def14a
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ý
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ Preliminary Proxy Statement
¨ Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Under Rule 14a-12
KELLOGG COMPANY
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
ý No fee required.
¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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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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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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Amount Previously Paid: |
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Form, Schedule or Registration Statement No: |
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KELLOGG
COMPANY, BATTLE CREEK, MICHIGAN
49017-3534
Dear
Shareowner:
It is my pleasure to invite you to attend the 2007 Annual
Meeting of Shareowners of Kellogg Company. The meeting will be
held at 1:00 p.m. Eastern Daylight Time on April 27,
2007 at the W. K. Kellogg Auditorium, 50 West Van Buren
Street, Battle Creek, Michigan.
The following pages contain the formal Notice of the Annual
Meeting and the Proxy Statement. Please review this material for
information concerning the business to be conducted at the
meeting and the nominees for election as Directors. Attendance
at the annual meeting will be limited to Shareowners only. If
you are a holder of record of Kellogg common stock and you plan
to attend the meeting, please detach the admission ticket
attached to your proxy card and bring it to the meeting.
If you plan to attend the meeting, but your shares are not
registered in your own name or you receive our proxy materials
electronically, please request an admission ticket by writing to
the following address: Kellogg Company Shareowner Services, One
Kellogg Square, Battle Creek, MI
49017-3534.
Evidence of your stock ownership, which you may obtain from your
bank, stockbroker, etc., must accompany your letter.
Shareowners without tickets will only be admitted to the
meeting upon verification of stock ownership.
Shareowners needing special assistance at the meeting are
requested to contact Shareowner Services at the address listed
above.
Your vote is important. Whether you plan to attend the meeting
or not, I urge you to vote your shares as soon as possible.
Please either sign and return the accompanying card in the
postage-paid envelope or instruct us by telephone or via the
Internet as to how you would like your shares voted. This will
ensure representation of your shares if you are unable to
attend. Instructions on how to vote your shares by telephone or
via the Internet are on the proxy card or voting instruction
card.
Sincerely,
A. D. David Mackay
President and Chief Executive Officer
March 19, 2007
ELECTRONIC VOTING:
You may now vote your shares by telephone or over the Internet.
Voting electronically is quick, easy, and saves us money.
Just follow the instructions on your proxy card or voting
instruction card.
ELECTRONIC DELIVERY:
Reduce paper mailed to your home and help lower our printing and
postage costs!
We are pleased to offer the convenience of viewing proxy
statements, Annual Reports to Shareowners, and related materials
on-line. With your consent, we will stop sending paper copies of
these documents unless you notify us otherwise.
To participate, follow the easy directions below.
You will receive notification when the materials are available
for review.
ACT NOW. . . . ITS FAST AND
EASY
Just follow these 2 easy steps:
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Log on to the Internet at
www.icsdelivery.com/kelloggs.
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2.
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Follow the instructions on the website.
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KELLOGG
COMPANY
One Kellogg Square
Battle Creek, Michigan
49017-3534
NOTICE
OF THE ANNUAL MEETING OF SHAREOWNERS
TO
BE HELD APRIL 27, 2007
TO OUR
SHAREOWNERS:
The 2007 Annual Meeting of Shareowners of Kellogg Company, a
Delaware corporation, will be held at 1:00 p.m. Eastern
Daylight Time on April 27, 2007 at the W. K. Kellogg
Auditorium, 50 West Van Buren Street, Battle Creek,
Michigan, for the following purposes:
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1.
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To elect four Directors for a three-year term to expire at the
2010 Annual Meeting of Shareowners;
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2.
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To ratify the Audit Committees appointment of
PricewaterhouseCoopers LLP for Kelloggs 2007 fiscal year;
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3.
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To consider and act upon a Shareowner proposal to prepare a
sustainability report, if presented at the meeting;
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4.
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To consider and act upon a Shareowner proposal to enact a
majority voting requirement, if presented at the
meeting; and
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5.
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To take action upon any other matters that may properly come
before the meeting, or any adjournments thereof.
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Only Shareowners of record at the close of business on
March 1, 2007 will receive notice of and be entitled to
vote at the meeting or any adjournments. We look forward to
seeing you there.
By Order of the Board of Directors,
Gary H. Pilnick
Senior Vice President,
General Counsel, Corporate Development and Secretary
March 19, 2007
TABLE OF
CONTENTS
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KELLOGG
COMPANY
ONE KELLOGG SQUARE
BATTLE CREEK, MICHIGAN
49017-3534
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON FRIDAY, APRIL 27, 2007
ABOUT THE
MEETING
Solicitation of Proxy. This proxy statement
and the accompanying proxy are furnished to Shareowners of
Kellogg Company in connection with the solicitation of proxies
for use at the 2007 Annual Meeting of Shareowners of Kellogg to
be held at 1:00 p.m. Eastern Daylight Time at the W. K.
Kellogg Auditorium, 50 West Van Buren Street, in Battle
Creek, Michigan, on Friday, April 27, 2007, or any
adjournments thereof. The enclosed proxy card is solicited by
Kelloggs Board of Directors.
Mailing Date. Kelloggs Annual Report for
2006, including financial statements, the Notice of the Annual
Meeting, this proxy statement, and the proxy, were first mailed
to Shareowners on or about March 19, 2007.
Who Can Vote Record Date. The
record date for determining Shareowners entitled to vote at the
annual meeting is March 1, 2007. Each of the approximately
397,644,084 shares of Kellogg common stock issued and
outstanding on that date is entitled to one vote at the annual
meeting.
How to Vote Proxy Instructions. If
you are a holder of record of Kellogg Company common stock, you
may vote your shares either (1) over the telephone by
calling a toll-free number, (2) by using the Internet or
(3) by mailing in your proxy card. Shareowners who hold
their shares in street name will need to obtain a
voting instruction card from the institution that holds their
shares and must follow the voting instructions given by that
institution.
The telephone and Internet voting procedures have been set up
for your convenience and have been designed to authenticate your
identity, to allow you to give voting instructions, and to
confirm that those instructions have been recorded properly. If
you would like to vote by telephone or by using the Internet,
please refer to the specific instructions on the proxy card. The
deadline for voting by telephone or via the Internet is
11:59 p.m. Eastern Daylight Time on Thursday,
April 26, 2007. If you wish to vote using the proxy card,
complete, sign, and date your proxy card and return it to us
before the meeting.
Whether you choose to vote by telephone, over the Internet or by
mail, you may specify whether your shares should be voted for
all, some or none of the nominees for Director
(Proposal 1); whether you approve, disapprove or abstain
from voting on the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent auditor for our 2007
fiscal year (Proposal 2); whether you approve, disapprove,
or abstain from voting on the Shareowner proposal to prepare a
sustainability report, which may be presented at the meeting
(Proposal 3); and whether you approve, disapprove or
abstain from voting on the Shareowner proposal to enact a
majority voting standard requirement, which may be presented at
the meeting (Proposal 4).
If you do not specify how you want to vote your shares on
your proxy card or voting instruction card, or voting by
telephone or over the Internet, we will vote them
For the election of all nominees for Director as set
forth under Proposal 1 Election of
Directors below, For Proposal 2,
Against Proposal 3 and Proposal 4, and
otherwise at the discretion of the persons named in the proxy
card.
When a properly executed proxy is received, the shares
represented thereby, including shares held under Kelloggs
Dividend Reinvestment Plan, will be voted by the persons named
as the proxy according to each Shareowners directions.
Proxies will also be considered to be voting instructions to the
applicable Trustee with respect to shares held in accounts under
Kelloggs Savings & Investment Plans.
Revocation of Proxies. If you are a holder of
record, you may revoke your proxy at any time before it is
exercised in any of three ways:
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(1)
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by submitting written notice of revocation to Kelloggs
Secretary;
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(2)
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by submitting another proxy by telephone, via the Internet or by
mail that is later dated and, if by mail, that is properly
signed; or
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(3)
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by voting in person at the meeting.
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If your shares are held in street name, you must contact your
broker or nominee to revoke and vote your proxy.
Quorum. A quorum of Shareowners is necessary
to hold a valid meeting. A quorum will exist if the holders
representing a majority of the votes entitled to be cast by the
Shareowners at the annual meeting are present, in person or by
proxy. Broker non-votes and abstentions are counted
as present at the annual meeting for purposes of determining
whether a quorum exists. A broker non-vote occurs
when a nominee, such as a bank or broker, holding shares for a
beneficial owner, does not vote on a particular proposal because
the nominee does not have discretionary voting power for that
particular item and has not received instructions from the
beneficial owner. Under current New York Stock Exchange rules,
nominees would have discretionary voting power for the election
of Directors (Proposal 1) and for ratification of
PricewaterhouseCoopers LLP as independent auditors
(Proposal 2), but not for the Shareowner proposals
(Proposal 3 and Proposal 4).
Required Vote. Our Board has adopted a
majority voting policy which applies to the election of
Directors. Under this policy, any nominee for Director who
receives a greater number of votes withheld from his
or her election than votes for such election is
required to offer his or her resignation following certification
of the Shareowner vote. Our Boards Nominating and
Governance Committee would then consider the offer of
resignation and make a recommendation to our independent
Directors as to the action to be taken with respect to the
offer. This policy does not apply in contested elections. For
more information about this policy, see Corporate
Governance Majority Voting for Directors; Director
Resignation Policy.
Under Delaware law, a nominee who receives a plurality of the
votes cast at the annual meeting will be elected as a Director
(subject to the resignation policy described above). The
plurality standard means the nominees who receive
the largest number of for votes cast are elected as
Directors. Thus, the number of shares not voted for the election
of a nominee (and the number of withhold votes cast
with respect to that nominee) will not affect the determination
of whether that nominee has received the necessary votes for
election under Delaware law. However, the number of
withhold votes with respect to a nominee will affect
whether or not our Director resignation policy will apply to
that individual. If any nominee is unable or declines to serve,
proxies will be voted for the balance of those named and for
such person as shall be designated by the Board to replace any
such nominee. However, the Board does not anticipate that this
will occur.
The affirmative vote of the holders representing a majority of
the shares present and entitled to vote at the annual meeting is
necessary to ratify the appointment of PricewaterhouseCoopers
LLP as our independent registered public accounting firm
(Proposal 2) and to approve the Shareowner proposals
(Proposal 3 and Proposal 4). Shares present but not
voted because of abstention will have the effect of a
no vote on Proposals 2, 3 and 4. If you do not
provide your broker or other nominee with instructions on how to
vote your street name shares, your broker or nominee
will not be permitted to vote them on non-routine matters (a
broker non-vote) such as Proposal 3 and
Proposal 4. Shares subject to a broker non-vote
will not be considered as present with respect to
Proposal 3 and Proposal 4 and will not affect the
outcome on those proposals.
Other Business. We do not intend to bring any
business before the meeting other than that set forth in the
Notice of the Annual Meeting and described in this proxy
statement. However, if any other business should properly come
before the meeting, the persons named in the proxy card intend
to vote in accordance with their best judgment on such business
and on any matters dealing with the conduct of the meeting
pursuant to the discretionary authority granted in the proxy.
Costs. We pay for the preparation and mailing
of the Notice of the Annual Meeting and proxy statement. We have
also made arrangements with brokerage firms and other
custodians, nominees, and fiduciaries for forwarding
proxy-soliciting materials to the beneficial owners of the
Kellogg common stock at our expense. In addition, we have
retained Georgeson Inc. to aid in the solicitation of proxies by
mail, telephone, facsimile,
e-mail and
personal solicitation. For these services, we will pay Georgeson
a fee of $12,500, plus reasonable expenses.
2
SECURITY
OWNERSHIP
Five Percent Holders. The following table
shows each person who, based upon their most recent filings or
correspondence with the Securities and Exchange Commission,
which we refer to as the SEC, beneficially owns more than 5% of
Kelloggs common stock.
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Percent of Class on
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Beneficial Owner
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Shares Beneficially
Owned
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December 31, 2006
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W. K. Kellogg Foundation Trust(1)
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93,759,190 shares(2
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23.6
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%
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c/o The Bank of New York Company,
Inc.
One Wall Street
New York, NY 10286
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George Gund III
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34,473,818 shares(3
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8.5
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%
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39 Mesa Street
San Francisco, CA 94129
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KeyCorp
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31,655,007 shares(4
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8.0
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%
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127 Public Square
Cleveland, OH
44114-1306
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(1) |
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The trustees of the W. K. Kellogg Foundation Trust (the
Kellogg Trust) are James M. Jenness, Sterling K.
Speirn, Shirley Bowser and The Bank of New York. The W. K.
Kellogg Foundation, a Michigan charitable corporation (the
Kellogg Foundation), is the sole beneficiary of the
Kellogg Trust. Under the agreement governing the Kellogg Trust
(the Agreement), at least one trustee of the Kellogg
Trust must be a member of the Kellogg Foundations Board,
and one member of Kelloggs Board must be a trustee of the
Kellogg Trust. The Agreement provides if a majority of the
trustees of the Kellogg Trust (which majority must include the
corporate trustee) cannot agree on how to vote the Kellogg
stock, the Kellogg Foundation has the power to direct the voting
of such stock. With certain limitations, the Agreement also
provides that the Kellogg Foundation has the power to approve
successor trustees, and to remove any trustee of the Kellogg
Trust. |
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According to Schedule 13G/A filed with the SEC on
February 13, 2007, The Bank of New York is a trustee of the
Kellogg Trust and shares voting and investment power with the
other three trustees with respect to the shares owned by the
Kellogg Trust. The Bank of New York and its subsidiaries hold
94,665,854 shares for various persons in various fiduciary
capacities. The Bank of New York has sole voting power for
153,103 shares, shared voting power for
94,512,751 shares (including those shares beneficially
owned by the Kellogg Trust), sole investment power for
743,827 shares and shared investment power for
93,783,776 shares (including those shares beneficially
owned by the Kellogg Trust). |
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According to Schedule 13G/A filed with the SEC on
February 13, 2007, George Gund III has sole voting
power for 184,650 shares, shared voting power for
34,289,168 shares, sole investment power for
66,650 shares and shared investment power for
6,252,881 shares. Of the shares over which Mr. Gund
has shared voting and investment power, 2,832,189 shares
are held by a nonprofit foundation of which Mr. Gund is one
of eight trustees and one of twelve members. Mr. Gund
disclaims beneficial ownership as to all of these shares. Gordon
Gund, a Kellogg Director, is a brother of George Gund III
and may be deemed to share voting or investment power over the
shares shown as beneficially owned by George Gund III, as
to which shares Gordon Gund disclaims beneficial ownership. |
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According to a Schedule 13G/A filed with the SEC on
January 31, 2007, KeyCorp, as trustee for certain Gund
family trusts included under (3) above, as well as other
trusts, has sole voting power for 3,488,309 shares, shared
voting power for 10,500 shares, sole investment power for
31,311,767 shares and shared investment power for
266,311 shares. |
3
Officer and Director Stock Ownership. The
following table shows the number of shares of Kellogg common
stock beneficially owned as of January 15, 2007, by each
non-employee Director, each executive officer included in the
Summary Compensation Table and all Directors and executive
officers as a group.
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Deferred Stock
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Total Beneficial
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Name
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Shares(1)
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Options(2)
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Units(3)
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Ownership(4)
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Percentage
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Non-Employee
Directors
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B. S. Carson Sr.
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16,674
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35,000
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0
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51,674
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*
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J. T. Dillon(5)
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17,151
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33,750
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0
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50,901
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*
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C. X. Gonzalez
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30,434
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29,999
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20,569
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81,002
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*
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G. Gund(6)
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47,014
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26,376
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47,915
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121,305
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*
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D. A. Johnson
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31,082
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29,715
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15,536
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76,333
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*
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L. D. Jorndt
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64,572
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19,270
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9,086
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92,928
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*
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A. M. Korologos
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25,431
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35,000
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15,004
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75,435
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*
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W. C. Richardson(7)(8)
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17,403
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35,000
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17,486
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69,889
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*
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J. L. Zabriskie
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26,084
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31,800
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17,947
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75,831
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*
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Named Executive
Officers
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J. M. Boromisa(9)
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108,130
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270,519
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0
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378,649
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*
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J. A. Bryant
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125,188
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514,668
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0
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639,856
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*
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A. F. Harris(10)
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168,037
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667,912
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0
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835,949
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*
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J. W. Montie
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111,522
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425,469
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0
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536,991
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*
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All Directors and executive
officers as a group (20 persons)(11)
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1,376,923
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4,800,684
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152,604
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6,330,211
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1.6
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%
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* |
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Less than 1%. |
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(1) |
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Represents the number of shares beneficially owned, excluding
shares which may be acquired through exercise of stock options
and units held under the Deferred Compensation Plan for
Non-Employee Directors. Includes the following number of shares
held in Kelloggs Grantor Trust for Non-Employee Directors
which are subject to restrictions on investment:
Dr. Carson, 15,374 shares; Mr. Dillon,
12,901 shares; Mr. Gonzalez, 22,098 shares;
Mr. Gund, 21,990 shares; Mr. Jenness,
9,399 shares; Ms. Johnson, 14,411 shares;
Mr. Jorndt, 9,462 shares; Ms. McLaughlin
Korologos 21,759 shares; Dr. Richardson,
17,003 shares; Dr. Zabriskie, 18,884 shares; and
all Directors as a group, 163,282 shares. These numbers
exclude the shares held in the Deferred Compensation Plan for
Non-Employee Directors. |
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(2) |
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Represents shares which may be acquired through exercise of
stock options as of January 15, 2007 or within 60 days
after that date. |
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(3) |
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Represents the number of common stock units held under the
Deferred Compensation Plan for Non-Employee Directors as of
January 15, 2007. The deferred stock units, or DSUs, have
no voting rights. For additional information, refer to
2006 Non-Employee Director Compensation and
Benefits Elective Deferral Program for a
description of this plan. |
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(4) |
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None of the shares listed have been pledged as collateral. |
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(5) |
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Includes 250 shares held for the benefit of a minor son,
over which Mr. Dillon disclaims beneficial ownership. |
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(6) |
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Includes 10,000 shares owned by Mr. Gunds wife.
Gordon Gund disclaims beneficial ownership of the shares
beneficially owned by his wife and George Gund III. |
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(7) |
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Dr. Richardson retired as a Director on February 16,
2007. He recently retired from his role as trustee of the
Kellogg Trust. Sterling K. Speirn, who was elected to the Board
effective March 1, 2007 to fill Dr. Richardsons
position, did not beneficially own any Kellogg common stock as
of the date of this table. |
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(8) |
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Does not include shares owned by the Kellogg Trust, as to which
Mr. Jenness and Dr. Richardson, as trustees of the
Kellogg Trust as of the date of this table, share voting and
investment power, or shares as to which the Kellogg Trust |
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or the Kellogg Foundation have current beneficial interest.
Dr. Richardson retired from his role as trustee of the
Kellogg Trust on January 31, 2007. Mr. Speirn filled
the vacancy created by Dr. Richardsons retirement
from the position of trustee of the Kellogg Trust. |
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Includes 2,002 shares held by his children, over which
Mr. Boromisa disclaims beneficial ownership. |
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(10) |
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Includes 8,825 shares owned by Mr. Harris wife. |
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(11) |
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Includes 20,785 shares owned by, or held for the benefit
of, spouses; 2,980 shares owned by, or held for the benefit
of, children, over which the applicable Director, or executive
officer disclaims beneficial ownership; 42,859 shares held
in Kelloggs Savings & Investment Plans, which
contain some restrictions on investment; and 119,429 restricted
shares, which contain some restrictions on investment. |
Section 16(a) Beneficial Ownership Reporting
Compliance. Section 16(a) of the Securities
Exchange Act of 1934 requires Kelloggs Directors,
executive officers, and greater-than-10% Shareowners to file
reports with the Securities and Exchange Commission. SEC
regulations require us to identify anyone who filed a required
report late during the most recent fiscal year. Based on our
review of these reports and written certifications provided to
us, we believe that the filing requirements for all of these
reporting persons were complied with, except that two
Form 4s for each of Mr. Gund, Mr. Gonzalez,
Dr. Zabriskie and Ms. McLaughlin Korologos were
inadvertently filed late. A Form 4 was filed in October
2006 for each of these Directors reporting these transactions.
5
CORPORATE
GOVERNANCE
Board-Adopted Corporate Governance
Guidelines. We operate under corporate governance
principles and practices that are designed to maximize long-term
Shareowner value, align the interests of the Board and
management with those of Kelloggs Shareowners and promote
high ethical conduct among Kelloggs Directors and
employees. The Board has focused on continuing to build upon our
strong corporate governance practices over the years. The
Boards current corporate governance guidelines include the
following:
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A majority of the Directors, and all of the members of the
Audit, Compensation, and Nominating and Governance Committees,
are required to meet the independence requirements of the New
York Stock Exchange.
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One of the Directors is designated a Lead Director, who approves
proposed meeting agendas and schedules, may call executive
sessions of the non-employee Directors and establishes a method
for Shareowners and other interested parties to use in
communicating with the Board.
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The Board reviews succession planning at least once per year.
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The Board and each Board committee have the power to hire
independent legal, financial or other advisors as they may deem
necessary, at Kelloggs expense.
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Non-employee Directors meet in executive session at least three
times annually.
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The Board and Board committees conduct annual self-evaluations.
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The independent members of the Board use the recommendations
from the Nominating and Governance Committee and Compensation
Committee to conduct an annual review of the CEOs
performance and determine the CEOs compensation.
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Non-employee Directors who change their principal responsibility
or occupation from that held when they were elected shall offer
his or her resignation for the Board to consider continued
appropriateness of Board membership under the circumstances.
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Directors have free access to Kellogg officers and employees.
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Continuing education is provided to Directors consistent with
our Board Education Policy.
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No Director may be nominated for a new term if he or she would
be seventy-two or older at the time of election.
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No Director shall serve as a Director, officer or employee of a
competitor.
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All Directors are expected to comply with stock ownership
guidelines for Directors, under which they are generally
expected to hold at least five times their annual cash retainer
in stock and stock equivalents.
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Majority Voting for Directors; Director Resignation
Policy. In an uncontested election of Directors
(that is, an election where the number of nominees is equal to
the number of seats open) any nominee for Director who receives
a greater number of votes withheld from his or her
election than votes for such election shall promptly
tender his or her resignation to the Nominating and Governance
Committee (following certification of the Shareowner vote) for
consideration in accordance with the following procedures.
The Nominating and Governance Committee would promptly consider
such resignation and recommend to the Qualified Independent
Directors (as defined below) the action to be taken with respect
to such offered resignation, which may include
(1) accepting the resignation; (2) maintaining the
Director but addressing what the Qualified Independent Directors
believe to be the underlying cause of the withheld votes;
(3) determining that the Director will not be renominated
in the future for election; or (4) rejecting the
resignation. The Nominating and Governance Committee would
consider all relevant factors including, without limitation,
(a) the stated reasons why votes were withheld from such
Director; (b) any alternatives for curing the underlying
cause of the withheld votes; (c) the tenure and
qualifications of the Director; (d) the Directors
past and expected future contributions to Kellogg;
(e) Kelloggs Director criteria;
(f) Kelloggs Corporate Governance Guidelines; and
(g) the overall composition of the Board, including whether
accepting the resignation would cause Kellogg to fail to meet
any applicable SEC or NYSE requirement.
The Qualified Independent Directors would act on the Nominating
and Governance Committees recommendation no later than
90 days following the date of the Shareowners meeting
where the election occurred. In considering the Nominating and
Governance Committees recommendation, the Qualified
Independent Directors would consider the
6
factors considered by the Nominating and Governance Committee
and such additional information and factors the Board believes
to be relevant. Following the Qualified Independent
Directors decision, Kellogg would promptly disclose in a
current report on
Form 8-K
the decision whether to accept the resignation as tendered
(providing a full explanation of the process by which the
decision was reached and, if applicable, the reasons for
rejecting the tendered resignation).
To the extent that any resignation is accepted, the Nominating
and Governance Committee would recommend to the Board whether to
fill such vacancy or vacancies or to reduce the size of the
Board.
Any Director who tenders his or her resignation pursuant to this
provision would not participate in the Nominating and Governance
Committees recommendation or Qualified Independent
Directors consideration regarding whether to accept the
tendered resignation. Prior to voting, the Qualified Independent
Directors would afford the Director an opportunity to provide
any information or statement that he or she deems relevant. If a
majority of the members of the Nominating and Governance
Committee received a greater number of votes
withheld from their election than votes
for their election at the same election, then the
remaining Qualified Independent Directors who are on the Board
who did not receive a greater number of votes
withheld from their election than votes
for their election (or who were not standing
for election) would consider the matter directly or may appoint
a Board committee amongst themselves solely for the purpose of
considering the tendered resignations that would make the
recommendation to the Board whether to accept or reject them.
For purposes of this policy, the term Qualified
Independent Directors means:
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All Directors who (1) are independent Directors (as defined
in accordance with the NYSE Corporate Governance Rules) and
(2) are not required to offer their resignation in
accordance with this policy.
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If there are fewer than three independent Directors then serving
on the Board who are not required to offer their resignations in
accordance with this policy, then the Qualified Independent
Directors shall mean all of the independent Directors and each
independent Director who is required to offer his or her
resignation in accordance with this Policy shall recuse himself
or herself from the deliberations and voting only with respect
to his or her individual offer to resign.
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Director Independence. The Board has
determined that all current Directors (other than
Mr. Jenness and Mr. Mackay) are independent based on
the following standards: (a) no entity (other than a
charitable entity) of which a Director is an employee in any
position or any immediate family member (as defined) is an
executive officer, made payments to, or received payments from,
Kellogg and its subsidiaries in any of the 2006, 2005, or 2004
fiscal years in excess of the greater of (1) $1,000,000 or
(2) two percent of that entitys annual consolidated
gross revenues; (b) no Director, or any immediate family
member employed as an executive officer of Kellogg or its
subsidiaries, received in any twelve month period within the
last three years more than $100,000 per year in direct
compensation from Kellogg or its subsidiaries, other than
Director and committee fees and pension or other forms of
deferred compensation for prior service not contingent in any
way on continued service; (c) Kellogg did not employ a
Director in any position, or any immediate family member as an
executive officer, during the past three years; (d) no
Director was currently employed by the present or former
independent or internal Kellogg auditor (Auditor),
no immediate family member of a Director was a current partner
of the Auditor, no Director or immediate family member was an
employee of the Auditor who personally worked on our audit
during the past three years and no immediate family member of a
Director was a current employee of the Auditor and participated
in the Auditors audit, assurance or tax compliance
practice; (e) no Director or immediate family member served
as an executive officer of another company during the past three
years at the same time as a current executive officer of Kellogg
served on the compensation committee of such company; and
(f) no other material relationship exists between any
Director and Kellogg or our subsidiaries. The Board also
determined that Mr. Perez and Dr. Richardson met the
above standards for Director independence in 2006 while they
served as Directors.
In connection with its independence determinations for
Mr. Speirn, the Board noted that Kellogg entered into two
agreements with the W. K. Kellogg Foundation Trust (the
Kellogg Trust), one dated as of November 8,
2005 (the 2005 Agreement) and one dated as of
February 16, 2006 (the 2006 Agreement, and
together with the 2005 Agreement, the Agreements)
under which we repurchased a total of 22,156,318 shares of
our common stock from the Kellogg Trust for an aggregate cash
purchase price of $950,000,000 (collectively, the
Trust Transactions). Mr. Speirn, a
recently elected Kellogg Director, became a trustee of the
Kellogg Trust in January 2007 and became the President and Chief
Executive Officer of the W. K. Kellogg Foundation (the
Kellogg Foundation), a charitable foundation that is
the sole beneficiary of the Kellogg Trust, in January 2006. In
connection with Mr. Speirns election to the Board,
the Board determined that
7
Mr. Speirn was independent under the NYSE listing
standards, and that the Agreements and the
Trust Transactions were not material for these purposes. In
reaching this conclusion, the Board took into account that:
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the Agreement and the contemplated Trust Transactions were
each negotiated on an arms-length basis and, on behalf of
the full Board, by a committee of the Board comprised of
independent Directors (with Directors who are affiliated with
the Kellogg Trust or Kellogg Foundation not participating in the
deliberations or approval);
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Mr. Speirn, and his predecessor, Dr. William C.
Richardson, did not participate in any of the Board
deliberations regarding the Agreements or any of the
Trust Transactions;
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the price of the shares sold in the Trust Transactions was based
on a discount to market;
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Mr. Speirn is not a beneficiary of the Kellogg Trust or of
the Kellogg Foundation;
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Mr. Speirns compensation with respect to his service
to the Kellogg Trust and the Kellogg Foundation was not related
to the Kellogg Trust Transactions; and
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Mr. Speirn did not and will not receive, directly or
indirectly, any of the proceeds of, or other interest in, the
Kellogg Trust Transaction.
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The Board also considered commercial ordinary-course
transactions with respect to several Directors as it assessed
independence status, including transactions relating to
purchasing supplies, selling product and marketing arrangements.
The Board concluded that these transactions did not impair
Director independence for a variety of reasons including that
the amounts in question were considerably under the thresholds
set forth in our independence standards and the relationships
were not deemed material.
Shareowner Recommendations for Director
Nominees. The Nominating and Governance Committee
will consider Shareowner nominations for membership on the
Board. For the 2008 Annual Meeting of Shareowners, nominations
may be submitted to the Office of the Secretary, Kellogg
Company, One Kellogg Square, Battle Creek, Michigan 49017, which
will forward them to the Chairman of the Nominating and
Governance Committee. Recommendations must be in writing and we
must receive the recommendation not earlier than the
120th day prior to the 2008 annual meeting and not later
than February 3, 2008. Recommendations must also include
certain other requirements specified in our bylaws.
The Nominating and Governance Committee believes that all
nominees must, at a minimum, meet the criteria set forth in the
Boards Code of Conduct and the Corporate Governance
Guidelines, which specify, among other things, that the
Nominating and Governance Committee will consider criteria such
as independence, diversity, age, skills and experience in the
context of the needs of the Board. The Nominating and Governance
Committee also will consider a combination of factors for each
nominee, including (1) the nominees ability to
represent all Shareowners without a conflict of interest;
(2) the nominees ability to work in and promote a
productive environment; (3) whether the nominee has
sufficient time and willingness to fulfill the substantial
duties and responsibilities of a director; (4) whether the
nominee has demonstrated the high level of character and
integrity that we expect; (5) whether the nominee possesses
the broad professional and leadership experience and skills
necessary to effectively respond to the complex issues
encountered by a multi-national, publicly-traded company; and
(6) the nominees ability to apply sound and
independent business judgment.
When filling a vacancy on the Board, the Nominating and
Governance Committee identifies the desired skills and
experience of a new director in light of the criteria described
above and the skills and experience of the then-current
Directors. The Nominating and Governance Committee may, as it
has done in the past, engage third parties to assist in the
search and provide recommendations. Also, Directors are
generally asked to recommend candidates for the position. The
candidates would be evaluated based on the process outlined in
the Corporate Governance Guidelines and the Nominating and
Governance Committee charter, and the same process would be used
for all candidates, including candidates recommended by
Shareowners.
Communication with the Board. Mr. Gund,
the Chairman of the Nominating and Governance Committee and the
Lead Director, usually presides at executive sessions of the
independent members of the Board. Mr. Gund may be contacted
at gordon.gund@kellogg.com. Any communications which Shareowners
may wish to send to the Board may be directly sent to
Mr. Gund at this
e-mail
address.
Attendance at Annual Meetings. All Directors
properly nominated for election are expected to attend the
annual meeting of Shareowners. All of our Directors attended the
2006 annual meeting of Shareowners.
8
Code of Ethics. We have adopted the Code of
Conduct for Kellogg Company Directors and Global Code of Ethics
for Kellogg Company employees (including the chief executive
officer, chief financial officer and corporate controller). Any
amendments to or waivers of the Global Code of Ethics applicable
to our chief executive officer, chief financial officer or
corporate controller will be posted on www.kelloggcompany.com.
There were no amendments to or waivers of the Global Code of
Ethics in 2006.
Availability of Corporate Governance
Documents. Copies of the Corporate Governance
Guidelines, the Charters of the Audit, Compensation, and
Nominating and Governance Committees of the Board, the Code of
Conduct for Kellogg Company Directors, and Global Code of Ethics
for Kellogg Company employees can be found on the Kellogg
Company website at www.kelloggcompany.com under Corporate
Governance. Shareowners may also request a free copy of
these documents from: Kellogg Company, P.O. Box CAMB,
Battle Creek, Michigan
49016-1986
(phone:
(800) 961-1413),
Ellen Leithold of the Investor Relations Department at that
same address (phone:
(269) 961-2800)
or investor.relations@kellogg.com.
BOARD AND
COMMITTEE MEMBERSHIP
The Board has the following standing committees: Audit,
Compensation, Nominating and Governance, Finance, Social
Responsibility, Consumer Marketing and Executive.
The Board held eight meetings in 2006. All of the incumbent
Directors attended at least 75% of the total number of meetings
of the Board and of all Board committees of which the Directors
were members during 2006.
The table below provides 2006 membership and meeting information
for each Board committee:
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Nominating
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and
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Social
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Consumer
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Audit
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Compensation
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Governance
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Finance
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Responsibility
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Marketing
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Executive
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B. S. Carson Sr.
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ü
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Chair
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J. T. Dillon
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Chair
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ü
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ü
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C. X. Gonzalez
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ü
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ü
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ü
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ü
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G. Gund
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ü
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Chair
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ü
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ü
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ü
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J. M. Jenness(1)
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Chair
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D. A. Johnson
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ü
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ü
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ü
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L. D. Jorndt
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ü
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ü
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ü
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A. D. D. Mackay(1)
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A. M. Korologos
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ü
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ü
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ü
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ü
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W. D. Perez(2)
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ü
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Chair
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W. C. Richardson(3)
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Chair
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ü
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J. L. Zabriskie
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Chair
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ü
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2006 Meetings
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4
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5
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3
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2
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2
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0
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(1) |
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Mr. Jenness and Mr. Mackay attend committee meetings
as members of management, other than portions of those meetings
held in executive session. |
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Mr. Perez resigned as a Director on November 14, 2006,
in connection with being named president and chief executive
officer of Wm. Wrigley Jr. Company. |
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(3) |
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Dr. Richardson retired as a Director on February 16,
2007. He was a trustee of the Kellogg Trust until his retirement
on January 31, 2007. Mr. Speirn, who was elected to
the Board effective March 1, 2007 to fill the vacancy
created by Dr. Richardsons retirement, was appointed
to the Social Responsibility and Consumer Marketing Committees. |
Audit Committee. Pursuant to a written
charter, the Audit Committee, among other responsibilities,
assists the Board in monitoring the integrity of our financial
statements, the independence and performance of our independent
registered public accountants, the performance of our internal
audit function and independent registered public accountants and
our compliance with legal and regulatory requirements. The Audit
Committee, or its Chairman, also pre-approves all audit,
internal control-related and permitted non-audit engagements and
services by the independent registered public accountants and
their affiliates. It also discusses
and/or
reviews specified matters with, and receives specified
information
9
or assurances from, Kellogg management and the independent
registered public accountants. The Committee also has the sole
authority to appoint or replace the independent registered
public accountants, which directly report to the Audit
Committee, and is directly responsible for the compensation and
oversight of the independent registered public accountants. Each
member of the Audit Committee has been determined by the Board
to be an audit committee financial expert, as that
term is defined in paragraph (h) of Item 401 of
SEC
Regulation S-K.
Each member has experience actively supervising a principal
financial officer
and/or
principal accounting officer. Each of the Committee members
meets the independence requirements of the New York Stock
Exchange.
Compensation Committee. Pursuant to a written
charter, the Compensation Committee, among other
responsibilities, reviews and makes recommendations for the
compensation of senior management personnel and monitors overall
compensation for senior executives; reviews and recommends,
subject to approval by the independent members of the Board, the
corporate goals and objectives and compensation of the Chief
Executive Officer; has sole authority to retain or terminate any
compensation consultant used to evaluate senior executive
compensation; oversees and administers employee benefit plans to
the extent provided in those plans; and reviews trends in
management compensation. The Committee may form and delegate
authority to subcommittees or the Chair when appropriate. To
assist the Compensation Committee in discharging its
responsibilities, the Committee has retained an independent
compensation consultant Towers Perrin. The
consultant reports directly to the Compensation Committee. Other
than the work it performs for the Compensation Committee and the
Board, Towers Perrin does not provide any consulting services to
Kellogg or its executive officers.
Each year, Towers Perrin presents the Compensation Committee
with peer group benchmarking data and information about other
relevant market practices and trends, and makes recommendations
to the Compensation Committee regarding target levels for
various elements of total compensation for senior executives,
which the Compensation Committee reviews and considers in its
deliberations. The CEO makes recommendations to the Compensation
Committee regarding the compensation package for each of the
NEOs (other than himself). Based on its review of the peer group
information, individual performance (taking into account input
from the CEO), input from the compensation consultant and other
factors, the Compensation Committee makes recommendations to the
Board regarding the compensation for the CEO and the other NEOs.
The independent members of the Board, meeting in executive
session, determine the compensation of the CEO. The full Board
determines the compensation of the other NEOs (unless an NEO is
also a Director, in which case he abstains from the
determination of his own compensation). Each of the Committee
members meets the independence requirements of the New York
Stock Exchange. For additional information about the
Compensation Committees processes for establishing and
overseeing executive compensation, refer to Compensation
Discussion and Analysis Our Compensation
Methodology.
Nominating and Governance Committee. Pursuant
to a written charter, the Nominating and Governance Committee,
among other responsibilities, assists the Board by identifying
and reviewing the qualifications of candidates for Directors and
in determining the criteria for new Directors; recommends
nominees for Director to the Board; recommends committee
assignments; reviews annually the Boards compliance with
the Corporate Governance Guidelines; reviews annually the
Corporate Governance Guidelines and recommends changes to the
Board; monitors the performance of Directors and conducts
performance evaluations of each Director before the
Directors renomination to the Board; administers the
annual evaluation of the Board; provides annually an evaluation
of CEO performance used by the independent members of the Board
in their annual review of CEO performance; considers and
evaluates potential waivers of the Codes of Conduct and Ethics
for Directors and senior officers (for which there were none in
2006), and makes a report to the Board on succession planning at
least annually; provides an annual review of the independence of
Directors to the Board; and reviews Director compensation
annually and recommends any changes to the Board. The Chairman
of this Committee, as Lead Director, also presides at executive
sessions of independent Directors of the Board. Each of the
Committee members meets the independence requirements of the New
York Stock Exchange.
Finance Committee. Pursuant to a written
charter, the Finance Committee, among other responsibilities,
reviews matters regarding our financial affairs, such as
strategic and operating plans, the financial terms of
acquisitions, divestitures, joint ventures and other
transactions, short- and long-term financing, foreign exchange
management, financial derivatives including commodities and
hedging, capital expenditures, dividends and taxes, financial
policies including cash flow, borrowing and dividend policy,
sales or repurchases of equity and long-term debt, finance,
treasury and related functions, insurance programs, pension
investment performance and pension plan compliance. The
Committee also receives a report from management which covers
any off-balance sheet transactions and confirms that Kellogg has
not made or arranged for any personal loan to any executive
officer or Director.
10
Social Responsibility Committee. Pursuant to a
written charter, the Social Responsibility Committee, among
other responsibilities, reviews the manner in which we discharge
our social responsibilities and recommends to the Board
policies, programs and practices it deems appropriate to enable
us to carry out and discharge our social responsibilities.
Kellogg views social responsibility as a way of life. This
commitment means investing in and enriching communities in which
we conduct business, as well as encouraging employee involvement
in these activities.
Consumer Marketing Committee. Pursuant to a
written charter, the Consumer Marketing Committee reviews, among
other responsibilities, matters regarding our marketing
activities, including strategies, programs, spending and
execution quality in order to help ensure that our marketing is
consistent with, and is sufficient to support, our overall
strategy and performance goals.
Executive Committee. Pursuant to a written
charter, the Executive Committee is generally empowered to act
on behalf of the Board between meetings of the Board, with some
exceptions.
11
PROPOSAL 1
ELECTION OF DIRECTORS
Kelloggs amended restated certificate of incorporation and
bylaws provide that the Board shall be comprised of not less
than seven and no more than fifteen Directors divided into three
classes as nearly equal in number as possible, and that each
Director shall be elected for a term of three years with the
term of one class expiring each year.
Four Directors are to be reelected at the 2007 Annual Meeting to
serve for a term ending at the 2010 Annual Meeting of
Shareowners, and the proxies cannot be voted for a greater
number of persons than the number of nominees named. There are
currently eleven members of the Board.
The Board recommends that the Shareowners vote
FOR the following nominees: Benjamin S.
Carson, Sr., Gordon Gund, Dorothy A. Johnson and Ann
McLaughlin Korologos. Each nominee was proposed for reelection
by the Nominating and Governance Committee for consideration by
the Board and proposal to the Shareowners.
Nominees
for Election for a Three-Year Term Expiring at the 2010 Annual
Meeting
BENJAMIN S. CARSON, SR. Dr. Carson, age 55, has
served as a Kellogg Director since 1997. He is Professor and
Director of Pediatric Neurosurgery, The Johns Hopkins Medical
Institutions, a position he has held since 1984, as well as
Professor of Oncology, Plastic Surgery, Pediatrics and
Neurosurgery at The Johns Hopkins Medical Institutions.
Dr. Carson is also a director of Costco Wholesale
Corporation.
GORDON GUND. Mr. Gund, age 67, has served as a
Kellogg Director since 1986. He is Chairman and Chief Executive
Officer of Gund Investment Corporation, which manages
diversified investment activities. He is also a director of
Corning Incorporated.
DOROTHY A. JOHNSON. Ms. Johnson, age 66, has
served as a Kellogg Director since 1998. Ms. Johnson is
President of the Ahlburg Company, a philanthropic consulting
agency, a position she has held since February 2000, and
President Emeritus of the Council of Michigan Foundations, which
she led as President and Chief Executive Officer from 1975 to
2000 and is on the Board of Directors of the Corporation for
National and Community Service and AAA Michigan. She has been a
member of the Board of Trustees of the W. K. Kellogg Foundation
since 1980.
ANN MCLAUGHLIN KOROLOGOS. Ms. McLaughlin Korologos,
age 65, has served as a Kellogg Director since 1989. She is
currently Chairman, RAND Board of Trustees, Chairman Emeritus of
The Aspen Institute, a nonprofit organization, and is a former
U.S. Secretary of Labor. She is also a director of AMR
Corporation (and its subsidiary, American Airlines), Host
Hotels & Resorts, Inc. and Harman International
Industries, Inc.
Continuing
Directors to Serve Until the 2009 Annual Meeting
JOHN T. DILLON. Mr. Dillon, age 68, has served
as a Kellogg Director since 2000. He is Vice Chairman of
Evercore Capital Partners and a Senior Managing Director of that
firms investment activities and private equity business.
He retired in October 2003 as Chairman of the Board and Chief
Executive Officer of International Paper Company, a position he
held since 1996, and retired as Chairman of the Business
Roundtable in June 2003. He is a director of the following
public companies: Caterpillar Inc. and E. I. du Pont de Nemours
and Company. He is also a director of the following
privately-held companies: Vertis, Inc. and Specialty
Products & Insulation Co.
JAMES M. JENNESS. Mr. Jenness, age 60, has been
Kellogg Chairman since February 2005 and has served as a Kellogg
Director since 2000. He was Kelloggs Chief Executive
Officer from February 2005 through December 30, 2006, and
Chief Executive Officer of Integrated Merchandising Systems,
LLC, a leader in outsource management of retail promotion and
branded merchandising, from 1997 to December 2004. Before
joining Integrated Merchandising Systems, Mr. Jenness
served as Vice Chairman and Chief Operating Officer of the Leo
Burnett Company from 1996 to 1997 and, before that, as Global
Vice Chairman North America and Latin America from 1993 to 1996.
He has also been a trustee of the W. K. Kellogg Foundation Trust
since 2005. He is also a director of Kimberly-Clark Corporation.
L. DANIEL JORNDT. Mr. Jorndt, age 65, has
served as a Kellogg Director since 2002. Mr. Jorndt retired
in January 2003 as a director of Walgreen Co. and from his
position as Chairman of the Board of Walgreen Co. He had been
Chairman of the Board since 1999, was Chief Executive Officer
from 1998 to 2002 and was Chief Operating Officer and President
from 1990 to 1999. He is also a director of The Investment
Company of America.
12
Continuing
Directors to Serve Until the 2008 Annual Meeting
CLAUDIO X. GONZALEZ. Mr. Gonzalez, age 72, has
served as a Kellogg Director since 1990. He has been Chairman of
the Board and Chief Executive Officer of Kimberly-Clark de
Mexico, S.A. de C.V., a producer of consumer disposable tissue
products. He is a director of the following public
companies: Kimberly-Clark Corporation, General Electric
Company, The Home Depot, Inc., The Investment Company of
America, Grupo Televisa, America Movil and The Mexico Fund. He
is also a director of the following privately-held
companies: Grupo ALFA, Grupo Mexico and Grupo Carso.
A. D. DAVID MACKAY. Mr. Mackay, age 51,
has served as a Kellogg Director since February 2005. On
December 31, 2006, he assumed the role of Kelloggs
President and Chief Executive Officer after having served as
Kelloggs President and Chief Operating Officer since
September 2003. Mr. Mackay joined Kellogg Australia in 1985
and held several positions with Kellogg USA, Kellogg Australia
and Kellogg New Zealand before leaving Kellogg in 1992. He
rejoined Kellogg Australia in 1998 as managing director and was
appointed managing director of Kellogg United Kingdom and
Republic of Ireland later in 1998. He was named Senior Vice
President and President, Kellogg USA in July 2000, Executive
Vice President in November 2000 and President and Chief
Operating Officer in September 2003. He is also a director of
Fortune Brands, Inc.
STERLING K. SPEIRN. Mr. Speirn, age 59, has
served as a Kellogg Director since March 1, 2007. He is
President and Chief Executive Officer of the W. K. Kellogg
Foundation. He is also a trustee of the W. K. Kellogg Foundation
Trust. Prior to joining the W. K. Kellogg Foundation in January
2006, he was President of Peninsula Community Foundation from
November 1992 to the end of 2005 and served as a director of the
Center for Venture Philanthropy, which he co-founded in 1999.
JOHN L. ZABRISKIE. Dr. Zabriskie, age 67, has
served as a Kellogg Director since 1995. He is also co-founder
and Director of PureTech Ventures, LLC, a firm that co-founds
life science companies. In 2001, he became Chairman of the Board
of Directors of MacroChem Corporation. In 1999, he retired as
Chief Executive Officer of NEN Life Science Products, Inc., a
position he had held since 1997. From November 1995 to January
1997, Dr. Zabriskie served as President and Chief Executive
Officer of Pharmacia & Upjohn, Inc. Dr. Zabriskie
is a director of the following public companies: Array
Biopharma, Inc. and MacroChem Corporation. He is also a director
of the following privately-held companies: Protein Forest, Inc.,
Puretech Ventures, L.L.C., ARCA Discovery and Cellicon
Biotechnologies.
13
2006
NON-EMPLOYEE DIRECTOR COMPENSATION AND BENEFITS
Only non-employee Directors receive compensation for their
services as Directors. Kelloggs 2006 compensation package
for non-employee Directors was comprised of cash (annual
retainers and committee meeting fees), stock awards and stock
option grants. The annual pay package is designed to attract and
retain highly-qualified, independent professionals to represent
our Shareowners and positioned to approximate the median of our
peer group. Refer to Compensation Discussion and
Analysis Our Compensation Methodology for a
description of the companies that make up our peer group. The
Nominating and Governance Committee generally reviews our
non-employee Director compensation program on an annual basis
with Towers Perrin, the independent compensation consultant,
including the competitiveness and appropriateness of the
program. Although the Nominating and Corporate Governance
Committee conducts this review on an annual basis, its general
practice is to consider adjustments to Director compensation
every other year.
Our compensation package is also designed to create alignment
between our Directors and our Shareowners through the use of
equity-based grants. In 2006, approximately 55% of non-employee
Director pay was in equity and approximately 45% in cash (prior
to elective deferrals by the Directors). Actual annual pay
varies among Directors based on Board committee memberships,
committee chair responsibilities and meetings attended.
2006 compensation for non-employee Directors consisted of the
following:
|
|
|
|
|
Type of Compensation
|
|
Amount
|
|
Annual Cash Retainer(1)
|
|
|
$70,000
|
|
Annual Stock Options Retainer
|
|
|
5,000 shares
|
|
Annual Stock Awards Retainer
|
|
|
1,700 shares
|
|
Annual Retainer for Committee
Chair:
|
|
|
|
|
Audit and Compensation Committees
|
|
|
$10,000
|
|
All Other Committees
|
|
|
$5,000
|
|
Board or Committee Attendance Fee
(per meeting attended):
|
|
|
|
|
Board Meeting Fee
|
|
|
$0
|
|
Audit Committee Meeting Fee
|
|
|
$2,000
|
|
All Other Committee Meetings(2)
|
|
|
$1,500
|
|
|
|
|
(1) |
|
The annual cash retainer is paid in quarterly installments. |
|
(2) |
|
No fee is payable for Executive Committee meetings held on the
same day as a regular Board meeting. |
Stock Option Awards. Stock option grants
(1) are made each year on January 31 or the next business
day, (2) are exercisable six months after the date of
grant, (3) have a ten-year term and (4) are granted
with exercise prices equal to the average of the high and low
trading prices of our stock on the date of grant. Prior to 2004,
we granted original options with an accelerated
ownership feature (AOF). Under the terms of the
original option grant, a new option, or AOF option,
is generally received when Kellogg stock is used to pay the
exercise price of a stock option and related taxes. The holder
of the option receives an AOF option for the number of shares so
used. For AOF options, the expiration date is the same as the
original option and the option exercise price is the fair market
value of Kelloggs stock on the date the AOF option is
granted. To better align with peer group compensation practices,
the Compensation Committee discontinued the use of the
accelerated ownership feature in all new option grants to
Directors and employees after 2003 and effective in 2007,
changed the AOF feature so that AOF options may only be received
once each calendar year.
Stock Awards. Stock awards are granted each
May 1 or the next business day and are automatically
deferred pursuant to the Kellogg Company Grantor Trust for
Non-Employee Directors. Under the terms of the Grantor Trust,
shares are available to a Director only upon termination of
service on the Board.
Business Expenses. The Directors are
reimbursed for their business expenses related to their
attendance at Kellogg meetings, including room, meals and
transportation to and from board and committee meetings. On rare
occasions, a Directors spouse accompanies a Director when
traveling on Kellogg business. At times, a Director travels to
and from Kellogg meetings on Kellogg corporate aircraft.
Directors are also eligible to be reimbursed for attendance at
qualified Director education programs.
14
Director and Officer Liability Insurance and Travel Accident
Insurance. Director and officer liability
insurance individually insures our Directors and officers
against certain losses that they are legally required to pay as
a result of their actions while performing duties on our behalf.
Kelloggs D&O insurance policy does not break out the
premium for Directors versus officers and, therefore, a dollar
amount cannot be assigned for individual Directors. Travel
accident insurance provides benefits to each Director in the
event of death or disability (permanent and total) during travel
on Kellogg corporate aircraft. Our travel accident insurance
policy also covers employees and others while traveling on
Kellogg corporate aircraft and, therefore, a dollar amount
cannot be assigned for individual Directors.
Elective Deferral Program. Non-employee
Directors may each year irrevocably elect to defer, under the
Deferred Compensation Plan for Non-Employee Directors, all or a
portion of their board annual cash retainer, committee Chair
annual retainers and committee meeting fees payable for the
following year. The amount deferred is credited to an account in
the form of units equivalent to the fair market value of our
common stock. If the Board declares dividends, a fractional unit
representing the dividend is credited to the account of each
participating Director. A participants account balance is
paid in cash or stock, at the election of the Director, upon
termination of service as a Director. The balance is paid in a
lump sum or over a period from one to ten years at the election
of the Director and the unpaid account balance accrues interest
annually at the prime rate in effect when the termination of
service occurred.
Minimum Stock Ownership Requirement. All
non-employee Directors are expected to comply with stock
ownership guidelines, under which they are expected to hold at
least five times the annual cash retainer in stock or stock
equivalents, subject to a five-year phase-in period for
newly-elected Directors. As of December 30, 2006, all of
the non-employee Directors satisfied this requirement by holding
Kellogg common stock or units equivalent in value to at least
$350,000 (i.e., five times the $70,000 annual cash
retainer).
Kellogg Matching Grant Program. Directors are
eligible to participate in our Corporate Citizenship Fund
Matching Grant Program, which is also available to all of our
active, full-time U.S. employees. Under this program, our
Corporate Citizenship Fund matches 100 percent of donations
made to eligible organizations up to a maximum of
$10,000 per calendar year for each individual. These limits
apply to both employees and Directors.
Discontinued Programs. Prior to December 1995,
we had a Directors Charitable Awards Program pursuant to
which each Director could name up to four organizations to which
Kellogg would contribute an aggregate of $1 million upon
the death of the Director. In 1995, the Board discontinued this
program for Directors first elected after December 1995. In
2006, the following current Directors, who were first elected to
the Board in 1995 or earlier, continued to be eligible to
participate in this program: Mr. Gonzalez, Mr. Gund,
Ms. McLaughlin Korologos and Dr. Zabriskie. We funded
the cost of this program for three out of the four eligible
Directors through the purchase of insurance policies prior to
2006. We will have to make cash payments in the future under
this program if insurance proceeds are not available at the time
of the Directors death. There were no cash payments made
in 2006 with respect to this program; however, in 2006, we
recognized nonpension postretirement benefits expense associated
with this obligation as follows: Mr. Gonzalez
$27,159, Mr. Gund $22,748, Ms. McLaughlin
Korologos $16,819 and Dr. Zabriskie
$23,495. These benefits are not reflected in the Non-Employee
Directors Compensation Table.
15
NON-EMPLOYEE
DIRECTORS COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity
|
|
and Nonqualified
|
|
|
|
|
|
|
Fees Earned
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
|
|
or Paid in
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name
|
|
Cash ($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
Earnings ($)(5)
|
|
($)(6)
|
|
($)
|
|
B. S. Carson Sr.
|
|
|
85,500
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
198,630
|
|
J. T. Dillon
|
|
|
94,500
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
5,500
|
|
|
|
213,130
|
|
C. X. Gonzalez
|
|
|
89,500
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
202,630
|
|
G. Gund
|
|
|
94,500
|
|
|
|
78,617
|
|
|
|
155,469
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
338,586
|
|
D. A. Johnson
|
|
|
80,500
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
Not Applicable
|
|
|
10,000
|
|
|
|
203,630
|
|
L. D. Jorndt
|
|
|
91,000
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
9,277
|
|
|
|
213,407
|
|
A. M. Korologos
|
|
|
89,500
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
208,630
|
|
W. D. Perez(7)
|
|
|
90,000
|
|
|
|
78,617
|
|
|
|
105,646
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
284,263
|
|
W. C. Richardson(8)
|
|
|
91,500
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
214,630
|
|
J. L. Zabriskie
|
|
|
105,500
|
|
|
|
78,617
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
218,630
|
|
|
|
|
(1) |
|
The aggregate dollar amount of all fees earned or paid in cash
for services as a Director, including annual board and committee
chair retainer fees, and committee meeting fees, in each case
before deferrals. |
|
(2) |
|
Value of the annual grant of 1,700 deferred shares of common
stock, which are placed in the Kellogg Company Grantor Trust for
Non-Employee Directors. Under the terms of the Grantor Trust,
shares are available to a Director only upon termination of
service on the Board. The value reflects the compensation
expense recognized by Kellogg during 2006 under Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based
Payment (SFAS No. 123(R)). The compensation
expense reflected in the table above is the same as the
grant-date fair value pursuant to SFAS No. 123(R)
because all of the stock awards vested during 2006. Refer to
Notes 1 and 8 to the Consolidated Financial Statements
included in our Annual Report on
Form 10-K
for the year ended December 30, 2006, for a discussion of
the relevant assumptions used in calculating the compensation
expense and grant-date fair value pursuant to
SFAS No. 123(R). The recognized compensation expense
and grant-date fair value of the stock-based awards for
financial reporting purposes will likely vary from the actual
amount the Director ultimately receives based on a number of
factors. These factors include our actual operating performance,
stock price fluctuations, differences from the valuation
assumptions used and the timing of vesting. As of
December 30, 2006, none of our Directors was deemed to have
outstanding restricted stock awards, because all of those awards
vested earlier in the year (or in prior years). The number of
shares of restricted stock held by each of our Directors is
shown under Officer and Director Stock Ownership on
page 4 of this proxy statement. |
|
(3) |
|
Value of the annual grant of options to purchase
5,000 shares of common stock (options have a ten-year term
and generally become exercisable six months after grant) plus
the value of any AOF options received by the Director. The value
reflects the compensation expense recognized by Kellogg during
2006 under SFAS No. 123(R). The compensation expense
reflected in the table above is the same as the grant-date fair
value pursuant to SFAS No. 123(R) because all of the
option awards vested during 2006. Refer to Notes 1 and 8 to
the Consolidated Financial Statements included in our Annual
Report on
Form 10-K
for the year ended December 30, 2006, for a discussion of
the relevant assumptions used in calculating the recognized
compensation expense and grant-date fair value pursuant to
SFAS No. 123(R). The recognized compensation expense
and grant-date fair value of the stock option awards for
financial reporting purposes will likely vary from the actual
amount ultimately realized by the Director based on a number of
factors. These factors include our actual operating performance,
stock price fluctuations, differences from the valuation
assumptions used and the timing of exercise. As of
December 30, 2006, the following Directors had the
following stock options outstanding: B. S. Carson, Sr.
35,000 options; J. T. Dillon 33,750 options; C. X. Gonzalez
29,999 options; G. Gund 26,376 options; D. A. Johnson 29,715
options; L. D. Jorndt 19,270 options; A. M. Korologos
35,000 options; W. D. Perez 26,337 options; W. C. Richardson
35,000 options; and J. L. Zabriskie 31,800 options. The
number of stock options held by our non-employee Directors is a
function of years of Board service and their decisions as to the
timing of exercise of vested awards. |
16
|
|
|
|
|
The table below presents the recognized compensation expense
separately for regular options and AOF options received by our
non-employee Directors in 2006: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular
|
|
AOF
|
|
|
|
|
Options
|
|
Options
|
|
|
|
|
($)
|
|
($)
|
|
Total
|
|
B. S. Carson, Sr.
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. T. Dillon
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. X. Gonzalez
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Gund
|
|
|
34,513
|
|
|
|
120,956
|
|
|
|
155,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. A. Johnson
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. D. Jorndt
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. M. Korologos
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. D. Perez
|
|
|
34,513
|
|
|
|
71,133
|
|
|
|
105,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. C. Richardson
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. L. Zabriskie
|
|
|
34,513
|
|
|
|
|
|
|
|
34,513
|
|
|
|
|
(4) |
|
Kellogg does not have a non-equity incentive plan for
non-employee Directors. |
|
(5) |
|
Kellogg does not have a pension plan for non-employee Directors
and does not pay above-market or preferential rates on
non-qualified deferred compensation for non-employee Directors. |
|
(6) |
|
Represents charitable matching contributions made under our
Corporate Citizenship Fund Matching Grant Program. |
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(7) |
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Mr. Perez resigned as a Director on November 14, 2006,
in connection with being named president and chief executive
officer of Wm. Wrigley Jr. Company. |
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(8) |
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Dr. Richardson retired as a Director on February 16,
2007. He was a trustee of the Kellogg Trust until his retirement
on January 31, 2007. Mr. Speirn, who was elected to
the Board effective March 1, 2007 to fill the vacancy
created by Dr. Richardsons retirement, did not
receive any Director compensation in 2006. |
17
COMPENSATION
DISCUSSION AND ANALYSIS
We are generally required to provide information regarding the
compensation program in place for our CEO, CFO and the three
other most highly-compensated executive officers. For continuity
purposes, we have also elected to include information concerning
an additional executive officer in this proxy statement. The SEC
rules required us to include information about this individual
in our proxy statement last year, and we expect that the rules
will require us to include information about him in our proxy
statement next year. In this proxy statement, we refer to our
CEO, CFO and the other four most highly-compensated executive
officers as our Named Executive Officers or
NEOs. This section includes information regarding,
among other things, the overall objectives of our compensation
program and each element of compensation that we provide. This
section should be read in conjunction with the detailed tables
and narrative descriptions under Executive
Compensation beginning on page 27 of this proxy
statement.
Overview of Kellogg Company. We are the
worlds leading producer of cereal and a leading producer
of convenience foods, including cookies, crackers, toaster
pastries, cereal bars, fruit snacks, frozen waffles and veggie
foods. Kellogg products are manufactured and marketed globally.
We manage our company for sustainable performance defined by our
long-term annual growth targets. During the periods presented in
our Annual Report on
Form 10-K
for the year ended December 30, 2006, these targets were
low single-digit for internal net sales, mid single-digit for
internal operating profit and high single-digit for net earnings
per share. In combination with an attractive dividend yield, we
believe this profitable growth has and will continue to provide
a strong total return to our Shareowners. We plan to continue to
achieve this sustainability through a strategy focused on
growing our cereal business, expanding our snacks business, and
pursuing selected growth opportunities. We support our business
strategy with operating principles that emphasize profit-rich,
sustainable sales growth, as well as cash flow and return on
invested capital. We believe our steady earnings growth, strong
cash flow and continued investment during a multi-year period of
significant commodity and energy-driven cost inflation
demonstrates the strength and flexibility of our business model.
Our Compensation Philosophy and Principles. We
operate in a competitive and challenging industry, both
domestically and internationally. We believe that our executive
compensation program for the CEO, CFO and other NEOs should be
designed to provide a competitive level of total compensation
necessary to attract and retain talented and experienced
executives and motivate them to contribute to Kelloggs
short- and long-term success and strong total return to our
Shareowners. Consistent with our business strategy discussed
above, our executive compensation program is driven by the
following principles:
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1.
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Overall Objectives. Compensation should be
competitive with the organizations with which we compete for
talent, and should reward performance and contribution to
Kellogg objectives.
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2.
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Pay for Performance. As employees assume
greater responsibility, a larger portion of their total
compensation should be at risk incentive
compensation (both annual and long-term), subject to corporate,
business unit and individual performance measures.
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3.
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Long-Term Focus. Consistent, long-term
performance is expected. Performance standards are established
to drive long-term sustainable growth.
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4.
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Shareowner Alignment. Equity-based incentives
are an effective method of facilitating an ownership culture and
further aligning the interests of executives with those of our
Shareowners. For example, about 70% of the 2006 target
compensation (salary, annual incentives and long-term
incentives) for Mr. Jenness, our CEO during 2006, was
comprised of equity-based incentives.
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5.
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Values-Based. The compensation program
encourages both desired results as well as the right behaviors.
In other words, our compensation is linked to how we
achieve as well as what we achieve. The shared
behaviors that Kellogg believes are essential to achieving
long-term growth in sales and profits and increased value for
Shareowners (what we call our K Values) are:
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Being passionate about our business, our brands and our food;
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Having the humility and hunger to learn;
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Striving for simplicity;
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Acting with integrity and respect;
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18
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Being accountable for our actions and results; and
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Recognizing success.
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Our Compensation Methodology. The Compensation
Committee of the Board is responsible for administering the
compensation program for executive officers and certain other
senior management of Kellogg. The Board has determined that each
member of the Compensation Committee meets the definition of
independence under Kelloggs corporate governance
guidelines and further qualifies as a non-employee Director for
purposes of
Rule 16b-3
under the Securities Exchange Act of 1934. None of the members
of the Compensation Committee are current or former employees of
Kellogg nor are any members eligible to participate in any of
Kelloggs executive compensation programs. Additionally,
the Compensation Committee operates in a manner designed to meet
the tax deductibility criteria included in Section 162(m)
of the Internal Revenue Code. Refer to Board and Committee
Membership beginning on page 9 for additional
information about the Compensation Committee and its members.
To assist the Compensation Committee in discharging its
responsibilities, the Committee has retained an independent
compensation consultant Towers Perrin. The
consultant reports directly to the Compensation Committee. Other
than the work it performs for the Compensation Committee and the
Board, Towers Perrin does not provide any consulting services to
Kellogg or its executive officers.
Each year, Towers Perrin presents the Compensation Committee
with peer group benchmarking data and information about other
relevant market practices and trends, and makes recommendations
to the Compensation Committee regarding target levels for
various elements of total compensation for senior executives,
which the Compensation Committee reviews and considers in its
deliberations. The CEO makes recommendations to the Compensation
Committee regarding the compensation package for each of the
NEOs (other than himself). Based on its review of the peer group
information, individual performance (taking into account input
from the CEO), input from the compensation consultant and other
factors, the Compensation Committee makes recommendations to the
Board regarding the compensation for the CEO and the other NEOs.
The independent members of the Board, meeting in executive
session, determine the compensation of the CEO. The full Board
determines the compensation of the other NEOs (unless an NEO is
also a Director, in which case he abstains from the
determination of his own compensation).
To ensure that our executive officer compensation is competitive
in the marketplace, we benchmark ourselves against a comparator
group (our compensation peer group). Our peer group
is comprised of the following branded consumer products
companies:
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Anheuser-Busch Cos., Inc.
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General Mills, Inc.
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Kraft Foods Inc.
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Campbell Soup Co.
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H.J. Heinz Co.
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PepsiCo Inc.
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Clorox Co.
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The Hershey Co.
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The Procter & Gamble Co.
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The
Coca-Cola
Co.
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Johnson & Johnson
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Sara Lee Corporation
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Colgate-Palmolive Co.
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Kimberly-Clark Corporation
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Wm. Wrigley Jr. Co.
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ConAgra Foods, Inc.
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We believe that our peer group is representative of the market
in which we compete for talent. The size of the group has been
established so as to provide sufficient benchmarking data across
the range of senior positions in Kellogg. Our peer group
companies were chosen because of their leadership positions in
branded consumer products and their general relevance to
Kellogg. The quality of these organizations has allowed Kellogg
to maintain a high level of continuity in the peer group over
many years, providing a consistent measure for benchmarking
compensation. The Compensation Committee periodically reviews
the peer group to confirm that it continues to be an appropriate
benchmark for Kellogg.
All components of our executive compensation package are
targeted at the 50th percentile of our peer group. Actual
pay will vary above or below the 50th percentile in line
with Kelloggs performance relative to the performance of
peer companies in the food and beverage group (our
performance peer group). The performance peer group
consists of the nine food companies in the broader compensation
peer group (Campbell Soup Co., ConAgra Foods, Inc., General
Mills, Inc., H.J. Heinz Co., The Hershey Co., Kraft Foods, Inc.,
PepsiCo Inc., Sara Lee Corporation and Wm. Wrigley Jr. Co.),
plus Unilever N.V. and Nestlé S.A. The performance peer
companies were chosen because they compete with us in the
consumer marketplace
and/or face
similar business dynamics and challenges.
The Compensation Committee annually reviews executive pay
tallies for NEOs (detailing the executives annual
pay target and actual and total
accumulated wealth under various performance and employment
scenarios) and peer group practices and performance (actual and
projected) to help ensure that the design of our program is
consistent with our compensation philosophy and that the amount
of compensation is within appropriate competitive parameters.
Based on
19
this review, the Compensation Committee has concluded that the
total compensation of each NEO (and, in the case of the
severance and
change-in-control
scenarios, potential payouts) is appropriate and reasonable.
Elements of Our Compensation Program. Our
executive officer compensation package includes a combination of
annual cash and long-term incentive compensation. Annual cash
compensation for executive officers is comprised of base salary
plus annual incentives. Long-term incentives currently consist
of stock option grants and a three-year long-term performance
plan.
Total Compensation. The target for total
compensation (salary, annual incentives, long-term incentives
and benefits), by element and in the aggregate, is the
50th percentile of our compensation peer group.
Compensation peer group practices are analyzed annually for
salary, target annual incentives and target long-term
incentives, and periodically for other pay elements. In setting
the total compensation of each executive, the Compensation
Committee also considers individual performance, experience in
the role and contribution to achieving Kelloggs business
strategy. In 2006, Kellogg ranked in the top quartile of its
performance peer group.
The basic construct of the primary elements of our 2006
executive officer pay package is outlined below.
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Element
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Purpose
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Characteristics
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Base Salaries
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Compensate executives for their
level of responsibility and sustained individual performance.
Also helps attract and retain strong talent.
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Fixed component; eligibility for
annual merit increases based on sustained individual performance.
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Annual
Incentives
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Promote the achievement of
Kelloggs annual corporate and business unit financial
goals, as well as individual goals.
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Performance-based cash
opportunity; amount earned will vary relative to the targeted
level (peer group 50th percentile) based on company,
business unit and individual results.
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Long-Term
Incentives
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Promote the achievement of
(a) Kelloggs long-term corporate financial goals
through the Executive Performance Plan and (b) stock price
appreciation through stock options.
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Performance-based equity
opportunity; amounts earned/realized will vary from the targeted
grant-date fair value based on actual financial and stock price
performance.
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Retirement
Plans
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Provide an appropriate level of
replacement income upon retirement. Also provide an incentive
for a long-term career with Kellogg, which is a key objective.
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Fixed component; however,
retirement contributions tied to pay will vary based on
performance.
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Post-Termination
Compensation
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Facilitate the attraction and
retention of high caliber executives in a competitive labor
market in which formal severance plans are common.
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Contingent component; only payable
if the executives employment is terminated as specified in
the arrangements (amount of severance benefits varies by level
in the organization).
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In setting total compensation, we apply a consistent approach
for all executive officers. The Compensation Committee also
exercises appropriate business judgment in how it applies the
standard approaches to the facts and circumstances associated
with each executive. Additional detail about each pay element is
presented below.
Base Salaries. Data on salaries paid to
comparable positions in our peer group are gathered and reported
to the Compensation Committee by the independent compensation
consultant each year. The Compensation Committee, after
receiving input from the compensation consultant, recommends to
the Board for its consideration and approval the salaries for
the CEO, CFO and other NEOs. The CEO provides input for the
salaries for the CFO and other NEOs. The Compensation Committee
generally seeks to establish base salaries for the CEO, CFO and
other NEOs at the 50th percentile of our compensation peer
group, which is the targeted market position to facilitate our
attraction and retention of executive talent. In 2006, the
salaries of each NEO approximated, on average, the compensation
peer group median.
By policy, we require any executive base salary above $950,000
(after pre-tax deductions for benefits and similar items) to be
deferred under our Executive Deferral Program. This policy
ensures that all base salary will be deductible under
Section 162(m) of the Internal Revenue Code. The deferred
amounts are credited to an account in the form of units that are
equivalent to the fair market value of Kelloggs common
stock. The units are payable in cash upon the executives
20
termination from employment. Only Mr. Jenness was affected
by this policy in 2006, and during that period, he deferred
$94,714 of his salary.
Annual Incentives. Annual incentive awards to
the CEO, CFO and NEOs are paid under the terms of the Kellogg
Senior Executive Annual Incentive Plan (AIP), which
is administered by the Compensation Committee. The total of all
annual incentives granted in any one year under the AIP may not
exceed 1% of our annual net income, as defined in the plan.
Annual incentive awards for the CEO, CFO and other NEOs are
intended to promote the achievement of Kelloggs annual
corporate and business unit financial goals, as well as
individual goals. Each year the Compensation Committee reviews
(1) our performance during the prior year and (2) our
performance objectives for the upcoming year. The Compensation
Committee also considers the actual and projected performance of
our performance peer group. The Compensation Committee uses this
information when considering recommendations from management
relating to performance goals for the upcoming year. The target
performance goals are generally set at the median of the
performance peer group. Consequently, actual performance above
the median would result in incentive payments above the target
level, with payments at the maximum level being made for
performance in the top quartile of the performance peer group.
Conversely, performance below the median would generally result
in incentive payments below the target level, with no payment
being made for performance below a minimum threshold (generally
set in the bottom quartile). The Compensation Committee believes
that this approach leads to realistic and reasonable, but
challenging, targets which drive sustainable growth.
The annual incentive opportunities are established as a
percentage of an executives base salary and are targeted
at the 50th percentile of the compensation peer group.
Actual AIP payments each year can range from 0% to 200% of the
target opportunity, based on corporate, business unit and
individual performance factors given the functions of the
particular executive. In 2006, Kellogg ranked in the first (top)
or second quartile of its performance peer group with respect to
each of the metrics for the 2006 AIP. The chart below includes
information about 2006 AIP opportunities and actual payout:
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2006 AIP Payout
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AIP Target
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AIP Maximum
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(paid in March 2007)
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% of Base
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% of AIP
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% of AIP
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Salary(1)
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Amount($)
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Target
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Amount($)
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Target
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Amount($)(2)
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J. M. Jenness
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130
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%
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1,460,550
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200
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%
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2,921,100
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170
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%
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2,482,900
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J. M. Boromisa
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75
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%
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358,650
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200
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%
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717,300
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138
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%
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494,900
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A. D. D. Mackay
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105
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%
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952,350
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200
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%
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1,904,700
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165
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%
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1,571,400
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A. F. Harris
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75
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%
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453,750
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200
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%
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907,500
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163
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%
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739,000
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J. W. Montie
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85
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%
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514,250
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200
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%
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1,028,500
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148
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%
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761,100
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J. A. Bryant
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75
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%
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427,500
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200
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%
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855,000
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163
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%
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697,000
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(1) |
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For AIP purposes, incentive opportunities are based on
executives salary levels at December 30. Annual
salary increases become effective in April of each year. |
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(2) |
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This amount is calculated by multiplying the executives
annualized base salary by (a) his AIP Target percentage as
shown in the first column of the table and (b) the
percentage of the AIP Target achieved as shown in the fifth
column of the table. For example, Mr. Mackays amount
is calculated by multiplying his annualized base salary of
$907,000 by (a) 105% and (b) 165%. |
The financial metrics for the 2006 AIP were based on internal
operating profit, internal net sales and cash flow. The
Compensation Committee and management believe that the metrics
for the 2006 AIP which are consistent with the
metrics used for the AIPs in the last several years
align well with our strategy of attaining sustainable growth. In
2006, Kellogg ranked in the first (top) or second quartile of
its performance peer group with respect to each of the three
measures. The Compensation Committee has the discretion to make
adjustments to performance goals and award opportunities to
mitigate the unbudgeted impact of unusual or nonrecurring gains
and losses, accounting changes or other extraordinary events not
foreseen at the time the performance goals or award
opportunities were established. With respect to the 2006 AIP,
the Compensation Committee made adjustments to mitigate the
impact of certain items of this nature.
We did not pay any bonuses outside of our AIP to our NEOs in
2006.
Long-Term
Incentives. General. Long-term
incentive awards for the CEO, CFO and other NEOs are granted in
order to promote achieving Kelloggs long-term corporate
financial goals and stock price appreciation. Each year, the
21
Compensation Committee reviews and makes recommendations to the
Board as to the long-term incentive awards for each of the NEOs.
In determining the total value of the long-term incentive
opportunity for each executive, the Compensation Committee
reviews the peer group data presented by its compensation
consultant on a
position-by-position
basis. Kelloggs long-term compensation program has
consisted of a mix of stock options and performance-based stock
awards, which the Compensation Committee evaluates each year.
Long-term incentives are provided to Kelloggs executives
under the 2003 Long-Term Incentive Plan, or LTIP
(the LTIP was approved by Shareowners). The LTIP permits grants
of stock options, stock appreciation rights, restricted shares
and performance shares and units. The plan is intended to meet
the deductibility requirements of Section 162(m) of the
Internal Revenue Code as performance-based pay (resulting in
paid awards being tax deductible to Kellogg).
All of the 2006 long-term incentive opportunity was provided
through equity-based awards, which the Compensation Committee
believes best achieves the compensation principles for the
program. For 2006, the Compensation Committee determined that
the NEOs would receive 70% of their total long-term incentive
opportunity in stock options and the remaining 30% in
performance shares (granted under the Executive Performance Plan
as discussed below). This award mix was set based on
consideration of the compensation principles, as well as peer
group practices and cost implications. The total amount of
long-term incentives (based on the grant date expected value) is
generally targeted at the 50th percentile of the peer group.
Stock Options. The Compensation Committee uses
annual grants of stock options to deliver competitive
compensation that recognizes executives for their contributions
to Kellogg and aligns executives with Shareowners in focusing on
long-term growth and stock performance. Stock options are
granted annually based on pre-established grant guidelines
calibrated to competitive standards and approved by the
Compensation Committee under the LTIP with exercise prices equal
to the average of the high and low trading prices of our stock
on the date of grant. Beginning in 2007, the exercise price of
our options will be set at the closing trading price on the date
of grant. Our options have a ten-year term. These options
provide value to the executive only if Kelloggs stock
price increases after the grants are made.
A wide range of employees participate in Kelloggs LTIP.
After considering recommendations from the independent
compensation consultant and management, on February 16,
2006, the Compensation Committee recommended to the Board an
overall stock option pool for approximately 2,500 employees, as
well as individual option grants to executives. On
February 17, 2006, the Board reviewed and approved the
overall pool and the individual option grants to executives.
Awards of options below the executive level are made by managers
in accordance with authority delegated by the Board, subject to
various internal guidelines and controls.
These options vest and become exercisable in two equal annual
installments, with 50% vesting on February 17, 2007 (the
first anniversary of the grant date), and the other 50% vesting
on February 17, 2008 (the second anniversary of the grant
date). The per-share exercise price for the stock options is
$44.46, the average of the high and low trading prices of
Kellogg common stock on the date of the grant. The stock options
expire on February 16, 2016. Approximately 81% of the stock
options covered by the February 17, 2006 grant were made to
employees other than the NEOs. Individual awards vary from
target based on the individuals performance, ability to
impact financial performance and future potential.
EPP. The Executive Performance Plan
(EPP), which is part of the LTIP, is a stock-based,
pay-for-performance,
multi-year incentive plan intended to focus senior management on
achieving critical multi-year operational goals that are
designed to increase Shareowner value, such as cash flow,
internal net sales growth and gross margin improvement. The
Compensation Committee seeks to set performance goals that lead
to realistic, yet challenging targets which drive sustainable
growth. About 100 of our most senior employees are participating
in the EPP covering fiscal years 2006 through 2008, including
the NEOs. Performance is generally measured on a cumulative
basis over the three-year performance period based on target
levels set at the start of the period. The final award under
outstanding EPPs, if any, would be paid in Kellogg common stock.
The incentive targets for individuals participating in
EPPs are based on market-competitive data and are
established at the start of the performance cycle. Under the
2006 EPP, each individuals target was set at 30% of his or
her total long-term incentive opportunity. Participants in the
EPP have the opportunity to earn between 0% and 200% of their
EPP target.
The
2006-2008
EPP cycle began on January 1, 2006 and concludes on
January 3, 2009. The
2006-2008
awards are based on compound annual growth in internal net sales
(adjusted for changes in foreign currency values, certain
acquisitions and divestitures and sales days). The
2006-2008
EPP emphasizes the importance of top line growth, which the
Compensation Committee and management believe is one of the key
drivers of Shareowner value.
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Dividends are not paid on unvested EPP awards. The
2006-2008
EPP award opportunities, presented in number of potential shares
earned, are included in the Grant of Plan-Based Awards Table on
page 31 of this proxy statement.
Restricted Stock. In addition, we award
restricted shares from time to time to selected executives and
employees based on consideration of performance and other
factors (e.g., to facilitate recruitment and retention). In
2006, one of our NEOs received a restricted stock award for
retention purposes.
Post-Termination Compensation. The NEOs are
covered by arrangements which specify payments in the event the
executives employment is terminated. The type and amount
of payments vary by executive level and the nature of the
termination. These severance benefits, which are competitive
with the compensation peer group and general industry practices,
are payable if and only if the executives employment
terminates as specified in the applicable plan document or
employment agreement. For more information, please refer to
Potential Post-Employment Payments, which begins on
page 44 of this proxy statement.
Retirement Plans. The NEOs participate in the
full range of benefits and are covered by the same plans (with
exceptions noted) on the same terms as provided to all
U.S. salaried employees. The plans are designed to provide
an appropriate level of replacement income upon retirement.
Kellogg targets its overall benefits to be competitive with
median levels at leading consumer products companies (a group
which is somewhat broader than the compensation peer group used
for pay comparisons). These benefits consist of:
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annual accruals under our pension plans; and
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deferrals by the executive of salary and annual incentives, and
matching contributions by us, under our savings and investment
plans.
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Both our pension program and our savings and investment program
include supplemental plans for our executives, which allow us to
provide benefits comparable to those which would be available
under our IRS qualified plans if the IRS regulations did not
include limits on covered compensation and benefits. We refer to
these plans as restoration plans because they
restore benefits that would otherwise be available under the
plans in which all of our U.S. salaried employees are
eligible to participate. These plans use the same benefit
formulas as our broad-based IRS qualified plans, and use the
same types of compensation to determine benefit amounts.
Amounts earned under long-term incentive programs such as EPP,
gains from stock options and awards of restricted stock are not
included when determining retirement benefits for any employee
(including executives). We do not pay above-market interest
rates on amounts deferred under our savings and investment plans.
The amount of an employees compensation is an integral
component of determining the benefits provided under pension and
savings plan formulas, and thus an individuals performance
over time will influence the level of his or her retirement
benefits. The amount of Kellogg contributions to our retirement
plans is included in the Summary Compensation Table. For more
information, please refer to Retirement and Non-Qualified
Defined Contribution and Deferred Compensation Plans,
which begins on page 39 of this proxy statement.
Perquisites. The Compensation Committee
believes that it has taken a conservative approach to
perquisites relative to other companies in the compensation peer
group. For example, Kellogg does not provide company cars or
club memberships to the NEOs. Pursuant to a policy adopted by
the Board, our CEO is generally required, when practical, to use
company aircraft for personal travel for security reasons.
Personal use of company aircraft by other NEOs is infrequent.
Kellogg does not provide tax
gross-ups on
perquisites. The Summary Compensation Table beginning on
page 27 of this proxy statement contains itemized
disclosure of all perquisites to our NEOs, regardless of amount.
Employee Stock Purchase Plan. We have a
tax-qualified employee stock purchase plan, which is made
available to all U.S. employees (including executive
officers), which allows participants to acquire Kellogg stock at
a discount price. The purpose of the plan is to encourage
employees at all levels to purchase stock and become
Shareowners. The plan allows participants to buy Kellogg stock
at a 15% discount to the market price with up to 10% of their
base salary (subject to IRS limits). Under applicable tax law,
no plan participant may purchase more than $25,000 in market
value (based on the market value of Kellogg stock on the last
trading day prior to the beginning of the enrollment period for
each subscription period) of Kellogg stock in any calendar year.
Although this benefit is generally available to all
U.S. employees, we have included the compensation expense
of any discounted stock purchased by our NEOs in the Summary
Compensation Table.
Executive Compensation Policies. Executive
Stock Ownership Guidelines. In order to preserve
the linkage between the interests of senior executives and those
of Shareowners, senior executives are expected to establish and
23
maintain a significant level of direct stock ownership. This can
be achieved in a variety of ways, including by retaining stock
received upon exercise of options or the vesting of stock awards
(including EPP awards), participating in the Employee Stock
Purchase Plan and purchasing stock in the open market. The
current stock ownership guidelines (minimum requirements) are as
follows:
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Chief Executive Officer
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5x
annual base
salary
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Global Leadership Team members
(includes other NEOs)
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3x
annual base salary
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Other senior executives
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2x
annual base
salary
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These executives have five years from the date they first become
subject to a particular level of the guidelines to meet them. As
of December 30, 2006, all of our NEOs met the guidelines
(other than Mr. Jenness, who had served in the CEO position
for approximately two years and was on track to meet his
ownership guideline), and all of our other senior executives met
or were on track to meet their ownership guideline. The
Compensation Committee reviews compliance with the guidelines on
an annual basis. Executives who are not in compliance with the
guidelines may not sell stock without prior permission from our
Chief Executive Officer, except for stock sales used to fund the
payment of taxes and transaction costs incurred in connection
with the exercise of options and the vesting of stock awards.
Practices Regarding the Grant of Equity
Awards. The Board has generally followed a
practice of making all option grants to executive officers on a
single date each year. Prior to the relevant Board meeting, the
Compensation Committee reviews an overall stock option pool for
all participating employees (approximately 2,500 in
2006) and recommendations for individual option grants to
executives. Based on the recommendation from the Compensation
Committee, the Board reviews and approves the overall pool and
the individual option grants to executives.
The Board grants these annual awards at its regularly-scheduled
meeting in mid-February. The February meeting usually occurs
within 2 or 3 weeks following our final earnings release
for the previous fiscal year. We believe that it is appropriate
that annual awards be made at a time when material information
regarding our performance for the preceding year has been
disclosed. We do not otherwise have any program, plan or
practice to time annual option grants to our executives in
coordination with the release of material non-public
information. EPP Awards are granted at the same time as options.
While most of our option awards to NEOs have historically been
made pursuant to our annual grant program, the Compensation
Committee and Board retain the discretion to make additional
awards of options or restricted stock to executives at other
times for recruiting or retention purposes. We do not have any
program, plan or practice to time off-cycle awards
in coordination with the release of material non-public
information.
All option awards made to our NEOs, or any of our other
employees or Directors, are made pursuant to our LTIP. As noted
above, all options under the LTIP are granted with an exercise
price equal to the average of the high and low trading prices of
our stock on the date of grant. Beginning in 2007, the exercise
price of our options will be set at the closing trading price on
the date of grant. We do not have any program, plan or practice
of awarding options and setting the exercise price based on the
stocks price on a date other than the grant date, and we
do not have a practice of determining the exercise price of
option grants by using average prices (or lowest prices) of our
common stock in a period preceding, surrounding or following the
grant date. All grants to NEOs are made by the Board itself and
not pursuant to delegated authority. Awards of options to
employees below the executive level are made by our CEO,
pursuant to authority delegated by the Board and subject to the
Board-approved allocation.
Securities Trading Policy. Our securities
trading policy prohibits our directors, executives and other
employees from engaging in any transaction in which they may
profit from short-term speculative swings in the value of
Kelloggs securities. This includes short sales
(selling borrowed securities which the seller hopes can be
purchased at a lower price in the future) or short sales
against the box (selling owned, but not delivered
securities), put and call options
(publicly available rights to sell or buy securities within a
certain period of time at a specified price or the like) and
hedging transactions, such as zero-cost collars and forward sale
contracts. In addition, this policy is designed to ensure
compliance with relevant SEC regulations, including insider
trading rules.
Recoupment of Option Awards. We maintain
clawback provisions relating to stock option exercises. Under
these clawback provisions, if an executive voluntarily leaves
our employment to work for a competitor within one year after
any option exercise, then the executive must repay to Kellogg
any gains realized from such exercise (but reduced by any tax
withholding or tax obligations).
24
Deductibility of Compensation and Other Related
Issues. Section 162 (m) of the Internal
Revenue Code includes potential limitations on the deductibility
of compensation in excess of $1 million paid to the
companys CEO and four other most highly compensated
executive officers serving on the last day of the year. Based on
the regulations issued by the Internal Revenue Service, we have
taken the necessary actions to ensure the deductibility of
payments under the AIP and with respect to stock options and
performance shares granted under our plans, whenever possible.
We intend to continue to take the necessary actions to maintain
the deductibility of compensation resulting from these types of
awards. In contrast, restricted stock granted under our plans
generally does not qualify as performance-based
compensation under Section 162(m). Therefore, the
vesting of restricted stock in some cases will result in a loss
of tax deductibility of compensation, including in the case of
the CEO. We view preserving tax deductibility as an important
objective, but not the sole objective, in establishing executive
compensation. In specific instances we have and in the future
may authorize compensation arrangements that are not fully tax
deductible but which promote other important objectives of the
company.
The Compensation Committee also reviews projections of the
estimated accounting (pro forma expense) and tax impact of all
material elements of the executive compensation program.
Generally, accounting expense is accrued over the requisite
service period of the particular pay element (generally equal to
the performance period) and Kellogg realizes a tax deduction
upon the payment to/realization by the executive. As a result of
the impact AOF options have on our overall non-cash compensation
expense, the Compensation Committee discontinued the use of the
AOF in all new option grants after 2003. In 2006, the
Compensation Committee also changed the AOF feature so that AOF
options may be received only once each calendar year. This
change began in 2007 and should further reduce our non-cash
compensation expense resulting from AOF options.
25
COMPENSATION
COMMITTEE REPORT
As detailed in its charter, the Compensation Committee of the
Board of Kellogg Company oversees Kelloggs compensation
program on behalf of the Board. In the performance of its
oversight function, the Compensation Committee, among other
things, reviewed and discussed with management the Compensation
Discussion and Analysis set forth in this proxy statement.
Based upon the review and discussions referred to above, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in
Kelloggs Annual Report on
Form 10-K
for the fiscal year ended December 30, 2006 and
Kelloggs Proxy Statement to be filed in connection with
Kelloggs 2007 Annual Meeting of Shareowners, each of which
will be filed with the Securities and Exchange Commission.
COMPENSATION COMMITTEE
Dr. John L. Zabriskie, Chair
Mr. Claudio X. Gonzalez
Mr. Gordon Gund
Mr. L. Daniel Jorndt
Ms. Ann McLaughlin Korologos
Dr. William C. Richardson
26
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following narrative, tables and footnotes describe the
total compensation earned during 2006 by our NEOs.
The total compensation presented below does not reflect the
actual compensation received by our NEOs in 2006 or the target
compensation of our NEOs in 2006. The actual value realized by
our NEOs in 2006 from long-term incentives (options and
restricted stock) is presented in the Option Exercises and Stock
Vested Table on page 38 of this proxy statement. Target
annual and long-term incentive awards for 2006 are presented in
the Grants of Plan-Based Awards table on page 31 of this
proxy statement.
The individual components of the total compensation calculation
reflected in the Summary Compensation Table are broken out below:
Salary. Base salary earned during 2006. Refer
to Compensation Discussion and Analysis
Elements of Our Compensation Program Base
Salaries. Mr. Harris base salary was set
pursuant to the terms of his employment agreement.
Bonus. We did not award to our NEOs any annual
non-performance-based cash incentives for 2006. The executives,
however, earned an annual performance-based cash incentive under
our AIP, as discussed below under Non-Equity Incentive
Plan Compensation. Refer to Compensation Discussion
and Analysis Elements of Our Compensation
Program Annual Incentives.
Stock Awards. The awards disclosed under the
heading Stock Awards consist of (1) the
2005-2007
EPP awards granted in 2005 and, in the case of Mr. Mackay,
an increase to his
2005-2007
EPP award resulting from him assuming the role of Chief
Executive Officer, (2) the
2006-2008
EPP awards granted in 2006 and (3) restricted stock awards.
The Stock Awards column also includes relatively
small compensation expense adjustments relating to
2003-2005
EPP awards as a result of a true up made in 2006. The dollar
amounts for the awards represent the grant-date fair value-based
compensation expense recognized in 2006 under
SFAS No. 123(R) for each NEO and as reported in our
audited financial statements contained in Kelloggs Annual
Report on
Form 10-K.
Details about the EPP awards and restricted stock granted in
2006 are included in the Grant of Plan-Based Awards Table below.
Refer to also Compensation Discussion and
Analysis Elements of Our Compensation
Program Long-Term Incentives for additional
information. The recognized compensation expense of the stock
awards for financial reporting purposes will likely vary from
the actual amount ultimately realized by the NEO based on a
number of factors. The ultimate value of the award will depend
on the number of shares earned and the price of our common stock
on the vesting date.
Option Awards. The awards disclosed under the
heading Option Awards consist of annual option
grants (each a regular option) and accelerated
ownership feature (AOF) option grants (each an
AOF option) granted in 2006 and in prior fiscal
years (to the extent such awards remained unvested in whole or
in part at the beginning of fiscal 2006). The dollar amounts for
the awards represent the grant-date fair value-based
compensation expense recognized in 2006 under
SFAS No. 123(R) for each NEO and as reported in our
audited financial statements contained in Kelloggs Annual
Report on
Form 10-K.
Details about the option awards made during 2006 are included in
the Grant of Plan-Based Awards Table below. Refer to also
Compensation Discussion and Analysis Elements
of Our Compensation Program Long-Term
Incentives Stock Options for additional
information. The recognized compensation expense of the option
awards for financial reporting purposes will likely vary from
the actual amount ultimately realized by the NEO based on a
number of factors. The factors include our actual operating
performance, stock price fluctuations, differences from the
valuation assumptions used and the timing of exercise or
applicable vesting.
Prior to 2004, we granted original options with an
accelerated ownership feature. Under the terms of the original
option grant, a new option, or AOF option, is generally received
when Kellogg stock is used to pay the exercise price of a stock
option and related taxes. The holder of the option receives an
AOF option for the number of shares so used. For AOF options,
the expiration date is the same as the original option and the
option exercise price is the fair market value of Kelloggs
stock on the date the AOF option is granted. To better align
with peer group compensation practices, the Compensation
Committee discontinued the use of the accelerated ownership
feature in all new option grants after 2003 and, effective in
2007, changed all AOF options so that AOF options may only be
exercised once each calendar year.
Non-Equity Incentive Plan Compensation. The
amount of Non-Equity Incentive Plan Compensation consists of the
Kellogg Senior Executive Annual Incentive Plan (AIP)
awards granted and earned in 2006. At the outset of 2006,
27
the Compensation Committee granted AIP awards to the CEO, CFO
and the other NEOs. Such awards are based on Kelloggs
performance during 2006 and were paid in March 2007. For
information on these awards refer to
Compensation Discussion and
Analysis Elements of Our Compensation
Program Annual Incentives.
Change in Pension Value. The amounts disclosed
under the heading Change in Pension Value and
Non-Qualified Deferred Compensation Earnings solely
represent the actuarial increase during 2006 in the pension
value provided under the Pension Plans. Kellogg does not pay
above-market or preferential rates on non-qualified deferred
compensation for employees, including the NEOs. A detailed
narrative and tabular discussion about our Pension Plans, as
defined in the section described below, and non-qualified
deferred compensation plans, our contributions to our Pension
Plans and the estimated actuarial increase in the value of our
Pension Plans are presented under the heading Retirement
and Non-Qualified Defined Contribution and Deferred Compensation
Plans.
SUMMARY
COMPENSATION TABLE
It is important to note that the information required by the
Summary Compensation Table does not necessarily reflect the
target or actual compensation for our NEOs in 2006. In addition,
the SEC regulations and accounting rules require certain
compensation expense reflected in the table to be recognized
immediately if any of the NEOs were retirement eligible in 2006.
Footnote 1 below describes the compensation for
Mr. Jenness and Mr. Mackay had they not been
considered retirement eligible.
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Change in
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Pension
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Value and
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Non-Qualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position(2)
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Year
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($)
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($)
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($)(3)
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($)(4)
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($)
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($)(5)
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($)(6)
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($)
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James M. Jenness,
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2006
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1,103,720
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0
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3,066,356
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(7)
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5,985,117
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2,482,900
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1,453,000
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257,773
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14,348,866
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(1)
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Chairman and Chief
Executive Officer
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Jeffrey M. Boromisa,
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2006
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467,599
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0
|
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450,286
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|
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1,268,466
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494,900
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682,000
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70,095
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3,433,346
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Senior Vice President
and Chief Financial
Officer
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A. D. David Mackay,
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2006
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898,743
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0
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4,939,572
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4,809,773
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1,571,400
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878,000
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135,600
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13,233,088
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(1)
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President and Chief
Operating Officer
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Alan F. Harris,
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2006
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618,272
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0
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666,039
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2,451,524
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739,000
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136,000
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85,897
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4,696,732
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Executive Vice President
and Chief Marketing
and Customer Officer
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Jeffrey W. Montie,
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2006
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594,361
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0
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1,267,579
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1,624,620
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761,100
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335,000
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79,561
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4,662,221
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Executive Vice President
and President,
Kellogg North America
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John A. Bryant,
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2006
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561,948
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0
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1,186,127
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1,811,463
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697,000
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80,000
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67,585
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4,404,123
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Executive Vice President
and President,
Kellogg International
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(1) |
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If Mr. Jenness were not retirement eligible, his
Total Compensation in 2006 would have been
$9,994,331 (as opposed to $14,348,866 which appears in the
table). This difference is a result of compensation expense for
certain equity-based awards and pension benefits being
recognized immediately when an employee is retirement eligible.
Specifically, the amounts that would have been reflected in the
table are as follows: (a) Stock Awards: $1,699,844 (as
opposed to $3,066,356 in the table); (b) Option Awards:
$4,036,094 (as opposed to $5,985,117 in the table); and
(c) Change in Pension: $414,000 (as opposed to $1,453,000
in the table). |
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If Mr. Mackay were not considered retirement eligible, his
Total Compensation in 2006 would have been
$9,861,662 (as opposed to $13,233,088 which appears in the
table). This difference is a result of compensation |
28
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expense for certain equity-based awards being recognized
immediately when an employee is considered retirement eligible.
Specifically, the amounts that would have been reflected in the
table are as follows: (a) Stock Awards: $2,336,357 (as
opposed to $4,939,572 in the table); and (b) Option Awards:
$4,041,562 (as opposed to $4,809,773 in the table). |
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(2) |
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On December 31, 2006, the following titles changed:
(a) Mr. Jenness became our Chairman;
(b) Mr. Boromisa became Senior Vice President, Kellogg
Company, Executive Vice President, Kellogg International and
President, Asia Pacific; (c) Mr. Mackay became our
President and Chief Executive Officer; and
(d) Mr. Bryant became Executive Vice President and
Chief Financial Officer, Kellogg Company, and President, Kellogg
International. On January 31, 2007, Mr. Harris ceased
to be an active employee of Kellogg. |
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(3) |
|
Reflects the compensation expense recognized in 2006 for stock
awards under SFAS No. 123(R) for each NEO and as
reported in our audited financial statements. Refer to
Notes 1 and 8 to the Consolidated Financial Statements
included in our Annual Report on
Form 10-K
for the year ended December 30, 2006 for a discussion of
the relevant assumptions used in calculating the compensation
expense. The table below presents separately the compensation
expense recognized in 2006 for our outstanding EPP awards and
restricted stock awards: |
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EPP
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Restricted Stock
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Total
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($)
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($)
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($)
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J. M. Jenness(a)
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2,733,024
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333,332
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3,066,356
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J. M. Boromisa
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450,286
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0
|
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450,286
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A. D. D. Mackay(a)
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4,939,572
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0
|
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4,939,572
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A. F. Harris(a)
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591,450
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74,589
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666,039
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J. W. Montie
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737,560
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530,019
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1,267,579
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J. A. Bryant
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653,712
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532,415
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1,186,127
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(a) |
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Messrs. Jenness, Mackay and Harris are considered
retirement eligible. |
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Prior to adoption of SFAS No. 123(R) on
January 1, 2006, we generally recognized stock compensation
expense over the stated vesting period of the award, with any
unamortized expense recognized immediately if an acceleration
event occurred (for example, retirement).
SFAS No. 123(R) specifies that a stock-based award is
considered vested for expense attribution purposes when the
employees retention of the award is no longer contingent
on providing subsequent service. Accordingly, compensation
expense is recognized immediately for awards granted to
retirement-eligible individuals or over the period from the
grant date to the date retirement eligibility is achieved, if
less than the stated vesting period. |
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(4) |
|
Reflects the compensation expense recognized in 2006 for the
stock option grants made in 2006 and in prior years (to the
extent such awards remained unvested in whole or in part at the
beginning of fiscal 2006). Refer to Notes 1 and 8 to the
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
for the year ended December 30, 2006 for a discussion of
the relevant assumptions used in calculating the compensation
expense. The table below presents separately the compensation
expense recognized in 2006 between our regular options and our
AOF options: |
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Regular Options ($)
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AOF Options ($)
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Total ($)
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J. M. Jenness(a)
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5,631,571
|
|
|
|
353,546
|
|
|
|
5,985,117
|
|
J. M. Boromisa
|
|
|
584,686
|
|
|
|
683,780
|
|
|
|
1,268,466
|
|
A. D. D. Mackay(a)
|
|
|
2,219,699
|
|
|
|
2,590,074
|
|
|
|
4,809,773
|
|
A. F. Harris(a)
|
|
|
812,473
|
|
|
|
1,639,051
|
|
|
|
2,451,524
|
|
J. W. Montie
|
|
|
1,011,525
|
|
|
|
613,095
|
|
|
|
1,624,620
|
|
J. A. Bryant
|
|
|
915,500
|
|
|
|
895,963
|
|
|
|
1,811,463
|
|
|
|
|
(a) |
|
Messrs. Jenness, Mackay and Harris are considered
retirement eligible. |
|
|
|
|
|
Prior to adoption of SFAS No. 123(R) on
January 1, 2006, we generally recognized stock compensation
expense on a pro forma basis over the stated vesting period of
the award, with any unamortized expense recognized immediately
if an acceleration event occurred (for example, retirement).
SFAS No. 123(R) specifies that a stock-based award is
considered vested for expense attribution purposes when the
employees retention of the award is no longer contingent
on providing subsequent service. Accordingly, beginning in 2006,
we prospectively revised our expense attribution method so that
the related compensation expense is recognized immediately for
awards granted to retirement-eligible |
29
|
|
|
|
|
individuals or over the period from the grant date to the date
retirement eligibility is achieved, if less than the stated
vesting period. |
|
(5) |
|
Solely represents the actuarial increase during 2006 in the
pension value provided under the Pension Plans as we do not pay
above-market or preferential earnings on non-qualified deferred
compensation. |
|
(6) |
|
The table below presents an itemized account of All Other
Compensation provided in 2006 to the NEOs, regardless of
the amount and any minimal thresholds provided under the SEC
rules and regulations. Consistent with our emphasis on
performance-based pay, perquisites and other compensation are
limited in scope and primarily comprised of retirement benefit
contributions and accruals. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kellogg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
S&I and
|
|
|
Company
|
|
|
Financial
|
|
|
|
|
|
Business
|
|
|
|
|
|
|
|
|
|
Restoration
|
|
|
Paid Death
|
|
|
Planning
|
|
|
ESPP
|
|
|
Aircraft
|
|
|
Physical
|
|
|
|
|
|
|
Plans(a)
|
|
|
Benefit(b)
|
|
|
Assistance(c)
|
|
|
Purchases(d)
|
|
|
Usage(e)
|
|
|
Exams(f)
|
|
|
TOTAL
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
J. M. Jenness
|
|
|
129,393
|
|
|
|
91,772
|
|
|
|
15,000
|
|
|
|
4,984
|
|
|
|
15,570
|
|
|
|
1,054
|
|
|
|
257,773
|
|
J. M. Boromisa
|
|
|
43,050
|
|
|
|
11,053
|
|
|
|
8,125
|
|
|
|
5,121
|
|
|
|
0
|
|
|
|
2,746
|
|
|
|
70,095
|
|
A. D. D. Mackay
|
|
|
100,882
|
|
|
|
26,593
|
|
|
|
8,125
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
135,600
|
|
A. F. Harris
|
|
|
60,631
|
|
|
|
15,660
|
|
|
|
3,700
|
|
|
|
4,819
|
|
|
|
0
|
|
|
|
1,087
|
|
|
|
85,897
|
|
J. W. Montie
|
|
|
57,702
|
|
|
|
8,938
|
|
|
|
8,125
|
|
|
|
4,796
|
|
|
|
0
|
|
|
|
0
|
|
|
|
79,561
|
|
J. A. Bryant
|
|
|
52,158
|
|
|
|
5,133
|
|
|
|
5,414
|
|
|
|
4,880
|
|
|
|
0
|
|
|
|
0
|
|
|
|
67,585
|
|
|
|
|
(a) |
|
For information about our Savings & Investment Plan and
Restoration Plan, refer to Non-Qualified Deferred
Compensation beginning on page 41. |
|
(b) |
|
Annual cost for Kellogg-paid life insurance, Kellogg-paid
accidental death and dismemberment, Executive Survivor Income
Plan (Kellogg funded death benefit provided to executive
employees). |
|
(c) |
|
Reflects reimbursement for financial and tax planning assistance. |
|
(d) |
|
Our tax-qualified Employee Stock Purchase Plan
(ESPP) is generally available to all
U.S. salaried employees. The dollar amounts represent the
grant-date fair value-based compensation expense recognized in
2006 under SFAS No. 123(R) for each NEO and as
reported in our audited financial statements contained in
Kelloggs Annual Report on
Form 10-K.
The price paid by all U.S. salaried employees, including
the NEOs, is 85% of the price of our common stock at the
beginning or the end of each quarterly purchase period,
whichever is lower. |
|
(e) |
|
The incremental cost of Kellogg aircraft used for a non-business
flight is calculated by multiplying the aircrafts hourly
variable operating cost by a trips flight time, which
includes any flight time of an empty return flight. Variable
operating costs include: (1) landing, parking, crew travel
and flight planning services expenses; (2) supplies,
catering and crew traveling expenses; (3) aircraft fuel and
oil expenses; (4) maintenance, parts and external labor
(inspections and repairs); and (5) any customs, foreign
permit and similar fees. Fixed costs that do not vary based upon
usage are not included in the calculation of direct operating
cost. On certain occasions, an NEOs spouse or other family
member may accompany the NEO on a flight. No additional direct
operating cost is incurred in such situations under the
foregoing methodology because the costs would not be
incremental. Kellogg does not pay its NEOs any amounts in
respect of taxes (i.e., gross up payments) on income
imputed to them for non-business aircraft usage. |
|
(f) |
|
Actual cost of a physical exam. |
|
|
|
|
|
In addition to the foregoing compensation, the NEOs also
participated in health and welfare benefit programs, including
vacation and medical, dental, prescription drug and disability
coverage. These programs are generally available and comparable
to those programs provided to all U.S. salaried employees. |
|
(7) |
|
Mr. Jenness agreed to forfeit his
2006-2008
EPP award as a result of his transition from Chairman and Chief
Executive Officer to Chairman. Thus, the entry in the table does
not reflect compensation expense relating to his
2006-2008
EPP award. |
30
Grant of
Plan-Based Awards Table
During 2006, we granted the following plan-based awards to our
NEOs:
|
|
|
|
1.
|
Stock Options (both Regular and AOF Options);
|
|
|
2.
|
2006 AIP grants (annual cash performance-based awards);
|
|
|
3.
|
2006-2008
EPP grants (multi-year stock performance-based awards);
|
|
|
4.
|
Only in the case of Mr. Mackay, a
2005-2007
EPP grant, which reflects an increase to his outstanding 2005
grant as a result of assuming the role of Chief Executive
Officer; and
|
|
|
5.
|
Only in the case of Mr. Boromisa, a Restricted Stock Grant.
|
Information with respect to each of these awards on a
grant-by-grant
basis is set forth in the table below. For a detailed discussion
of each of these awards and their material terms, refer to
Executive Compensation Summary Compensation
Table and Compensation Discussion and
Analysis Elements of Our Compensation Program
above. We no longer grant new options with the AOF feature, but
as disclosed in the Outstanding Equity Awards at Fiscal Year-End
Table, a number of options granted prior to 2004 contain this
feature. When an executive exercises an original option with an
AOF, the AOF option is treated as a new grant for disclosure and
accounting purposes even though the new grant relates back to
the approval of the original option grant. All of our regular
and AOF options are granted with an exercise price equal to the
fair market value of our common stock on the date of grant.
Prior to 2007, fair market value was defined under our LTIP as
the average of the highest and lowest trading price per share of
our common stock on the date of grant. As of 2007, fair market
value is defined under our LTIP as the officially quoted closing
price of our common stock on the date of grant. As such, we have
added an additional column to the table to show the closing
price on the grant date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible
|
|
|
|
|
|
|
|
Stock
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under
|
|
Estimated Future
|
|
Awards:
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive
|
|
Payouts Under Equity
|
|
Number
|
|
Awards:
|
|
Exercise or
|
|
|
|
Grant-date
|
|
|
|
|
|
|
Plan Awards
|
|
Incentive Plan Awards
|
|
of Shares
|
|
Number of
|
|
Base Price
|
|
|
|
Fair Value
|
|
|
|
|
|
|
Thresh-
|
|
|
|
Max-
|
|
|
|
|
|
|
|
of Stock
|
|
Securities
|
|
of Option
|
|
Closing
|
|
of Stock
|
|
|
Grant
|
|
Approval
|
|
old
|
|
Target
|
|
imum
|
|
Thresh-
|
|
Target
|
|
Max-
|
|
or Units
|
|
Underlying
|
|
Awards
|
|
Price
|
|
and Option
|
Name
|
|
Date(1)
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
old (#)
|
|
(#)
|
|
imum (#)
|
|
(#)
|
|
Options (#)
|
|
($/Sh)
|
|
($/Sh)
|
|
Awards ($)
|
|
J. M. Jenness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
421,410
|
|
|
|
44.46
|
|
|
|
44.50
|
|
|
|
3,898,043
|
(2)
|
AOF Options
|
|
|
3/10/06
|
|
|
|
7/27/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,978
|
|
|
|
45.12
|
|
|
|
45.28
|
|
|
|
150,442
|
(2)
|
|
|
|
9/11/06
|
|
|
|
7/27/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,604
|
|
|
|
50.01
|
|
|
|
50.11
|
|
|
|
149,346
|
(2)
|
|
|
|
9/11/06
|
|
|
|
1/31/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,816
|
|
|
|
50.01
|
|
|
|
50.11
|
|
|
|
14,206
|
(2)
|
|
|
|
9/11/06
|
|
|
|
1/31/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,863
|
|
|
|
50.01
|
|
|
|
50.11
|
|
|
|
19,488
|
(2)
|
|
|
|
9/11/06
|
|
|
|
1/31/03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,977
|
|
|
|
50.01
|
|
|
|
50.11
|
|
|
|
20,063
|
(2)
|
2006 AIP
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
1,460,550
|
|
|
|
2,921,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006-08
EPP
(forfeited)
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
50,400
|
(3)
|
|
|
100,800
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,145,904
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. M.
Boromisa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,900
|
|
|
|
44.46
|
|
|
|
44.50
|
|
|
|
591,075
|
(2)
|
AOF Options
|
|
|
5/18/06
|
|
|
|
3/14/97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,435
|
|
|
|
45.94
|
|
|
|
45.83
|
|
|
|
7,450
|
(2)
|
|
|
|
5/18/06
|
|
|
|
3/13/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,382
|
|
|
|
45.94
|
|
|
|
45.83
|
|
|
|
33,133
|
(2)
|
|
|
|
5/18/06
|
|
|
|
1/4/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,570
|
|
|
|
45.94
|
|
|
|
45.83
|
|
|
|
8,151
|
(2)
|
|
|
|
5/18/06
|
|
|
|
1/31/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,295
|
|
|
|
45.94
|
|
|
|
45.83
|
|
|
|
89,789
|
(2)
|
|
|
|
5/18/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,511
|
|
|
|
45.94
|
|
|
|
45.83
|
|
|
|
59,761
|
(2)
|
|
|
|
5/18/06
|
|
|
|
2/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,844
|
|
|
|
45.94
|
|
|
|
45.83
|
|
|
|
139,363
|
(2)
|
|
|
|
11/20/06
|
|
|
|
3/14/97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,367
|
|
|
|
50.06
|
|
|
|
49.97
|
|
|
|
6,896
|
(2)
|
|
|
|
11/20/06
|
|
|
|
3/13/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,301
|
|
|
|
50.06
|
|
|
|
49.97
|
|
|
|
21,698
|
(2)
|
|
|
|
11/20/06
|
|
|
|
1/4/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,131
|
|
|
|
50.06
|
|
|
|
49.97
|
|
|
|
20,840
|
(2)
|
|
|
|
11/20/06
|
|
|
|
1/31/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,416
|
|
|
|
50.06
|
|
|
|
49.97
|
|
|
|
22,278
|
(2)
|
|
|
|
11/20/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,355
|
|
|
|
50.06
|
|
|
|
49.97
|
|
|
|
87,553
|
(2)
|
|
|
|
11/20/06
|
|
|
|
2/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,771
|
|
|
|
50.06
|
|
|
|
49.97
|
|
|
|
54,338
|
(2)
|
|
|
|
11/20/06
|
|
|
|
2/21/03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,271
|
|
|
|
50.06
|
|
|
|
49.97
|
|
|
|
132,532
|
(2)
|
2006 AIP
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
358,650
|
|
|
|
717,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006-08
EPP
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
8,400
|
|
|
|
16,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
690,984
|
(4)
|
Restricted Stock
Grant
|
|
|
12/29/06
|
|
|
|
12/7/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
654,160
|
(2)
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible
|
|
|
|
|
|
|
|
Stock
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under
|
|
Estimated Future
|
|
Awards:
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive
|
|
Payouts Under Equity
|
|
Number
|
|
Awards:
|
|
Exercise or
|
|
|
|
Grant-date
|
|
|
|
|
|
|
Plan Awards
|
|
Incentive Plan Awards
|
|
of Shares
|
|
Number of
|
|
Base Price
|
|
|
|
Fair Value
|
|
|
|
|
|
|
Thresh-
|
|
|
|
Max-
|
|
|
|
|
|
|
|
of Stock
|
|
Securities
|
|
of Option
|
|
Closing
|
|
of Stock
|
|
|
Grant
|
|
Approval
|
|
old
|
|
Target
|
|
imum
|
|
Thresh-
|
|
Target
|
|
Max-
|
|
or Units
|
|
Underlying
|
|
Awards
|
|
Price
|
|
and Option
|
Name
|
|
Date(1)
|
|
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
old (#)
|
|
(#)
|
|
imum (#)
|
|
(#)
|
|
Options (#)
|
|
($/Sh)
|
|
($/Sh)
|
|
Awards ($)
|
|
A. D. D.
Mackay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,100
|
|
|
|
44.46
|
|
|
|
44.50
|
|
|
|
1,536,425
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOF Options
|
|
|
5/16/06
|
|
|
|
3/13/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,276
|
|
|
|
46.29
|
|
|
|
46.48
|
|
|
|
37,774
|
(2)
|
|
|
|
5/16/06
|
|
|
|
1/4/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,595
|
|
|
|
46.29
|
|
|
|
46.48
|
|
|
|
106,921
|
(2)
|
|
|
|
5/16/06
|
|
|
|
8/1/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,967
|
|
|
|
46.29
|
|
|
|
46.48
|
|
|
|
51,745
|
(2)
|
|
|
|
5/16/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,936
|
|
|
|
46.29
|
|
|
|
46.48
|
|
|
|
186,565
|
(2)
|
|
|
|
5/16/06
|
|
|
|
3/26/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,271
|
|
|
|
46.29
|
|
|
|
46.48
|
|
|
|
214,263
|
(2)
|
|
|
|
5/16/06
|
|
|
|
2/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,350
|
|
|
|
46.29
|
|
|
|
46.48
|
|
|
|
666,342
|
(2)
|
|
|
|
11/16/06
|
|
|
|
8/1/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,884
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
165,893
|
(2)
|
|
|
|
11/16/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,611
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
68,665
|
(2)
|
|
|
|
11/16/06
|
|
|
|
3/26/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,511
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
648,312
|
(2)
|
|
|
|
11/16/06
|
|
|
|
2/21/03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,931
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
443,594
|
(2)
|
2006 AIP
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
952,350
|
|
|
|
1,904,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006-08
EPP(5)
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
19,900
|
|
|
|
39,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,636,974
|
(4)
|
|
|
|
10/23/06
|
|
|
|
10/20/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
30,500
|
|
|
|
61,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,508,930
|
(4)
|
2005-07
EPP(5)
|
|
|
10/23/06
|
|
|
|
10/20/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
10,200
|
|
|
|
20,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
829,668
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. F.
Harris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
44.46
|
|
|
|
44.50
|
|
|
|
555,000
|
(2)
|
AOF Options
|
|
|
5/15/06
|
|
|
|
3/14/97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,114
|
|
|
|
46.12
|
|
|
|
46.25
|
|
|
|
151,148
|
(2)
|
|
|
|
5/15/06
|
|
|
|
3/13/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,764
|
|
|
|
46.12
|
|
|
|
46.25
|
|
|
|
325,846
|
(2)
|
|
|
|
5/15/06
|
|
|
|
1/31/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,093
|
|
|
|
46.12
|
|
|
|
46.25
|
|
|
|
93,932
|
(2)
|
|
|
|
5/15/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,085
|
|
|
|
46.12
|
|
|
|
46.25
|
|
|
|
31,591
|
(2)
|
|
|
|
5/15/06
|
|
|
|
2/21/03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,971
|
|
|
|
46.12
|
|
|
|
46.25
|
|
|
|
197,130
|
(2)
|
|
|
|
11/16/06
|
|
|
|
1/31/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,943
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
161,146
|
(2)
|
|
|
|
11/16/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,497
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
360,688
|
(2)
|
|
|
|
11/16/06
|
|
|
|
2/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,950
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
317,570
|
(2)
|
2006 AIP
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
453,750
|
|
|
|
907,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006-08
EPP
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
7,500
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
616,950
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. W.
Montie
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,000
|
|
|
|
44.46
|
|
|
|
44.50
|
|
|
|
1,063,750
|
(2)
|
AOF Options
|
|
|
3/6/06
|
|
|
|
2/21/93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,544
|
|
|
|
44.31
|
|
|
|
44.21
|
|
|
|
117,039
|
(2)
|
|
|
|
3/6/06
|
|
|
|
3/13/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,949
|
|
|
|
44.31
|
|
|
|
44.21
|
|
|
|
46,460
|
(2)
|
|
|
|
3/6/06
|
|
|
|
1/31/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,973
|
|
|
|
44.31
|
|
|
|
44.21
|
|
|
|
10,243
|
(2)
|
|
|
|
3/6/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,725
|
|
|
|
44.31
|
|
|
|
44.21
|
|
|
|
60,872
|
(2)
|
|
|
|
9/6/06
|
|
|
|
3/13/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,354
|
|
|
|
49.93
|
|
|
|
50.24
|
|
|
|
42,144
|
(2)
|
|
|
|
9/6/06
|
|
|
|
1/4/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,138
|
|
|
|
49.93
|
|
|
|
50.24
|
|
|
|
56,189
|
(2)
|
|
|
|
9/6/06
|
|
|
|
1/31/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,510
|
|
|
|
49.93
|
|
|
|
50.24
|
|
|
|
22,752
|
(2)
|
|
|
|
9/6/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,946
|
|
|
|
49.93
|
|
|
|
50.24
|
|
|
|
55,220
|
(2)
|
|
|
|
9/6/06
|
|
|
|
2/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,858
|
|
|
|
49.93
|
|
|
|
50.24
|
|
|
|
39,642
|
(2)
|
|
|
|
9/6/06
|
|
|
|
2/21/03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,218
|
|
|
|
49.93
|
|
|
|
50.24
|
|
|
|
162,533
|
(2)
|
2006 AIP
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
514,250
|
|
|
|
1,028,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006-08
EPP
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
13,800
|
|
|
|
27,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,135,188
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. A.
Bryant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,000
|
|
|
|
44.46
|
|
|
|
44.50
|
|
|
|
971,250
|
(2)
|
AOF Options
|
|
|
5/15/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,377
|
|
|
|
46.12
|
|
|
|
46.25
|
|
|
|
59,065
|
(2)
|
|
|
|
5/15/06
|
|
|
|
2/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,826
|
|
|
|
46.12
|
|
|
|
46.25
|
|
|
|
372,892
|
(2)
|
|
|
|
11/16/06
|
|
|
|
2/21/93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,528
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
199,411
|
(2)
|
|
|
|
11/16/06
|
|
|
|
3/13/98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,719
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
13,717
|
(2)
|
|
|
|
11/16/06
|
|
|
|
1/4/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,131
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
41,019
|
(2)
|
|
|
|
11/16/06
|
|
|
|
1/31/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,236
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
31,459
|
(2)
|
|
|
|
11/16/06
|
|
|
|
2/16/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,245
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
92,042
|
(2)
|
|
|
|
11/16/06
|
|
|
|
2/22/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,118
|
|
|
|
49.92
|
|
|
|
50.01
|
|
|
|
86,357
|
(2)
|
2006 AIP
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
427,500
|
|
|
|
855,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006-08
EPP
|
|
|
2/17/06
|
|
|
|
2/17/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
12,400
|
|
|
|
24,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,020,024
|
(4)
|
|
|
|
(1) |
|
The grant date for our AOF options is different than
the approval date because an AOF option is treated
as a new grant for disclosure and financial reporting purposes
under SFAS No. 123(R) even though the new grant
relates back to the date the original option was approved by the
Compensation Committee. The Compensation Committee takes no new
action in connection with the grant of AOF options. |
|
(2) |
|
Represents the grant-date fair value calculated under
SFAS No. 123(R), and as presented in our audited
financial statements contained in Kelloggs Annual Report
on
Form 10-K.
The fair value of the stock option awards for |
32
|
|
|
|
|
financial reporting purposes likely will vary from the actual
amount ultimately realized by the NEO based on a number of
factors. These factors include our actual operating performance,
stock price fluctuations, differences from the valuation
assumptions used and the timing of exercise or applicable
vesting. |
|
(3) |
|
On October 20, 2006, Mr. Jenness agreed to voluntarily
forfeit his
2006-2008
EPP award in connection with his transition from Chairman and
Chief Executive Officer to Chairman. Refer to Employment
Agreements. |
|
(4) |
|
Represents the grant-date fair value calculated under
SFAS No. 123(R), and as presented in our audited
financial statements contained in Kelloggs Annual Report
on
Form 10-K.
This grant-date fair value assumes that each participant earns
the maximum EPP award (i.e., 200% of EPP target). The ultimate
value of the award will depend on the number of shares earned
and the price of our common stock on the vesting date. |
|
(5) |
|
The additional
2005-2007
EPP grant and
2006-08 EPP
grant to Mr. Mackay on October 23, 2006 was made in
connection with him assuming the role of Chief Executive
Officer. Refer to Employment Agreements. |
33
Outstanding
Equity Awards at Fiscal Year-End Table
The following equity awards granted to our NEOs were outstanding
as of the end of fiscal 2006:
Regular Options (disclosed under the Option
Awards columns). Represents annual option
grants made in February of each year to our NEOs. As noted
below, also represents annual Director option grants made to
Mr. Jenness prior to becoming Chairman and Chief Executive
Officer in 2005.
AOF Options (disclosed under the Option Awards
columns). Represents AOF options granted when
Kellogg stock is used to pay the exercise price of a stock
option and related taxes. Beginning in 2007, options with an AOF
may only be exercised once each calendar year.
Restricted Stock Awards (disclosed under the Stock
Awards columns). In 2005, Mr. Jenness
received a restricted stock award in connection with recruiting
him to become our Chairman and Chief Executive Officer. In 2005,
each of Mr. Montie and Mr. Bryant received a
restricted stock award for retention purposes. In 2006,
Mr. Boromisa received a restricted stock award for
retention purposes.
2005-2007
EPP Grants (disclosed under the Stock Awards
columns). The
2005-2007
EPP cycle began on December 28, 2004 and concludes on
December 29, 2007. The
2005-2007
awards are based on compound annual growth in internal net
sales. The ultimate value of the awards will depend on the
number of shares earned and the price of our common stock at the
time awards are issued.
2006-2008
EPP Grants (disclosed under the Stock Awards
columns). The
2006-2008
EPP cycle began on January 1, 2006 and concludes on
January 3, 2009. The
2006-2008
awards are based on compound annual growth in internal net
sales. The ultimate value of the awards will depend on the
number of shares earned and the price of our common stock at the
time awards are issued.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Equity
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Incentive
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Market or
|
|
|
Number of
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
Shares,
|
|
Payout Value
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Units or
|
|
of Unearned
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Other
|
|
Shares, Units
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
|
|
Units of
|
|
Units of
|
|
Rights
|
|
or Other
|
|
|
Options (#)
|
|
Options (#)
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
That Have
|
|
Rights That
|
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
Not Vested
|
|
Have Not
|
Name
|
|
(1)
|
|
(2)
|
|
Options (#)(3)
|
|
($)(4)
|
|
Date(5)
|
|
Vested (#)(6)
|
|
Vested ($)(7)
|
|
(#)(8)
|
|
Vested ($)(9)
|
|
J. M. Jenness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
5,000
|
(10)
|
|
|
0
|
|
|
|
|
|
|
|
38.09
|
|
|
|
1/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(10)
|
|
|
0
|
|
|
|
|
|
|
|
44.98
|
|
|
|
1/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,550
|
|
|
|
191,550
|
(11)
|
|
|
|
|
|
|
44.04
|
|
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
421,410
|
(12)
|
|
|
|
|
|
|
44.46
|
|
|
|
2/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOF Options
|
|
|
16,265
|
|
|
|
0
|
|
|
|
|
|
|
|
45.03
|
|
|
|
7/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,978
|
|
|
|
0
|
|
|
|
|
|
|
|
45.12
|
|
|
|
7/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,604
|
|
|
|
0
|
|
|
|
|
|
|
|
50.01
|
|
|
|
7/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,816
|
|
|
|
0
|
|
|
|
|
|
|
|
50.01
|
|
|
|
1/31/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,863
|
|
|
|
0
|
|
|
|
|
|
|
|
50.01
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,977
|
|
|
|
0
|
|
|
|
|
|
|
|
50.01
|
|
|
|
1/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,429(13
|
)
|
|
|
1,122,796
|
|
|
|
|
|
|
|
|
|
2005-07
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,800
|
|
|
|
5,046,048
|
|
2006-08
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Equity
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Incentive
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Market or
|
|
|
Number of
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
Shares,
|
|
Payout Value
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Units or
|
|
of Unearned
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Other
|
|
Shares, Units
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
|
|
Units of
|
|
Units of
|
|
Rights
|
|
or Other
|
|
|
Options (#)
|
|
Options (#)
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
That Have
|
|
Rights That
|
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
Not Vested
|
|
Have Not
|
Name
|
|
(1)
|
|
(2)
|
|
Options (#)(3)
|
|
($)(4)
|
|
Date(5)
|
|
Vested (#)(6)
|
|
Vested ($)(7)
|
|
(#)(8)
|
|
Vested ($)(9)
|
|
J. M. Boromisa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
45,000
|
|
|
|
0
|
|
|
|
|
|
|
|
38.93
|
|
|
|
2/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,950
|
|
|
|
31,950
|
(11)
|
|
|
|
|
|
|
44.04
|
|
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
63,900
|
(12)
|
|
|
|
|
|
|
44.46
|
|
|
|
2/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOF Options
|
|
|
2,373
|
|
|
|
0
|
|
|
|
|
|
|
|
48.47
|
|
|
|
3/14/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,367
|
|
|
|
0
|
|
|
|
|
|
|
|
50.06
|
|
|
|
3/14/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,862
|
|
|
|
0
|
|
|
|
|
|
|
|
45.94
|
|
|
|
3/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,301
|
|
|
|
0
|
|
|
|
|
|
|
|
50.06
|
|
|
|
3/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,570
|
|
|
|
0
|
|
|
|
|
|
|
|
45.94
|
|
|
|
1/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,131
|
|
|
|
0
|
|
|
|
|
|
|
|
50.06
|
|
|
|
1/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,897
|
|
|
|
0
|
|
|
|
|
|
|
|
45.94
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,416
|
|
|
|
0
|
|
|
|
|
|
|
|
50.06
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,511
|
|
|
|
0
|
|
|
|
|
|
|
|
45.94
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,355
|
|
|
|
0
|
|
|
|
|
|
|
|
50.06
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,844
|
|
|
|
0
|
|
|
|
|
|
|
|
45.94
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,771
|
|
|
|
0
|
|
|
|
|
|
|
|
50.06
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,271
|
|
|
|
0
|
|
|
|
|
|
|
|
50.06
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,000(14
|
)
|
|
|
650,780
|
|
|
|
|
|
|
|
|
|
2005-07
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,800
|
|
|
|
841,008
|
|
2006-08
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,800
|
|
|
|
841,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. D. D. Mackay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
262,000
|
|
|
|
0
|
|
|
|
|
|
|
|
38.93
|
|
|
|
2/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,500
|
|
|
|
75,500
|
(11)
|
|
|
|
|
|
|
44.04
|
|
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
166,100
|
(12)
|
|
|
|
|
|
|
44.46
|
|
|
|
2/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOF Options
|
|
|
7,276
|
|
|
|
0
|
|
|
|
|
|
|
|
46.29
|
|
|
|
3/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,595
|
|
|
|
0
|
|
|
|
|
|
|
|
46.29
|
|
|
|
1/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,967
|
|
|
|
0
|
|
|
|
|
|
|
|
46.29
|
|
|
|
8/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,884
|
|
|
|
0
|
|
|
|
|
|
|
|
49.92
|
|
|
|
8/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,361
|
|
|
|
0
|
|
|
|
|
|
|
|
45.23
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,936
|
|
|
|
0
|
|
|
|
|
|
|
|
46.29
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,611
|
|
|
|
0
|
|
|
|
|
|
|
|
49.92
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,930
|
|
|
|
0
|
|
|
|
|
|
|
|
45.23
|
|
|
|
3/26/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,271
|
|
|
|
0
|
|
|
|
|
|
|
|
46.29
|
|
|
|
3/26/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,511
|
|
|
|
0
|
|
|
|
|
|
|
|
49.92
|
|
|
|
3/26/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,350
|
|
|
|
0
|
|
|
|
|
|
|
|
46.29
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,931
|
|
|
|
0
|
|
|
|
|
|
|
|
49.92
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
2005-07
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,200
|
|
|
|
3,013,612
|
|
2006-08
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,800
|
|
|
|
5,046,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. F. Harris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
110,000
|
|
|
|
0
|
|
|
|
|
|
|
|
38.93
|
|
|
|
2/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,450
|
|
|
|
28,450
|
(11)
|
|
|
|
|
|
|
44.04
|
|
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
60,000
|
(12)
|
|
|
|
|
|
|
44.46
|
|
|
|
2/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOF Options
|
|
|
1,008
|
|
|
|
0
|
|
|
|
|
|
|
$
|
44.48
|
|
|
|
3/14/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,114
|
|
|
|
0
|
|
|
|
|
|
|
$
|
46.12
|
|
|
|
3/14/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,764
|
|
|
|
0
|
|
|
|
|
|
|
$
|
46.12
|
|
|
|
3/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,392
|
|
|
|
0
|
|
|
|
|
|
|
$
|
44.76
|
|
|
|
1/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,201
|
|
|
|
0
|
|
|
|
|
|
|
$
|
45.33
|
|
|
|
1/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,678
|
|
|
|
0
|
|
|
|
|
|
|
$
|
44.76
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,093
|
|
|
|
0
|
|
|
|
|
|
|
$
|
46.12
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,943
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,085
|
|
|
|
0
|
|
|
|
|
|
|
$
|
46.12
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,870
|
|
|
|
0
|
|
|
|
|
|
|
$
|
44.76
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,497
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,854
|
|
|
|
0
|
|
|
|
|
|
|
$
|
45.33
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,950
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,592
|
|
|
|
0
|
|
|
|
|
|
|
$
|
45.33
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,971
|
|
|
|
0
|
|
|
|
|
|
|
$
|
46.12
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
2005-07
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
750,900
|
|
2006-08
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
750,900
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Equity
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Incentive
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Market or
|
|
|
Number of
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
Shares,
|
|
Payout Value
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Units or
|
|
of Unearned
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Other
|
|
Shares, Units
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
|
|
Units of
|
|
Units of
|
|
Rights
|
|
or Other
|
|
|
Options (#)
|
|
Options (#)
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
That Have
|
|
Rights That
|
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
Not Vested
|
|
Have Not
|
Name
|
|
(1)
|
|
(2)
|
|
Options (#)(3)
|
|
($)(4)
|
|
Date(5)
|
|
Vested (#)(6)
|
|
Vested ($)(7)
|
|
(#)(8)
|
|
Vested ($)(9)
|
|
J. W. Montie
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
110,000
|
|
|
|
0
|
|
|
|
|
|
|
|
38.93
|
|
|
|
2/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,000
|
|
|
|
53,000
|
(11)
|
|
|
|
|
|
|
44.04
|
|
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
115,000
|
(12)
|
|
|
|
|
|
|
44.46
|
|
|
|
2/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOF Options
|
|
|
170
|
|
|
|
0
|
|
|
|
|
|
|
$
|
45.62
|
|
|
|
3/14/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,354
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.93
|
|
|
|
3/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,138
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.93
|
|
|
|
1/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,650
|
|
|
|
0
|
|
|
|
|
|
|
$
|
45.62
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,510
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.93
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,946
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.93
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,343
|
|
|
|
0
|
|
|
|
|
|
|
$
|
45.62
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,858
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.93
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,782
|
|
|
|
0
|
|
|
|
|
|
|
$
|
44.39
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,218
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.93
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,100(15
|
)
|
|
|
1,256,506
|
|
|
|
|
|
|
|
|
|
2005-07
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,600
|
|
|
|
1,381,656
|
|
2006-08
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,600
|
|
|
|
1,381,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. A. Bryant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular Options
|
|
|
125,500
|
|
|
|
0
|
|
|
|
|
|
|
|
38.93
|
|
|
|
2/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,500
|
|
|
|
47,500
|
(11)
|
|
|
|
|
|
|
44.04
|
|
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
105,000
|
(12)
|
|
|
|
|
|
|
44.46
|
|
|
|
2/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOF Options
|
|
|
2,719
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
3/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,131
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
1/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,236
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
1/31/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,377
|
|
|
|
0
|
|
|
|
|
|
|
$
|
46.12
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,245
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
2/16/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,171
|
|
|
|
0
|
|
|
|
|
|
|
$
|
44.52
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,826
|
|
|
|
0
|
|
|
|
|
|
|
$
|
46.12
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,118
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
2/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,317
|
|
|
|
0
|
|
|
|
|
|
|
$
|
45.48
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,528
|
|
|
|
0
|
|
|
|
|
|
|
$
|
49.92
|
|
|
|
2/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,800(15
|
)
|
|
|
1,141,368
|
|
|
|
|
|
|
|
|
|
2005-07
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,800
|
|
|
|
1,241,488
|
|
2006-08
EPP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,800
|
|
|
|
1,241,488
|
|
|
|
|
(1) |
|
On an
award-by-award
basis, the number of securities underlying unexercised options
that are exercisable and that are not reported in Column
3 Number of Securities Underlying Unexercised
Unearned Options. |
|
(2) |
|
On an
award-by-award
basis, the number of securities underlying unexercised options
that are unexercisable and that are not reported in
Column 3 Number of Securities Underlying
Unexercised Unearned Options. |
|
(3) |
|
On an
award-by-award
basis, there were no shares underlying unexercised options
awarded under any equity incentive plan that have not been
earned. |
|
(4) |
|
The exercise price for each option reported in Columns 1 and
2 Number of Securities Underlying Unexercised
Options and Column 3 Number of
Securities Underlying Unexercised Unearned Options. |
|
(5) |
|
The expiration date for each option reported in Columns 1 and
2 Number of Securities Underlying Unexercised
Options and Column 3 Number of
Securities Underlying Unexercised Unearned Options. |
|
(6) |
|
The total number of shares of stock that have not vested and
that are not reported in Column 8 Number of
Unearned Shares, Units or Other Rights That Have Not
Vested. |
|
(7) |
|
Represents the number of shares of stock that have not vested
and that are not reported in Column 9 Equity
Incentive Plan Awards: Market or Payout Value of Unearned
Shares, Units or Other Rights That Have Not Vested
multiplied by the closing price of our common stock on
December 29, 2006 (the last trading day of fiscal 2006). |
|
(8) |
|
Represents the maximum number of shares that could
be earned under outstanding EPP awards. The cycle for the
2005-07 EPP
grants concludes on December 29, 2007 and the cycle for the
2006-08 EPP
grants concludes on January 3, 2009. The ultimate number of
shares issued under the EPP awards will depend on the number of
shares |
36
|
|
|
|
|
earned and the price of our common stock on the actual vesting
date. For additional information with respect to these awards,
refer to Executive Compensation Summary
Compensation Table and Compensation Discussion and
Analysis Elements of Our Compensation Program. |
|
(9) |
|
Represents the maximum number of shares that could
be earned under outstanding EPP awards multiplied by the closing
price of our common stock on December 29, 2006 (the last
trading day of fiscal 2006). The ultimate value of the EPP
awards will depend on the number of shares earned and the price
of our common stock on the actual vesting date. |
|
(10) |
|
Represents annual Director option grants made to
Mr. Jenness prior to becoming Chairman and Chief Executive
Officer in 2005. |
|
(11) |
|
These options vested on February 18, 2007. |
|
(12) |
|
50% of these options vested on February 17, 2007 and 50%
vests on February 17, 2008. |
|
(13) |
|
Vests on February 7, 2008. |
|
(14) |
|
Vests on December 29, 2009. |
|
(15) |
|
Vests on February 4, 2008. |
37
Option
Exercises and Stock Vested Table
With respect to our NEOs, this table shows (1) the stock
options exercised by such officers during 2006 and (2) each
officers restricted stock awards that vested during 2006.
No EPP awards vested in 2006.
Stock Options (disclosed under the Option Awards
columns). The dollar value reflects the total
pre-tax value realized by such officers (Kellogg stock
price at exercise minus the options exercise price), not
the grant-date fair value or recognized compensation expense
disclosed elsewhere in this proxy statement. Value from these
option exercises were only realized to the extent Kelloggs
stock price increased relative to the stock price at grant
(exercise price). These options have been granted to the NEOs
since 1997. Consequently, the value realized by the executives
upon exercise of the options was actually earned over a period
of up to 10 years.
Restricted Stock (disclosed under the Stock
Awards columns). The dollar value reflects
the final pre-tax value received by such officers upon
the vesting of restricted stock (Kellogg stock price on the
vesting date), not the grant-date fair value or recognized
compensation expense disclosed elsewhere in this proxy
statement. These restricted stock awards were granted in 2003.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Number of Shares
|
|
Value Realized on
|
Name
|
|
Acquired on Exercise (#)
|
|
Exercise ($)
|
|
Acquired on Vesting (#)
|
|
Vesting ($)
|
|
J. M. Jenness
|
|
|
86,889
|
|
|
|
1,277,970
|
|
|
|
0
|
|
|
|
0
|
|
J. M. Boromisa
|
|
|
144,017
|
|
|
|
463,552
|
|
|
|
0
|
|
|
|
0
|
|
A. D. D. Mackay
|
|
|
559,517
|
|
|
|
4,273,335
|
|
|
|
0
|
|
|
|
0
|
|
A. F. Harris
|
|
|
370,970
|
|
|
|
1,646,903
|
|
|
|
10,000
|
|
|
|
504,850
|
|
J. W. Montie
|
|
|
131,158
|
|
|
|
541,009
|
|
|
|
20,000
|
|
|
|
1,009,700
|
|
J. A. Bryant
|
|
|
194,622
|
|
|
|
1,558,833
|
|
|
|
25,000
|
|
|
|
1,262,125
|
|
38
RETIREMENT
AND NON-QUALIFIED DEFINED CONTRIBUTION
AND DEFERRED COMPENSATION PLANS
Pension
Plans
The CEO, CFO and other NEOs are eligible to participate in
Kellogg-provided pension plans which provide benefits based on
years of service and pay (salary plus annual incentive). Our
pension plans are comprised of the Kellogg Company Pension Plan
and the non-qualified restoration plans, which include the
Kellogg Company Executive Excess Plan for accruals after
December 31, 2004, and the Kellogg Company Excess Benefit
Retirement Plan for accruals on or before December 31, 2004
(collectively, the Pension Plans). The Compensation
Committee has reviewed the provisions of these plans as they
apply to executives and found the benefits payable under the
plans to be reasonable by market standards.
Mr. Jenness, our Chairman, who retired from the position of
CEO as of December 30, 2006, is entitled to a lump sum
pension benefit from Kellogg calculated as of January 1,
2008. The benefit is payable six months after the termination
of his employment from Kellogg as a result of Section 409A
of the Internal Revenue Code. In accordance with our Pension
Plans, the pension benefit (stated as a single life annuity of
$155,167) will be converted to a lump sum amount using the PBGC
interest rate in effect three months prior to his last day of
employment. The lump sum will accrue interest at the
30 year treasury rate for the six-month period prior to
payment, which is consistent with how Kellogg handles similar
situations.
Below is an overview of our Pension Plans, which is applicable
to our executives and active
U.S.-based
Kellogg employees (other than Mr. Jenness, as described
above):
|
|
|
|
|
|
|
|
|
|
Pension Plan
|
|
|
Non-Qualified
Plans
|
Reason for Plan
|
|
|
Provide eligible employees with a
competitive level of retirement benefits based on pay and years
of service.
|
|
|
Provide eligible executives with a
competitive level of retirement benefits, based on the formula
used in the Salaried Pension Plan, by restoring the
benefits limited by the Internal Revenue Code.
|
Eligibility
|
|
|
Salaried employees, including the
CEO, CFO and other NEOs, and certain hourly and union employees.
|
|
|
Executives impacted under the
Internal Revenue Code by statutory limits on the level of
compensation and benefits that can be considered in determining
Kellogg-provided retirement benefits.
|
Payment Form
|
|
|
Monthly annuity.
|
|
|
Monthly annuity or lump sum at the
choice of the executive.
|
|
|
|
|
|
|
|
We changed the retirement benefits formulas effective
January 1, 2003, which, based on the implementation
approach, resulted in two different formulas for NEOs covered by
our Pension Plans: a Grandfathered Formula (applicable to
Messrs. Mackay, Harris, Montie and Boromisa) and a
Non-Grandfathered Formula (applicable to Mr. Bryant). Below
is an overview of the two formulas applicable to our Pension
Plans:
|
|
|
|
|
|
|
|
|
|
Grandfathered Formula
|
|
|
Non-Grandfathered
Formula
|
Participation, as of
January 1, 2003
|
|
|
Active Kellogg heritage employees
who are 40 years of age or older or have 10 or
more years of service.
|
|
|
Active Kellogg heritage employees
who are less than 40 years of age and have less
than 10 years of service.
|
Retirement Eligibility
|
|
|
Full Unreduced
Benefit: Normal
retirement age 65 Age 55 with 30 or more
years of service Age 62 with 5 years
of serviceReduced Benefit: Age 55 with
20 years of service Any age with 30 years
of service
|
|
|
Full Unreduced
Benefit: Normal
retirement age 65Reduced
Benefit: Age 62 with 5 years of
service Age 55 with 20 or more years
of service Any age with 30 years of
service
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
Grandfathered Formula
|
|
|
Non-Grandfathered
Formula
|
Pension Formula
|
|
|
Single Life Annuity = 1.5% x
(years of service) x (final average pay based on the
average of highest three consecutive years)
(Social Security offset)
|
|
|
Single Life Annuity =
1.5% x (years of service) x (final average pay based
on the average of highest five consecutive
years) (Social Security offset)
|
Pensionable Earnings
|
|
|
Includes only base pay, overtime
pay and annual incentive payments. We do not include any other
compensation, such as restricted stock grants, EPP payouts,
gains from stock option exercises and any other form of stock-
or option-based compensation in calculating pensionable
earnings.
|
|
|
|
|
|
|
|
The estimated actuarial present value of the retirement benefit
accrued through December 30, 2006 appears in the table
below. The calculation of actuarial present value is generally
consistent with the methodology and assumptions outlined in our
audited financial statements, except that benefits are reflected
as payable as of the date the executive is first entitled to
full unreduced benefits (as opposed to the assumed retirement
date) and without consideration of pre-retirement mortality.
Specifically, present value amounts were determined based on the
financial accounting discount rate for U.S. pension plans
of 5.9%, and benefits subject to lump-sum distribution were
determined using an interest rate of 3.4% and PBGC mortality
assumptions. For further information on our accounting for
pension plans, refer to Note 9 within Notes to the
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
for the year ended December 30, 2006. The actuarial
increase in 2006 of the projected retirement benefits can be
found in the Summary Compensation Table under the heading
Change in Pension Value and Non-Qualified Deferred
Compensation Earnings (all amounts reported under that
heading represent actuarial increases in our Pension Plans). No
payments were made to our NEOs under our Pension Plans during
2006. The number of years of credited service disclosed below
equals an executives length of service with Kellogg,
except that in 2003 Mr. Mackay and Mr. Harris (who are
both retirement-eligible) received additional years of credited
service under the Pension Plans for retention purposes. Refer to
Employment Agreements.
PENSION
BENEFITS TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Years
|
|
|
|
Present Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited Service
|
|
|
|
Accumulated
|
|
|
|
Payments During
|
|
Name
|
|
|
Plan Name
|
|
|
|
(#)
|
|
|
|
Benefit ($)
|
|
|
|
Last Fiscal Year
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. M. Boromisa
|
|
|
|
Pension Plan
|
|
|
|
|
26
|
|
|
|
|
710,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2004 and before)
|
|
|
|
|
24
|
|
|
|
|
744,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2005 and after)
|
|
|
|
|
2
|
|
|
|
|
2,485,000
|
|
|
|
|
0
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
3,939,000
|
|
|
|
|
0
|
|
A. D. D. Mackay
|
|
|
|
Pension Plan
|
|
|
|
|
16
|
|
|
|
|
260,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2004 and before)
|
|
|
|
|
14
|
|
|
|
|
1,733,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2005 and after)
|
|
|
|
|
8
|
(1)
|
|
|
|
3,144,000
|
|
|
|
|
0
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
5,137,000
|
|
|
|
|
0
|
|
A. F. Harris
|
|
|
|
Pension Plan
|
|
|
|
|
23
|
|
|
|
|
478,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2004 and before)
|
|
|
|
|
21
|
|
|
|
|
1,719,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2005 and after)
|
|
|
|
|
5
|
(2)
|
|
|
|
2,399,000
|
|
|
|
|
0
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
4,596,000
|
|
|
|
|
0
|
|
J. W. Montie
|
|
|
|
Pension Plan
|
|
|
|
|
19
|
|
|
|
|
367,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2004 and before)
|
|
|
|
|
17
|
|
|
|
|
743,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2005 and after)
|
|
|
|
|
2
|
|
|
|
|
1,823,000
|
|
|
|
|
0
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
2,933,000
|
|
|
|
|
0
|
|
J. A. Bryant
|
|
|
|
Pension Plan
|
|
|
|
|
9
|
|
|
|
|
64,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2004 and before)
|
|
|
|
|
7
|
|
|
|
|
154,000
|
|
|
|
|
0
|
|
|
|
|
|
Non-Qualified Plan (2005 and after)
|
|
|
|
|
2
|
|
|
|
|
187,000
|
|
|
|
|
0
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
405,000
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40
|
|
|
(1) |
|
Mr. Mackay was granted 6 years of additional service
credit in 2003 for retention purposes. This additional service
credit increased the actuarial present value of his
non-qualified pension benefit shown above by $1,442,000. |
|
(2) |
|
Mr. Harris was granted 3.5 years of additional service
credit in 2003 for retention purposes. This additional service
credit increased the actuarial present value of his
non-qualified pension benefit shown above by $626,000. |
Non-Qualified
Deferred Compensation
We offer both qualified and non-qualified defined contribution
plans for employees to elect voluntary deferrals of salary and
annual incentive awards. Our defined contribution plans are
comprised of (1) the Savings & Investment Plan
(which is a qualified plan available to substantially all
salaried employees) and (2) the Restoration
Savings & Investment Plan (Restoration
Plan), which is a non-qualified plan as described below.
Effective on January 1, 2005, the Restoration Plan was
renamed the Grandfathered Restoration Plan to preserve certain
distribution options previously available in the old Restoration
Plan, but no longer allowed under IRS regulations on deferrals
after January 1, 2005. Deferrals after January 1, 2005
are contributed to a new Restoration Plan, which complies with
the new IRS regulations on distributions. Under these plans,
employees can defer up to 50% of base salary plus annual
incentives. Payouts are generally made after retirement or
termination of employment with Kellogg either as annual
installments or as a lump sum, based on the distribution payment
alternative elected under each plan. Participants in the
Restoration Plan may not make withdrawals during their
employment. Participants in the Grandfathered Restoration Plan
may make withdrawals during employment, but must pay a 10%
penalty on any in-service withdrawal.
In order to assist employees with saving for retirement, we
provide matching contributions on employee deferrals. Under this
program, we match dollar for dollar up to 3% of eligible
compensation (i.e., base salary plus annual incentive) which is
deferred by employees, and 50% of the deferred compensation
between 3% and 5% of eligible compensation deferred by
employees. Accordingly, if employees contribute 5% of eligible
compensation, we provide a matching contribution of 4% of
eligible compensation. No Kellogg contributions are provided
above 5% of eligible compensation deferred by employees. Kellogg
contributions are immediately vested.
Our Restoration Plan is a non-qualified, unfunded plan we offer
to employees who are impacted by the statutory limits of the
Internal Revenue Code on contributions under our qualified plan.
The Restoration Plan allows us to provide the same matching
contribution, as a percentage of eligible compensation, to
impacted employees as other employees. All contributions to the
Restoration Plan are invested in the Stable Income Fund, which
was selected by Kellogg (and is one of the 11 investment choices
available to employees participating in the Savings &
Investment Plan). The Stable Income Fund has provided an
interest rate of about 4% per year. As an unfunded plan, no
money is actually invested in the Stable Income Fund;
contributions and earnings/losses are tracked in a book-entry
account and all account balances are general Kellogg
obligations.
The following table provides information with respect to our
Restoration Plan for each NEO. This table excludes balances in
the Savings & Investment Plan, which is a qualified
plan available to all salaried Kellogg employees as described
above. The information for Mr. Jenness is also with respect
to our Deferred Compensation Plan for Non-Employee Directors
discussed in the section entitled 2006 Non-Employee
Director Compensation and Benefits and our Executive
Deferral Program discussed in the section entitled
Compensation Discussion and Analysis Elements
of Our Compensation Program Base Salaries.