26 weeks, the officer would
receive long-term disability payments of 60% of base salary, not
to exceed $15,000 per month.
The named executive officers participate in other qualified
benefit plans, such as medical insurance plans, in the same
manner as all other employees. Highly compensated employees such
as the named executive officers pay a larger portion of the
premiums for these benefit plans than lower-compensated
employees pay.
The King Pharmaceuticals, Inc. Deferred Compensation Plan is a
tax-deferred compensation program for a limited number of
executives, including the named executive officers. It provides
a tax-favorable vehicle for deferring cash compensation,
including base salary and awards pursuant to the EMIA program.
Under the plan, an executive may defer up to 75% of his or her
base salary and up to 90% of annual incentive pay. Deferred
balances are credited with gains or losses which mirror the
performance of benchmark investment funds selected by the
participant from among twelve available funds and eleven target
date funds. Deferred amounts are paid, at the participants
option, either in a lump sum or in annual installments over a
period of up to ten years for retirement or termination
distributions, or up to five years for scheduled in-service
withdrawals. There are no above-market or preferential earnings
on deferred compensation. Consequently, the Summary Compensation
Table does not include earnings on deferred amounts. King
matches contributions to this plan to the extent that deferrals
reduce matching contributions otherwise available under the
401(k) plan.
Attributed costs of the personal benefits available to the named
executive officers for the fiscal year ended December 31,
2008, are included in column (i) of the Summary
Compensation Table on page 27.
Severance
and Change of Control Benefits
We believe that reasonable severance and change in control
benefits are necessary in order to recruit and retain effective
senior executives and are generally required by the competitive
recruiting environment within our industry. These severance
benefits reflect the fact that it may be difficult for such
executives to find comparable employment within a short period
of time and are designed to alleviate an executives
concerns about the loss of his or her position without cause. We
also believe that a change in control arrangement will provide
an executive security that will likely reduce any reluctance of
an executive to pursue a change in control transaction that
could be in the best interests of our shareholders. For a
detailed discussion of potential severance and change of control
benefits, see Post-Termination Payments, beginning
on page 34.
Share
Ownership Guidelines
The Committee has from time to time considered the adoption of
share ownership guidelines, discussing the matter with
management and with its consultant. The Committee has also
reviewed information about the use of these guidelines in
companies of Kings size and among pharmaceutical companies
generally. Based on these reviews, the Committee has determined
not to adopt ownership guidelines but to review the issue as
warranted.
24
Timing of
Committee Meetings and Grants; Option Pricing; Other Equity
Grants
The Committee typically holds four or five regular meetings each
year, and the timing of these meetings is generally established
during the prior year. The Committee holds special meetings from
time to time as its workload requires. Typically, annual grants
of equity awards have been accomplished at a meeting of the
Committee in March of each year. The 2008 LTIA grants were
accomplished by the Committee in March 2008. Individual grants
(for example, associated with the hiring of a new executive
officer) may occur at other times of year. We do not coordinate
the timing of equity award grants with the release of material
non-public information. The exercise price of each stock option
awarded to our executive officers is the closing price of our
common stock on the date of grant.
We have adopted a policy related to the adoption and
administration of equity incentive plans and related equity
grants. This policy addresses the procedures for review and
adoption of equity incentive plans, offers of equity grants to
employees, prospective employees, directors and prospective
directors. The policy defines the processes through which these
grants are reviewed and approved, and it also addresses SEC
reporting obligations, notification of grant recipients,
recordkeeping requirements, tax requirements and other matters.
Key elements of the policy include the following:
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No equity grant may be offered to any employee, prospective
employee, director or prospective director without prior proper
authorization unless the offer advises that any equity grant
ultimately awarded would depend upon proper review and approval.
All offers of equity grants must be made in writing.
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Only the Committee is authorized to make equity grants to our
executive officers. All such grants, and all other grants made
by the Committee, are recorded in the Committees minutes.
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Only the board of directors is authorized to make equity grants
to non-employee members of our board of directors. All such
grants are recorded in the Boards minutes.
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The exercise price of any stock option must be, unless otherwise
required by the equity incentive plan under which the option is
granted, not less than the closing price of our common stock as
of the grant date. Our Incentive Plan provides that stock
options granted pursuant to the Plan shall have an exercise
price no less than the closing price of our common stock on the
date the option is granted.
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The Committee has delegated to the CEO limited authority to make
grants of nonqualified stock options and restricted stock to
employees who are not executive officers. This delegation of
authority is discussed in more detail below. If the CEO wishes
to use this authority to make a grant of stock options or
restricted stock, the policy requires that he first approve all
material terms of the proposed equity grant and submit these
terms to an Equity Grant Completion Committee (or
EGCC) for review. The EGCC is composed of two
members of management, one from the Human Resources Department
and an attorney from the Legal Department, and it operates
pursuant to a written charter. The EGCC is required to verify
that the terms of the proposed equity grant, if the grant were
completed, conform with legal requirements, with the authority
delegated to the CEO by the Committee, with company policies,
with the applicable equity incentive plan and with other
applicable requirements. If the EGCC determines unanimously that
all of these requirements are met, then the grant is made, with
a grant date of the
15th day
of the month following the month during which the EGCC approved
the terms of the grant. The EGCCs approval of a grant may
be withheld only if completion of the equity grant would not
conform with the requirements described above, and the EGCC has
no independent authority to make equity grants.
|
As noted above, the Committee has delegated to the CEO limited
authority to make grants, pursuant to our Incentive Plan, of
nonqualified stock options and restricted stock to employees who
are not executive officers. Unless otherwise authorized by the
Committee, the CEO is authorized to grant a total of no more
than 250,000 stock options and shares of restricted stock per
calendar year, and unused shares are not carried from one year
to the next. No single grant of restricted stock may exceed
25,000 shares and no single grant of stock options may
exceed 50,000 options. Further, no employee may receive, through
this process, more than one grant of stock options and one grant
of restricted stock per calendar year. The CEO is authorized to
determine the vesting schedule of the grants made pursuant to
this process, but all other terms must conform to a form of
grant agreement previously approved by the Committee. The
exercise price of all stock options may not be less than the
closing price of our common stock on the grant date. The CEO is
required to report to the Committee not less than twice per year
regarding his use of this delegated authority.
25
Tax and
Accounting Implications
Deductibility
of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as
amended, precludes the deductibility of an executive
officers compensation that exceeds $1.0 million per
year unless the compensation is paid under a performance-based
plan that has been approved by shareholders. The Committee
believes that it is generally preferable to comply with the
requirements of Section 162(m) through, for example, the
use of our Incentive Plan. However, to maintain flexibility in
compensating executive officers in a manner that attracts,
rewards and retains high quality individuals, the Committee may
elect to provide compensation outside of those requirements when
it deems appropriate. The Committee believes that shareholder
interests are best served by not restricting the
Committees discretion in this regard, even though such
compensation may result in non-deductible compensation expenses
to the company.
Nonqualified
Deferred Compensation
On October 22, 2004, the American Jobs Creation Act of 2004
was signed into law, changing the tax rules applicable to
nonqualified deferred compensation arrangements. We believe we
have operated in good faith compliance with the statutory
provisions which were effective January 1, 2005. The final
regulations pursuant to the Act were adopted in 2007. Since that
time, we have acted in conformity with the final rules and have
reviewed and amended several of our plans, agreements and
arrangements affected by the final rules. We completed all
necessary amendments prior to the end of 2008.
Accounting
for Stock-Based Compensation
Effective January 1, 2006, we adopted Statement of
Financial Accounting Standards No. 123(R), Share
Based Payment, which requires the recognition of the fair
value of stock-based compensation in earnings. FAS 123(R)
has not had a significant impact on decisions related to
Kings compensation programs.
Economic
Climate
The Committee is closely monitoring the current economic climate
and intends to assess any effects it may have on executive
compensation matters.
REPORT OF
THE COMPENSATION AND HUMAN RESOURCES COMMITTEE OF THE BOARD OF
DIRECTORS
The following Report of the Compensation and Human Resources
Committee does not constitute soliciting material and should not
be deemed filed or incorporated by reference into any other
company filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent the
company specifically incorporates this Report by reference
therein.
The Compensation and Human Resources Committee has reviewed and
discussed with management the Compensation Discussion and
Analysis set forth above. Taking this review and discussion into
account, the undersigned Committee members recommended to the
Board of Directors that the Compensation Discussion and Analysis
be included in this proxy statement.
The Compensation and Human Resources Committee of the Board
of Directors
Earnest W. Deavenport, Jr., Chair
Gregory D. Jordan
Ted G. Wood
26
EXECUTIVE
AND DIRECTOR COMPENSATION TABLES
Summary
Compensation Table
The following table summarizes the compensation paid to the
companys named executive officers for 2008, 2007 and 2006.
Amounts listed under column (g), Non-Equity Incentive Plan
Compensation, were determined by the Compensation
Committee, pursuant to the terms of the Executive Management
Incentive Award program and, to the extent not deferred by an
executive, were paid shortly after these determinations. The
named executive officers were not entitled to receive payments
which would be characterized as Bonus payments for
the years ended December 31, 2006, 2007 and 2008.
Based on the dollar amounts recognized for financial statement
reporting purposes for equity incentives for the fiscal year
ended December 31, 2008 and the base salary of the named
executive officers, Salary in 2008 accounted for
approximately 17% of the total compensation of the named
executives, equity-based incentive compensation accounted for
approximately 68% of total compensation, non-equity incentive
compensation accounted for approximately 13% of total
compensation and other compensation accounted for approximately
2% of total compensation. The Committee reviews at least
annually a tally sheet for each named executive, and
others, that shows the total compensation of the executive.
There are no above-market or preferential earnings on deferred
compensation. Consequently, the table does not include earnings
on deferred amounts. None of the named executive officers is
eligible for pension benefits as King does not have any defined
benefit programs in which the named executive officers are
eligible to participate.
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(g)
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(e)
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(f)
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Non-Equity
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(i)
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(c)
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Stock
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Option
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Incentive Plan
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All Other
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(j)
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(a)
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(b)
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Salary
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Awards
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Awards
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Compensation
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Compensation
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Total
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Name And Principal Position
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Year
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|
($)
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($) (1)
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($) (1)
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($) (2)
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($) (3)
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($)
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Brian A. Markison
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2008
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980,820
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4,194,648
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684,644
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980,820
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125,300
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6,966,232
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President and Chief
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2007
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922,945
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2,843,420
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688,115
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1,780,926
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162,780
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6,398,186
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Executive Officer
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2006
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825,000
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1,398,615
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947,317
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1,650,000
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|
|
|
171,542
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|
|
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4,992,474
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|
|
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|
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|
|
|
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Joseph Squicciarino
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|
|
2008
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|
|
|
552,000
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|
2,034,392
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|
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|
243,781
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386,400
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75,940
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3,292,513
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Chief Financial Officer
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2007
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|
511,434
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|
|
|
1,474,187
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|
145,276
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|
|
|
716,008
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|
|
|
60,401
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|
|
|
2,907,306
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2006
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|
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466,033
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830,040
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64,914
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|
|
|
652,446
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|
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59,029
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|
|
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2,072,462
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Stephen J. Andrzejewski
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2008
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411,000
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1,205,040
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155,796
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246,600
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53,334
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2,071,770
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Chief Commercial Officer
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2007
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395,200
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880,343
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188,160
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424,169
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|
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57,621
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|
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1,945,493
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2006
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|
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386,333
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481,733
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273,438
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463,600
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37,624
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1,642,728
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Eric J. Bruce
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2008
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|
411,000
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|
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|
1,055,170
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|
155,796
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|
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246,600
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27,054
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1,895,620
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President, Alpharma
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|
|
2007
|
|
|
|
395,200
|
|
|
|
684,625
|
|
|
|
100,233
|
|
|
|
474,240
|
|
|
|
33,103
|
|
|
|
1,687,401
|
|
Animal Health
|
|
|
2006
|
|
|
|
386,333
|
|
|
|
381,266
|
|
|
|
46,412
|
|
|
|
428,830
|
|
|
|
36,439
|
|
|
|
1,279,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James W. Elrod
|
|
|
2008
|
|
|
|
431,500
|
|
|
|
964,243
|
|
|
|
114,533
|
|
|
|
258,900
|
|
|
|
27,960
|
|
|
|
1,797,136
|
|
Chief Legal Officer
|
|
|
2007
|
|
|
|
375,200
|
|
|
|
484,814
|
|
|
|
75,260
|
|
|
|
375,200
|
|
|
|
24,211
|
|
|
|
1,334,685
|
|
and Secretary
|
|
|
2006
|
|
|
|
327,402
|
|
|
|
250,130
|
|
|
|
73,084
|
|
|
|
335,000
|
|
|
|
178,038
|
|
|
|
1,163,654
|
|
|
|
|
(1)
|
|
The amounts shown represent the
dollar amounts recognized for financial statement reporting
purposes for the fiscal years ended December 31, 2008, 2007
and 2006 in accordance with FAS 123(R) and include amounts from
awards granted during prior years. Assumptions used in the
calculation of these amounts are described in Note 21,
Stock-Based Compensation, to our financial
statements for the year ended December 31, 2008, included
in our Annual Report on
Form 10-K
that was filed with the SEC on March 2, 2009. All awards
were made under the companys Incentive Plan or its
predecessor plan, the 1997 Stock Option Plan for Employees of
King Pharmaceuticals, Inc., and are subject to individual award
agreements, the forms of which were previously filed with the
SEC. During 2008, 2007 and 2006, there were no forfeitures of
awards related to service-based vesting conditions for the named
executive officers.
|
|
(2)
|
|
Cash incentive awards pursuant to
the 2008, 2007 and 2006 Executive Management Incentive Award
(EMIA) programs.
|
27
|
|
|
(3)
|
|
The following two tables detail
All Other Compensation received by each named
executive officer for 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites and
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Personal
|
|
|
401(k) Matching
|
|
|
Tax
|
|
|
Total Other
|
|
Name
|
|
Benefits
|
|
|
Contributions
|
|
|
Reimbursements
|
|
|
Compensation
|
|
|
|
(In Dollars)
|
|
|
Brian A. Markison
|
|
|
107,267
|
|
|
|
11,500
|
|
|
|
6,533
|
|
|
|
125,300
|
|
Joseph Squicciarino
|
|
|
57,907
|
|
|
|
11,500
|
|
|
|
6,533
|
|
|
|
75,940
|
|
Stephen J. Andrzejewski
|
|
|
31,458
|
|
|
|
9,818
|
|
|
|
12,058
|
|
|
|
53,334
|
|
Eric J. Bruce
|
|
|
11,440
|
|
|
|
11,500
|
|
|
|
4,114
|
|
|
|
27,054
|
|
James W. Elrod
|
|
|
11,440
|
|
|
|
10,858
|
|
|
|
5,662
|
|
|
|
27,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian A.
|
|
|
Joseph
|
|
|
Stephen J.
|
|
|
|
|
|
|
|
Type of Compensation
|
|
Markison
|
|
|
Squicciarino
|
|
|
Andrzejewski
|
|
|
Eric J. Bruce
|
|
|
James W. Elrod
|
|
|
|
(In Dollars)
|
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial planning
|
|
|
11,440
|
|
|
|
11,440
|
|
|
|
10,729
|
|
|
|
11,440
|
|
|
|
11,440
|
|
Personal use of corporate
aircraft (1)
|
|
|
95,827
|
|
|
|
46,467
|
|
|
|
10,343
|
|
|
|
0
|
|
|
|
0
|
|
Other
|
|
|
0
|
|
|
|
0
|
|
|
|
10,386
|
(2)
|
|
|
0
|
|
|
|
0
|
|
Total Perquisites
|
|
|
107,267
|
|
|
|
57,907
|
|
|
|
31,458
|
|
|
|
11,440
|
|
|
|
11,440
|
|
401(k) Matching Contributions
|
|
|
11,500
|
|
|
|
11,500
|
|
|
|
9,818
|
|
|
|
11,500
|
|
|
|
10,858
|
|
Tax Reimbursements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial planning
|
|
|
6,533
|
|
|
|
6,533
|
|
|
|
6,127
|
|
|
|
4,114
|
|
|
|
5,662
|
|
Other
|
|
|
0
|
|
|
|
0
|
|
|
|
5,931
|
|
|
|
0
|
|
|
|
0
|
|
Total Tax Reimbursements
|
|
|
6,533
|
|
|
|
6,533
|
|
|
|
12,058
|
|
|
|
4,114
|
|
|
|
5,662
|
|
Total All Other Compensation
|
|
|
125,300
|
|
|
|
75,940
|
|
|
|
53,334
|
|
|
|
27,054
|
|
|
|
27,960
|
|
|
|
|
(1)
|
|
Includes the aggregate incremental
cost to King of: aircraft operation; crew transportation, meals
and lodging; and aircraft handling, parking, de-icing and
maintenance.
|
|
(2)
|
|
Relates to a trip to reward
Kings top sales performers.
|
We regularly use offer letters in connection with the hiring of
new employees. In addition to customary elements such as salary
and benefit information, these letters have sometimes contained
provisions related to post-termination pay and benefits when
necessary to provide employment security to newly-hired
executives. An offer letter between King and Mr. Markison
provides for arrangements with respect to post-termination pay
and benefits. For information regarding the terms of these offer
letters, please see the section entitled Post-Termination
Payments beginning on page 34.
28
2008
Grants of Plan Based Awards
The following table contains information on the companys
equity and non-equity incentive plan awards to named executive
officers during 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
Under
|
|
|
|
Estimated Future Payouts
Under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
(1)
|
|
|
|
Equity Incentive Plan Awards
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
(k)
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Fair Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Stock and
|
|
|
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
Option
|
|
(a)
|
|
Grant
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
|
(#) (3)
|
|
|
(#) (4)
|
|
|
($/Sh) (5)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian A.
Markison
|
|
|
|
|
|
|
|
490,410
|
|
|
|
980,820
|
|
|
|
1,961,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,565
|
|
|
|
43,130
|
|
|
|
86,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
528,343
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,315
|
|
|
|
100,630
|
|
|
|
201,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
896,613
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,500
|
|
|
|
|
|
|
|
|
|
|
|
512,325
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,590
|
|
|
|
8.91
|
|
|
|
740,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
Squicciarino
|
|
|
|
|
|
|
|
193,200
|
|
|
|
386,400
|
|
|
|
772,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,015
|
|
|
|
16,030
|
|
|
|
32,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,368
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,705
|
|
|
|
37,410
|
|
|
|
74,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
333,323
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,370
|
|
|
|
|
|
|
|
|
|
|
|
190,407
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,500
|
|
|
|
8.91
|
|
|
|
275,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J.
Andrzejewski
|
|
|
|
|
|
|
|
123,300
|
|
|
|
246,600
|
|
|
|
493,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,180
|
|
|
|
8,360
|
|
|
|
16,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,410
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,750
|
|
|
|
19,500
|
|
|
|
39,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173,745
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,140
|
|
|
|
|
|
|
|
|
|
|
|
99,257
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,180
|
|
|
|
8.91
|
|
|
|
143,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric J. Bruce
|
|
|
|
|
|
|
|
123,300
|
|
|
|
246,600
|
|
|
|
493,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,180
|
|
|
|
8,360
|
|
|
|
16,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,410
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,750
|
|
|
|
19,500
|
|
|
|
39,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173,745
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,140
|
|
|
|
|
|
|
|
|
|
|
|
99,257
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,180
|
|
|
|
8.91
|
|
|
|
143,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James W.
Elrod
|
|
|
|
|
|
|
|
129,450
|
|
|
|
258,900
|
|
|
|
517,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,385
|
|
|
|
8,770
|
|
|
|
17,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,433
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,235
|
|
|
|
20,470
|
|
|
|
40,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
182,388
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,700
|
|
|
|
|
|
|
|
|
|
|
|
104,247
|
|
|
|
|
3/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,930
|
|
|
|
8.91
|
|
|
|
150,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects grants pursuant to the
companys Incentive Plan in connection with the
companys 2008 Executive Management Incentive Award
program. Details regarding that program, including actual payout
amounts, may be found in the Compensation Discussion and
Analysis beginning on page 13.
|
|
(2)
|
|
Reflects Three-Year and One-Year
performance share units (PSUs) granted pursuant to the
companys Incentive Plan in connection with the 2008 Long
Term Incentive Award program. Further details regarding that
program, including performance-based conditions, may be found in
the Compensation Discussion and Analysis beginning on
page 13.
|
|
(3)
|
|
Principally reflects restricted
stock granted pursuant to the companys Incentive Plan in
connection with the 2008 Long Term Incentive Award program.
Further details regarding that program may be found in the
Compensation Discussion and Analysis beginning on page 13.
|
|
(4)
|
|
Reflects stock options granted
pursuant to the companys Incentive Plan in connection with
the 2008 Long Term Incentive Award program. Further details
regarding that program may be found in the Compensation
Discussion and Analysis beginning on page 13.
|
|
(5)
|
|
The exercise price of each stock
option awarded to our named executive officers in 2008 is the
closing price of our common stock on the date of grant.
|
29
2008
Outstanding Equity Awards at Fiscal Year End
The following table discloses information relating to stock
options, restricted stock and performance share units held by
the named executive officers as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(c)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
Number of
|
|
|
Equity Incentive Plan
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of
|
|
|
Unearned
|
|
|
Awards: Market or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units
|
|
|
Shares or
|
|
|
Shares,
|
|
|
Payout Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Units
|
|
|
Units or Other
|
|
|
Unearned Shares,
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
That
|
|
|
of Stock That
|
|
|
Rights That
|
|
|
Units
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have
|
|
|
or Other Rights That
|
|
(a)
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Have Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Brian A.
Markison
|
|
|
114,724
|
|
|
|
|
|
|
|
19.4600
|
|
|
|
3/8/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,276
|
|
|
|
|
|
|
|
19.4600
|
|
|
|
3/8/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
10.6700
|
|
|
|
7/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,626
|
|
|
|
18,354
|
(1)
|
|
|
19.6800
|
|
|
|
3/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,396
|
|
|
|
61,714
|
(2)
|
|
|
19.2900
|
|
|
|
3/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,590
|
(3)
|
|
|
8.9100
|
|
|
|
3/25/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,450
|
(4)
|
|
|
291,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,830
|
(5)
|
|
|
497,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(6)
|
|
|
2,124,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,500
|
(7)
|
|
|
610,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,580
|
(8)
|
|
|
728,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108,801
|
(9)
|
|
|
1,155,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,260
|
(10)
|
|
|
2,137,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,448
|
(14)
|
|
|
132,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,450
|
(15)
|
|
|
440,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,260
|
(16)
|
|
|
916,081
|
|
Joseph
Squicciarino
|
|
|
15,305
|
|
|
|
7,885
|
(1)
|
|
|
19.6800
|
|
|
|
3/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,999
|
|
|
|
18,271
|
(2)
|
|
|
19.2900
|
|
|
|
3/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,500
|
(3)
|
|
|
8.9100
|
|
|
|
3/25/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,790
|
(4)
|
|
|
125,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,870
|
(5)
|
|
|
147,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,500
|
(11)
|
|
|
1,120,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(6)
|
|
|
849,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,370
|
(7)
|
|
|
226,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,460
|
(8)
|
|
|
312,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,220
|
(9)
|
|
|
342,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,820
|
(10)
|
|
|
794,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,345
|
(14)
|
|
|
56,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,270
|
(15)
|
|
|
130,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,060
|
(16)
|
|
|
340,477
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(c)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
Number of
|
|
|
Equity Incentive Plan
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of
|
|
|
Unearned
|
|
|
Awards: Market or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units
|
|
|
Shares or
|
|
|
Shares,
|
|
|
Payout Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Units
|
|
|
Units or Other
|
|
|
Unearned Shares,
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
That
|
|
|
of Stock That
|
|
|
Rights That
|
|
|
Units
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have
|
|
|
or Other Rights That
|
|
(a)
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Have Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Stephen J. Andrzejewski
|
|
|
88,274
|
|
|
|
|
|
|
|
17.0550
|
|
|
|
5/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,726
|
|
|
|
|
|
|
|
17.0550
|
|
|
|
5/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,942
|
|
|
|
5,638
|
(1)
|
|
|
19.6800
|
|
|
|
3/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,900
|
|
|
|
11,980
|
(2)
|
|
|
19.2900
|
|
|
|
3/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,180
|
(3)
|
|
|
8.9100
|
|
|
|
3/25/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,430
|
(4)
|
|
|
89,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,090
|
(5)
|
|
|
96,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,000
|
(11)
|
|
|
562,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(6)
|
|
|
424,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,140
|
(7)
|
|
|
118,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,060
|
(8)
|
|
|
223,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,120
|
(9)
|
|
|
224,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000
|
(10)
|
|
|
414,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,823
|
(14)
|
|
|
40,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,050
|
(15)
|
|
|
85,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,720
|
(16)
|
|
|
177,566
|
|
Eric J. Bruce
|
|
|
10,942
|
|
|
|
5,638
|
(1)
|
|
|
19.6800
|
|
|
|
3/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,900
|
|
|
|
11,980
|
(2)
|
|
|
19.2900
|
|
|
|
3/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,180
|
(3)
|
|
|
8.9100
|
|
|
|
3/25/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,430
|
(4)
|
|
|
89,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,090
|
(5)
|
|
|
96,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
(6)
|
|
|
764,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,140
|
(7)
|
|
|
118,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,060
|
(8)
|
|
|
223,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,120
|
(9)
|
|
|
224,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000
|
(10)
|
|
|
414,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,823
|
(14)
|
|
|
40,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,050
|
(15)
|
|
|
85,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,720
|
(16)
|
|
|
177,566
|
|
James W. Elrod
|
|
|
20,000
|
|
|
|
|
|
|
|
9.7850
|
|
|
|
3/4/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
|
|
15.5600
|
|
|
|
10/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,547
|
|
|
|
3,373
|
(1)
|
|
|
19.6800
|
|
|
|
3/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,801
|
|
|
|
7,719
|
(2)
|
|
|
19.2900
|
|
|
|
3/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,930
|
(3)
|
|
|
8.9100
|
|
|
|
3/25/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,300
|
(12)
|
|
|
226,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,040
|
(4)
|
|
|
53,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,860
|
(5)
|
|
|
62,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(13)
|
|
|
1,062,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,700
|
(7)
|
|
|
124,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,600
|
(8)
|
|
|
133,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,609
|
(9)
|
|
|
144,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,940
|
(10)
|
|
|
434,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,285
|
(14)
|
|
|
24,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,180
|
(15)
|
|
|
55,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,540
|
(16)
|
|
|
186,274
|
|
31
|
|
|
(1)
|
|
Thirty-three percent of the option
became exercisable on March 20, 2007, thirty-three percent
became exercisable on March 20, 2008 and the remaining
thirty-four percent became exercisable on March 20, 2009.
|
|
(2)
|
|
Thirty-three percent of the option
became exercisable on March 21, 2008, thirty-three percent
became exercisable on March 21, 2009 and the remaining
thirty-four percent will become exercisable on March 21,
2010.
|
|
(3)
|
|
Thirty-three percent of the option
became exercisable on March 25, 2009, thirty-three percent
will become exercisable on March 25, 2010 and the remaining
thirty-four percent will become exercisable on March 25,
2011.
|
|
(4)
|
|
Restricted stock which vests on
March 20, 2009.
|
|
(5)
|
|
Restricted stock which vests on
March 21, 2010.
|
|
(6)
|
|
Restricted stock which vests on
December 14, 2010.
|
|
(7)
|
|
Restricted stock which vests on
March 25, 2011.
|
|
(8)
|
|
One-year performance share units
which were paid in stock following a restricted period that
ended on December 31, 2008.
|
|
(9)
|
|
One-year performance share units
which are payable in stock following a restricted period ending
on December 31, 2009.
|
|
(10)
|
|
One-year performance share units
which are payable in stock following a restricted period ending
on December 31, 2010.
|
|
(11)
|
|
Restricted stock which vests on
May 15, 2012.
|
|
(12)
|
|
Restricted stock which vested on
February 21, 2009.
|
|
(13)
|
|
Restricted stock which vests on
November 29, 2010.
|
|
(14)
|
|
Three-year performance share units
granted in 2006 which were paid in common stock after
December 31, 2008 based upon Kings three-year total
shareholder return of 30.5%, reflecting approximately threshold
performance.
|
|
(15)
|
|
Assumes target performance under
three-year performance share units granted in 2007 which will be
paid in common stock after December 31, 2009 based upon
Kings three-year total shareholder return (stock price
appreciation plus dividends) versus the returns of companies in
the Dow Jones U.S. Pharmaceuticals Index for the years 2007
through 2009. For more information about three-year performance
share units, see the Compensation Discussion and Analysis
beginning on page 13.
|
|
(16)
|
|
Assumes stretch performance under
three-year performance share units granted in 2008 which will be
paid in common stock after December 31, 2010 based upon
Kings three-year total shareholder return (stock price
appreciation plus dividends) versus the returns of companies in
the Dow Jones U.S. Pharmaceuticals Index for the years 2008
through 2010. For more information about three-year performance
share units, see the Compensation Discussion and Analysis
beginning on page 13.
|
32
2008
Option Exercises and Stock Vested
The following table provides information concerning stock awards
that vested during 2008 for each named executive officer. No
named executive officer exercised stock options during 2008.
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
|
(e)
|
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on
|
|
|
on
|
|
(a)
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
Brian A. Markison (1)
|
|
|
211,028
|
|
|
|
1,830,787
|
|
Joseph Squicciarino (2)
|
|
|
68,139
|
|
|
|
561,626
|
|
Stephen J. Andrzejewski (3)
|
|
|
74,883
|
|
|
|
664,512
|
|
Eric J. Bruce (4)
|
|
|
55,495
|
|
|
|
449,050
|
|
James W. Elrod (5)
|
|
|
14,885
|
|
|
|
93,924
|
|
|
|
|
(1)
|
|
Includes 68,580 shares of
common stock issued pursuant to a 2006 grant of one-year
performance share units, 12,448 shares of common stock
issued pursuant to a 2006 grant of three-year performance share
units and 130,000 shares of restricted stock granted in
2006 for which the restrictions lapsed in 2008.
|
|
(2)
|
|
Includes 29,460 shares of
common stock issued pursuant to a 2006 grant of one-year
performance share units, 5,345 shares of common stock
issued pursuant to a 2006 grant of three-year performance share
units and 33,334 shares of restricted stock granted in 2006
for which the restrictions lapsed in 2008.
|
|
(3)
|
|
Includes 21,060 shares of
common stock issued pursuant to a 2006 grant of one-year
performance share units, 3,823 shares of common stock
issued pursuant to a 2006 grant of three-year performance share
units and 50,000 shares of restricted stock granted in 2006
for which the restrictions lapsed in 2008.
|
|
(4)
|
|
Includes 21,060 shares of
common stock issued pursuant to a 2006 grant of one-year
performance share units, 3,823 shares of common stock
issued pursuant to a 2006 grant of three-year performance share
units and 30,612 shares of restricted stock granted in 2006
for which the restrictions lapsed in 2008.
|
|
(5)
|
|
Includes 12,600 shares of
common stock issued pursuant to a 2006 grant of one-year
performance share units and 2,285 shares of common stock
issued pursuant to a 2006 grant of three-year performance share
units.
|
Pension
Benefits
King has no defined benefit program in which the named executive
officers are eligible to participate.
33
2008
Nonqualified Deferred Compensation
The following table contains information relating to the named
executive officers participation in Kings
non-qualified deferred compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(d)
|
|
|
(f)
|
|
|
|
Executive
|
|
|
Aggregate
|
|
|
Aggregate
|
|
(a)
|
|
Contributions In
|
|
|
Earnings In
|
|
|
Balance At Last
|
|
Name
|
|
Last FY ($) (1)
|
|
|
Last FY ($) (2)
|
|
|
FYE ($)
|
|
|
Brian A. Markison
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Joseph Squicciarino
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Stephen J. Andrzejewski
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Eric J. Bruce
|
|
|
71,136
|
|
|
|
5,918
|
|
|
|
162,597
|
|
James W. Elrod
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(1)
|
|
The amount in this column for
Mr. Bruce reflects the deferral of $71,136 of his 2007
Executive Management Incentive Award, which was paid in 2008.
This deferral is included in the 2008 Non-Equity Incentive
Plan Compensation column.
|
|
(2)
|
|
There are no above-market or
preferential earnings on deferred compensation. Consequently,
the Summary Compensation Table does not include earnings on
deferred amounts.
|
The King Pharmaceuticals, Inc. Deferred Compensation Plan is a
tax deferred compensation program for a limited number of
executives, including the named executive officers. It provides
a tax favorable vehicle for deferring cash compensation,
including base salary and awards pursuant to the companys
2008 Executive Management Incentive Award program. Under the
plan, an executive may defer up to 75% of his or her base salary
and up to 90% of annual incentive pay. Deferred balances are
credited with gains or losses which mirror the performance of
benchmark investment funds selected by the participant from
among twelve available funds and eleven target date funds.
Deferred amounts are paid, at the participants option,
either in a lump sum or in annual installments over a period of
up to ten years for retirement or termination distributions, or
up to five years for scheduled in-service withdrawals. King
matches contributions to this plan to the extent that deferrals
reduce matching contributions otherwise available under the
401(k) plan.
Post-Termination
Payments
The Amended and Restated Severance Pay Plan: Tier I,
adopted by the Compensation and Human Resources Committee of the
board of directors in October 2007 (the Severance
Plan), applies to all of the named executive officers,
although an offer letter between King and Mr. Markison
addresses severance matters. This offer letter is discussed
below.
Each executives receipt of the termination payments,
accelerated vesting and other benefits contemplated by
Kings Severance Plan is conditioned upon execution of a
Waiver, Release and Nonsolicitation, Noncompete and
Nondisclosure Agreement (the Waiver and Release
Agreement) within forty-five days of its provision to the
executive. This agreement will include, among other things,
customary noncompetition, nonsolicitation and confidentiality
covenants. The term of the obligations of the named executive
officer under the Waiver and Release Agreement will be equal to
the number of years used as the severance multiple, as described
below, or in the case of the confidentiality covenant shall
survive indefinitely. If a named executive officer breaches the
Waiver and Release Agreement: (1) there will be immediate
and permanent cessation of any payment or benefit to the
executive; (2) the executive will be required to repay 90%
of the amount of severance pay, severance benefits
and/or
suspended equity awards previously paid or provided to the
executive and dependents; and (3) the executive will be
required to repay to the company its costs and expenses of
enforcing the terms of the Waiver and Release Agreement.
Kings Severance Plan is designed to provide a severance
payment and certain benefits to an executive for a Qualifying
Separation (as defined below). It is also designed to pay an
enhanced severance payment for a Qualifying Separation in
connection with a Change of Control (as defined below). The
severance payment is payable in a lump sum within thirty days
after the expiration of any revocation period associated with
the Waiver and Release Agreement. The severance obligations will
be paid by the company or any successor entity.
34
If a Qualifying Separation occurs under the Severance Plan
within twenty-four months after a Change in Control, then
the named executive officer will be entitled to the following:
|
|
|
|
|
For the Chief Executive Officer, a severance payment equal to
three times the sum of (1) current annual salary and
(2) an amount equal to his target (mid-range) cash
incentive award; or, for the other named executive officers, two
times the sum of (1) current annual salary and (2) an
amount equal to the target (mid-range) cash incentive award;
|
|
|
|
Compensation for earned and unused vacation days;
|
|
|
|
Continuation of welfare benefits as described below;
|
|
|
|
Acceleration of all unvested equity awards; and
|
|
|
|
Additional tax gross up payments in order to compensate for any
tax liability imposed on change of control payments to the
extent these payments constitute parachute payments
under Section 280G of the Internal Revenue Code of 1986, as
amended (the Code).
|
If a Qualifying Separation occurs under the Severance Plan prior
to a Change in Control or more than twenty-four months
after a Change in Control, then the named executive officer will
be entitled to the following:
|
|
|
|
|
A severance payment equal to two times the sum of
(1) current annual salary and (2) the target
(mid-range) cash incentive award for the Chief Executive
Officer; or, for the other named executive officers, one and
one-half times the sum of (1) current annual salary and
(2) the target (mid-range) cash incentive award;
|
|
|
|
Compensation for earned and unused vacation days;
|
|
|
|
Continuation of welfare benefits as described below; and
|
|
|
|
Acceleration of all unvested equity awards.
|
The plan administrator has discretion under the Severance Plan
to use up to the stretch (top-range) cash incentive bonus amount
in place of the target (mid-range) cash incentive bonus amount
in order to increase the severance payment to any named
executive.
Each payment made by the company under the terms of the
Severance Plan is intended to be (i) a separate payment for
the purposes of section 409A of the Code, and
(ii) exempt from the application of Code Section 409A,
to the extent possible. If the company decides that the
executive is a specified employee, as that term is
defined by Treasury
Regulation 1.409A-1(i)(1),
and that payments made to the executive are or may become
subject to additional tax under Code Section 409A, then
payments to the executive will be (a) delayed for six
months after the executives termination, or such shorter
period as the company decides is necessary to avoid the
imposition of additional taxes under Code Section 409A, and
(b) increased by an amount equal to the interest (at prime
rate) on them for the period in which the payments were actually
delayed.
The Severance Plan provides for the continuation of coverage
under Kings welfare benefit plans (within the
contemplation of ERISA) for which the executive was eligible and
participating on the date of the termination described above.
These benefits would have the same terms and conditions
(exclusive of any tax consequences to the recipient on resulting
coverage or benefits) as if the executive were still an active
employee of King, including dependent coverage where applicable.
These benefits would end on the earliest of (a) eighteen
months beginning on the date of the termination described above,
(b) the end of the period for which severance pay is
calculated, (c) the date of any material breach of the
provisions of the Severance Plan by the executive, or
(d) the date the executive first becomes eligible for
coverage of the same general category under another plan,
program or other arrangement. The executive must notify King in
writing within seven days after becoming eligible for alternate
coverage. At the end of the period of continued coverage, the
executive would be eligible to elect to continue
company-sponsored medical coverage under COBRA, as defined in
Section 4980B of the Code, by paying such amounts as COBRA
may require.
A Qualifying Separation is defined under Kings
Severance Plan to mean separation from the company:
|
|
|
|
|
within twenty-four months following the date on which a Change
in Control occurs, either (a) for Good Reason or
(b) initiated by the company or its successor without Cause
(as defined below); or
|
|
|
|
not following a Change in Control, whether (a) for Good
Reason or (b) initiated by the company without Cause.
|
35
Kings Severance Plan defines Good Reason to
mean:
|
|
|
|
|
Implementation of a material diminution in the nature or status
of the executives authority, duties, responsibilities,
reporting relationships, title
and/or
position (except that a reduction in the number of employees
reporting to the executive will not, by itself, constitute Good
Reason). Material diminution will be determined, in the case of
a Change in Control only, with reference to those in effect as
of thirty days prior to the Change in Control, determined in the
context of the individuals relative position in the
overall controlled group of corporations which includes the
company immediately prior to a Change in Control as compared to
the individuals position in the overall controlled group
of corporations which includes the company immediately after a
Change in Control;
|
|
|
|
Failure to pay promptly any material compensation when due;
|
|
|
|
Material reduction in the rate of annual base salary without the
executives consent;
|
|
|
|
Material breach by King of any employment contract or other
agreement as to the terms and conditions of employment; or
|
|
|
|
Requiring the executive to be based at a work site in excess of
fifty miles from the current location of the executives
principal job location or office.
|
The executive must provide notice to the company of the
existence of one of the above conditions constituting Good
Reason within thirty days of discovering it. King will then have
thirty days to cure the condition, and, if the company fails to
do so, the executive may then effect a separation of service for
Good Reason within thirty days after the expiration of the cure
period or else waive the right to do so.
Kings Severance Plan defines Cause to mean:
|
|
|
|
|
Conviction of or pleading guilty or nolo contendere to an
act of fraud, embezzlement, theft or any other act constituting
a felony or any crime involving moral turpitude
and/or
dishonesty;
|
|
|
|
Gross negligence or willful misconduct which results or, in the
sole opinion of the plan administrator would be likely to
result, in material harm to the company or which results or, in
the sole opinion of the plan administrator would be likely to
result, in a materially adverse effect on the companys
reputation, operations, properties, or business or employee
relationships;
|
|
|
|
By action or inaction, failing or refusing faithfully and
conscientiously to perform one or more material assignments or
responsibilities of the executives position;
|
|
|
|
Failing or refusing to look after the best interests of the
company committed to the executives care;
|
|
|
|
Failing or refusing reasonably to advance the interests of the
company;
|
|
|
|
Failing to devote full time, attention and energy to the
business of the company; or
|
|
|
|
Failing to devote best efforts to the business of the company.
|
Kings Severance Plan defines Change in Control
to mean:
|
|
|
|
|
The sale of substantially all of the assets of the
company; or
|
|
|
|
Any person or group (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended, or the Exchange Act), other
than the executive officers, is or becomes the beneficial
owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act except that a person shall be deemed to
have beneficial ownership of all securities that
such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than thirty five percent of the
total voting stock of the company;
|
36
|
|
|
|
|
The company consolidates with, or merges with or into, another
person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to
any person, or any person consolidates with, or merges with or
into, the company, in any such event pursuant to a transaction
in which any voting stock of the company is reclassified or
changed into or exchanged for cash, securities or other
property, other than any such transaction where (i) any
voting stock of the company is reclassified or changed into or
exchanged for nonredeemable voting stock of the surviving or
transferee corporation and (ii) immediately after such
transaction no person or group (as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than the executive officers, is the beneficial
owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act, except that a person shall be deemed to
have beneficial ownership of all securities that
such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than thirty five percent of the
total voting stock of the surviving or transferee
corporation; or
|
|
|
|
A majority of members of the companys board of directors
is replaced during any twelve-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the companys board of directors prior to the
date of the appointment or election. The tables below contain
specific information about arrangements that provide for
payments to the named executive officers at, following, or in
connection with their termination with or without cause,
resignation, retirement, termination upon change in control, or
other separation. These tables assume that the relevant
triggering event occurred on the last business day of the last
completed fiscal year, December 31, 2008, and apply the
closing price of the companys common stock on that day,
$10.62.
|
Post-Termination
Payments for Mr. Markison
Effective on July 15, 2004, Mr. Markison agreed to an
offer letter whereby he became President and Chief Executive
Officer of King. If Mr. Markisons employment is
terminated while the offer letter is in effect either
(a) by King other than for cause, or
(b) by Mr. Markison for good reason, King
will pay Mr. Markison a lump-sum cash severance payment
equal to two times the sum of:
|
|
|
|
|
his base salary at the time of termination of his
employment, and
|
|
|
|
his target cash incentive bonus for the year of termination
(which amount would not be pro-rated based on the date of his
termination).
|
Also, in the event of termination of Mr. Markisons
employment for these reasons,
|
|
|
|
|
King would continue to provide Mr. Markison with health and
welfare benefits generally made available to executives until
the second anniversary of his termination of employment,
provided that this obligation would end if he became covered by
the employee benefits plans of a subsequent employer;
|
|
|
|
all unvested stock options awarded to Mr. Markison would
immediately become fully vested; and
|
|
|
|
in the event that any payments he received were considered
excess parachute payments under Section 280G of
the Code, he would be entitled to a
gross-up
payment to make him whole for any excise tax imposed on him
under Section 4999 of the Code (and such
gross-up
payment would include amounts to make him whole for the Federal,
state and local income and excise taxes owing with respect to
the gross-up
payment).
|
Under Mr. Markisons offer letter, cause
includes:
|
|
|
|
|
conviction of, or plea of guilty or no contest to, a felony,
|
|
|
|
embezzlement,
|
|
|
|
the illegal use of drugs,
|
|
|
|
a material violation of law, regulation or written company
policy which, in the good faith belief of the Board, is conduct
so unacceptable as to prohibit the Board from continuing to
maintain him in the position of Chief Executive Officer, or
|
|
|
|
if no change in control has occurred, his failure to
substantially perform his duties as determined by the Board.
|
37
Mr. Markisons offer letter defines Good
Reason to mean:
|
|
|
|
|
a reduction of his compensation or benefits, responsibilities,
duties, authority, reporting relationships, title
and/or
position (in each case other than his position, if any, as
director of King or any subsidiary or as an officer of any
subsidiary), unless other similarly situated senior executives
of King are required to accept a similar reduction, and
excluding any isolated, insubstantial and inadvertent action not
taken in bad faith and that is remedied by King promptly after
receipt of notice from Mr. Markison; provided, however,
that this clause (i) shall not be deemed triggered merely
as a result of Kings ceasing to be a publicly traded
company in connection with a change in control or as a result of
Kings (or its successors) becoming a subsidiary of
another company,
|
|
|
|
the company, without his consent, requires him to relocate
(which term shall not include travel) to a location more than
fifty miles from his current residence,
|
|
|
|
the failure to pay to him any compensation or benefits due him,
other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and that is remedied by King promptly
after receipt of notice thereof given by
Mr. Markison, or
|
|
|
|
Kings material breach of any provision of
Mr. Markisons offer letter.
|
If Mr. Markisons employment is terminated while the
offer letter is in effect (a) by King other than for
cause, or (b) by Mr. Markison for
good reason, in each case during the two-year period
following a change in control, King will pay Mr. Markison a
lump-sum cash severance payment equal to three times the sum of:
|
|
|
|
|
his base salary at the time of termination of his
employment, and
|
|
|
|
his target cash incentive bonus for the year of termination
(which amount would not be pro-rated based on the date of his
termination).
|
Also, in the event of termination of Mr. Markisons
employment for these reasons,
|
|
|
|
|
King would continue to provide him with health and welfare
benefits generally made available to the company executives
until the third anniversary of his termination of employment,
provided that such obligation would cease if he became covered
by the employee benefits plans of a subsequent employer,
|
|
|
|
all unvested stock options awarded to Mr. Markison under
the stock option plan would immediately become fully
vested, and
|
|
|
|
in the event that any payments he received were considered
excess parachute payments under Section 280G of
the Code, he would be entitled to a
gross-up
payment to make him whole for any excise tax imposed on him
under Section 4999 of the Code (and such
gross-up
payment would include amounts to make him whole for the Federal,
state and local income and excise taxes owing with respect to
the gross-up
payment).
|
Mr. Markisons receipt of the termination payments and
other benefits contemplated by his offer letter is conditioned
upon his execution of an Agreement and Release at the time of
his severance. The Agreement and Release will include, among
other things, customary non competition and non solicitation
covenants of a term that will not exceed one year, and a
customary confidentiality covenant.
Mr. Markisons offer letter defines change in
control to mean:
|
|
|
|
|
The sale of substantially all of Kings assets;
|
|
|
|
Any person or group (as these terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the beneficial owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act, except that a person shall be deemed to
have beneficial ownership of all securities that
such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than fifty percent of the total
voting stock of King;
|
|
|
|
King consolidates with, or merges with or into, another person
or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets, in one
transaction or a series of transactions, to any person or any
person consolidates with, or merges with or into, King, in any
such event pursuant to a transaction in which any voting stock
of King is reclassified or changed into or exchanged for cash,
securities or other property, other
|
38
|
|
|
|
|
than any such transaction where (A) any voting stock of
King is reclassified or changed into or exchanged for
non-redeemable voting stock of the surviving or transferee
corporation and (B) immediately after such transaction no
person or group (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act) is the
beneficial owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act, except that a person shall be deemed to
have beneficial ownership of all securities that
such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than fifty percent of the total
voting stock of the surviving or transferee corporation; or
|
|
|
|
|
|
During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board (together with
any new directors whose election by the shareholders of King was
approved by a vote of 66 2/3% of the directors then still in
office who were either directors at the beginning of such period
or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Board then in office.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
(d)
|
|
|
|
(e)
|
|
|
|
(f)
|
|
|
|
(g)
|
|
|
|
(h)
|
|
|
|
(i)
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian A. Markison
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
For Good
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
Change In
|
|
President and Chief Executive Officer
|
|
|
Cause
|
|
|
|
For Cause
|
|
|
|
Resignation
|
|
|
|
Reason
|
|
|
|
(1)
|
|
|
|
Death
|
|
|
|
Disability
|
|
|
|
Control (4)
|
|
|
|
|
(In Dollars)
|
|
Benefits Earned Prior to Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of unexercised vested stock options
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) plan balance
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
N/A
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive deferred comp. plan balance
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Already Earned
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
N/A
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Payments Earned
Upon Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance
|
|
|
|
3,960,000
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,960,000
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
5,940,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity incentive for year of termination
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of unvested stock options(2)
|
|
|
|
310,519
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
310,519
|
|
|
|
|
N/A
|
|
|
|
|
310,519
|
|
|
|
|
310,519
|
|
|
|
|
310,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of restricted stock and PSUs
(1-year
perf. period)(2)(3)
|
|
|
|
6,816,351
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
6,816,351
|
|
|
|
|
N/A
|
|
|
|
|
6,816,351
|
|
|
|
|
6,816,351
|
|
|
|
|
6,816,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of PSUs
(3-year
perf. period)
|
|
|
|
898,240
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
898,240
|
|
|
|
|
N/A
|
|
|
|
|
898,240
|
|
|
|
|
898,240
|
|
|
|
|
898,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and welfare continuation
|
|
|
|
25,000
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
25,000
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
37,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial planning
|
|
|
|
40,127
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
40,127
|
|
|
|
|
N/A
|
|
|
|
|
40,127
|
|
|
|
|
40,127
|
|
|
|
|
60,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sec. 280(G) excise tax and related
gross-up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,656,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl Payments Due to Termination
|
|
|
|
12,050,237
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
12,050,237
|
|
|
|
|
N/A
|
|
|
|
|
8,065,237
|
|
|
|
|
8,065,237
|
|
|
|
|
17,719,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
12,124,854
|
|
|
|
|
74,617
|
|
|
|
|
74,617
|
|
|
|
|
12,124,854
|
|
|
|
|
N/A
|
|
|
|
|
8,139,854
|
|
|
|
|
8,139,854
|
|
|
|
|
17,793,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Executive is not
retirement-eligible.
|
|
(2)
|
|
Treatment of unvested awards upon
termination without cause and for good reason is governed by an
offer letter dated July 15, 2004 and the Severance Pay
Plan: Tier 1.
|
|
(3)
|
|
Includes One-Year PSUs earned
during fiscal years 2007 and 2008 but which are not yet vested.
|
|
(4)
|
|
Change in Control followed by
termination for good reason or involuntarily without cause
within 24 months.
|
39
Post-Termination
Payments for Mr. Squicciarino, Mr. Andrzejewski,
Mr. Bruce and Mr. Elrod
Messrs. Squicciarino, Andrzejewski, Bruce and Elrod are
eligible for our Severance Pay Plan: Tier I, which is
described earlier in this section. The potential amounts payable
to each executive and the circumstances under which they are
payable are set forth in the following tables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
(d)
|
|
|
|
(e)
|
|
|
|
(f)
|
|
|
|
(g)
|
|
|
|
(h)
|
|
|
|
(i)
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph Squicciarino
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
For Good
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
Change In
|
|
Chief Financial Officer
|
|
|
Cause
|
|
|
|
For Cause
|
|
|
|
Resignation
|
|
|
|
Reason
|
|
|
|
(1)
|
|
|
|
Death
|
|
|
|
Disability
|
|
|
|
Control (4)
|
|
|
|
|
(In Dollars)
|
|
Benefits Earned Prior to Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of unexercised vested
stock options
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) plan balance
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
N/A
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive deferred comp.
plan balance
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Already Earned
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
N/A
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Payments Earned
Upon Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance
|
|
|
|
1,407,600
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,407,600
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,876,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity incentive for year of termination
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of unvested stock options (2)
|
|
|
|
115,425
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
115,425
|
|
|
|
|
N/A
|
|
|
|
|
115,425
|
|
|
|
|
115,425
|
|
|
|
|
115,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of restricted stock and PSUs
(1-year
perf. period) (2)(3)
|
|
|
|
3,606,233
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,606,233
|
|
|
|
|
N/A
|
|
|
|
|
3,606,233
|
|
|
|
|
3,606,233
|
|
|
|
|
3,606,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of PSUs
(3-year
perf. period)
|
|
|
|
300,546
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
300,546
|
|
|
|
|
N/A
|
|
|
|
|
300,546
|
|
|
|
|
300,546
|
|
|
|
|
300,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and welfare continuation
|
|
|
|
18,750
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial planning
|
|
|
|
40,127
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
40,127
|
|
|
|
|
N/A
|
|
|
|
|
40,127
|
|
|
|
|
40,127
|
|
|
|
|
60,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sec. 280(G) excise tax and
related
gross-up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl Payments Due to Termination
|
|
|
|
5,488,681
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
5,488,681
|
|
|
|
|
N/A
|
|
|
|
|
4,062,331
|
|
|
|
|
4,062,331
|
|
|
|
|
5,977,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
5,567,273
|
|
|
|
|
78,592
|
|
|
|
|
78,592
|
|
|
|
|
5,567,273
|
|
|
|
|
N/A
|
|
|
|
|
4,140,923
|
|
|
|
|
4,140,923
|
|
|
|
|
6,056,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Executive is not
retirement-eligible.
|
|
(2)
|
|
Treatment of unvested awards upon
termination without cause and for good reason is governed by the
Severance Pay Plan: Tier 1.
|
|
(3)
|
|
Includes One-Year PSUs earned
during fiscal years 2007 and 2008 but which are not yet vested.
|
|
(4)
|
|
Change in Control followed by
termination for good reason or involuntarily without cause
within 24 months.
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
(d)
|
|
|
|
(e)
|
|
|
|
(f)
|
|
|
|
(g)
|
|
|
|
(h)
|
|
|
|
(i)
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Andrzejewski
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
For Good
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
Change In
|
|
Chief Commercial Officer
|
|
|
Cause
|
|
|
|
For Cause
|
|
|
|
Resignation
|
|
|
|
Reason
|
|
|
|
(1)
|
|
|
|
Death
|
|
|
|
Disability
|
|
|
|
Control (4)
|
|
|
|
|
(In Dollars)
|
|
Benefits Earned Prior to Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of unexercised vested
stock options
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) plan balance
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
N/A
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive deferred comp.
plan balance
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Already Earned
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
N/A
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Payments Earned
Upon Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash severance
|
|
|
|
986,400
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
986,400
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,315,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity incentive for year
of termination
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of unvested stock options (2)
|
|
|
|
60,158
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
60,158
|
|
|
|
|
N/A
|
|
|
|
|
60,158
|
|
|
|
|
60,158
|
|
|
|
|
60,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of restricted stock and PSUs
(1-year
perf. period)
(2)(3)
|
|
|
|
1,930,504
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,930,504
|
|
|
|
|
N/A
|
|
|
|
|
1,930,504
|
|
|
|
|
1,930,504
|
|
|
|
|
1,930,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of PSUs
(3-year
perf. period)
|
|
|
|
174,274
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
174,274
|
|
|
|
|
N/A
|
|
|
|
|
174,274
|
|
|
|
|
174,274
|
|
|
|
|
174,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and welfare continuation
|
|
|
|
18,750
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial planning
|
|
|
|
40,127
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
40,127
|
|
|
|
|
N/A
|
|
|
|
|
40,127
|
|
|
|
|
40,127
|
|
|
|
|
60,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sec. 280(G) excise tax and
related
gross-up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
829,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl Payments Due to Termination
|
|
|
|
3,210,213
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,210,213
|
|
|
|
|
N/A
|
|
|
|
|
2,205,063
|
|
|
|
|
2,205,063
|
|
|
|
|
4,388,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
3,307,359
|
|
|
|
|
97,146
|
|
|
|
|
97,146
|
|
|
|
|
3,307,359
|
|
|
|
|
N/A
|
|
|
|
|
2,302,209
|
|
|
|
|
2,302,209
|
|
|
|
|
4,485,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Executive is not
retirement-eligible.
|
|
(2)
|
|
Treatment of unvested awards upon
termination without cause and for good reason governed by
Severance Pay Plan: Tier 1.
|
|
(3)
|
|
Includes One-Year PSUs earned
during fiscal years 2007 and 2008 but which are not yet vested.
|
|
(4)
|
|
Change in Control followed by
termination for good reason or involuntarily without cause
within 24 months.
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
(d)
|
|
|
|
(e)
|
|
|
|
(f)
|
|
|
|
(g)
|
|
|
|
(h)
|
|
|
|
(i)
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric J. Bruce
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
For Good
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
Change In
|
|
President, Alpharma Animal Health
|
|
|
Cause
|
|
|
|
For Cause
|
|
|
|
Resignation
|
|
|
|
Reason
|
|
|
|
(1)
|
|
|
|
Death
|
|
|
|
Disability
|
|
|
|
Control (4)
|
|
|
|
|
(In Dollars)
|
|
Benefits Earned Prior to Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of unexercised vested
stock options
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) plan balance
|
|
|
|
63,209
|
|
|
|
|
63,209
|
|
|
|
|
63,209
|
|
|
|
|
63,209
|
|
|
|
|
N/A
|
|
|
|
|
63,209
|
|
|
|
|
63,209
|
|
|
|
|
63,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive deferred comp.
plan balance
|
|
|
|
162,597
|
|
|
|
|
162,597
|
|
|
|
|
162,597
|
|
|
|
|
162,597
|
|
|
|
|
N/A
|
|
|
|
|
162,597
|
|
|
|
|
162,597
|
|
|
|
|
162,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Already Earned
|
|
|
|
225,806
|
|
|
|
|
225,806
|
|
|
|
|
225,806
|
|
|
|
|
225,806
|
|
|
|
|
N/A
|
|
|
|
|
225,806
|
|
|
|
|
225,806
|
|
|
|
|
225,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Payments Earned
Upon Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
986,400
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
986,400
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,315,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity incentive for year
of termination
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of unvested
stock options (2)
|
|
|
|
60,158
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
60,158
|
|
|
|
|
N/A
|
|
|
|
|
60,158
|
|
|
|
|
60,158
|
|
|
|
|
60,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of restricted
stock and PSUs
(1-year
perf. period)
(2)(3)
|
|
|
|
1,707,484
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,707,484
|
|
|
|
|
N/A
|
|
|
|
|
1,707,484
|
|
|
|
|
1,707,484
|
|
|
|
|
1,707,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of PSUs
(3-year
perf. period)
|
|
|
|
174,274
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
174,274
|
|
|
|
|
N/A
|
|
|
|
|
174,274
|
|
|
|
|
174,274
|
|
|
|
|
174,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and welfare continuation
|
|
|
|
18,750
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial planning
|
|
|
|
36,003
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
36,003
|
|
|
|
|
N/A
|
|
|
|
|
36,003
|
|
|
|
|
36,003
|
|
|
|
|
54,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sec. 280(G) excise tax and
related
gross-up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
606,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl Payments Due to Termination
|
|
|
|
2,983,069
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,983,069
|
|
|
|
|
N/A
|
|
|
|
|
1,977,919
|
|
|
|
|
1,977,919
|
|
|
|
|
3,936,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
3,208,875
|
|
|
|
|
225,806
|
|
|
|
|
225,806
|
|
|
|
|
3,208,875
|
|
|
|
|
N/A
|
|
|
|
|
2,203,725
|
|
|
|
|
2,203,725
|
|
|
|
|
4,162,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Executive is not
retirement-eligible.
|
|
(2)
|
|
Treatment of unvested awards upon
termination without cause and for good reason is governed by
Severance Pay Plan: Tier 1.
|
|
(3)
|
|
Includes One-Year PSUs earned
during fiscal years 2007 and 2008 but which are not yet vested.
|
|
(4)
|
|
Change in Control followed by
termination for good reason or involuntarily without cause
within 24 months.
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
|
(c)
|
|
|
|
(d)
|
|
|
|
(e)
|
|
|
|
(f)
|
|
|
|
(g)
|
|
|
|
(h)
|
|
|
|
(i)
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James W. Elrod
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
For Good
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
Change In
|
|
Chief Legal Officer and Secretary
|
|
|
Cause
|
|
|
|
For Cause
|
|
|
|
Resignation
|
|
|
|
Reason
|
|
|
|
(1)
|
|
|
|
Death
|
|
|
|
Disability
|
|
|
|
Control (4)
|
|
|
|
|
(In Dollars)
|
|
Benefits Earned Prior to Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of unexercised vested
stock options
|
|
|
|
16,700
|
|
|
|
|
0
|
|
|
|
|
16,700
|
|
|
|
|
16,700
|
|
|
|
|
N/A
|
|
|
|
|
16,700
|
|
|
|
|
16,700
|
|
|
|
|
16,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) plan balance
|
|
|
|
110,415
|
|
|
|
|
110,415
|
|
|
|
|
110,415
|
|
|
|
|
110,415
|
|
|
|
|
N/A
|
|
|
|
|
110,415
|
|
|
|
|
110,415
|
|
|
|
|
110,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive deferred comp.
plan balance
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Already Earned
|
|
|
|
127,115
|
|
|
|
|
110,415
|
|
|
|
|
127,115
|
|
|
|
|
127,115
|
|
|
|
|
N/A
|
|
|
|
|
127,115
|
|
|
|
|
127,115
|
|
|
|
|
127,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Payments Earned
Upon Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
1,035,600
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,035,600
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
1,380,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity incentive for year
of termination
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of unvested
stock options (2)
|
|
|
|
63,150
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
63,150
|
|
|
|
|
N/A
|
|
|
|
|
63,150
|
|
|
|
|
63,150
|
|
|
|
|
63,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of restricted
stock and PSUs
(1-year
perf. period)
(2)(3)
|
|
|
|
2,107,528
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
2,107,528
|
|
|
|
|
N/A
|
|
|
|
|
2,107,528
|
|
|
|
|
2,107,528
|
|
|
|
|
2,107,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl value due to vesting of PSUs
(3-year
perf. period)
|
|
|
|
148,149
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
148,149
|
|
|
|
|
N/A
|
|
|
|
|
148,149
|
|
|
|
|
148,149
|
|
|
|
|
148,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and welfare continuation
|
|
|
|
18,750
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Planning
|
|
|
|
40,127
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
40,127
|
|
|
|
|
N/A
|
|
|
|
|
40,127
|
|
|
|
|
40,127
|
|
|
|
|
60,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sec. 280(G) excise tax and
related
gross-up
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
N/A
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
908,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addl Payments Due to Termination
|
|
|
|
3,413,304
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
3,413,304
|
|
|
|
|
N/A
|
|
|
|
|
2,358,954
|
|
|
|
|
2,358,954
|
|
|
|
|
4,687,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
3,540,419
|
|
|
|
|
110,415
|
|
|
|
|
127,115
|
|
|
|
|
3,540,419
|
|
|
|
|
N/A
|
|
|
|
|
2,486,069
|
|
|
|
|
2,486,069
|
|
|
|
|
4,814,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Executive is not
retirement-eligible.
|
|
(2)
|
|
Treatment of unvested awards upon
termination without cause and for good reason is governed by
Severance Pay Plan: Tier 1.
|
|
(3)
|
|
Includes One-Year PSUs earned
during fiscal years 2007 and 2008 but which are not yet vested.
|
|
(4)
|
|
Change in Control followed by
termination for good reason or involuntarily without cause
within 24 months.
|
43
2008 Director
Compensation
Our Board of Directors believes that our non-employee directors
should be compensated according to the following key principles:
|
|
|
|
|
that the interests of directors should be closely aligned with
those of shareholders through equity-based compensation; and
|
|
|
|
that their compensation should approximate the median
compensation paid to directors of the companies in Kings
Comparator Group.
|
The following table describes the compensation received by our
non-employee directors for 2008. Mr. Markison received no
additional compensation for his service as Chairman of the Board
or as a director.
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(g)
|
|
(h)
|
|
|
|
|
|
|
Option
|
|
All Other
|
|
|
|
|
Fees Earned Or Paid
|
|
Stock Awards
|
|
Awards
|
|
Compensation
|
|
Total
|
Name
|
|
In Cash ($) (1)
|
|
($) (2)(3)
|
|
($) (3)(4)
|
|
($) (5)
|
|
($)
|
|
Ted G. Wood
|
|
115,400
|
|
174,665
|
|
0
|
|
0
|
|
290,065
|
Earnest W. Deavenport, Jr.
|
|
97,500(6)
|
|
174,665
|
|
0
|
|
0
|
|
272,165
|
Elizabeth M. Greetham
|
|
90,400
|
|
174,665
|
|
0
|
|
7,518
|
|
272,583
|
Philip A. Incarnati
|
|
83,200
|
|
174,665
|
|
0
|
|
0
|
|
257,865
|
Gregory D. Jordan
|
|
104,700
|
|
174,665
|
|
0
|
|
0
|
|
279,365
|
R. Charles Moyer
|
|
106,918
|
|
174,665
|
|
0
|
|
0
|
|
281,583
|
D. Greg Rooker
|
|
88,400
|
|
174,665
|
|
0
|
|
4,773
|
|
267,838
|
|
|
|
(1)
|
|
Excludes amounts paid in 2008 for
service in 2007 and includes amounts paid in 2009 for service in
2008.
|
|
(2)
|
|
As of December 31, 2008, each
of the non-management directors held 13,527 restricted stock
units. Each restricted stock unit entitles the holder to receive
one share of Kings common stock upon vesting. Restricted
stock units held by Mr. Deavenport, Mr. Incarnati,
Dr. Jordan and Dr. Moyer are scheduled to vest as of
May 15, 2009 or earlier upon the occurrence of certain
events. Restricted stock units held by Mr. Wood,
Mr. Rooker and Ms. Greetham will vest on a date within
six months from their respective departures from the board of
directors. The grant date fair value of the restricted stock
units issued to the directors during 2008 was $134,999.46 each.
|
|
(3)
|
|
The amounts shown represent the
dollar amounts recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008 in
accordance with FAS 123(R) and include amounts from awards
granted during and prior to 2008. Assumptions used in the
calculation of these amounts are described in Note 21,
Stock-Based Compensation, to the companys
financial statements for the year ended December 31, 2008,
included in the companys Annual Report on
Form 10-K
that was filed with the SEC on March 2, 2009.
|
|
(4)
|
|
The following table lists the
number of stock options held by each non-management director as
of December 31, 2008. All options were fully exercisable as
of that date.
|
|
|
|
|
|
|
|
Stock Options Held
|
|
Name
|
|
at Fiscal Year End
|
|
|
Ted G. Wood
|
|
|
26,794
|
|
Earnest W. Deavenport, Jr.
|
|
|
53,333
|
|
Elizabeth M. Greetham
|
|
|
24,904
|
|
Philip A. Incarnati
|
|
|
0
|
|
Gregory D. Jordan
|
|
|
40,000
|
|
R. Charles Moyer
|
|
|
53,333
|
|
D. Greg Rooker
|
|
|
73,333
|
|
|
|
|
(5)
|
|
Reflects the aggregate incremental
cost to the company of the directors personal use of
corporate aircraft, including: aircraft operation; crew
transportation, meals and lodging; and aircraft handling,
parking, de-icing and maintenance.
|
|
(6)
|
|
Mr. Deavenport deferred 100%
of this amount through the King Pharmaceuticals, Inc.
Non-Employee Directors Deferred Compensation Plan.
|
Non-employee directors received an annual retainer of $38,000
and a fee of $2,000 for each board meeting they attended. They
received $1,200 for each committee meeting attended.
Mr. Wood received a retainer of $25,000 per year
(annualized), paid quarterly, for his service as Lead
Independent Director in 2008. The chair of the Audit Committee
received an annual retainer of $12,000, and each other committee
chair received an annual retainer of $7,500. Non-employee
directors were reimbursed for reasonable and customary expenses
associated with attending continuing education programs. They
were also entitled to use corporate aircraft for personal use
for up to 10 hours per year, but only in connection with
flights for which Kings business was the primary purpose.
Any such personal use was treated as
44
compensation to the director as required by the Internal Revenue
Code. The incremental cost to King of personal use of corporate
aircraft by directors included: aircraft operation; crew
transportation, meals and lodging; and aircraft handling,
parking, de-icing and maintenance.
Restricted stock units related to Kings common stock,
having in 2008 a value of approximately $135,000 at the time of
grant (based upon the closing price of the common stock as of
that date), are automatically granted to each non-employee
director on May 15 of each year, or, if May 15 falls on a
weekend or holiday, on the first business day immediately
preceding May 15. Upon becoming a director (other than
through re-election), a non-employee director is automatically
granted, upon the first day of service as a director, the number
of restricted stock units as have a value equal to the portion
of the value of the annual grant which is equivalent to the
fraction of a year between the first date of service and the
first May 15 thereafter.
During each calendar year, non-employee directors may elect
between two payout schedules for any restricted stock units to
be awarded them on May 15 of the following year. Under the first
alternative, the restricted stock units have a restricted period
which ends on the date of the first to occur of the following
events, and otherwise according to the terms of the Incentive
Plan: (1) one year following the date of grant;
(2) death; (3) disability; (4) the director,
standing for reelection, is not reelected; (5) the director
completes his or her term of office after declining to stand for
reelection; (6) the director completes his or her term of
office after not being nominated to stand for reelection;
(7) the director completes his or her term of office,
having been ineligible to stand for reelection under term limit
provisions then in effect; (8) a change of control. Under
the second of the payout schedule alternatives, the restricted
stock units are paid out six months following the date on which
service as a director ends.
Non-employee directors can participate in the King
Pharmaceuticals, Inc. Non-Employee Directors Deferred
Compensation Plan, which allows them to defer receipt of some or
all fees paid for service as a member of the Board of Directors,
thereby deferring the obligation to pay income taxes on these
amounts. Directors can elect to defer 0%, 25%, 50%, 75% or 100%
of their fees until termination of their service. Investment
choices consist of a money market fund and phantom stock units.
Each phantom stock unit equates to one share of King common
stock valued at the closing price on the NYSE on the last
trading day of the quarter. The money market fund replicates the
value of the Fidelity Retirement Money Market Fund. Deferral
elections must be made by the December 31st preceding
the year in which deferrals are to be made. For 2008,
Mr. Deavenport elected to defer 100% of his director fees.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Human Resources Committee of the Board of
Directors is responsible for developing compensation philosophy.
Committee members since May 2008 are Earnest W.
Deavenport, Jr. (Chair), Gregory D. Jordan and Ted G. Wood.
No current member of the Compensation and Human Resources
Committee nor any person who was a member of the Committee
during 2008 is a current or former officer or employee of King.
In addition, there are no relationships among our executive
officers, members of the Compensation and Human Resources
Committee or entities whose executives serve on the Board of
Directors or the Compensation and Human Resources Committee that
require disclosure under applicable SEC regulations.
EXECUTIVE
OFFICERS
In addition to Mr. Markison, who serves as our President
and Chief Executive Officer, the following persons serve as
executive officers of King:
Joseph Squicciarino, age 53, has served as
Kings Chief Financial Officer since June 2005. Prior to
joining King, he was Chief Financial Officer North
America for Revlon, Inc., beginning in March 2005. From February
2003 until March 2005 he served as Chief Financial
Officer International for Revlon International, Inc.
He held the position of Group Controller
Pharmaceuticals Europe, Middle East, Africa with
Johnson & Johnson from October 2001 until October
2002. He held a variety of positions with the Bristol-Myers
Squibb Company and its predecessor, the Squibb Corporation, from
1979 until 2001, including Vice President Finance, International
Medicines; Vice President Finance, Europe
Pharmaceuticals & Worldwide Consumer Medicines; Vice
President Finance, Technical Operations; and Vice President
Finance, U.S. Pharmaceutical Group. Mr. Squicciarino
also serves on the Board of Directors of Zep, Inc., a
publicly-held company. He is a Certified Public Accountant, a
member of the New Jersey Society of Certified Public
45
Accountants and a member of the American Institute of Certified
Public Accountants. Mr. Squicciarino graduated from Adelphi
University in 1978 with a Bachelor of Science degree in
Accounting.
James W. Elrod, age 48, has served as Chief
Legal Officer since January 2009 and Secretary since May 2005.
He was General Counsel from February 2006 until January 2009 and
Acting General Counsel from February 2005 to February 2006. He
previously served in various positions within Kings Legal
Department, beginning in September 2003, including Vice
President, Legal Affairs. Prior to joining King, he served in
various capacities at Service Merchandise Company, Inc.
including Vice President, Legal Department. He previously
practiced law in Nashville, Tennessee. Mr. Elrod earned a
Juris Doctor degree from the University of Tennessee and a
Bachelor of Arts degree from Berea College.
Stephen J. Andrzejewski, age 43, has served
as Chief Commercial Officer since October 2005. He was
previously Corporate Head, Commercial Operations, commencing in
May 2004. Prior to joining King, Mr. Andrzejewski was
Senior Vice President, Commercial Business at Endo
Pharmaceuticals Inc., starting in June 2003. He previously
served in various positions with Schering-Plough Corporation
beginning in 1987, including Vice President of New Products and
Vice President of Marketing, and had responsibility for
launching the
Claritin®
product. Mr. Andrzejewski graduated cum laude from Hamilton
College with a Bachelor of Arts degree in 1987 and in 1992
graduated from New York Universitys Stern School of
Business with a Master of Business Administration degree.
Frederick Brouillette, Jr., age 58, has
served as Corporate Compliance Officer since August 2003. He was
Executive Vice President, Finance from January 2003 until August
2003 and, prior to that, Vice President, Risk Management
beginning in February 2001. Before joining King,
Mr. Brouillette, a Certified Public Accountant, was with
PricewaterhouseCoopers LLP for 4 years, serving most
recently in that firms Richmond, Virginia office providing
internal audit outsourcing and internal control consulting
services. He was formerly a chief internal audit executive for
two major public corporations and served for 12 years in
the public accounting audit practice of Peat, Marwick
Mitchell & Co., the predecessor firm to KPMG.
Mr. Brouillette is a member of the Virginia Society of
Certified Public Accountants, the American Institute of
Certified Public Accountants and the Institute of Internal
Auditors. He graduated with honors from the University of
Virginias McIntire School of Commerce in 1973 with a
Bachelor of Science degree in accounting.
Eric J. Bruce, age 52, has served as
President, Alpharma Animal Health since February 2009. He was
the Chief Technical Operations Officer from June 2005 until
February 2009. Prior to joining King, Mr. Bruce was Vice
President of Operations for Mallinckrodt Pharmaceuticals, a
position he had occupied since 2000. Previously, he was Vice
President of Manufacturing for Kendall Health Care from 1997
until 2000, and from 1996 until 1997 he held various positions
with INBRAND, including that of Senior Vice President of
Manufacturing. Mr. Bruce graduated from the Georgia
Institute of Technology in 1978 with a Bachelor of Science
degree in Industrial Management.
Eric G. Carter, M.D., Ph.D., age 57, has
served as Kings Chief Science Officer since January 2007.
Prior to joining King, he held several positions with
GlaxoSmithKline commencing in 1999, most recently as Vice
President and Global Head, Clinical Development and Medical
Affairs, Gastroenterology, R&D. His earlier experience at
GlaxoSmithKline included North American responsibility for
Gastroenterology and for emerging therapeutic areas.
Dr. Carter has served as a Clinical Associate Professor at
the University of North Carolina for the Division of Digestive
Diseases and Nutrition, School of Medicine. He previously held
academic positions with the University of California, where he
was responsible for establishing and directing many research
programs. After earning a bachelors degree in Biochemistry
from the University of London, Dr. Carter received his
medical degree from the University of Miami and a doctor of
philosophy degree from the University of Cambridge. He obtained
board certification from the American Board of Internal
Medicine, Gastroenterology and Clinical Nutrition and has
authored or co-authored more than 50 scientific publications.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our executive officers and directors, as well as owners of 10%
or more of our common stock, are subject to the reporting
requirements of Section 16(a) of the Securities Exchange
Act of 1934. Section 16(a) requires these persons to file
with the SEC reports of their holdings and transactions in King
Pharmaceuticals, Inc. common stock and options. Based on our
records and representations from these persons, we believe that
SEC beneficial ownership reporting requirements for 2008 were
met, except with respect to one inadvertent late Form 4
filing each by Messrs. Brouillette, Bruce, Green and
Markison, related to shares withheld for the payment of taxes as
the result of the vesting of certain restricted shares.
46
PROPOSAL 1
ELECTION OF CLASS I AND CLASS II DIRECTORS
The Board of Directors has nominated the following persons to
stand for election at the 2009 annual meeting of shareholders,
to serve until the 2010 annual meeting of shareholders, or until
the directors respective successors are elected and
qualified:
|
|
|
Class I:
|
|
R. Charles Moyer
|
|
|
D. Gregory Rooker
|
|
|
Ted G. Wood
|
|
|
|
Class II:
|
|
Earnest W. Deavenport, Jr.
|
|
|
Elizabeth M. Greetham
|
Information about the persons nominated for election as
Class I and Class II directors, along with information
about the Class III directors whose terms will continue
after the 2009 annual meeting of shareholders, is provided
beginning on page 4.
Unless authority to vote for any of these nominees is withheld,
the shares represented by proxies will be voted FOR the election
of the persons listed above. In the event that any nominee
becomes unable or unwilling to serve, the shares represented by
the enclosed proxy will be voted for the election of such other
person as the Board of Directors may recommend in his or her
place. We have no reason to believe that any nominee will be
unable or unwilling to serve as a director.
Election
of directors requires the affirmative vote of the holders
of a plurality of the shares of common stock represented at the
annual meeting.
The Board of Directors recommends a vote FOR the election
of each of the persons listed above.
47
PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee has appointed PricewaterhouseCoopers LLP, an
independent registered public accounting firm, to audit our
financial statements for the fiscal year ending
December 31, 2009. The Board proposes that the shareholders
ratify this appointment.
PricewaterhouseCoopers LLP audited our financial statements for
the fiscal year ended December 31, 2008. We expect that
representatives of PricewaterhouseCoopers LLP will be present at
the meeting, will be able to make a statement if they so desire,
and will be available to respond to appropriate questions.
The following table presents fees for professional audit
services rendered by PricewaterhouseCoopers LLP for the audit of
the companys annual financial statements for the years
ended December 31, 2008 and 2007, and fees billed for other
services rendered by PricewaterhouseCoopers LLP during those
periods.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit fees (1)
|
|
$
|
2,329,857
|
|
|
$
|
1,516,774
|
|
Audit related fees (2)
|
|
|
576,150
|
|
|
|
24,032
|
|
Tax fees (3)
|
|
|
248,670
|
|
|
|
295,847
|
|
All other fees (4)
|
|
|
1,212,867
|
|
|
|
370,573
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,367,544
|
|
|
$
|
2,207,226
|
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(1)
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Audit fees relate to work performed
for the audit of financial statements or to services that are
normally provided by the independent registered public
accounting firm in connection with statutory and regulatory
filings or in connection with its audit engagement.
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(2)
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Audit related fees consisted
principally of: assurance and related services that are
reasonably related to the performance of the audit or review of
financial statements; including employee benefit plan audits;
due diligence assistance services in connection with Kings
acquisition of Alpharma Inc.; and special procedures required to
meet certain regulatory requirements.
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(3)
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Fees for professional services
rendered by the independent registered public accounting firm
for tax compliance, tax advice, and tax planning.
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All other fees in 2008 and 2007
consisted of: subscriptions to services; fees associated with
service as Independent Review Organization in connection with
the requirements of the Corporate Integrity Agreement between
King and the Office of Inspector General of the United States
Department of Health and Human Services; and fees associated
with integration assistance services in connection with
Kings acquisition of Alpharma Inc.
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Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Registered Public Accounting
Firm
Consistent with SEC policies regarding auditor independence, the
Audit Committee has responsibility for retaining, compensating,
terminating and overseeing the work of our independent
registered public accounting firm, and for pre-approving audit,
audit-related and permitted non-audit services rendered by that
firm. In recognition of this responsibility, the Audit Committee
has established a policy to pre-approve all audit and
permissible non-audit services provided by the independent
registered public accounting firm.
Before the company or any of its subsidiaries engages the
independent registered public accounting firm to render a
service, the engagement must be either specifically approved by
the Audit Committee or entered into pursuant to the Audit
Committees pre-approval policy. Unless a type of service
has received general pre-approval, it requires specific
pre-approval by the Audit Committee. Each year, the Audit
Committee reviews, and updates as necessary, a policy defining
all Audit, Audit-related, Tax and All Other services that have
the general or specific pre-approval of the Audit Committee. The
Audit Committee specifically pre-approves the terms of audit
services engagements, including quarterly reviews and
Section 404 attestation services and approves, if
necessary, any changes in terms, conditions and fees resulting
from changes in audit scope, company structure or other matters,
from one year to the next. As regards the other kinds of
services, while the Audit Committee believes that the
independent registered public accounting firm can provide
services such as assurance and related services, tax compliance
and planning, and other permissible non-audit services that are
routine and recurring without impairing the auditors
independence, the Audit Committee carefully scrutinizes the
scope of each proposed type of service prior to granting either
general or specific pre-approval. In particular, the Audit
Committee considers the amount or range of estimated fees as a
factor in determining whether a proposed service would impair
the auditors independence. When the Audit Committee has
approved an estimated fee for a service, the pre-approval
applies to all services described in the approval. Any proposed
services exceeding these levels require specific pre-approval by
the Audit Committee. Requests to provide services that require
specific approval by the Audit Committee
48
must be submitted jointly to the Audit Committee by the
independent registered public accounting firm and the Chief
Financial Officer, and must include a joint statement as to
whether, in their view, the request or application is consistent
with the SECs and the Public Company Accounting Oversight
Boards rules on auditor independence. In 2008 and 2007 the
Audit Committee approved all services provided by
PricewaterhouseCoopers LLP, the fees for which are reflected in
the table above.
In the event the shareholders do not ratify the appointment of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm, the Audit Committee will reconsider its
appointment.
The
affirmative votes of the shares of common stock present
or represented by proxy at the meeting must exceed the opposing
votes
in order to ratify the appointment of the independent registered
public accounting firm.
The Board of Directors recommends a vote FOR ratification of the
appointment
of PricewaterhouseCoopers LLP as our independent registered
public accounting firm.
49
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PROPOSAL 3
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NON-BINDING
SHAREHOLDER PROPOSAL REQUESTING THE ADOPTION OF A MAJORITY
VOTING STANDARD IN THE ELECTION OF DIRECTORS
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King has been advised that a shareholder intends to present the
following proposal at the meeting. King will furnish the name,
address and number of shares held by the proponent upon receipt
of a request for this information directed to William
L. Phillips III, Assistant Secretary, King
Pharmaceuticals, Inc., 501 Fifth Street, Bristol, Tennessee
37620.
RESOLVED: That the shareholders of King
Pharmaceuticals (the Company) hereby request that
the board of directors amend the Companys governing
documents and take such other steps as may be necessary to
provide that at each shareholder meeting where there is an
uncontested election for the board of directors, a director
shall be elected by a majority of the votes cast with respect to
that director, with any incumbent director who fails to achieve
such a majority vote obliged to tender his or her resignation
and the board obliged to decide and state publicly within
90 days whether it has accepted that resignation.
Supporting
Statement
King Pharmaceuticals uses a plurality vote standard
to elect directors. Thus, in an uncontested election, there is
no way for shareholders to vote against an individual candidate;
shareholders can merely withhold support for that
candidate, who will be elected anyway. In effect, plurality
voting allows a candidate to be elected even if a substantial
majority of shares are not affirmatively voted in favor of that
candidate.
This proposal asks the Board to adopt a majority
vote policy for electing directors. This would mean that
nominees for the board must receive a majority of the votes cast
in order to be elected or re-elected to the board, i.e.,
the number of votes cast for a nominee must
exceed the number of votes cast against a nominee.
If the only options are to vote yes or to
withhold support, then a withhold vote
would count as a vote against the nominee.
In our view, an effective majority vote policy also requires
incumbent directors who fail to win re-election to resign from
the board. Without such a provision, the failure of a candidate
to achieve a majority might be viewed as creating a vacancy, and
state law may allow an incumbent to fill that
vacancy until his or her successor is chosen.
Allowing a director to hold onto his or her seat in that
situation undercuts the goal of majority voting, which is why
resignations are required at companies that adopt majority
voting and why in that situation a board must decide and
announce within 90 days whether it will accept the
resignation.
Majority voting has been adopted by dozens of companies in
recent years. In our view, such a majority vote
standard in director elections would give shareholders a more
meaningful role in the director election process. We believe
that this Company should make appropriate changes to its
governing documents to empower shareholders here.
We urge your support for this important director election
reform.
Board of
Directors Response
THE BOARD OF DIRECTORS OPPOSES THE NON-BINDING
PROPOSAL AND UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE
PROPOSAL FOR THE REASONS STATED BELOW.
The Board of Directors (the Board) has carefully
considered the non-binding proposal requesting the adoption of a
majority voting standard in the election of directors. For the
reasons outlined below, the Board does not believe that adoption
of the proposal is in the best interests of the company and its
shareholders. The Board believes the plurality vote standard
continues to be the best standard for electing the
companys directors, especially given shareholders
current important role in the identification, nomination and
election of directors and the Boards processes for
ensuring the quality of nominees and sitting directors. The
Board also believes a change in the voting standard is
unnecessary and could in fact lead to unintended and undesirable
consequences.
50
The company already has numerous processes in place to ensure
the quality of nominees to the Board.
The Board believes that the quality of the companys
directors is significantly more important than the voting
standard used to elect them, and that the existing processes for
identification, evaluation and nomination of director candidates
are very rigorous.
There are rigorous processes in place that provide for the
participation of shareholders in the identification and
evaluation of director candidates. Under provisions of the
companys bylaws, shareholders may nominate persons to
stand for election as director. Alternatively, shareholders may
also submit the names of director candidates to the Boards
Nominating and Corporate Governance Committee for consideration
as nominees of the Board. The Committee evaluates these
candidates using the same standards as for all other potential
nominees, considering the candidates education, business
experience, character and integrity, familiarity with public
companies as well as other pertinent criteria. The Board has in
the past also retained nationally-recognized firms to assist it
in locating highly-qualified director candidates.
The Board has already implemented, or is implementing,
numerous governance processes that help ensure the robustness of
the Board, including a variety of shareholder-requested changes
to governance processes. Many of these changes focus on
ensuring the quality of both director nominees and sitting
directors. Examples of these provisions are as follows:
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In 2007, the Board recommended, and shareholders approved, an
amendment to the companys charter by which director terms
are shortened, as they expire, from three years to one year. In
2010, all directors will stand for election annually.
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Directors, other than the Chief Executive Officer, may not serve
on the Board for more than 15 consecutive one-year terms.
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Directors may not sit on more than three public, for profit
corporate boards at any one time, and the CEO may not sit on
more than two.
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The company has adopted director independence standards which
are more stringent than those required by the New York Stock
Exchange, the exchange on which the companys common stock
trades.
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The Board has determined that, if the Chairman of the Board is
not an independent director, the Board shall appoint a Lead
Independent Director, whose duties include regularly meeting
with the Chairman of the Board; facilitating communications
among members of the Board; advising the Chairman of the Board
as to an appropriate schedule of Board meetings; consulting with
the Chairman of the Board in establishing agendas for Board
meetings and consulting with the chair of each Committee in
establishing agendas for Committee meetings; directing the
provision of any materials to the Board that he or she
determines to be necessary for the independent directors to
effectively and responsibly perform their duties; and acting as
liaison between the independent directors and the Chairman of
the Board.
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Directors are required regularly to attend director education
programs.
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The Board believes that the majority voting standard
contemplated by the proposal could result in a number of
unintended or undesirable consequences, as summarized below.
A majority voting standard could result in election outcomes
that reflect the interests of a minority of shareholders rather
than the majority. While the proposal may appear
straightforward, the Board believes it may not achieve its
stated intent. For example, under a majority voting standard, a
single-issue activist would need to mobilize only a minority of
the companys shareholders to achieve AGAINST
votes from a majority of the votes cast. Consequently, a
minority of the companys shares outstanding could act to
defeat a directors election. The Board believes it is
unlikely shareholders generally want the consequence of a
single-issue message to be the actual failure to elect a
particular director or group of directors, especially given that
the current plurality vote standard allows shareholders to
nonetheless register dissatisfaction by means of a
withhold vote for one or more directors. Further,
such vote-no campaigns against the election of one
or more of the Boards director nominees could force the
company to employ a proactive telephone solicitation, a second
mailing or other strategies to obtain the required votes. The
result would be increased spending for routine elections, which
is not the best expenditure of the companys resources.
51
A majority voting standard could cause significant
disruptions in the functioning of the Board or make it
impossible for the company to comply with applicable
regulations. The proposal fails to take into account the
fact that vacancies resulting from the adoption of majority
voting standard could be highly disruptive and could interfere
with the functioning of the Board and the company. Further, the
Board may face multiple simultaneous resignations or vacancies,
which might result in a failure by the company to meet New York
Stock Exchange listing requirements relating to the independence
and financial literacy of directors. In contrast, the
companys current voting and corporate governance
structure, under which shareholders may express dissatisfaction
with directors or nominees by withholding votes for them, allows
a stable Board to carefully evaluate appropriate responses to
shareholder dissatisfaction and avoids potential regulatory
violations.
A majority voting standard could create undesirable
consequences in light of proposed NYSE broker voting
rules. The consequences of adopting a majority
voting standard may not be fully understood in light of a
proposed NYSE rule that has been approved by the Exchange and is
being reviewed by the SEC. Under the proposed rule, a broker
would not be permitted to vote the shares of an account holder
for the election of directors if the account holder has not
provided voting instructions to his or her broker. If adopted,
this rule is expected to result in far fewer votes being cast in
future director elections because brokers representing investors
will no longer be able to cast the typically large number of
votes for which the account holder did not respond to the
request for voting instructions. Consequently, by significantly
reducing the number of votes cast, this NYSE rule, if adopted,
may allow a minority of shares or a single-issue activist to
defeat the election of a director or group of directors,
resulting in an outcome that may be unfair to the majority of
shareholders or inconsistent with the companys long-term
goals.
Plurality voting is the predominant method of voting at
public companies.
Plurality voting is the predominant voting standard for public
companies, particularly among those of the companys size.
The plurality voting standard yields a voting result that is
certain and delivers election results in a simple, efficient and
transparent manner. Moreover, the rules governing plurality
voting are well understood by shareholders. Every year,
thousands of companies and millions of individual voters, with
varying levels of sophistication, cast their votes for the
election of directors, and under the plurality system all voters
know exactly what to do. Moving to a majority voting standard
could jeopardize the simplicity, certainty and efficiency of the
current plurality system.
In 2006, a committee of the American Bar Association conducted a
study of the majority voting standard and recommended that
plurality voting continue to be the standard for corporations
that have not voluntarily adopted a different standard.
According to the committee, it is not advisable to alter
the existing plurality default rule. Although the Committee is
mindful of the criticisms of plurality voting, the Committee is
currently persuaded that the potential negative consequences of
failed elections, combined with the uncertainty of applying an
untested voting standard as the default rule for public
corporations, warrants the retention of the plurality voting
rule.
For the reasons stated above, the Board of Directors
unanimously recommends that you vote AGAINST this proposal.
The
affirmative votes of the shares of common stock present
or represented by proxy at the meeting must exceed the opposing
votes
in order to approve this non-binding shareholder proposal.
The Board of Directors recommends a vote AGAINST this
proposal.
52
OTHER
MATTERS
The Board knows of no matters which will be presented at the
annual meeting other than those discussed in this proxy
statement. However, if any other matters are properly brought
before the meeting, any proxy given pursuant to this
solicitation will be voted in accordance with the
recommendations of management.
A copy of our Annual Report on
Form 10-K
for fiscal 2008 has been posted on the Internet, along with this
Proxy Statement, each of which is accessible by following the
instructions in the Notice of Availability of Proxy Materials.
The Annual Report is not incorporated into this Proxy Statement
and is not considered proxy-soliciting materials.
We filed our Annual Report on
Form 10-K
with the SEC on March 2, 2009. We will mail without charge,
upon the request of a shareholder, a copy of our Annual Report
on
Form 10-K
for fiscal 2008, without exhibits. Requests should be directed
to Broadridge Financial Solutions, Inc. at
(800) 579-1639.
BY ORDER OF THE BOARD OF DIRECTORS
James W. Elrod
Chief Legal Officer and Secretary
Bristol, Tennessee
April 23, 2009
53
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KING PHARMACEUTICALS, INC.
501 FIFTH STREET
BRISTOL, TN 37620
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M.
Eastern Daylight Time the day before the meeting date. Have your proxy card in hand when you access the web site and
follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by King Pharmaceuticals, Inc.
in mailing proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions above to vote using the Internet and,
when prompted, indicate that you agree to receive or access shareholder communications
electronically in future years. |
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VOTE BY
PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Daylight Time the day before the meeting date.
Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to
King Pharmaceuticals, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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If you are not voting via telephone or the Internet, please detach
along perforated line and mail in the envelope provided promptly
as votes submitted by mail must be received prior to the annual meeting.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
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M13523-P76743
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KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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DETACH AND RETURN THIS PORTION ONLY |
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KING PHARMACEUTICALS, INC. |
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For All |
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Withhold All |
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For All Except |
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To withhold authority to vote for any individual nominee(s),
mark For All Except and write the number(s)
of the nominee(s) on the line below.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2 AND A VOTE AGAINST PROPOSAL 3.
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Vote on Directors |
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1. |
Election of Directors |
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Nominees: |
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01) R. Charles Moyer 04) Earnest W. Deavenport, Jr.
02) D. Gregory Rooker 05) Elizabeth M. Greetham
03) Ted G. Wood
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Vote on Proposals |
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For |
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Abstain |
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2. |
Ratification of appointment of
PricewaterhouseCoopers LLP
as independent registered public accounting firm for 2009. |
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3. |
Non-binding shareholder proposal requesting the adoption of
a majority voting standard in the election of directors. |
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Note: |
Please sign exactly as name appears on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator,
trustee or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by authorized person. |
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For address changes and/or comments,
please check this box and write them on the back where indicated. |
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Please indicate if you plan to attend this meeting.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
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KING PHARMACEUTICALS, INC.
ANNUAL MEETING OF SHAREHOLDERS
JUNE 4, 2009, 9:00 A.M. EASTERN DAYLIGHT TIME
Directions to The Umstead Hotel
100 Woodland Pond
Cary, North Carolina 27513
Tel: 919-447-4000
From RDU International Airport: Take I-40 East to Exit 287 (North Harrison Avenue).
Turn right onto North Harrison Avenue. At the first traffic light turn left onto SAS Campus Drive. The Umstead Hotel at 100 Woodland Pond is on the left.
Traveling on I-40 East: Follow I-40 East to Exit 287 (North Harrison Avenue).
Turn right onto North Harrison Avenue. At the first traffic light turn left onto SAS Campus Drive. The Umstead Hotel at 100 Woodland Pond is on the left.
Traveling on I-40 West: Follow I-40 West to Exit 287 (North Harrison Avenue).
Turn left onto North Harrison Avenue. At the second traffic light turn left onto SAS Campus Drive. The Umstead Hotel at 100 Woodland Pond is on the left.
Traveling on I-95 North: Follow I-95 North into North Carolina. Take I-40 West to Exit 287 (North Harrison Avenue). Turn left onto North Harrison Avenue. At
the second traffic light turn left onto SAS Campus Drive. The Umstead Hotel at 100 Woodland Pond is on the left.
Traveling on I-85 North: Follow I-85 North towards Durham, NC. From Durham, take Durham Freeway South (Hwy 147 South) to I-40 East. Follow I-40 East to
Exit 287 (North Harrison Avenue). Turn right onto North Harrison Avenue. At the first traffic light turn left onto SAS Campus Drive. The Umstead Hotel at 100 Woodland
Pond is on the left.
Traveling on I-85 South: Follow I-85 South to Durham, NC. From Durham, take Durham Freeway South (Hwy 147 South) to I-40 East. Follow I-40 East to Exit
287 (North Harrison Avenue). Turn right onto North Harrison Avenue. At the first traffic light turn left onto SAS Campus Drive. The Umstead Hotel at 100 Woodland Pond
is on the left.
Traveling on I-95 South: Follow I-95 South into North Carolina. Take I-40 West to Exit 287 (North Harrison Avenue). Turn left onto North Harrison Avenue. At
the second traffic light turn left onto SAS Campus Drive. The Umstead Hotel at 100 Woodland Pond is on the left.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
If you choose to attend the shareholders meeting, you will be required to present this Notice Regarding Internet Availability of Proxy Materials and valid photographic
identification.
M13524-P76743
ANNUAL MEETING OF SHAREHOLDERS OF
KING PHARMACEUTICALS, INC.
June 4, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2009 ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints each of James W. Elrod and William L. Phillips III, or either of them, with full power of substitution and
revocation as Proxy, to vote all shares of stock standing in my name on the books of King Pharmaceuticals, Inc. (the Company) at the close of business
on March 30, 2009, which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders of the Company to be held at The
Umstead Hotel, 100 Woodland Pond, Cary, North Carolina, on Thursday June 4, 2009, at 9:00 a.m., Eastern Daylight Time, and at any and all adjournments, upon the
matters set forth in the notice of the meeting. The Proxy is further authorized to vote according to the recommendation of management as to any other matters which
may come before the meeting. At the time of preparation of the Proxy Statement, the Board of Directors knows of no business to come before the meeting other than
that referred to in the Proxy Statement.
The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting of Shareholders of King Pharmaceuticals, Inc. and the related Proxy Statement.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON THE REVERSE SIDE AND WHEN NO INSTRUCTIONS ARE
GIVEN, WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD AS DESCRIBED IN THE ACCOMPANYING NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT AND ON THIS PROXY.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be signed on the reverse side)