VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
At the close of business on March 3, 2008, there were outstanding 97,611,057 shares of Common Stock (together with the
associated preferred stock purchase rights under the Rights Agreement dated as of July 26, 2006, between the Corporation and Computershare Investor Services, LLC, as amended). Other than
23,194 shares of Common Stock granted as restricted stock without voting rights, each of the shares of Common
Stock is entitled to one vote. Shareholders do not have cumulative voting rights with respect to the election of directors.
1
Based
on Schedule 13G filings with the Securities and Exchange Commission ("SEC"), the following table indicates the beneficial owners of more than 5 percent of the
Corporation's outstanding Common Stock as of December 31, 2007:
Name and Address
of Beneficial Owner
|
|
Shares
Beneficially Owned
|
|
Percent
of Class
|
Janus Capital Management LLC
151 Detroit Street
Denver, Colorado 80206-4805
|
|
7,647,921
|
(1)
|
7.6
|
Lord Abbett & Co.
90 Hudson Street
Jersey City, New Jersey 07302-3973
|
|
6,189,041
|
(2)
|
6.16
|
Vanguard Fiduciary Trust Company
500 Admiral Nelson Boulevard
Malvern, Pennsylvania 19355
|
|
5,845,651
|
(3)
|
5.82
|
-
(1)
-
1,048,526
shares are held with sole voting and dispositive power. 6,599,395 shares are held with shared voting and dispositive power.
-
-
Janus
Capital has an indirect 86.5 percent ownership stake in Enhanced Investment Technologies LLC ("INTECH") and an indirect
30 percent ownership stake in Perkins, Wolf, McDonnell and Company, LLC ("Perkins Wolf"). Janus Capital, Perkins Wolf and INTECH are aggregated for purposes of this filing. Janus
Capital, Perkins Wolf and INTECH are collectively referred to as "Managed Portfolios."
-
-
Perkins
Wolf and INTECH are indirect subsidiaries of Janus Capital. Janus Capital has an indirect 30 percent ownership stake in Perkins Wolf and an
indirect 86.5 percent ownership stake in INTECH. Perkins Wolf and INTECH are registered investment companies registered under Section 8 of the Investment Company Act of 1940.
-
-
As
a result of its role as investment advisor or sub-advisor to the Managed Portfolios, Janus Capital may be deemed to be the beneficial owner
of 1,048,526 shares or 1 percent of the shares outstanding of Ball Common Stock held by such Managed Portfolios. However, Janus Capital does not have the right to receive any dividends from, or
the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
-
-
As
a result of its role as investment advisor or sub-advisor to the Managed Portfolios, Perkins Wolf may be deemed to be the beneficial owner of
2,174,287 shares or 2.2 percent of the shares outstanding of Ball Common Stock held by such Managed Portfolios. However, Perkins Wolf does not have the right to receive any dividends from, or
the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
-
-
As
a result of its role as investment advisor or sub-advisor to the Managed Portfolios, INTECH may be deemed to be the beneficial owner of
4,425,108 shares or 4.4 percent of the shares outstanding of Ball Common Stock held by such Managed Portfolios. However, INTECH does not have the right to receive any dividends from, or the
proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
-
(2)
-
5,963,141
shares are held with sole voting power and 6,189,041 shares are held with sole dispositive power.
-
(3)
-
These
shares are held with shared voting and dispositive power.
2
The
following table lists the beneficial ownership of Common Stock of the Corporation by director nominees, continuing directors, the Chief Executive Officer and the four other most
highly compensated executive officers and, as a group, of such persons and the other executive officers as of the close of business on March 3, 2008.
Title of Class
|
|
Name of
Beneficial Owner
|
|
Shares Beneficially
Owned
(1)
|
|
Percent of
Class
(2)
|
Common
|
|
Robert W. Alspaugh
|
|
3,000
|
(3)
|
*
|
Common
|
|
Howard M. Dean
|
|
91,799
|
(4)
|
*
|
Common
|
|
Hanno C. Fiedler
|
|
125,402
|
(5)
|
*
|
Common
|
|
John R. Friedery
|
|
274,031
|
(6)
|
*
|
Common
|
|
John A. Hayes
|
|
209,901
|
(7)
|
*
|
Common
|
|
R. David Hoover
|
|
1,486,630
|
(8)
|
1.5
|
Common
|
|
John F. Lehman
|
|
122,381
|
(9)
|
*
|
Common
|
|
Georgia R. Nelson
|
|
7,999
|
(10)
|
*
|
Common
|
|
Jan Nicholson
|
|
167,193
|
(11)
|
*
|
Common
|
|
Raymond J. Seabrook
|
|
434,267
|
(12)
|
*
|
Common
|
|
George M. Smart
|
|
21,540
|
(13)
|
*
|
Common
|
|
Theodore M. Solso
|
|
58,040
|
(14)
|
*
|
Common
|
|
Stuart A. Taylor II
|
|
88,865
|
(15)
|
*
|
Common
|
|
Erik H. van der Kaay
|
|
42,398
|
(16)
|
*
|
Common
|
|
David A. Westerlund
|
|
479,122
|
(17)
|
*
|
Common
|
|
All of the above and present executive officers as a group (21)
|
|
4,308,321
|
(18)
|
4.4
|
-
(1)
-
Full
voting and dispositive investment power, unless otherwise noted.
-
(2)
-
*
Indicates less than 1 percent ownership.
-
(3)
-
Mr. Alspaugh
has 3,000 restricted stock units with no voting rights or dispositive investment power.
-
(4)
-
Includes
1,000 shares owned by Mr. Dean's wife, as to which he disclaims beneficial ownership, and 8,000 shares that he may acquire during the next 60 days
upon the exercise of stock options. Also includes 357 stock units equivalent to 357 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans and 2,000
restricted stock units with no voting rights or dispositive investment power.
-
(5)
-
Includes
10,000 shares that Mr. Fiedler may acquire during the next 60 days upon exercise of stock options. Also includes 17,144 shares of restricted stock
or restricted stock units without voting rights. Voting rights attach to the shares as the restrictions lapse.
-
(6)
-
Includes
90,625 shares that Mr. Friedery may acquire during the next 60 days upon the exercise of stock options. Also includes 76,151 stock units
equivalent to 76,151 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans with no voting rights or dispositive investment power, and 23,500
restricted stock units with no voting rights or dispositive investment power.
-
(7)
-
Includes
65,242 shares that Mr. Hayes may acquire during the next 60 days upon the exercise of stock options. Also includes 45,056 stock units equivalent
to 45,056 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans with no voting rights or dispositive investment power, and 29,250 restricted stock
units with no voting rights or dispositive investment power. In addition, 20,000 shares have been pledged.
-
(8)
-
Includes
218,143 shares held in trust for Mr. Hoover's wife, as to which he disclaims beneficial ownership, and 744,511 shares that he may acquire during the next
60 days upon the exercise of stock options. Also includes 369,593 stock units equivalent to 369,593 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company
Stock Plans with no voting rights or dispositive investment power, and 80,000 restricted stock units with no voting rights or dispositive investment power. In addition, 80,000 shares have been
pledged.
-
(9)
-
Includes
32,000 shares that Mr. Lehman may acquire during the next 60 days upon the exercise of stock options. Also includes 16,866 stock units equivalent
to 16,866 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans and 2,000 restricted stock units with no voting rights or dispositive investment
power.
-
(10)
-
Includes
2,999 stock units equivalent to 2,999 shares that Ms. Nelson has deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans and
2,000 restricted stock units with no voting rights or dispositive investment power.
-
(11)
-
Includes
8,000 shares that Ms. Nicholson may acquire during the next 60 days upon the exercise of stock options. Also includes 11,546 stock units
equivalent to 11,546 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans and 2,000 restricted stock units with no voting rights or dispositive
investment power.
-
(12)
-
Includes
7,500 shares owned by Mr. Seabrook's children, as to which he disclaims beneficial ownership, and 215,669 shares that he may acquire during the next
60 days upon the exercise of stock options. Also includes 104,477 stock units equivalent to 104,477 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company
Stock Plans with no voting rights or dispositive investment power, and 23,500 restricted stock units with no voting rights or dispositive investment power.
-
(13)
-
Includes
4,000 shares owned by Mr. Smart's wife, as to which he disclaims beneficial ownership. Also includes 2,015 stock units equivalent to 2,015 shares that
have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans, and 2,000 restricted stock units with no voting rights or dispositive investment power.
3
-
(14)
-
Includes
8,000 shares that Mr. Solso may acquire during the next 60 days upon the exercise of stock options. Also includes 15,617 stock units equivalent
to 15,617 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans and 2,000 restricted stock units with no voting rights or dispositive investment
power.
-
(15)
-
Includes
30,250 shares that Mr. Taylor may acquire during the next 60 days upon the exercise of stock options. Also includes 16,276 stock units equivalent
to 16,276 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company Stock Plans and 2,000 restricted stock units with no voting rights or dispositive investment
power.
-
(16)
-
Includes
2,765 stock units equivalent to 2,765 shares that Mr. van der Kaay has deferred pursuant to the Ball Corporation Deferred Compensation Company Stock
Plans and 2,000 restricted stock units with no voting rights or dispositive investment power.
-
(17)
-
Includes
25,078 shares owned by Mr. Westerlund's wife, as to which he disclaims beneficial ownership, and 222,125 shares that he may acquire during the next
60 days upon the exercise of stock options. Also includes 120,412 stock units equivalent to 120,412 shares that have been deferred pursuant to the Ball Corporation Deferred Compensation Company
Stock Plans with no voting rights or dispositive investment power, and 23,500 restricted stock units with no voting rights or dispositive investment power.
-
(18)
-
Includes
343,348 shares to which beneficial ownership is disclaimed, and 1,708,056 shares that may be acquired during the next 60 days upon the exercise of stock
options, and includes 77,025 to which beneficial ownership is disclaimed. Also includes 916,627 stock units equivalent to 916,627 shares that have been deferred pursuant to the Ball Corporation
Deferred Compensation Company Stock Plans with no voting rights or dispositive investment power, and includes 43,311 to which beneficial ownership is disclaimed; and 253,000 restricted stock units
with no voting rights or dispositive investment power, and includes 12,250 restricted stock units to which beneficial ownership is disclaimed. In addition, 141,025 shares have been pledged.
VOTING ITEM IELECTION OF DIRECTORS
In 1985 the shareholders adopted the Amended Articles of Incorporation of Ball Corporation, dividing the Board of Directors (the
"Board") into three classes, as nearly equal in number as possible, with directors serving staggered three-year terms. On April 23, 2008, one person is to be elected to serve as a
director until 2009 and three persons are to be elected to serve as directors until 2011. Unless otherwise instructed on the proxy card, the persons named in the accompanying proxy intend to vote for
nominees Robert W. Alspaugh to hold office as a director of the Corporation until the 2009 Annual Meeting of Shareholders and George M. Smart, Theodore M. Solso, and Stuart A. Taylor II to hold office
as directors of the Corporation until the 2011 Annual Meeting of Shareholders, or, in each case, until his respective successor is elected and qualified. All nominees have consented to be named as
candidates in the Proxy Statement and have agreed to serve if elected. If, for any reason, any of the nominees becomes unavailable for election, the shares represented by proxies will be voted for any
substitute nominee or nominees designated by the Board. The Board has no reason to believe that any of the nominees will be unable to serve.
Howard
M. Dean, who has served as a director since 1984, has reached the retirement age for directors and, therefore, will not stand for reelection at the 2008 Annual Meeting. The
Corporation wishes to express its appreciation to Mr. Dean for his significant contributions to the Corporation and its shareholders during his tenure as a director.
In
accordance with the Indiana Business Corporation Law, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a
quorum is present. Abstentions and broker nonvotes are considered neither votes "for" nor "against." Proxies may not be voted for a greater number of persons than the four named nominees.
Set
forth for each director nominee in Classes II and III and for each continuing director in Classes I and III is the director's principal occupation and employment during
the past five years or, if longer, the period during which the director has served as a director, and certain other information.
4
DIRECTOR NOMINEES AND CONTINUING DIRECTORS
To Be Elected for a Term of One Year Until the 2009 Annual Meeting (Class III)
|
Robert W. Alspaugh
|
|
Chief Executive Officer, KPMG International, 2002 to 2005. Age 61.
|
|
Director since 2008. Member, Audit and Nominating/Corporate Governance Committees.
Mr. Alspaugh is a director of Autoliv, Inc., Stockholm, Sweden.
|
To Be Elected for a Term of Three Years Until the 2011 Annual Meeting (Class II)
|
George M. Smart
|
|
President, Sonoco-Phoenix Inc., Canton, Ohio, a subsidiary of Sonoco Products Company, 2001 to 2004. Age 62.
|
|
Director since 2005. Member, Human Resources and Audit Committees.
Mr. Smart is a director of FirstEnergy Corp., Akron, Ohio.
|
Theodore M. Solso
|
|
Chairman and Chief Executive Officer, Cummins, Inc., Columbus, Indiana, since January 2000. Age 61.
|
|
Director since 2003. Member, Audit and Human Resources Committees.
Mr. Solso is a director of Ashland Inc., Covington, Kentucky.
|
Stuart A. Taylor II
|
|
Chief Executive Officer, The Taylor Group L.L.C., Chicago, Illinois, since June 2001; Senior Managing Director, Bear, Stearns & Co. Inc., Chicago, Illinois, 1999 to 2001. Age 47.
|
|
Director since 1999. Member, Human Resources and Nominating/Corporate Governance Committees.
|
The Board of Directors recommends that shareholders vote "FOR" the election of each nominee for Director named above.
|
5
To Continue in Office Until the 2009 Annual Meeting (Class III)
|
R. David Hoover
|
|
Chairman, President and Chief Executive Officer, Ball Corporation, since April 2002; President and Chief Executive Officer, January 2001 to April 2002; Vice Chairman, President and Chief Operating Officer, April 2000 to January 2001; Vice Chairman,
President and Chief Financial Officer, January 2000 to April 2000; Vice Chairman and CFO, 1998 to 2000; Executive Vice President and CFO, 1997 to 1998; Executive Vice President, CFO and Treasurer, 1996 to 1997. Age 62.
|
|
Director since 1996.
Mr. Hoover is a director of Energizer Holdings, Inc., St. Louis, Missouri, Irwin Financial Corporation, Columbus, Indiana, and Qwest Communications International, Inc., Denver, Colorado.
|
Jan Nicholson
|
|
President, The Grable Foundation, Pittsburgh, Pennsylvania, since 1990; Managing Director, Strategic Risk Assessment, MBIA Insurance Corporation, Armonk, New York, 1998 to 2000; Managing Director, Research and Development, Capital Markets Assurance
Corporation (CapMAC), New York, New York, 1994 to 1998. Age 62.
|
|
Director since 1994. Member, Audit and Finance Committees.
Ms. Nicholson is a director of Radian Group Inc., Philadelphia, Pennsylvania.
|
6
To Continue in Office Until the 2010 Annual Meeting (Class I)
|
Hanno C. Fiedler
|
|
Executive Vice President, Ball Corporation, and Chairman and Chief Executive Officer, Ball Packaging Europe, December 2002 to December 2005; Chairman and Chief Executive Officer, Schmalbach-Lubeca AG, 1996 to 2002. Age 62.
|
|
Director since 2002. Member, Finance Committee.
Mr. Fiedler serves on the Supervisory Boards of Thyssen Krupp Steel AG, Duisburg, Germany, Pfleiderer AG of Neumarkt, Germany, and MAN-Roland AG, Augsburg, Germany.
|
John F. Lehman
|
|
Chairman, J. F. Lehman & Company, New York, New York, since 1990; Chairman of the Board, OAO Technology Solutions, Inc., Greenbelt, Maryland, since 2001; Chairman of the Board, Sperry Marine Inc., Charlottesville, Virginia, 1993 to
1996; Managing Director, Investment Banking Division, PaineWebber Inc., New York, New York, 1988 to 1990; Secretary of the Navy, Washington, D.C., 1981 to 1987. Age 65.
|
|
Director since 1987. Member, Finance and Nominating/Corporate Governance Committees.
Mr. Lehman is a director of EnerSys, Reading, Pennsylvania.
|
Georgia R. Nelson
|
|
President and Chief Executive Officer, PTI Resources, LLC, Chicago, Illinois, since June 2005; President, Midwest Generation EME, LLC, Chicago, Illinois, April 1999 to June 2005; General Manager, Edison Mission Energy Americas, Irvine,
California, January 2002 to June 2005. Age 58.
|
|
Director since 2006. Member, Human Resources and Nominating/Corporate Governance Committees.
Ms. Nelson is a director of Cummins, Inc., Columbus, Indiana, and Nicor Inc., Naperville, Illinois.
|
Erik H. van der Kaay
|
|
Chairman of the Board, Symmetricom, Inc., October 2002 to October 2003; President, Chief Executive Officer, and Chairman of the Board, Datum, Inc., Irvine, California, April 1998 to October 2002 upon Symmetricom's acquisition of Datum. Age
67.
|
|
Director since 2004. Member, Audit and Finance Committees.
Mr. van der Kaay is Chairman of Comarco, Inc., Irvine, California, RF Micro Devices, Greensboro, North Carolina, and TranSwitch Corporation, Shelton, Connecticut.
|
7
GOVERNANCE OF THE CORPORATION
Corporate Governance Guidelines
The Board has established Corporate Governance Guidelines to comply with the relevant provisions of Section 303A of the New York Stock Exchange ("NYSE")
Listed Company Manual (the "NYSE Listing Standards"). The Corporate Governance Guidelines are set forth on the Corporation's Web site at www.ball.com, under the section "Investors," under the
subsection "Financial Information" and under the link, "Corporate Governance." A copy may also be obtained upon request from the Corporation's Corporate Secretary.
Policies on Business Ethics and Conduct
Ball established a Corporate Compliance Committee in 1993 chaired by a designated Compliance Officer. The Committee publishes a code of business ethics, which is
in the form of the Business Ethics booklet. The Board has adopted a separate additional business ethics statement referred to as the Ball Corporation Executive Officers and Directors Business Ethics
Statement ("Executive Officers and Directors Ethics Statement") designed to establish principles requiring the highest level of ethical behavior toward achieving business success within the
requirements of the law and the Corporation's policies and ethical standards. The Business Ethics booklet and the Executive Officers and Directors Ethics Statement are set forth on the Corporation's
Web site at www.ball.com, under the section "Investors," under the subsection "Financial Information" and under the link, "Corporate Governance." Copies may also be obtained upon request from the
Corporation's Corporate Secretary.
Director Training
All new directors receive orientation training soon after being elected to the Board. Continuing education programs are made available to directors including
internal presentations, third party presentations and externally offered programs.
Communications With Directors
The Corporation has established means for shareholders or others to send communications to the Board. Persons interested in communicating with the Board, its
individual directors or its Committees may send communications in writing via the Corporate Secretary or the Chairman of the Board. The communication should be sent in care of the Corporate Secretary,
Ball Corporation, by mail to P.O. Box 5000, Broomfield, Colorado 80038-5000 or facsimile transmission to 303-460-2127.
In
accordance with the NYSE and SEC requirements, the Corporation has established additional means for interested parties to send communications to the Board and selected Committees,
which are described on the Corporation's Web site at www.ball.com, under the section "Investors," under the subsection "Financial Information" and under the link, "Corporate Governance."
Shareholder
proposals for inclusion in the Corporation's proxy materials will continue to be handled and must be communicated as disclosed in this Proxy Statement on page 41.
Meetings of Nonmanagement and Independent Directors
The Board meets regularly and not less than four times per year. Nonmanagement directors meet regularly, usually in conjunction with a regular Board meeting.
Independent directors meet at least annually. Stuart A. Taylor II served as Presiding Director for meetings of nonmanagement and independent directors held in 2007 except the January meeting at which
Ms. Nelson presided.
Director Independence Standards
Pursuant to the NYSE Listing Standards, the Board has adopted a policy adhering to the director independence requirements of the NYSE in determining the
independence of directors. These standards are described on the Corporation's Web site at www.ball.com, under the section "Investors," under the subsection "Financial Information" and under the link,
"Corporate Governance."
The
Board has determined that a majority of the Board is independent, and the Board has determined that based upon the NYSE independence standards, each of the members of the Board is
independent with the exception of Messrs. Fiedler and Hoover.
8
CERTAIN COMMITTEES OF THE BOARD
The standing committees of the Board are the Audit, Nominating/Corporate Governance, Human Resources and Finance Committees.
Audit Committee:
The primary purpose of the Audit Committee is to assist the Board in fulfilling its responsibilities to oversee management's conduct and the integrity of the
Corporation's public financial reporting process including the overview of the accounting policies and the system of internal accounting controls over financial reporting, disclosure controls and
procedures and the performance of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Corporation (the Corporation's "independent auditor") and the internal
audit department. The Audit Committee is responsible for engaging and evaluating the Corporation's independent auditor, including the independent auditor's qualifications and independence; resolving
any differences between management and the independent auditor regarding financial reporting; preapproving all audit and non-audit services provided by the independent auditor; and
establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters.
Members
of the Audit Committee are Ms. Nicholson and Messrs. Alspaugh (effective February 2008), Smart, Solso and van der Kaay. The Board has determined that each member of
the Audit Committee is independent and financially literate, and the Board identifies Ms. Nicholson, among others, as having accounting or financial management expertise and as an Audit
Committee financial expert under the NYSE Listing Standards and the SEC regulations. The Audit Committee met five times during 2007.
The
Report of the Audit Committee is set forth on page 38. The Committee has considered the non-audit services provided during 2007 and 2006 by the independent auditor as
disclosed below and determined the services were compatible with maintaining the auditor's independence. The Committee believes the fees paid to the independent auditor in respect of those services
were appropriate, necessary and cost efficient in the management of the business of the Corporation and are compatible with maintaining the auditor's independence.
Audit Fees and Services
The following table represents fees for professional services rendered by PricewaterhouseCoopers LLP for the audit of the Corporation's annual consolidated
financial statements and quarterly reports and the auditor's report under the Sarbanes Oxley Act of 2002 for fiscal 2007 and fiscal 2006, together with fees for audit-related services and tax services
rendered by PricewaterhouseCoopers LLP during fiscal 2007 and fiscal 2006. Audit-related services for 2007 consisted of consultations related to derivative transactions, stock repurchase
programs, various local and special audits, quality testing of IT systems, joint venture consultations and a preferability letter in inventory accounting. Tax fees consisted principally of tax
compliance, including tax compliance matters related to tax audits and return preparation fees and fees for tax consultations. Other fees included fees for access to PricewaterhouseCoopers LLP
online accounting research software and other accounting advice for the Corporation's foreign investments.
|
|
Fiscal 2007
|
|
Fiscal 2006
|
Audit Fees
|
|
|
|
|
|
|
|
Attestation Report and Accounting Consultations
|
|
$
|
4,794,000
|
|
$
|
5,174,000
|
|
Foreign Statutory Audits
|
|
|
1,310,000
|
|
|
1,584,000
|
Audit-Related Fees
|
|
|
|
|
|
|
|
Benefit Plans
|
|
$
|
22,000
|
|
$
|
19,000
|
|
Consultations
|
|
|
158,000
|
|
|
25,000
|
Tax Fees
|
|
|
|
|
|
|
|
Tax Compliance Matters
|
|
$
|
466,000
|
|
$
|
1,091,000
|
|
Tax Consultations
|
|
|
649,000
|
|
|
394,000
|
All Other Fees
|
|
$
|
20,000
|
|
$
|
22,000
|
The
Audit Committee's Charter requires management to submit for preapproval all audit, audit-related and non-audit-related services to be performed by the independent
auditor. Management and the independent auditor
9
submit
a report of fees for review and preapproval by the Committee on a quarterly basis. The Audit Committee requires management and the independent auditor to submit a report at least annually
regarding audit, audit-related, tax and all other fees paid by the Corporation to the independent auditor for services rendered in the immediately preceding two fiscal years. The Committee considers
whether the fees for non-audit and audit-related services are compatible with maintaining the auditor's independence and requires management and the independent auditor to confirm this as
well. The Audit Committee preapproved 100 percent of all of the above-referenced fees paid in 2007 and 2006 for services that were provided by PricewaterhouseCoopers LLP.
The
percentage of hours expended by persons other than the independent auditor's full-time, regular employees on the independent auditor's engagement to audit the
Corporation's financial statements was less than 10 percent.
A
copy of the Audit Committee Charter is attached as Annex I to the Proxy Statement and is set forth on the Corporation's Web site at www.ball.com, under the section "Investors,"
under the subsection "Financial Information" and under the link, "Corporate Governance."
Nominating/Corporate Governance Committee:
The Nominating/Corporate Governance Committee is responsible for assisting the Board in fulfilling its responsibility to identify qualified individuals to become
Board members; recommending to the Board the selection of Board nominees for the next annual meeting of shareholders; addressing the independence and effectiveness of the Board by advising and making
recommendations on matters involving the organization and operation of the Board, Corporate Governance Guidelines and directorship practices; overseeing the evaluation of the Board and its Committees;
and reviewing and assessing the Corporation's Sustainability activities and performance. The Nominating/Corporate Governance Committee utilizes the standards set forth below for considering director
nominees.
Members
of the Nominating/Corporate Governance Committee are Messrs. Alspaugh (effective February 2008), Dean, Lehman and Taylor and Ms. Nelson. The Board has determined
that the members of the Committee are independent under the NYSE Listing Standards. The Nominating/Corporate Governance Committee met four times during 2007.
The
Board has established a process whereby nominees for the Board may be submitted by members of the Board, the Chief Executive Officer, shareholders and any other persons. The
Committee considers these recommended candidates in light of criteria set forth below.
The
Committee will seek candidates who meet at a minimum the following criteria: (1) candidates who have sufficient time to attend or otherwise be present at Board, relevant Board
Committee and Shareholders' meetings;
(2) candidates who will subscribe to Ball Corporation's Corporate Governance Guidelines and the Executive Officers and Directors Ethics Statement; (3) candidates who demonstrate
credentials and experience in a broad range of corporate matters; (4) candidates who have experience and are focused on a broad range of corporate performance standards typical of publicly
traded companies headquartered in the U.S.; (5) candidates who will subscribe to the finalized strategic and operating plans of the Corporation as approved by the Board from time to time;
(6) candidates who are not affiliated with special interest groups that represent major causes or constituents; and (7) candidates who meet the criteria, if any, for being a director of
the Corporation as set forth in the Indiana Business Corporation Law, the Articles of Incorporation and Bylaws of the Corporation.
The
Committee will apply the principles of diversity in consideration of candidates. The Committee may utilize and pay third party consultants to identify and screen candidates on a
confidential basis for service on the Board. The Committee will also determine candidates' qualifications in light of the standards set by the Committee and by evaluating the qualifications of all
candidates in an attempt to select the most qualified nominees suited to serve as a director while attempting to ensure that a majority of the Board is independent and, where needed, to meet the NYSE
and SEC requirements for financial literacy, accounting or financial management expertise or audit committee financial expert status.
The
Nominating/Corporate Governance Committee will consider candidates recommended by shareholders. Any such recommendation should be in writing and addressed to the Chair,
Nominating/Corporate Governance Committee, in care of the Corporate Secretary, Ball Corporation, by mail to P.O. Box 5000, Broomfield, Colorado 80038-5000.
10
The
Committee received no recommendations for candidates as nominees for the Board from a security holder or group of security holders that beneficially owned more than 5 percent
of the Corporation's voting Common Stock for at least one year as of the date of the recommendation.
A
copy of the Nominating/Corporate Governance Committee Charter is attached as Annex II to this Proxy Statement and is set forth on the Corporation's Web site at www.ball.com,
under the section "Investors," under the subsection "Financial Information" and under the link, "Corporate Governance."
Human Resources Committee:
The primary purpose of the Human Resources Committee is to assist the Board in fulfilling its responsibilities related to the evaluation and compensation of the
Chief Executive Officer and overseeing the compensation of the other executive officers of the Corporation; reviewing and approving the schedule of salary ranges and grades for the salaried employees
of the Corporation; approving the Corporation's stock and cash incentive compensation programs, including awards to executive officers and the number of shares to be optioned and/or granted from time
to time to employees of the Corporation; approving and receiving reports on major benefit plans, plan changes and determinations and discontinuations of benefit plans; discussing the performance
evaluation system and succession planning system of the Corporation, including discussions with the Chairman of the Board and Chief Executive Officer about the succession plan for the Chairman of the
Board and Chief Executive Officer;
hiring experts including executive compensation consultants as deemed appropriate to advise the Committee; and authorizing the filing of required reports with federal, state and local governmental
agencies.
Members
of the Human Resources Committee are Messrs. Dean, Smart, Solso and Taylor and Ms. Nelson. The Board has determined that the members of the Committee are
independent under the NYSE Listing Standards. The Human Resources Committee met five times during 2007. A copy of the Human Resources Committee Charter is attached as Annex III to this Proxy
Statement and is set forth on the Corporation's Web site at www.ball.com, under the section "Investors," under the subsection "Financial Information" and under the link, "Corporate Governance."
Finance Committee:
The Finance Committee assists the Board in fulfilling its responsibility to oversee management in the financing and risk management of the Corporation, the status
of the Corporation's retirement plans and insurance policies and the Corporation's policies relating to interest rates, commodity hedging and currency hedging. The Committee may hire experts as deemed
appropriate to advise the Committee in the performance of its duties. The Committee reports to the Board concerning the financing of the Corporation and the performance of the Committee.
The
members of the Finance Committee are Messrs. Fiedler, Lehman and van der Kaay and Ms. Nicholson. The Committee met four times during 2007. A copy of the Finance
Committee Charter is attached as Annex IV to this Proxy Statement and is set forth on the Corporation's Web site at www.ball.com, under the section "Investors," under the subsection "Financial
Information" and under the link, "Corporate Governance."
BOARD MEETINGS AND ANNUAL MEETING
The members of the Board are expected to attend all meetings of the Board, relevant Committee meetings and the Annual Meeting of
Shareholders. The Board held five meetings during 2007. Every director attended 75 percent or more of the aggregate of the total number of meetings of the Board and the total number of meetings
held by all Committees of the Board on which the director served. All directors attended the 2007 Annual Meeting.
11
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Ball Corporation has adopted a policy with respect to transactions with related persons requiring its executive officers and directors
to comply with all SEC and NYSE requirements concerning transactions between the Corporation and "related persons," as defined in the applicable SEC and NYSE rules. With respect to related persons,
David L. Taylor currently serves as president and chief executive officer of a wholly-owned subsidiary of Ball Corporation, and is the spouse of Lisa A. Pauley, an executive officer of the
Corporation. For 2007, Mr. Taylor's base compensation was approximately $350,000. To facilitate compliance with such policy, the Board adopted procedures for the review, approval or
ratification of any transaction required to be reported under the applicable rules. The policy provides that each executive officer and director will promptly report to the Chairman of the Board any
transaction with the Corporation undertaken or contemplated by such officer or director, by any beneficial owner of 5 percent or more of the Corporation's voting securities or by any immediate
family member. The Chairman of the Board will refer the transaction to the General Counsel for review and recommendations. Upon receipt of such review and recommendations, the matter will be brought
before the Nominating/Corporate Governance Committee to consider whether the transaction in question should be approved, ratified, suspended, revoked or terminated. This policy for transactions with
related persons is in writing and is part of the Ball Corporation Executive Officers and Directors Ethics Statement. The written form of the policy can be found on the Corporation's Web site as
indicated in the section "Policies on Business Ethics and Conduct" on page 8.
EXECUTIVE COMPENSATION
REPORT OF THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS
The Human Resources Committee of the Board of Directors (the "Committee") has reviewed this Compensation Discussion and Analysis and
discussed its contents with members of the Corporation's management. Based on this review and discussion, the Committee has recommended that the Compensation Discussion and Analysis (the "CD&A") be
incorporated by reference in the Corporation's Annual Report on Form 10-K and in this Proxy Statement.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Objectives and Philosophy
The primary objective of the Corporation's executive compensation program is to support the achievement of the Corporation's business and performance objectives.
The program is mainly designed to:
-
-
Attract,
motivate and retain a highly capable and performance-focused executive team;
-
-
Promote
a culture of employee owners whose financial interests are aligned with those of the Corporation's shareholders;
-
-
Pay
for performance such that total compensation reflects the individual performance of executives and the absolute and relative performance of Ball; and
-
-
Efficiently
manage the potential dilution, cash flow, tax and reported earnings implications of executive compensation, consistent with the other objectives of the program.
The
Corporation's executive compensation philosophy emphasizes share ownership among executives, aligns executive incentives with shareholder interests and rewards performance that
enhances total shareholder returns. In support of Ball's emphasis on significant ownership by key executives, Ball delivers long-term incentive opportunities that encourage ownership.
Specifically, Ball may grant stock-settled stock appreciation rights ("SARs"), incentive stock options ("ISOs"), nonqualified stock options ("NQOs"), performance contingent restricted stock units
and/or restricted stock/restricted stock units, in addition to long-term performance cash incentives.
12
Consistent
with its ownership philosophy, Ball has established guidelines that all executive officers retain minimum ownership levels of the Corporation's Common Stock. As of
December 31, 2007, all executive officers including the Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO") and other proxy named executive officers ("NEOs") have met their
ownership guidelines. The 2007 stock ownership guidelines (minimum requirements) were as follows:
Executive
|
|
Ownership Multiple (of Base Salary)
|
CEO
|
|
5 times
|
CFO, EVPs and SVPs
|
|
3 times
|
Other Executives
|
|
1 to 2 times
|
With
the Corporation's successes and share price appreciation, some executives and/or directors may desire to lock in a portion of that success, thereby managing a portion of the
economic risk associated with concentrated holdings of Ball Common Stock. The Corporation has evaluated the potential approaches that executives and directors can use. As a result of this review, the
Corporation permits executives to use prepaid variable forward contracts or contracts to purchase or sell Corporation Common Stock pursuant to SEC Rule 10b5-1. Put and call options
and other hedging transactions involving Corporation stock (including selling the stock "short") are not permitted.
In
addition to promoting prudent share ownership, the Corporation's executive compensation objectives and philosophy focus on rewarding performance. This means that shareholder returns
along with corporate, operating unit and individual performance, both short-term and long-term, determine the largest portion of executive pay.
Process for Determining Executive Compensation
The Committee oversees the administration of the executive compensation program and determines the compensation of the executive officers of the Corporation. The
Committee is comprised solely of nonemployee directors, all of whom meet the independence requirements of the NYSE.
To
assist the Committee in discharging its responsibilities, the Committee has retained Towers Perrin, an independent consultant (the "Consultant"). The Consultant is engaged by and
reports directly to the Committee. Specifically, the Consultant's role is to develop recommendations for the Committee related to all aspects of executive compensation programs and the Consultant
works with management to obtain information necessary to develop the recommendations.
When
setting executive compensation, the Corporation applies a consistent approach for all executive officers. It intends that the combination of elements of executive compensation
closely aligns the executive's interest with those of the shareholders. Target total compensation is comprised of base salary, annual economic value added incentive compensation and
long-term incentive compensation in the form of both cash and equity. As a general rule, the Committee reviews and adjusts executive target total compensation levels annually in October
effective the following January; however, equity grants are generally considered and made in April.
The
Corporation begins the annual process in October by reviewing each executive officer's target total compensation in relation to the 50th percentile of comparably sized
companies based on general industry data. The Corporation also takes into account, as an additional reference point, competitive compensation data from a selected group of peer companies consisting of
leading container and packaging, distiller and brewer, food, household durable and nondurable goods companies (the "Peer Group"). Companies contained in Ball's Peer Group used in 2007 include:
Anheuser-Busch Companies, Inc.; Campbell Soup Company; The Clorox Company; Colgate-Palmolive Company; Fortune Brands, Inc.; H.J. Heinz Company; The Hershey Company; Jarden Corporation;
Kellogg Company; Molson Coors Brewing Company; Owens-Illinois, Inc; Smurfit-Stone Container Company; Sonoco Products Company; Temple-Inland, Inc; and Wm. Wrigley Jr. Company. This general industry and
Peer Group data is gathered by the Consultant and presented to the Corporation and the Committee in reports that provide a comparative analysis of our executive officer compensation to this
competitive market compensation. The Consultant works in collaboration with the Corporation's compensation department when preparing such reports.
As
part of this process, the Consultant creates tally sheets for each executive, which are used by the Committee when setting target total compensation for the CEO and other executive
officers. Tally sheets outline each executive's annual target and actual pay as well as total accumulated pay under various performance and employment scenarios and corporate performance, both recent
and projected. The Consultant also prepares for the Committee an independent
13
review
and recommendation of the CEO's compensation. In its deliberations, the Committee meets with the CEO and other members of senior management, as appropriate, to discuss the application of the
competitive benchmarking (pay and performance) relative to the unique structure and needs of the Corporation.
The
CEO's target total compensation package is set by the Committee during an executive session based on the Committee's review of the competitive information prepared by the Consultant,
assessment of the CEO's individual performance in conjunction with the financial and operating performance of Ball, and appropriate business judgment.
A
recommendation for the target total compensation of the Corporation's other executive officers, including the CFO and other NEOs, is made by the CEO after reviewing the executive's and
the Corporation's performance in conjunction with the executive's responsibility and experience when compared to the competitive information prepared by the Consultant. The compensation package for
the other executive officers, including the CFO and the other NEOs, is established by the Committee based on the recommendation of the CEO to the Committee and in consideration of the executive
officer's individual job responsibilities, experience and overall performance.
Generally,
the amount of compensation realized or potentially realizable does not directly impact the level at which future pay opportunities are set. However, when granting equity
awards the Committee reviews and considers both individual performance and the number of outstanding and previously granted equity awards.
14
Elements of Ball's Executive Compensation Program
The executive compensation program at Ball Corporation is designed to be consistent with the compensation objectives described above. The primary elements of the
Corporation's executive compensation program are outlined in the following table. The purpose of each element is also provided to demonstrate how each fits with the overall compensation objectives,
specifically, share ownership and pay for performance.
|
Component
|
|
Element
|
|
Type
|
|
Purpose
|
|
Current Year
|
|
|
|
Annual Base Salary
|
|
|
|
Base Compensation
|
|
|
|
Fixed element of pay based on an individual's primary duties and responsibilities.
|
|
|
|
|
Annual economic value added Incentive Compensation Plan
|
|
|
|
Short-term performance based plan
|
|
|
|
Designed to reward achievement of specified annual corporate and/or operating unit financial goals pursuant to economic value added principles.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term IncentiveCash
|
|
|
|
Acquisition-Related Special Incentive Plan
|
|
|
|
Long-term performance based plan
|
|
|
|
Designed to reward selected executives who can potentially contribute materially to the successful integration of newly acquired businesses.
|
|
|
|
|
Long-Term Cash Incentive Plan
|
|
|
|
Long-term performance based plan
|
|
|
|
Designed to reward key executives who can potentially contribute materially to the long-term financial and operating success of the Corporation and provide an executive retention incentive.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term IncentiveEquity
|
|
|
|
Stock Options and Stock-Settled Stock Appreciation Rights
|
|
|
|
Long-term performance based element
|
|
|
|
Designed to promote share ownership and reward participants if the value of Ball's Common Stock increases.
|
|
|
|
|
Performance Contingent Restricted Stock Units
|
|
|
|
Long-term performance based plan
|
|
|
|
Designed to tie equity compensation to the achievement of the Corporation's financial results, while encouraging stock ownership.
|
|
|
|
|
Deposit Shares
|
|
|
|
Long-term performance based plan
|
|
|
|
Designed to increase stock ownership by certain executives and provide long-term incentive.
|
|
|
|
|
Restricted Stock/Restricted Stock Units
|
|
|
|
Long-term performance based element
|
|
|
|
Designed to enhance share ownership by certain executives and provide an executive retention incentive.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Life and Pension Benefits
|
|
|
|
Benefit
|
|
|
|
Support basic life and retirement income security needs.
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
|
Benefit
|
|
|
|
Provides benefits according to the retirement plan's description where amounts are limited by IRS provisions.
|
|
|
|
|
Nonqualified Deferred Compensation
|
|
|
|
Benefit
|
|
|
|
Provides eligible participants the ability to defer certain pretax compensation into a savings plan to support retirement income security needs.
|
|
|
|
|
Perquisites and other personal benefits
|
|
|
|
Benefit
|
|
|
|
Noncash compensation generally nominal in value ranging from 2 to 4 percent of total compensation, which may consist of components such as financial planning, company contributions, aircraft usage and insurance premiums. The percent of total
compensation may exceed the nominal range for an executive on foreign assignment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mix of Compensation Elements Awarded in 2007
The diagrams below represent the mix of target total compensation awarded to the Corporation's CEO, CFO, and to the other NEOs in 2007. Target total compensation
is comprised of base salary, target annual incentive and target
15
long-term
incentives, which consist of a target cash value and grant date fair value of stock options and performance contingent equity awards. In 2007, Ball's target total compensation
for the CEO, CFO and the other NEOs approximated, on average, the competitive market median and was appropriate for the Corporation considering general industry and Peer Group data, executive-specific
factors such as individual performance and executive responsibility as well as internal equity. Although the Corporation and the Committee establish target total compensation based on target
performance, actual total compensation can vary based on the Corporation's actual performance. A large proportion of the target total compensation is variable based on performance, which constitutes
pay at risk. The CEO of Ball is eligible to participate in the same executive programs as the CFO and the other NEOs; however, a larger proportion of his target total compensation is at risk. As can
be seen, 85 percent of the target total compensation awarded to the CEO and 79 percent awarded to the other NEOs in 2007 was based on elements that may vary from year to year depending
on business performance. Additionally, 70 percent of the CEO's and approximately 65 percent of the other NEOs' target total compensation was based on long-term performance of
three years or more. This emphasis on longer-term compensation, through performance-based long-term cash and equity awards, ensures a strong continued alignment with Ball's
executive ownership and shareholder value creation objectives.
2007 Compensation Mix
Principal Executive Officer
|
|
2007 Compensation Mix
Avg of All Other NEOs
|
|
|
|
Specifics Related to the 2007 Executive Compensation Elements
Base Salary
This element represents the base fixed cash compensation paid to compensate an executive for services rendered during the fiscal year. The level of base salary
takes into account job responsibilities, experience level and market competitiveness. Base salaries are generally reviewed annually in October with any changes becoming effective on January 1
of the next year. Annual adjustments are based on individual performance, performance of the area of responsibility, the Corporation's performance, competitiveness versus the external market and
internal merit increase budgets.
Annual Incentives
This element is a short-term annual cash incentive designed to produce sustained shareholder value improvement by establishing a direct link between
economic value added and incentive compensation.
Economic value added is computed by subtracting a charge for the use of invested capital from net operating profit, after-tax. The Corporation's and/or operating unit's economic value
added financial performance determines the amount, if any, of awards earned under the Annual Incentive Compensation Plan. Such awards are based on actual economic value added performance relative to
the established economic value added target. For any one year, the economic value added target is equal to the sum of the prior year's target economic value added and one-half the amount
of the prior year's economic value added gain or shortfall relative to target and may be calculated as follows:
Current year's
economic value
added target
|
|
=
|
|
Prior year's
economic value
added target
|
|
+
|
|
1/2
|
|
|
|
Prior year's
actual economic
valued added
|
|
-
|
|
Prior year's
economic value
added target
|
|
|
Improvement
in economic value added occurs when the amount of net operating profit after-tax less a charge for capital employed in the business increases over
time. It establishes a direct link between incentive compensation and
16
return
earned on capital relative to a specified target return. For a given year, a payout at 100 percent of target annual incentive compensation is achieved when actual economic value added is
equal to the target economic value added. The awards earned for 2007 under the Annual Incentive Compensation Plan for the Corporation as a whole and Ball Packaging Europe were above target and,
accordingly, the targets for 2008 will be increased by one half of the excess, whereas the award earned for Ball North American packaging operations was below target, so the target for 2008 will be
reduced by one half of the shortfall. In either event current year target economic value added is set at a level that is greater than the prior year's actual performance. Economic value added was
selected as the measure for Ball's Annual Incentive Compensation Plan because it has been demonstrated to correlate management's incentive with total shareholder return.
This
short-term incentive opportunity is established each year as a percentage of an executive's annual base salary and is targeted at approximately the
50th percentile of the competitive market with the opportunity to earn more for superior performance or less for below-target performance. Actual annual incentive payments each year can range
from 0 to 200 percent of the target opportunity based on corporate performance and/or the performance of the operating unit over which the executive has responsibility. Any amounts over
200 percent of target are banked and remain at risk. The balance may be paid over time in one third increments based on corporate and/or operating unit performance.
Certain
executives including the CEO, CFO and the other NEOs may elect to defer the payment of all or a portion of their annual incentive compensation into the 2005 Deferred Compensation
Plan and/or the 2005 Deferred Compensation Company Stock Plan. The executive becomes a general unsecured creditor of the Corporation with respect to amounts deferred. Amounts deferred to the 2005
Deferred Compensation Plan or its successor are notionally "invested" among various investment funds available under the applicable Plan. A participant's amounts are not actually invested in the
investment funds for their account, but the return on the participant's account is determined as if the amounts were invested in those funds. Amounts deferred into the 2005 Deferred Compensation
Company Stock Plan receive a 20 percent Corporation match with a maximum match of $20,000 per year. Amounts deferred into this plan will be represented in the participant's account as stock
units, with each unit having a value equivalent to one share of Ball Corporation Common Stock. Participants may later reallocate a prescribed number of units to other notional investment funds,
comparable to those described above, subject to specified time constraints.
Annual
incentives to the CEO, CFO and the other NEOs are paid consistent with the terms of the Ball Corporation Stock and Cash Incentive Plan and the Ball Corporation Annual Incentive
Compensation Plan, which are administered by the Committee. The Plans are intended to meet the deductibility requirements of Section 162(m) of the Internal Revenue Code of 1986 (the "Code") as
performance-based pay, resulting in amounts paid being tax deductible to the Corporation.
Long-Term Incentives
This element of compensation is designed to provide ownership and cash opportunities to promote the achievement of longer-term financial performance
goals and enhanced total shareholder returns. The Corporation's annual long-term incentive opportunity is generally provided through a combination of
equity and cash awards, which the Committee believes best achieves the compensation principles for the program. Long-term incentives are provided pursuant to the 2005 Stock and Cash
Incentive Plan, which was approved by the Corporation's shareholders in April 2005. This plan permits grants of cash awards, stock options, SARs or stock awards (e.g., shares, restricted stock
and restricted stock units).
In
2007, Ball delivered approximately 15 percent of the target long-term incentive through performance-based cash awards and approximately 85 percent through
performance-based equity awards. This award mix was set to achieve the objectives described above, while viewed in light of market practices and cost implications. The total amount of
long-term incentives, based on the grant date expected value, was generally targeted at the 50th percentile of the competitive market.
Performance-Based Cash Awards
Ball's performance-based long-term cash incentive award is
intended to focus executives on the achievement of multiyear performance goals that will enhance shareholder value. The Corporation's total shareholder return and return on average invested capital
("ROAIC") are considered in determining the amount, if any, of awards earned under the Corporation's Long-Term Cash Incentive Plan ("LTCIP"). Performance is generally measured on a
cumulative basis over a three-year performance period. Awards pursuant to the LTCIP are generally made on an annual basis such that three performance periods overlap. Any actual award
earned is paid at the end of the three-year performance period.
17
The
2005 through 2007, 2006 through 2008 and 2007 through 2009 performance periods provide executives the opportunity to earn awards based on a combination of two performance measures.
One half of the award is based on the Corporation's three-year total shareholder return as measured against the total shareholder returns of a group of companies in the S&P 500 not
including companies in the S&P 500 Index that are classified as being part of the Financials or Utilities industry sectors or the Transportation industry group. Companies added to the
S&P 500 during the performance period are also excluded. Total shareholder return is measured by comparing the average daily closing price and dividends of the Corporation in the third year of
the performance cycle with the average daily closing price and dividends prior to the start of the performance cycle relative to the distribution of the equivalent total shareholder returns during the
performance cycle of the group of companies as described above. The target performance requirement for the total shareholder returns measure is the 50th percentile of the S&P group described
above. The other half of the award is based on ROAIC performance over the three-year period. ROAIC is calculated by dividing the average of the Corporation's net operating profit
after-tax over the relevant performance period by its average invested capital over such period. The target performance requirement for the ROAIC measure is 9 percent.
The
incentive opportunity is established as a percentage of the executive's average base salary plus target annual incentive over the three-year performance period. Actual
payments at the end of the performance period can range from 0 to 200 percent of the target opportunity based on actual performance relative to the established performance measures described
above. As a result of the Corporation's actual performance for the 2005 through 2007 performance period, cash payouts (made in early 2008) for the CEO, CFO and the other NEOs in the Plan were
143 percent of the target opportunities and are reported in the Summary Compensation Table. The potential award value of the 2007 through 2009 performance period, which was awarded to the NEOs
in 2007, is reported in the Grants of Plan-Based Awards Table.
In
conjunction with the 2006 acquisition of U.S. Can Corporation and the Alcan Plastics business, the Corporation implemented a three-year Acquisition-Related Special
Incentive Plan designed to motivate participating employees to successfully integrate the acquisitions into the Corporation. Payouts under this plan are based on cumulative earnings before interest
and taxes and cumulative cash flow over a 36-month period, with awards, if any, made at 12 months, 24 months and 36 months. This incentive opportunity is established
as a percentage of an executive's average base salary over the three-year performance period. The Summary Compensation Table indicates that no award was earned by the CEO, CFO and the
other NEOs in 2007. The cumulative earnings and cash flow targets are generally achievable in the event that the relevant divisions perform in accordance with financial projections at the time of the
acquisitions.
Equity-Based Awards
The Corporation's equity awards may be provided through various forms (SARs, ISOs,
NQOs, performance contingent units, restricted stock and restricted stock units), all of which are tied to the price of Ball Common Stock. Annual equity awards associated with target total
compensation are typically granted in April on the date of the Annual Meeting of Shareholders; however, equity awards may be granted during the year as part of an executive's promotion or for
retention purposes. In the case of newly hired executives, equity awards may be granted upon the executive joining the Corporation.
SARs,
ISOs and NQOs are granted in order to reward executives for the creation of shareholder value, and will only provide value to executives if the price of Ball's stock price
increases. Such awards generally vest at 25 percent per year for four years and expire in 10 years. The grant value of each SAR, ISO and/or NQO is based on the closing price of Ball
stock on the date of grant. In 2006, Ball began granting to certain key executives stock-settled SARs based on the view that stock-settled SARs are an effective way to both manage equity dilution and
promote share ownership. On April 25, 2007, the Board of Directors authorized for any grants on or after such date, that for participants who retire early, defined as the first to occur of
either attaining both age 55 and 15 years of service or age 60 and 10 years of service, upon the execution of an agreement not to compete with the Corporation, a participant's unvested
stock options and/or SARs will continue to vest under the regular vesting schedule and such participants will have five years from the retirement date or up to the original expiration date, whichever
is sooner, to exercise vested stock options and/or SARs. During 2007, the Corporation granted both SARs and ISOs to certain executives.
The
Corporation may grant restricted stock or restricted stock units pursuant to the Deposit Share Program ("DSP"), which was instituted in 2001. The DSP is intended to increase share
ownership among certain executives who must make additional investments in the Corporation's stock in order to participate. Under this program, an executive receives one share of restricted stock or
one restricted stock unit for every share newly acquired by the participant (either outright or through the exercise and holding of stock options or settlement of SARs) during a preestablished
purchase period, up to a preestablished maximum number of shares. As long as the executive continues to hold the newly acquired shares, the restricted stock or units granted cliff vest four years from
the date of grant; or if share
18
ownership
guidelines are met, 30 percent of the shares or units will vest at the end of the second year and third year and 40 percent will vest at the end of the fourth year. Restricted
stock or units granted pursuant to the DSP are made on the 15th day of each month following the executive's submission of adequate documentation to the Corporation detailing the procurement of
the newly acquired shares.
On
April 25, 2007, the Board of Directors approved the award of performance contingent restricted stock units pursuant to the provisions of the 2005 Stock and Cash Incentive Plan.
The award of performance contingent restricted stock units provides participants with the opportunity to receive common shares if the Corporation's return on average invested capital during a
three-year period is equal to or exceeds the Corporation's estimated cost of capital as established at the beginning of the performance period. Units not vested at the end of the
performance period are forfeited. The performance period for the 2007 grants is a
33-month period that extends from April 2007 to December 2009 and the estimated cost of capital and required return for the performance period was established at 6.1 percent. Any
future performance periods will be 36 months commencing January 1 of the first year of the cycle. The performance contingent restricted stock units may be granted in order to encourage
executives to assure long-term return on the Corporation's invested capital in excess of its current cost of capital.
Restricted
stock or restricted stock units not related to the DSP may also be granted to executives by the Committee or the CEO. Pursuant to the provisions of the 2005 Stock and Cash
Incentive Plan, the Committee delegated to the CEO the authority to grant up to a maximum of 6,000 restricted shares or restricted stock units to any one individual in a calendar year, except the CEO
may not make such grants to officers of the Corporation. Any such grant is ratified by the Committee at the first Committee meeting following such grant. Grants made are generally effective at the
closing stock price on the day of the grant or may be effective at the closing stock price on a specific day in the future as defined by the Committee or the CEO. As an example, the future grant of a
restricted stock award may be approved pending the effective date of a promotion, employment or a specific date. These awards generally vest in either 20 or 25 percent increments on each
anniversary of the grant date. These grants serve as a long-term incentive element, promote share ownership and may provide an executive retention incentive.
In
2007, the approximate 85 percent portion of the target long-term incentive compensation delivered to the NEOs in the form of equity was comprised of SARs, ISOs and
performance contingent restricted stock units. There were no DSP grants made to the NEOs in 2007.
Retirement Benefits
The CEO, CFO and the other NEOs participate in the same benefit plans (with exceptions noted) and on the same terms as provided to all U.S. salaried employees.
Ball targets its overall benefits to be competitive with the median of the competitive market. Included in these benefits are the annual pension accruals under the qualified pension plan (the
"Salaried Pension Plan") and contributions to the qualified 401(k) savings plan.
The
Corporation sponsors two qualified salaried defined benefit pension plans in the U.S., one covering its Aerospace subsidiary's employees and the other covering all other U.S.
salaried employees. Prior to January 1, 2007, the benefits were determined by final average salary, covered compensation and years of service. Beginning in 2007, the benefit in both plans is an
accumulated annual credit based on base salary, the Social Security Wage Base and a multiplier that is based on service.
The
401(k) savings plan is a tax-qualified defined contribution plan that allows U.S. salaried employees, including the NEOs, to contribute to the plan 1 to 55 percent
of their base salary up to IRS-determined limits on a before-tax basis. Prior to January 1, 2007, the Corporation matched 50 percent of the first 6 percent
of base salary contributed to the plan. Beginning in 2007, the Corporation matched 100 percent of the first 3 percent of base salary contributed, and 50 percent of the next
2 percent of base salary contributed, up to a maximum match of 4 percent of base salary contributed.
Certain
executives, including the NEOs, also receive benefits under the nonqualified Supplemental Executive Retirement Plan ("SERP"), which replaces benefits otherwise available in the
qualified pension plan but for limits on covered compensation in the qualified plan set by the Code. The SERP is designed to provide retirement benefits that are calculated on base salary that exceeds
the maximum amount of pay that can be included in the
pension calculation under a pension plan that is tax qualified under the Code. Further information regarding the salaried pension plan and the SERP are provided in the "Pension Benefits" section on
page 30.
19
The
Corporation's pension plans and SERP provide pension benefits based on base salary only and do not include incentive compensation as part of the pension calculation.
Additionally,
the Corporation provides a deferred compensation benefit to certain employees. Under the terms of the deferred compensation program, participants are eligible to defer
current annual incentive compensation to be paid and/or restricted stock units to be issued in the future. When amounts are deferred, the participant becomes a general, unsecured creditor of the
Corporation and deferred amounts become subject to claims on the same basis as other general creditors of the Corporation. The deferred compensation plans provide a means for participants to
accumulate funds for retirement or other purposes.
Performance Measures Summary
The following table summarizes the specific Corporation performance measures considered for 2007:
|
Pay Element
|
|
Performance Measures
|
|
2007 Performance
|
|
Base Salary
|
|
Individual performance and contribution based on primary duties and responsibilities.
|
|
Individual performance and contribution.
|
Annual Incentive
|
|
Actual 2007 economic value added based on the amount of net operating profit after-tax, less a charge for capital employed in the business, as compared to the 2007 economic value added target.
|
|
Resulted in an award of 139 percent of target for all NEOs except Mr. Friedery, who received an award of 93 percent of target and Mr. Hayes, who received an award of 249 percent of target, of
which 49 percent was banked.
|
Long-Term Cash Plan 2005-2007 Performance Period
|
|
50 percent based on Total Shareholder Return over three years relative to a group of S&P 500 companies and 50 percent based on ROAIC over three years, as compared to targets.
|
|
Resulted in an award of 143 percent of target for all NEOs based on performance above target for Total Shareholder Return and ROAIC.
|
Special Acquisition Incentive
|
|
Cumulative earnings before interest and taxes and cumulative cash flow of the Metal Food & Household Products Packaging Division, Americas, and Plastic Packaging Division, Americas, combined.
|
|
No awards were earned for the performance period ending December 31, 2007.
|
Stock-Settled Stock Appreciation Rights
|
|
Stock price performance relative to the grant date stock price (exercise price) of the SAR grants.
|
|
Total Shareholder Return ending December 31, 2007:
|
Stock Options
|
|
Stock price performance relative to the grant date stock price (exercise price) of the option grants.
|
|
Ball vs. S&P 500 one-year: 4.05 percent vs. 3.53 percent.
|
Restricted Stock/Restricted Stock Units
|
|
Attainment of required holding period and stock price performance.
|
|
Ball vs. S&P 500 three-year: 5.22 percent vs. 21.16 percent.
|
Severance and Change-in-Control Benefits
The CEO, CFO and the other NEOs are covered by arrangements that specify payments in the event the executive's employment is terminated. The type and amount of
payments vary by executive level and whether the termination is following a change-in-control of the Corporation. These severance benefits, which are competitive with general
industry practices, are payable if and only if the executive's employment is terminated as specified in each of the agreements. Further discussion is provided in the "Other Potential
Post-Termination Employment Benefits" section on page 32.
20
Accounting and Tax Considerations
When establishing pay elements or associated programs, the Committee reviews projections of the estimated pro forma expense and tax impact of all material
elements of the executive compensation program. Generally, an accounting expense is accrued over the requisite service period of the particular pay element, which in many cases is equal to the
performance period, and the Corporation realizes a tax deduction upon payment to and/or realization by the executive.
Section 162(m)
of the Code generally provides that publicly-held corporations may not deduct in any one taxable year certain compensation in excess of
$1 million paid to the CEO and the next four most highly compensated executive officers. To the extent that any cash compensation for any NEO, otherwise deductible for a particular tax year,
would not be deductible in that year because of the limitations of Section 162(m) of the Code, the Committee has mandated that such compensation will be deferred until retirement; however, the
Committee, in its sole discretion, may approve payment of nondeductible compensation from time to time if it deems circumstances warrant it.
Beginning
January 1, 2006, the Corporation began accounting for stock-based payments including current and prior year stock options, SARs, restricted stock and restricted stock
units in accordance with the requirements of Financial Accounting Standard 123R ("FAS 123R").
In
December 2005, the Committee approved two new deferred compensation plans that incorporate rules applicable to nonqualified deferred compensation as provided by Code
Section 409A regulations. The Corporation has administered its nonqualified deferred compensation plans in good faith compliance with the Code Section 409A regulations.
Code
Section 280G considerations related to tax reimbursements made to executives for taxes on amounts paid in the event of termination following a
change-in-control are discussed in the narrative to the Other Potential Post-Termination Employment Benefits Table.
TABLES AND NARRATIVES
Set forth on pages 21 through 36 are tables showing, for the CEO, CFO and the three other highest paid executive officers of the
Corporation, the following: (1) fiscal year 2007 elements of compensation in summary form; (2) equity and non-equity incentives awarded in 2007; (3) outstanding stock
options and stock awards held as of December 31, 2007; (4) the value realized on stock options exercised and stock awards that vested during 2007; (5) information regarding
nonqualified deferred compensation; (6) projected pension benefit values; and (7) projections for other potential post-termination benefits. On page 37 is a table
summarizing the fiscal year 2007 elements of compensation for the Corporation's nonemployee directors. Accompanying each table are narratives and/or footnotes intended to further the understanding of
the information disclosed in the tables. The tables should be read in conjunction with the Compensation Discussion and Analysis ("CD&A") beginning on page 12, which explains Ball's compensation
objectives and philosophy, its process for determining executive compensation and a description of the elements of compensation.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table on page 22 represents all fiscal year 2007 elements of compensation for Ball's NEOs, including:
-
-
Base
salary earned;
-
-
Awards
earned under the Annual Incentive Compensation Plan for 2007 performance;
-
-
Awards
earned under the Acquisition-Related Special Incentive Plan for 2007 performance;
-
-
Awards
earned under the Long-Term Cash Incentive Plan ("LTCIP") for the three-year performance period ended in 2007;
-
-
Compensation
cost recognized during 2007 in accordance with FAS 123R for NQOs, ISOs and SARs granted in 2007 as well as prior years; and
-
-
Compensation
cost recognized during 2007 in accordance with FAS 123R for restricted stock and restricted stock units granted in 2007 as well as prior years.
21
The
2007 payout factors used to determine the amounts earned for the Annual Incentive Compensation Plan, Acquisition-Related Special Incentive Plan and LTCIP for the CEO, CFO and the
other NEOs is provided in the "Performance Measures Summary" section on page 20 of the CD&A.
In
addition to these elements of compensation, the table also presents the increase in 2007 in the value of pensions payable at age 65 for the NEOs as well as above-market earnings
associated with nonqualified deferred compensation. Certain of the Corporation's predecessor deferred compensation plans provide for an interest rate that is equal to the Moody's corporate bond rate
and in some plans, an interest rate that is 5 percentage points higher than the Moody's corporate bond rate, and in others, a fixed interest rate equal to 9 percent. No additional
deferrals are permitted into these plans. Any earnings credited to accounts within plans that provide the Moody's rate plus 5 percentage points and/or the 9 percent fixed interest that
is in excess of above-market earnings that would have been credited at a rate that is 120 percent of the applicable federal long-term rate have been classified as above-market
earnings on deferred compensation.
The
All Other Compensation column represents the sum of the values of:
-
-
Perquisites
and other personal benefits;
-
-
Corporation
contributions to defined contribution plans or deferred compensation plans;
-
-
Corporation-paid
insurance premiums;
-
-
Discounted
securities purchases pursuant to the Corporation's broad-based Employee Stock Purchase Plan ("ESPP"); and
-
-
Tax
reimbursements made by the Corporation.
The
individual values are disclosed in the All Other Compensation Table that follows the Summary Compensation Table.
Details
regarding post-termination compensation are discussed in the section entitled "Other Potential Post-Termination Employment Benefits" on page 32.
Summary Compensation Table
|
Name & Principal Position
|
|
Year
|
|
Salary ($)
|
|
Stock
Awards
($)
(1)
|
|
Option
Awards
($)
(2)
|
|
Non-Equity
Incentive Plan
Compensation
($)
(3)
|
|
Change in
Pension Value &
Nonqualified
Deferred
Compensation
Earnings ($)
(4)
|
|
All Other
Compensation
($)
(5)
|
|
Total ($)
|
|
R. David Hoover
Chairman, President and CEO
|
|
2007
2006
|
|
$
$
|
1,030,000
1,000,000
|
|
$
$
|
2,366,524
1,896,638
|
|
$
$
|
671,881
297,681
|
|
$
$
|
2,577,197
2,112,066
|
|
$
$
|
747,588
890,188
|
|
$
$
|
93,548
88,931
|
|
$
$
|
7,486,738
6,285,504
|
Raymond J. Seabrook
EVP and CFO
|
|
2007
2006
|
|
$
$
|
451,000
420,096
|
|
$
$
|
583,924
454,099
|
|
$
$
|
164,928
83,167
|
|
$
$
|
696,686
529,949
|
|
$
$
|
75,492
89,760
|
|
$
$
|
66,155
39,763
|
|
$
$
|
2,038,185
1,616,834
|
John R. Friedery
President, Metal Beverage Packaging, Americas and Asia
|
|
2007
2006
|
|
$
$
|
426,000
414,000
|
|
$
$
|
687,878
555,891
|
|
$
$
|
164,928
82,446
|
|
$
$
|
520,035
517,271
|
|
$
$
|
68,460
107,551
|
|
$
$
|
45,909
49,678
|
|
$
$
|
1,913,210
1,726,837
|
David A. Westerlund
EVP, Administration and Corporate Secretary
|
|
2007
2006
|
|
$
$
|
410,000
380,615
|
|
$
$
|
583,924
488,899
|
|
$
$
|
164,928
83,167
|
|
$
$
|
631,425
476,962
|
|
$
$
|
143,549
216,619
|
|
$
$
|
45,078
48,310
|
|
$
$
|
1,978,904
1,694,572
|
John A. Hayes
EVP and Chief Operating Officer
|
|
2007
2006
|
|
$
$
|
364,333
323,000
|
|
$
$
|
614,706
512,839
|
|
$
$
|
127,898
64,693
|
|
$
$
|
670,465
437,595
|
|
$
$
|
17,435
23,352
|
|
$
$
|
1,446,953
367,929
|
|
$
$
|
3,241,790
1,729,408
|
-
(1)
-
Reflects
the dollar amount of compensation cost recognized during 2007 in accordance with FAS 123R for restricted stock/units granted in 2007 and previous fiscal years. The
assumptions used in the calculation of these amounts are included in the Corporation's Annual Report on Form 10-K in Notes 1 and 16 to the Consolidated Financial Statements
for fiscal year ended December 31, 2007, and Notes 1 and 14 to the Consolidated Financial Statements for fiscal year ended December 31, 2004.
22
-
(2)
-
Reflects
the dollar amount of compensation cost recognized during 2007 in accordance with FAS 123R for NQO, ISO and SAR awards granted in 2007 and previous fiscal years. The
assumptions used in the calculation of these amounts are included in the Corporation's Annual Report on Form 10-K in Notes 1 and 16 to the Consolidated Financial Statements
for fiscal year ended December 31, 2007, and Notes 1 and 14 to the Consolidated Financial Statements for fiscal year ended December 31, 2004.
-
(3)
-
Includes
payouts from the Annual Incentive Compensation Plan and LTCIP, which were earned in 2007 and paid or deferred in 2008. The detail for each NEO is as follows:
Mr. Hoover
Annual Incentive Compensation Plan = $1,464,918 and LTCIP = $1,112,279; no portion of the annual incentive was
deferred in February 2008.
Mr. Seabrook
Annual Incentive Compensation Plan = $448,887 and LTCIP = $247,799; $100,000 of the annual incentive was
deferred in February 2008.
Mr. Friedery
Annual Incentive Compensation Plan = $279,011 and LTCIP = $241,024; no portion of the annual incentive was
deferred in February 2008.
Mr. Westerlund
Annual Incentive Compensation Plan = $407,658 and LTCIP = $223,767; $203,829 of the annual incentive was
deferred in February 2008.
Mr. Hayes
Annual Incentive Compensation Plan = $487,742 and LTCIP = $182,723; no portion of the annual incentive was
deferred in February 2008.
-
(4)
-
The
aggregate change in pension value and above-market earnings on deferred compensation for each NEO are as follows:
Mr. Hoover
$618,622 aggregate change in pension value and $128,966 above-market earnings on deferred compensation.
Mr. Seabrook
$27,877 aggregate change in pension value and $47,615 above-market earnings on deferred compensation.
Mr. Friedery
$53,980 aggregate change in pension value and $14,480 above-market earnings on deferred compensation.
Mr. Westerlund
$97,153 aggregate change in pension value and $46,396 above-market earnings on deferred compensation.
Mr. Hayes
$15,242 aggregate change in pension value and $2,193 above-market earnings on deferred compensation.
-
(5)
-
Includes
value of financial planning services, the incremental cost for the personal use of corporate aircraft, employer contribution to 401(k), employer contribution to the 2005
Deferred Compensation Company Stock Plan, employer paid disability insurance premiums, the value of the Corporation's match for the ESPP and the value of employer tax reimbursements. The value for
Mr. Hayes also includes employer paid expenses and tax equalization related to his foreign assignment. Additional information for all is included in the All Other Compensation Table below. In
addition, the 2006 figure for Mr. Hayes was amended to incorporate $130,030 of foreign assignment expenses that were inadvertently omitted.
All Other Compensation Table
|
Name
|
|
Perquisites &
Other Personal
Benefits
(1)(2)
|
|
Registrant
Contributions
to Defined
Contribution
Plans
|
|
Insurance
Premiums
|
|
Discounted
Securities
Purchases
|
|
Registrant
Contributions
to Deferred
Compensation
|
|
Foreign Service
and Special
Assignment
Premium
(3)
|
|
Tax
Reimbursements
(4)
|
|
R. David Hoover
|
|
$
|
41,991
|
|
$
|
9,000
|
|
$
|
3,083
|
|
$
|
1,200
|
|
$
|
20,000
|
|
$
|
|
|
$
|
18,274
|
Raymond J. Seabrook
|
|
$
|
23,558
|
|
$
|
9,000
|
|
$
|
2,174
|
|
$
|
1,200
|
|
$
|
20,000
|
|
$
|
|
|
$
|
10,223
|
John R. Friedery
|
|
$
|
10,000
|
|
$
|
9,000
|
|
$
|
1,497
|
|
$
|
1,200
|
|
$
|
20,000
|
|
$
|
|
|
$
|
4,212
|
David A. Westerlund
|
|
$
|
10,000
|
|
$
|
9,000
|
|
$
|
2,004
|
|
$
|
1,200
|
|
$
|
20,000
|
|
$
|
|
|
$
|
2,874
|
John A. Hayes
|
|
$
|
162,857
|
|
$
|
9,000
|
|
$
|
1,053
|
|
$
|
1,200
|
|
$
|
20,000
|
|
$
|
208,546
|
|
$
|
1,044,297
|
-
(1)
-
Represents
the value of $10,000 for financial planning services for all NEOs and the incremental costs of $31,991 and $13,558 for the personal use of the corporate aircraft for
Messrs. Hoover and Seabrook, respectively. The amount for Mr. Hayes also includes the value of employer paid expenses resulting from his foreign assignment as follows: $36,451 for family
education, $23,907 for family travel allowance to home country, $71,241 for housing allowance $6,008 for company provided automobile, and $15,250 for other miscellaneous expenses such as home care,
storage, tax services, and family language training. The foreign assignment benefits Mr. Hayes received are consistent with those received by other U.S. employees on foreign assignments.
-
(2)
-
The
incremental cost of the personal use of the corporate aircraft was calculated based on the 2007 average direct operating cost apportioned among business versus nonbusiness related
passengers.
-
(3)
-
Represents
the foreign service premium and cost of living differential allowance paid to Mr. Hayes for his foreign assignment.
-
(4)
-
Represents
tax reimbursements made by the Corporation for financial planning services for all NEOs and spouse business travel for all NEOs except Mr. Hayes. The amount for
Mr. Hayes also includes tax equalization payments related to his foreign assignment as it is the Corporation's policy to neutralize the tax effects by limiting the assignee's tax costs to what
the assignee would have paid had the assignee not resided in the foreign location.
23
GRANTS OF PLAN-BASED AWARDS TABLE
The table on page 25 summarizes the plan-based awards granted by the Corporation to the NEOs during 2007, which
includes the following:
-
-
Annual
cash incentives pursuant to the Annual Incentive Compensation Plan for the 2007 performance period;
-
-
Cash-based
long-term incentives under the Long-Term Cash Incentive Plan ("LTCIP") for the 2007 to 2009 three-year performance
period;
-
-
Performance
contingent restricted stock units;
-
-
Stock-settled
stock appreciation rights ("SARs");
-
-
Restricted
stock units granted as part of the Deposit Share Program ("DSP"); and
-
-
Restricted
stock units.
Awards
made under the Annual Incentive Compensation Plan are determined based on economic value added performance. For the NEOs, awards can range from 0 to 200 percent of target.
Amounts earned in excess of 200 percent are banked and may be paid over time in one-third increments based on corporate and/or operating unit performance.
Awards
under the LTCIP are granted on an annual basis and are determined based on Ball's total shareholder return relative to the group of S&P 500 companies described in the CD&A
as well as Ball's ROAIC. Each executive is eligible to receive a range of awards that is based on the executive's average base salary plus target incentive compensation during the
three-year performance period. The target and maximum award values shown in the table below reflect projected increases in target total compensation of 4 percent per year during the
performance period. The actual target and maximum award values may vary depending on future changes to target total compensation and on the Corporation's performance. The award made in 2007 is for the
three-year performance period beginning January 1, 2007, and ending December 31, 2009.
Performance
contingent restricted stock units were granted to the NEOs in 2007. The awards will cliff vest after the performance period provided the Corporation's return on average
invested capital exceeds its weighted average cost of capital of 6.1 percent as established at the beginning of the performance period.
SARs
were granted to the NEOs in 2007. The awards vest annually in 25 percent increments starting on the first anniversary of the date of grant. Should the price of Ball's stock
increase during the vesting period, each NEO would receive upon exercise a number of shares of Corporation stock that reflects the value of the appreciation over the original grant price. ISOs were
also granted to the NEOs in 2007, with a vesting schedule identical to that of the SARs.
Dividends
or dividend equivalents are paid quarterly on the number of unlapsed restricted shares or restricted stock units accounted for on the record date used for determining dividends
payable to shareholders and at the same dividend rate as paid to shareholders.
The
vesting of plan-based awards may be accelerated as described in the narrative to the Other Potential Post-Termination Employment Benefits Table.
24
Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
Estimated
Future Payouts
Under Equity
Incentive Plan
Awards
Target #
|
|
All Other
Option Awards:
Number of
Securities
Underlying
Options (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise or
Base Price
of Option
Awards ($
per Share)
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
|
Grant Date
Fair Value
Stock and
Option Awards
(1)
|
Name
|
|
Grant Date
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum($)
|
|
R. David Hoover
|
|
01-Jan-07
|
(2)
|
$
|
436,379
|
|
$
|
872,759
|
|
$
|
1,745,518
|
|
|
|
|
|
|
|
|
|
|
|
|
01-Jan-07
|
(3)
|
$
|
|
|
$
|
1,028,846
|
|
$
|
2,057,692
|
|
|
|
|
|
|
|
|
|
|
|
|
25-Apr-07
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(4)
|
135,000
|
|
$
|
49.32
|
|
$
|
1,373,833
|
Raymond J. Seabrook
|
|
01-Jan-07
|
(2)
|
$
|
96,670
|
|
$
|
201,396
|
|
$
|
402,791
|
|
|
|
|
|
|
|
|
|
|
|
|
01-Jan-07
|
(3)
|
$
|
|
|
$
|
315,404
|
|
$
|
630,808
|
|
|
|
|
|
|
|
|
|
|
|
|
25-Apr-07
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(4)
|
36,500
|
|
$
|
49.32
|
|
$
|
371,444
|
John R. Friedery
|
|
01-Jan-07
|
(2)
|
$
|
87,193
|
|
$
|
181,651
|
|
$
|
363,302
|
|
|
|
|
|
|
|
|
|
|
|
|
01-Jan-07
|
(3)
|
$
|
|
|
$
|
276,600
|
|
$
|
553,200
|
|
|
|
|
|
|
|
|
|
|
|
|
25-Apr-07
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(4)
|
36,500
|
|
$
|
49.32
|
|
$
|
371,444
|
David A. Westerlund
|
|
01-Jan-07
|
(2)
|
$
|
87,850
|
|
$
|
183,021
|
|
$
|
366,043
|
|
|
|
|
|
|
|
|
|
|
|
|
01-Jan-07
|
(3)
|
$
|
|
|
$
|
286,731
|
|
$
|
573,462
|
|
|
|
|
|
|
|
|
|
|
|
|
25-Apr-07
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(4)
|
36,500
|
|
$
|
49.32
|
|
$
|
371,444
|
John A. Hayes
|
|
01-Jan-07
|
(2)
|
$
|
95,224
|
|
$
|
198,383
|
|
$
|
396,767
|
|
|
|
|
|
|
|
|
|
|
|
|
01-Jan-07
|
(3)
|
$
|
|
|
$
|
231,267
|
|
$
|
462,533
|
|
|
|
|
|
|
|
|
|
|
|
|
25-Apr-07
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(4)
|
30,000
|
|
$
|
49.32
|
|
$
|
305,296
|
-
(1)
-
The
grant date fair value of stock and option awards is based on assumptions consistent with the Corporation's application of FAS 123R as referenced in the Corporation's Annual
Report on Form 10-K in Notes 1 and 16 to the Consolidated Financial Statements for the fiscal year ended December 31, 2007. The value associated with stock option
awards takes into consideration an assumption for forfeitures.
-
(2)
-
Represents
grants made under the LTCIP. Payout levels are based on projected average base salary plus target incentive compensation over the three year period ending
December 31, 2009 (assuming 4 percent per year increases in base salary).
-
(3)
-
Represents
grants made under the Annual Incentive Compensation Plan.
-
(4)
-
Represents
performance contingent restricted stock unit grants valued using a price of $49.32 per unit.
25
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2007
The following table outlines the outstanding option awards and stock awards held by the NEOs as of December 31, 2007. The
outstanding option awards and stock awards represented in the table were granted to the NEOs over a period of several years, including 2007.
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)
(2)
|
|
Market
Value
of Shares
or Units
of Stock
That Have
Not Vested
($)
(3)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
(4)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
(3)
|
|
R. David Hoover
|
|
30,000
|
|
|
|
|
|
$
|
11.0625
|
|
9/22/2009
|
|
95,100
|
|
$
|
4,279,500
|
|
50,000
|
|
$
|
2,250,000
|
|
|
6,761
|
|
|
|
|
|
$
|
8.2657
|
|
4/25/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
$
|
10.6125
|
|
3/6/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
172,000
|
|
|
|
|
|
$
|
23.7450
|
|
4/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
$
|
28.1550
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
82,000
|
|
|
|
|
|
$
|
39.7400
|
|
4/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
29,000
|
(5)
|
87,000
|
(5)
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
3,000
|
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,000
|
(5)
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
Raymond J. Seabrook
|
|
30,000
|
|
|
|
|
|
$
|
8.2657
|
|
4/25/2010
|
|
24,950
|
|
$
|
1,122,750
|
|
13,500
|
|
$
|
607,500
|
|
|
100,000
|
|
|
|
|
|
$
|
10.6125
|
|
3/6/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
|
|
|
|
$
|
23.7450
|
|
4/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
8,544
|
|
|
|
|
|
$
|
28.1550
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
19,500
|
|
|
|
|
|
$
|
39.7400
|
|
4/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
7,750
|
(5)
|
23,250
|
(5)
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
(5)
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
John R. Friedery
|
|
28,000
|
|
|
|
|
|
$
|
23.7450
|
|
4/23/2012
|
|
28,000
|
|
$
|
1,260,000
|
|
13,500
|
|
$
|
607,500
|
|
|
14,000
|
|
|
|
|
|
$
|
28.1550
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000
|
|
|
|
|
|
$
|
39.7400
|
|
4/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
7,750
|
(5)
|
23,250
|
(5)
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
3,000
|
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
(5)
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
David A. Westerlund
|
|
40,000
|
|
|
|
|
|
$
|
8.2657
|
|
4/25/2010
|
|
24,950
|
|
$
|
1,122,750
|
|
13,500
|
|
$
|
607,500
|
|
|
80,000
|
|
|
|
|
|
$
|
10.6125
|
|
3/6/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
$
|
23.7450
|
|
4/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
$
|
28.1550
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
19,500
|
|
|
|
|
|
$
|
39.7400
|
|
4/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
7,750
|
(5)
|
23,250
|
(5)
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
3,000
|
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
(5)
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
John A. Hayes
|
|
24,000
|
|
|
|
|
|
$
|
23.7450
|
|
4/23/2012
|
|
29,770
|
|
$
|
1,339,650
|
|
10,000
|
|
$
|
450,000
|
|
|
9,500
|
|
|
|
|
|
$
|
28.1550
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
11,484
|
|
516
|
|
|
|
$
|
39.7400
|
|
4/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250
|
(5)
|
15,750
|
(5)
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
3,000
|
|
|
|
$
|
43.6900
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,268
|
(5)
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,732
|
|
|
|
$
|
49.3200
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
vesting schedule for the unexercisable stock options for each NEO is as follows:
Mr. Hoover
87,000 and 3,000 vest over three remaining tranches on April 26, 2008; April 26, 2009; and April 26,
2010; and 131,000 and 4,000 vest at 25 percent per year on April 25, 2008; April 25, 2009; April 25, 2010; and April 25, 2011.
Mr. Seabrook
23,250 and 3,000 vest over three remaining tranches on April 26, 2008; April 26, 2009; and April 26,
2010; and 32,500 and 4,000 vest at 25 percent per year on April 25, 2008; April 25, 2009; April 25, 2010; and April 25, 2011.
Mr. Friedery
23,250 and 3,000 vest over three remaining tranches on April 26, 2008; April 26, 2009; and April 26,
2010; and 32,500 and 4,000 vest at 25 percent per year on April 25, 2008; April 25, 2009; April 25, 2010; and April 25, 2011.
26
Mr. Westerlund
23,250 and 3,000 vest over three remaining tranches on April 26, 2008; April 26, 2009; and
April 26, 2010; and 32,500 and 4,000 vest at 25 percent per year on April 25, 2008; April 25, 2009; April 25, 2010; and April 25, 2011.
Mr. Hayes
516 vest over two remaining tranches on April 27, 2008, and April 27, 2009; 15,750 and 3,000 vest in three
remaining tranches on April 26, 2008; April 26, 2009; and April 26, 2010; and 26,268 and 3,732 vest at 25 percent per year on April 25, 2008; April 25, 2009;
April 25, 2010; and April 25, 2011.
-
(2)
-
The
vesting schedule for shares or units not yet vested for each NEO is as follows:
Mr. Hoover
47,100 on June 30, 2008; 9,000 on December 31, 2008; 18,000 on June 30, 2009; 9,000 on
December 31, 2009; and 12,000 on December 31, 2010.
Mr. Seabrook
13,750 on June 30, 2008; 7,200 on June 30, 2009; and 4,000 on June 30, 2010.
Mr. Friedery
10,600 on September 30, 2008; 2,000 on November 3, 2008; 3,600 on December 31, 2008; 3,000 on
September 30, 2009; 4,800 on December 31, 2009; and 4,000 on September 30, 2010.
Mr. Westerlund
13,750 on June 30, 2008; 7,200 on June 30, 2009; and 4,000 on June 30, 2010.
Mr. Hayes
3,200 on May 16 in years 2008, 2009 and 2010; 750 on June 1 in years 2008, 2009 and 2010; 8,520 on
June 30, 2008; 2,100 on December 31, 2008; 2,400 on June 30, 2009; 2,100 on December 31, 2009; and 2,800 on December 31, 2010.
-
(3)
-
The
market value of shares is based on $45.00, the closing price of Ball Corporation Common Stock on December 31, 2007.
-
(4)
-
The
vesting date for the units not yet vested for each NEO is February 1, 2010, which is contingent on meeting the performance goal for the period ending December 31,
2009.
-
(5)
-
Represents
a grant of stock-settled stock appreciation rights.
OPTION EXERCISES AND STOCK VESTED IN 2007
The following table summarizes for each NEO the options exercised and the stock awards vested during 2007. The options that were
exercised by each NEO were granted in prior years and became exercisable pursuant to a prescribed vesting schedule. The value realized on exercise reflects the appreciation in the stock price from the
option base price on grant date to the exercise date and is reported on a before-tax basis. The shares acquired upon vesting for each NEO were for restricted stock/units granted in prior
years that vested pursuant to a prescribed vesting schedule. The value realized reflects the closing stock price on the vesting date and is also reported on a before-tax basis. NEOs can
defer the receipt of units of certain awards into the Ball Corporation 2005 Deferred Compensation Company Stock Plan, pursuant to which distributions may take place no earlier than the participant's
separation from service. Information regarding the 2005 Deferred Compensation Company Stock Plan is provided in the "Nonqualified Deferred Compensation" section that follows. Footnotes are provided to
detail circumstances when amounts realized upon vesting were deferred. The value realized on vesting also includes the vested value of dividend equivalents paid during 2007 on all outstanding
restricted stock or restricted stock units.
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number
of
Shares
Acquired
on
Exercise
(#)
|
|
Value
Realized
on
Exercise
($)
|
|
Number of
Shares
Acquired on
Vesting
(#)
(2)
|
|
Value
Realized
on
Vesting
($)
(1)(2)(3)
|
|
R. David Hoover
|
|
38,000
|
|
$
|
1,486,845
|
|
48,700
|
|
$
|
2,618,759
|
Raymond J. Seabrook
|
|
45,864
|
|
$
|
1,707,230
|
|
10,850
|
|
$
|
586,415
|
John R. Friedery
|
|
|
|
$
|
|
|
13,300
|
|
$
|
684,955
|
David A. Westerlund
|
|
|
|
$
|
|
|
10,850
|
|
$
|
586,415
|
John A. Hayes
|
|
|
|
$
|
|
|
13,590
|
|
$
|
734,907
|
-
(1)
-
Value
realized on vesting is based on the closing stock price on the day the restricted stock or restricted stock units vest.
-
(2)
-
Amounts
deferred upon vesting of stock awards for each NEO is as follows:
Mr. Hoover
deferred until separation of service 48,700 of his vested restricted stock units, having a value of $2,556,979.
Mr. Seabrook
deferred until separation of service 5,150 of his vested restricted stock units, having a value of $267,346.
Mr. Friedery
deferred until separation of service 11,300 of his vested restricted stock units, having a value of $568,235.
Mr. Westerlund
deferred until separation of service 10,850 of his vested restricted stock units, having a value of $570,415.
Mr. Hayes
deferred until separation of service 5,040 of his vested restricted stock units, having a value of $267,977.
-
(3)
-
Value
realized on vesting also includes the value of dividend equivalents vested and paid during 2007 on outstanding restricted stock or restricted stock units. Dividend equivalents
paid are based on the number of outstanding shares or units on the record date at a dividend rate equal to that paid to the Corporation's common shareholders. Dividend equivalents paid during 2007 for
each NEO is as follows:
Mr. Hoover
$61,780
Mr. Seabrook
$16,000
Mr. Friedery
$19,200
Mr. Westerlund
$16,000
Mr. Hayes
$17,186
27
NONQUALIFIED DEFERRED COMPENSATION
The Corporation has three active deferred compensation plans to which eligible participants may make contributions. They are:
(1) the 2005 Ball Corporation Deferred Compensation Plan, (2) the 2005 Ball Corporation Deferred Compensation Company Stock Plan, and (3) the 2005 Ball Corporation Deferred
Compensation Plan for Directors. The three active plans provide for investment earnings and distributions and were implemented in 2005 in order to administer and operate the deferred compensation
program in good faith compliance with Code Section 409A. Plans dated prior to 2005 are closed to participant contributions; however, they continue to provide for investment earnings and
distributions. The CEO, CFO and the other NEOs are all participants in the 2005 Deferred Compensation Plan and the 2005 Deferred Compensation Company Stock Plan and may have balances in one or more of
the prior plans. Below is a summary of the key elements of the three active plans:
-
-
2005 Deferred Compensation Plan
Eligible employee participants may defer payment of a portion or all of their
annual incentive compensation to this plan. Participant elections to defer are made annually. The plan may also include the deferral of payments of other forms of a NEO's cash compensation, as
mandated by the Committee, to the extent that such compensation would not be deductible in a given year as a result of the limitations of Section 162(m) of the Code. Amounts deferred or
credited are notionally "invested" among various investment funds available under this plan. A participant's balance is not actually invested in investment funds, but the return on the participant's
balance is determined as if the amounts were invested in those funds. The menu of investment funds consists of 15 mutual fund-like investments that cover the standard asset classes of
fixed rate, bonds, market index, large, mid and small caps, and international along with one real estate investment fund. The one-year annual rate of return of the funds ranged from a
negative 15.56 percent to a positive 23.59 percent, and the three-year average annual rate of return of the funds ranged from a positive 2.50 to 19.72 percent. The
return on a participant's balance is dependent on the investment fund allocation selected by the participant. Distributions from this plan to participants are based on the payment schedule elected by
the participant. Distributions may occur during service with the Corporation or commence at a defined point no sooner than six months following separation of service, in the form of either a lump sum
and/or annual installments ranging between two and fifteen years.
-
-
2005 Deferred Compensation Company Stock Plan
Eligible employee participants may defer payment of a portion or
all of their annual incentive compensation to this plan. Elections to defer the annual incentive compensation are made annually. Nonemployee members of the Corporation's Board may defer payment of a
portion or all of their annual director fees to this plan. Elections to defer director fees are made annually. Under this plan, eligible employee participants and nonemployee members of the Board may
also defer the issuance of restricted stock units at time of lapse. Elections to defer issuance of restricted stock units are made at or near the time of grant in compliance with the Code
Section 409A provision for deferral election with respect to certain forfeitable rights. Amounts deferred or credited to this plan are represented in the participant's account as stock units,
with each unit having the value equivalent to one share of Ball Corporation Common Stock. Additionally, amounts deferred into this plan receive a 20 percent Corporation match with a maximum
match of $20,000 per year. The Committee determined that starting in 2007, pursuant to specified timing rules, participants may reallocate a prescribed percentage of units to other investment funds,
comparable to those described in the 2005 Deferred Compensation Plan section above; however, at least 50 percent of the balance will remain in stock units until retirement. Dividend
equivalents, applicable to any balance denominated in units, are credited to participant accounts as of each dividend payment date for the Corporation's Common Stock. Distributions from this plan are
based on the payment schedule elected by the participant in the form of a lump sum and/or annual installments ranging between two and fifteen years; however, distributions may not commence until at
least six months following separation of service.
-
-
2005 Deferred Compensation Plan for Directors
Nonemployee members of the Corporation's Board may defer payment of
a portion or all of their annual director fees to this plan. Elections to defer director fees are made annually. Amounts deferred or credited are notionally "invested" among various investment funds
available under the plan. A participant's balance is not actually invested in investment funds, but the return on the participant's balance is determined as if the amounts were invested in those
funds. Distributions from this plan are based on the payment schedule elected by the participant in the form of a lump sum and/or annual installments ranging between two and fifteen years; however,
distributions may not commence until separation of service from the Board.
28
Participant
distributions from any of the prior plans are based on the payment schedule elected by the participant, which could be in the form of a lump sum or annual installments
ranging between two and fifteen years. The basis for investment earnings may vary by plan as follows:
-
-
2001 Deferred Compensation Plan
Provides for a return as if the balance is notionally invested in investment
funds available under this plan, which is the same as that described above for the 2005 Deferred Compensation Plan.
-
-
2000 Deferred Compensation Company Stock Plan
Balance is represented in the form of stock units, with each unit
having a value equivalent to one share of Ball Corporation Common Stock. Dividend equivalents are credited to the account as of each dividend payment date for the Corporation's Common Stock.
-
-
2002 Deferred Compensation Plan for Directors
Provides for a return as if the balance is notionally invested in
investment funds available under this plan, which is the same as that described above for the 2005 Deferred Compensation Plan for Directors.
-
-
1989 Deferred Compensation Plan
Provides for an annual return equal to the average composite yield on Moody's
Seasoned Corporate Bond Index for the 12 months ending October 31.
-
-
1988 Deferred Compensation Plan
Provides for an annual return equal to the average composite yield on Moody's
Seasoned Corporate Bond Index for the 12 months ending October 31 plus 5 percentage points or a fixed rate as set by the Corporation at 9 percent.
-
-
1986 Deferred Compensation Plan
Provides for an annual return equal to the average composite yield on Moody's
Seasoned Corporate Bond Index for the 12 months ending October 31 plus 5 percentage points.
-
-
1986 Deferred Compensation Plan for Directors
Provides for an annual return equal to the average composite yield
on Moody's Seasoned Corporate Bond Index for the 12 months ending October 31 plus 5 percentage points.
-
-
Ball-InCon Deferred Compensation Plan
Depending on the time of the initial deferral, the plan
provides for an annual return equal to the average composite yield on Moody's Seasoned Corporate Bond Index for the 12 months ending October 31 or the Moody's rate plus
5 percentage points.
The
table below provides information related to the Corporation's deferred compensation plans. The Aggregate Balance at Last FYE represents compensation earned, deferred and accumulated
by the NEOs over many years and does not represent current year compensation.
Nonqualified Deferred Compensation Table
|
Name
|
|
Executive
Contributions in
Last FY ($)
|
|
Registrant
Contributions in
Last FY ($)
|
|
Aggregate
Earnings in
Last FY ($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last FYE ($)
|
|
R. David Hoover
|
|
$
|
3,452,725
|
|
$
|
20,000
|
|
$
|
2,447,323
|
|
$
|
|
|
$
|
39,461,636
|
Raymond J. Seabrook
|
|
$
|
367,346
|
|
$
|
20,000
|
|
$
|
442,311
|
|
$
|
|
|
$
|
7,549,784
|
John R. Friedery
|
|
$
|
568,235
|
|
$
|
20,000
|
|
$
|
365,850
|
|
$
|
|
|
$
|
6,462,021
|
David A. Westerlund
|
|
$
|
690,880
|
|
$
|
20,000
|
|
$
|
356,464
|
|
$
|
|
|
$
|
8,024,099
|
John A. Hayes
|
|
$
|
406,922
|
|
$
|
20,000
|
|
$
|
152,410
|
|
$
|
|
|
$
|
3,368,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following footnote quantifies, as required, the extent to which the amounts reported in the Contributions and Earnings columns above are
reported as compensation in the Summary Compensation Table in fiscal year 2007, and the amounts reported in the Aggregate Balance column above have been reported in the Summary Compensation Table in
all years since 2006. Please note that the aggregate balance also includes amounts earned and reported as compensation in years prior to 2006. The footnote also includes the earnings measures for
amounts reported in the Aggregate Earnings column.
Mr. Hoover
$1,266,670 of the Executive Contributions, $20,000 of the Registrant Contributions
and $128,966 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2007; and $3,841,727 of the Aggregate Balance has been reported as compensation in
the Summary Compensation Table since 2006. The Aggregate Earnings amount reflects $1,886,925 from earnings credited
29
on
cash accounts comprised of $181,448 based on Moody's rate plus 5 percentage points, $111,026 based on a 9 percent fixed rate and $1,594,451 based on notional investment in investment
funds plus $560,397 from appreciation and dividend equivalents on equity accounts.
Mr. Seabrook
$150,934 of the Executive Contributions, $20,000 of the Registrant Contributions
and $47,615 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2007; and $655,981 of the Aggregate Balance has been reported as compensation in
the Summary Compensation Table since 2006. The Aggregate Earnings amount reflects $232,269 from earnings credited on cash accounts comprised of $98,168 based on Moody's rate plus 5 percentage
points, $7,486 based on Moody's rate and $126,616 based on notional investment in investment funds plus $210,042 from appreciation and dividend equivalents on equity accounts.
Mr. Friedery
$330,427 of the Executive Contributions, $20,000 of the Registrant Contributions
and $14,480 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2007; and $732,815 of the Aggregate Balance has been reported as compensation in
the Summary Compensation Table since 2006. The Aggregate Earnings amount reflects $216,506 from earnings credited on cash accounts comprised of $29,853 based on Moody's rate plus 5 percentage
points and $186,653 based on notional investment in investment funds plus $149,344 from appreciation and dividend equivalents on equity accounts.
Mr. Westerlund
$277,058 of the Executive Contributions, $20,000 of the Registrant Contributions
and $46,396 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2007; and $837,711 of the Aggregate Balance has been reported as compensation in
the Summary Compensation Table since 2006. The Aggregate Earnings amount reflects $202,784 from earnings credited on cash accounts comprised of $95,654 based on Moody's rate plus 5 percentage
points, $4,522 based on Moody's rate and $102,608 based on notional investment in investment funds plus $153,680 from appreciation and dividend equivalents on equity accounts.
Mr. Hayes
$121,952 of the Executive Contributions, $20,000 of the Registrant Contributions and
$2,193 of the Aggregate Earnings are reported as compensation in the Summary Compensation Table for fiscal year 2007; and $285,142 of the Aggregate Balance was reported as compensation in the Summary
Compensation Table since 2006. The Aggregate Earnings amount reflects $81,202 from earnings credited on cash accounts comprised of $4,521 based on Moody's rate plus 5 percentage points and
$76,681 based on notional investment in investment funds plus $71,208 from appreciation and dividend equivalents on equity accounts.
PENSION BENEFITS
Retirement benefits are provided to the NEOs under a qualified salaried defined benefit pension plan and a nonqualified Supplemental
Executive Retirement Plan ("SERP"). The 2007 Pension Benefits Table on page 32 shows each NEO's number of years of credited service, present value of accumulated benefits and payments during
fiscal year 2007 for the qualified plan and the SERP. The present value of the accumulated benefit is the December 31, 2007, value of the annual benefit that was earned as of
December 31, 2007.
The
Corporation offers two qualified salaried defined benefit pension plans in the U.S. that provide the same benefits. One plan covers its Aerospace subsidiary's salaried employees and
the other covers all other U.S. salaried employees. The NEOs are covered under the latter. The qualified plans were designed to provide tax-qualified pension benefits that are generally
available to all U.S. salaried employees. Effective January 1, 2007, the Corporation changed the formula by which the accrued pension benefit under the plans is determined. Prior to
January 1, 2007, the accrued pension benefit expressed as a monthly annuity payable at age 65 was based on final average salary, covered compensation and years of service. After
January 1, 2007, the accrued pension benefit is a monthly annuity that is equivalent to a lump sum payable when the participant reaches age 65 calculated on base salary each year, the Social
Security Wage Base and a multiple based on years of service. Payments of accrued benefits earned may be in the form of an annuity, lump sum or a combination of both, depending on the election of the
participant at retirement. The Corporation also sponsors a nonqualified SERP. The SERP mirrors the pension plans and is designed to replace the benefits that would have been provided under the pension
plans if they were not subject to IRS-imposed limits. Under the Code, the maximum permissible benefit from the qualified plans, for retirement in 2007, is $180,000 and annual compensation
exceeding $225,000 in 2007 cannot be considered in computing the maximum permissible benefit under the plans.
Terms for Accrued Benefits Prior to January 1, 2007
The monthly accrued benefit for benefits earned prior to January 1, 2007, was determined according to the following formula:
-
-
1 percent
times Final Monthly Average Salary
plus
0.5 percent
times
Final Monthly Average Salary in excess of Covered Compensation
times
Benefit Service through
December 31, 2006, up to a maximum of 35 years, where
-
-
Salary
is defined to be a NEO's monthly base salary excluding bonus and incentive compensation.
Final Monthly Average Salary
is calculated based on the highest average for any 60 consecutive months out of the last 120 months,
through December 31, 2006.
30
Covered Compensation
is an average of the Social Security Wage Base in effect during a NEO's career. The Social Security Wage Base is the
maximum monthly amount of income on which FICA taxes are due. The years included in the average are the 35 years ending in the year the NEO is eligible for an unreduced Social Security benefit.
This portion of the benefit formula accounts for the fact that Social Security does not cover earnings over a certain level.
Benefit Service
is a NEO's service as a salaried employee with the Corporation plus any service with a predecessor plan as appropriate.
Participants are 100 percent vested in their benefit at the time they are credited with five or more years of service with the Corporation.
Normal
retirement age under the plan is 65 with a minimum of five years of benefit service, but a participant may elect to receive payment upon termination or at any time after reaching
age 55. Benefits paid before age 65 are subject to reduction based on the age and service at termination. Participants who terminate employment after age 55 with at least 10 years of vesting
service will receive a reduction of benefit equal to 4 percent for each year that benefit commencement age precedes age 65 but is greater than age 60, and a 6 percent reduction for each
year that benefit commencement age precedes age 60. Benefits for participants not meeting these requirements are reduced for payment prior to age 65 on an actuarial equivalent basis.
Terms for Accrued Benefits After January 1, 2007
The monthly annuity, which is the equivalent of a lump sum benefit payable at age 65 is based on a percentage of the participant's base pay each year as follows:
|
If, at the beginning of the year, benefit service is:
|
|
Annual lump sum benefit accrued and payable at age 65
|
|
0 to 9 full years of benefit service
|
|
11.5 percent of base pay + 5 percent of base pay over 50 percent of SSWB
(1)
|
10 to 19 full years of benefit service
|
|
13.0 percent of base pay + 5 percent of base pay over 50 percent of SSWB
(1)
|
20 or more full years of benefit service
|
|
15.0 percent of base pay + 5 percent of base pay over 50 percent of SSWB
(1)
|
-
(1)
-
"SSWB"
is the Social Security Wage Base, which is the maximum earnings on which the participant pays FICA tax each year. This portion of the pension formula accounts for the fact that
Social Security does not cover earnings over a certain level.
Base pay is the NEO's base salary during the calendar year excluding incentive compensation, severance pay or vacation payouts.
Upon
termination or retirement, the vested pension benefit accrued beginning January 1, 2007, may be paid to the participant in either a lump sum or annuity. If the benefit is
paid prior to age 65, the benefit will be reduced 5 percent compounded annually for each year the payment is made before such age.
Terms for SERP Accrued Benefits
Since the SERP mirrors the qualified pension plan, the formulas for deriving the SERP accrued benefits are the same as those described above for the pension
plans; however, the amount of retirement benefit the participants receive is equal to the difference between the benefit calculated without IRS limits and the benefits calculated using the IRS limits.
Effective January 1, 2007, the SERP was amended by the Committee to provide participants with benefits accrued as of December 31, 2006, a one-time option to elect the form of
payment under which the participant will receive benefits in the future. The payment options available consist of various annuities and a lump sum. For all SERP benefits accrued beginning
January 1, 2007, participants will receive benefits only in the form of a lump sum. In accordance with Code Section 409A, payments from the SERP will commence six months after
termination of employment. The SERP was also amended to provide that when determining lump sum payments, the SERP would use the same assumptions that exist in the salaried retirement
plans except that the interest rate used shall be equal to four-fifths of the interest rate used to determine lump sum benefits under those salaried retirement plans in recognition that
payments from the SERP cannot be rolled to a tax deferred account such as an IRA.
31
Present Value Assumptions
The Present Value of Accumulated Benefit reported in the table below is based on the following assumptions, which are consistent with those used for the
Corporation's Consolidated Financial Statements for fiscal year ending December 31, 2007:
Discount Rate
|
|
6.25 Percent
|
Mortality
|
|
RP-2000 Mortality Table
|
Preretirement Decrements
|
|
None
|
Form of Payment
|
|
Life Only Annuity10 Percent
Lump Sum90 Percent
|
Pension Benefits Table
|
Name
|
|
Plan Name
|
|
Number
of Years
Credited
Service
(#)
|
|
Present
Value of
Accumulated
Benefit ($)
|
|
Payments
During
Last
Fiscal
Year ($)
|
|
R. David Hoover
|
|
Qualified
SERP
|
|
37.5
37.5
|
|
$
$
|
964,380
3,695,172
|
|
$
$
|
|
Raymond J. Seabrook
|
|
Qualified
SERP
|
|
15.2
15.2
|
|
$
$
|
284,122
|
|
$
$
|
|
John R. Friedery
|
|
Qualified
SERP
|
|
19.3
19.3
|
|
$
$
|
256,350
221,775
|
|
$
$
|
|
David A. Westerlund
|
|
Qualified
SERP
|
|
32.3
32.3
|
|
$
$
|
582,735
359,644
|
|
$
$
|
|
John A. Hayes
|
|
Qualified
SERP
|
|
8.9
8.9
|
|
$
$
|
65,743
24,815
|
|
$
$
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER POTENTIAL POST-TERMINATION EMPLOYMENT BENEFITS
This section provides information related to the potential post-termination employment benefits that could be payable or
due to the CEO, CFO and the other NEOs under various termination scenarios. Such potential benefits payable or due may result from the Corporation's obligation to the executive under (1) any
existing compensation and benefit plan, policy, practice or program of the Corporation that is generally available to all participants, or (2) under any agreement specifically entered into by
the Corporation and the executive.
In
general, the compensation and benefit elements provided to employees, including the CEO, CFO and the other NEOs, are governed by provisions, terms or procedures of plan documents,
policies and practices that define the rights of and the obligations due to the participant in the case of termination of employment. These provisions, terms or procedures apply to all employees,
including the CEO, CFO and the other NEOs receiving such compensation or benefit. Such compensation and benefit elements would include annual incentive compensation, long-term cash
incentives, long-term equity incentives, retirement benefits and deferred compensation.
32
Ball has entered into certain severance benefit and change-in-control agreements with the CEO, CFO and the other NEOs which contain provisions that require Ball
to provide post-termination payments or benefits to each in the event of termination of employment without cause or termination following a change-in-control of the
Corporation. The Corporation does not have employment agreements with any of these executives. The respective agreements with the NEOs contain customary non-compete provisions,
non-solicitation provisions, non-disparagement provisions and confidentiality covenants.
The
key provisions, terms or procedures that would apply to the CEO, CFO and the other NEOs for the various compensation and benefit elements under various termination scenarios are
provided in the table below. It is followed by another table containing an estimate of the compensation payable or the value of compensation elements due to the CEO, CFO and other NEOs under the
various termination scenarios assuming termination was effective at the end of the fiscal year 2007.
Post-Termination Employment Benefits Summary
|
Component
|
|
Voluntary or
Termination
for Cause
|
|
Death
|
|
Disability
|
|
Termination
Without Cause
|
|
Termination
Following a
Change-in-
Control
|
|
Cash Severance
|
|
|
No additional benefits received.
|
|
|
No additional benefits received.
|
|
|
No additional benefits received.
|
|
|
CEO2 times
base salary plus
target annual
incentive.
All Other NEOs1.5 times base salary plus target annual incentive.
Form of payment to all NEOs is a lump sum.
|
|
|
All NEOs2 times base salary plus target annual incentive, which is paid in a lump sum.
|
Treatment of Annual Incentives
|
|
|
Retirement eligible NEOs receive a prorated portion of the award if terminated mid-performance cycle.
|
|
|
NEOs' beneficiaries receive a prorated portion of the target award if terminated mid-performance cycle.
|
|
|
NEOs receive a prorated portion of the target award if terminated mid-performance cycle.
|
|
|
NEOs receive a prorated portion of the target award if terminated mid-performance cycle.
|
|
|
NEOs receive a prorated portion of the target award if terminated mid-performance cycle.
|
Treatment of Long-Term Cash Incentive
|
|
|
Retirement eligible NEOs receive a prorated portion of awards.
|
|
|
Prorated portion of awards are paid.
|
|
|
Prorated portion of awards are paid.
|
|
|
Retirement eligible NEOs receive a prorated portion of awards.
|
|
|
NEOs receive a prorated portion of awards.
|
Treatment of Restricted Stock/Deposit Shares
|
|
|
Restricted Stock/UnitsAll unvested stock/units are forfeited.
|
|
|
Restricted Stock/UnitsAll unvested stock/units vest.
|
|
|
Restricted Stock/UnitsAll unvested stock/units vest.
|
|
|
Restricted Stock/UnitsAll unvested stock/units are forfeited.
|
|
|
Restricted Stock/UnitsAll unvested stock/units vest.
|
|
|
|
Deposit SharesRetirement eligible NEOs receive a prorated portion of unvested stock/units. All other NEOs forfeit unvested stock/units.
|
|
|
Deposit SharesAll unvested stock/units vest.
|
|
|
Deposit SharesAll unvested stock/units vest.
|
|
|
Deposit SharesRetirement eligible NEOs receive a prorated portion of unvested stock/units. All other NEOs forfeit unvested stock/units.
|
|
|
Deposit SharesAll unvested stock/units vest.
|
33
Post-Termination Employment Benefits SummaryContinued
|
Component
|
|
Voluntary or
Termination
for Cause
|
|
Death
|
|
Disability
|
|
Termination
Without Cause
|
|
Termination
Following a
Change-In-
Control
|
|
Treatment of Performance Contingent Restricted Stock Units
|
|
|
For retirement eligible NEOs, age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-compete agreement, unvested units will cliff vest on the vest date if
the performance measure is achieved. For all other NEOs, the unvested units are forfeited.
|
|
|
All unvested units vest.
|
|
|
All unvested units vest.
|
|
|
For retirement eligible NEOs, age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-compete agreement, unvested units will cliff vest on the vest date if
the performance measure is achieved. For all other NEOs, the unvested units are forfeited.
|
|
|
All unvested units vest.
|
Treatment of Stock Options
|
|
|
Stock Options granted prior to 2007Unvested shares are forfeited. For retirement eligible NEOs, options remain exercisable for a maximum of 2 years (90 days for incentive stock options). For all other NEOs,
the options remain exercisable for 30 days.
|
|
|
Stock OptionsAll options vest.
|
|
|
Stock OptionsShares continue to vest pursuant to the original vesting schedule.
|
|
|
Stock Options granted prior to 2007Unvested shares are forfeited. For retirement eligible NEOs, options remain exercisable for a maximum of 2 years (90 days for incentive stock options). For all other NEOs,
the options remain exercisable for 30 days.
|
|
|
Stock OptionsAll options vest.
|
|
|
|
Stock Options granted in 2007For retirement eligible NEOs, age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-compete agreement, unvested options will continue to vest under
the normal schedule and options will remain exercisable for a maximum of 5 years (90 days for incentive stock options). For all other NEOs, the same provisions as those described above for grants made prior to 2007 are
applicable.
|
|
|
|
|
|
|
|
|
Stock Options granted in 2007For retirement eligible NEOs, age 55 or above with 15 years of service or age 60 or above with 10 years of service and who have signed a non-compete agreement, unvested options will continue to vest under
the normal schedule and options will remain exercisable for a maximum of 5 years (90 days for incentive stock options). For all other NEOs, the same provisions as those described above for grants made prior to 2007 are
applicable.
|
|
|
|
Retirement Benefits
|
|
|
No additional benefits received.
|
|
|
No additional benefits received.
|
|
|
No additional benefits received.
|
|
|
CEOPaid a lump sum amount equal to an additional 2 years of service credited.
All Other NEOsPaid a lump sum amount equal to an additional 1.5 years of service credited.
|
|
|
All NEOsPaid a lump sum amount equal to an additional 2 years of service credited.
|
34
Post-Termination Employment Benefits SummaryContinued
|
Component
|
|
Voluntary or
Termination
for Cause
|
|
Death
|
|
Disability
|
|
Termination
Without Cause
|
|
Termination
Following a
Change-In-
Control
|
|
Health and Welfare Benefits
|
|
|
No additional benefits received.
|
|
|
No additional benefits received.
|
|
|
Continue for period of disability.
|
|
|
CEOContinued for 2 years.
|
|
|
All NEOsContinued for 2 years.
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other NEOsContinued for 1.5 years.
|
|
|
|
Other Benefits
|
|
|
Financial planning services valued at $10,000 per year for 2 years.
|
|
|
No additional benefits received.
|
|
|
No additional benefits received.
Long-term disability payment of up to $15,000 per month.
|
|
|
Outplacement benefits valued at $20,000.
Financial planning services valued at $10,000 per year for 2 years.
|
|
|
Outplacement benefits valued at $20,000.
Payment for excise taxes incurred as a result of Code Section 280G excess payments, if applicable.
|
A termination without cause will be triggered if the NEO is terminated in either an Actual Termination not for cause or a Constructive
Termination. An Actual Termination is any termination by the Corporation for reasons other than death or disability or for cause or by the executive for reasons other than Constructive Termination. A
Constructive Termination means, in general terms, any significant reduction in duties, compensation or benefits or change of office location from those in effect immediately prior to the
change-in-control, unless agreed to by the executive.
Payments
associated with a termination following a change-in-control will be triggered if both of the following two events occur:
-
1.
-
A
change-in-control occurs. A "change-in-control" can occur by virtue, in general terms, of an acquisition by any person of
30 percent or more of the Corporation's voting shares; a merger in which the shareholders of the Corporation before the merger own 50 percent or less of the Corporation's voting shares
after the merger; shareholder approval of a plan of liquidation or a plan to sell or dispose of substantially all of the assets of the Corporation; and if, during any two-year period,
directors at the beginning of the period fail to constitute a majority of the Board.
-
2.
-
The
executive is terminated in either an Actual Termination or a Constructive Termination not for cause.
35
In
the event benefits are paid because of a change-in-control and such benefits are subject to Code Section 280G, the Corporation would reimburse the
executive for such excise taxes paid, together with taxes incurred as a result of such reimbursement.
The
table below represents the amounts potentially payable to the NEOs under various termination scenarios. The values assume termination on December 31, 2007, with stock awards
and unexercisable stock options benefit values based on the Corporation's December 31, 2007, stock price of $45.00.
Estimated Post-Termination Employment Benefits Table
Name
|
|
Voluntary or
for Cause
|
|
Death
|
|
Disability
|
|
Without Cause
|
|
Change-in-
Control
|
R. David Hoover
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
$
|
4,120,000
|
|
$
|
4,120,000
|
|
Prorated Long-Term Cash Incentive
|
|
$
|
846,475
|
|
$
|
846,475
|
|
$
|
846,475
|
|
$
|
846,475
|
|
$
|
846,475
|
|
Outstanding Stock Awards
|
|
$
|
2,617,425
|
|
$
|
4,279,500
|
|
$
|
4,279,500
|
|
$
|
2,617,425
|
|
$
|
4,279,500
|
|
Outstanding Performance Awards
|
|
$
|
2,250,000
|
|
$
|
2,250,000
|
|
$
|
2,250,000
|
|
$
|
2,250,000
|
|
$
|
2,250,000
|
|
Unexercisable Stock Options
|
|
$
|
117,900
|
|
$
|
117,900
|
|
$
|
117,900
|
|
$
|
117,900
|
|
$
|
117,900
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
$
|
431,454
|
|
$
|
431,454
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
$
|
28,062
|
|
$
|
28,062
|
|
Perquisites
|
|
$
|
20,000
|
|
|
|
|
|
|
|
$
|
40,000
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,851,800
|
|
$
|
7,493,875
|
|
$
|
7,493,875
|
|
$
|
10,451,316
|
|
$
|
12,093,391
|
|
|
|
|
|
|
|
|
|
|
|
Raymond J. Seabrook
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
$
|
1,150,050
|
|
$
|
1,533,400
|
|
Prorated Long-Term Cash Incentive
|
|
$
|
194,022
|
|
$
|
194,022
|
|
$
|
194,022
|
|
$
|
194,022
|
|
$
|
194,022
|
|
Outstanding Stock Awards
|
|
$
|
689,040
|
|
$
|
1,122,750
|
|
$
|
1,122,750
|
|
$
|
689,040
|
|
$
|
1,122,750
|
|
Outstanding Performance Awards
|
|
$
|
607,500
|
|
$
|
607,500
|
|
$
|
607,500
|
|
$
|
607,500
|
|
$
|
607,500
|
|
Unexercisable Stock Options
|
|
$
|
34,388
|
|
$
|
34,388
|
|
$
|
34,388
|
|
$
|
34,388
|
|
$
|
34,388
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
$
|
87,834
|
|
$
|
123,695
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
$
|
22,962
|
|
$
|
30,910
|
|
Perquisites
|
|
$
|
20,000
|
|
|
|
|
|
|
|
$
|
40,000
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,544,950
|
|
$
|
1,958,660
|
|
$
|
1,958,660
|
|
$
|
2,825,796
|
|
$
|
3,666,665
|
|
|
|
|
|
|
|
|
|
|
|
John R. Friedery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
$
|
1,054,350
|
|
$
|
1,405,800
|
|
Prorated Long-Term Cash Incentive
|
|
|
|
|
$
|
177,665
|
|
$
|
177,665
|
|
|
|
|
$
|
177,665
|
|
Outstanding Stock Awards
|
|
|
|
|
$
|
1,260,000
|
|
$
|
1,260,000
|
|
|
|
|
$
|
1,260,000
|
|
Outstanding Performance Awards
|
|
|
|
|
$
|
607,500
|
|
$
|
607,500
|
|
|
|
|
$
|
607,500
|
|
Unexercisable Stock Options
|
|
|
|
|
$
|
34,388
|
|
$
|
34,388
|
|
|
|
|
$
|
34,388
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
$
|
66,283
|
|
$
|
95,315
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
$
|
19,851
|
|
$
|
26,752
|
|
Perquisites
|
|
$
|
20,000
|
|
|
|
|
|
|
|
$
|
40,000
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20,000
|
|
$
|
2,079,553
|
|
$
|
2,079,553
|
|
$
|
1,180,484
|
|
$
|
3,627,420
|
|
|
|
|
|
|
|
|
|
|
|
David A. Westerlund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
$
|
1,045,500
|
|
$
|
1,394,000
|
|
Prorated Long-Term Cash Incentive
|
|
$
|
176,197
|
|
$
|
176,197
|
|
$
|
176,197
|
|
$
|
176,197
|
|
$
|
176,197
|
|
Outstanding Stock Awards
|
|
$
|
689,040
|
|
$
|
1,122,750
|
|
$
|
1,122,750
|
|
$
|
689,040
|
|
$
|
1,122,750
|
|
Outstanding Performance Awards
|
|
$
|
607,500
|
|
$
|
607,500
|
|
$
|
607,500
|
|
$
|
607,500
|
|
$
|
607,500
|
|
Unexercisable Stock Options
|
|
$
|
34,388
|
|
$
|
34,388
|
|
$
|
34,388
|
|
$
|
34,388
|
|
$
|
34,388
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
$
|
90,513
|
|
$
|
127,184
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
$
|
16,733
|
|
$
|
22,498
|
|
Perquisites
|
|
$
|
20,000
|
|
|
|
|
|
|
|
$
|
40,000
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,527,125
|
|
$
|
1,940,835
|
|
$
|
1,940,835
|
|
$
|
2,699,871
|
|
$
|
3,504,517
|
|
|
|
|
|
|
|
|
|
|
|
John A. Hayes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
$
|
940,500
|
|
$
|
1,254,000
|
|
Prorated Long-Term Cash Incentive
|
|
|
|
|
$
|
176,539
|
|
$
|
176,539
|
|
|
|
|
$
|
176,539
|
|
Outstanding Stock Awards
|
|
|
|
|
$
|
1,339,650
|
|
$
|
1,339,650
|
|
|
|
|
$
|
1,339,650
|
|
Outstanding Performance Awards
|
|
|
|
|
$
|
450,000
|
|
$
|
450,000
|
|
|
|
|
$
|
450,000
|
|
Unexercisable Stock Options
|
|
|
|
|
$
|
27,277
|
|
$
|
27,277
|
|
|
|
|
$
|
27,277
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
$
|
26,846
|
|
$
|
46,232
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
$
|
18,472
|
|
$
|
24,915
|
|
Perquisites
|
|
$
|
20,000
|
|
|
|
|
|
|
|
$
|
40,000
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20,000
|
|
$
|
1,993,466
|
|
$
|
1,993,466
|
|
$
|
1,025,818
|
|
$
|
3,338,613
|
|
|
|
|
|
|
|
|
|
|
|
36
SHAREHOLDER PROPOSAL
RESOLVED: That the shareholders of Ball Corporation request its Board of Directors to take the steps necessary to eliminate
classification of terms of the Board of Directors to require that all Directors stand for election annually. The Board declassification shall be completed in a manner that does not affect the
unexpired terms of the previously-elected Directors.
SUPPORTING STATEMENT
The proponent believes the election of directors is the strongest way that shareholders influence the directors of any corporation.
Currently, our Board of Directors is divided into three classes with each class serving three-year terms. Because of this structure, shareholders may only vote for one-third of
the directors each year. This is not in the best interest of the shareholders because it reduces accountability.
U.S.
Bancorp., Associated Banc-Corp, Piper-Jaffray Companies, Fifth-Third Bancorp, Pan Pacific Retail Properties, Qwest Communications International, Xcel Energy, Greater Bay
Bancorp, North Valley Bancorp, Pacific Continental Corporation, Regions Financial Corporation, CoBiz Financial Inc., Marshall & Illsley Corporation, and Wintrust Financial, Inc.
are among the corporations electing directors annually because of the efforts of the proponent.
The
performance of our management and our Board of Directors is now being more strongly tested due to economic conditions and the accountability for performance must be given to the
shareholders whose capital has been entrusted in the form of share investments.
A
study by researchers at Harvard Business School and the University of Pennsylvania's Wharton School titled "Corporate Governance and Equity Prices" (Quarterly Journal of Economics,
February, 2003), looked at the relationship between corporate governance practices (including classified boards) and firm performance. The study found a significant positive link between governance
practices favoring shareholders (such as annual directors election) and firm value.
39
While
management may argue that directors need and deserve continuity, management should become aware that continuity and tenure may be best assured when their performance as directors
is exemplary and is deemed beneficial to the best interests of the corporation and its shareholders.
The
proponent regards as unfounded the concern expressed by some that annual election of all directors could leave companies without experienced directors in the event that all
incumbents are voted out by shareholders. In the unlikely event that shareholders do vote to replace all directors, such a decision would express dissatisfaction with the incumbent directors and
reflect a need for change.
If
you agree that shareholders may benefit from greater accountability afforded by annual election of
all
directors, please vote "FOR" this proposal.
STATEMENT IN OPPOSITION TO THE SHAREHOLDER PROPOSAL
The Board of Directors believes that a classified board, where approximately one-third of the directors are elected
annually, is in the best interests of the Corporation and its shareholders. The classified board was approved at the 1985 Annual Meeting of Shareholders by 82 percent of the shares entitled to
vote.
The
Board believes a classified board helps provide continuity and stability of the Corporation's leadership and policies because a majority of the directors at any one time will have
prior experience as directors of the Corporation and in-depth knowledge of the Corporation. This system permits directors to more effectively represent the long-term interests
of all shareholders in a variety of circumstances, including responding to circumstances created by demands or action by a minority shareholder or group or proponents of a takeover or restructuring or
other extraordinary corporate action. The Board believes that the continuity and experience of leadership that results from a classified board helps directors focus on creating long-term
value for shareholders and avoid short-term decisions of a transitory majority or vocal minority focused only on a single issue at any particular time.
The
Board believes there are many specific arguments favoring multiyear terms including the following:
-
1.
-
Director
independence. Directors are less influenced by transitory outside influences.
-
2.
-
Negotiating
power and takeover bids. The inability of a bidder to replace the entire board in a single election provides additional time and increases the power of the target company
board to determine the adequacy of a bid and consider all options to maximize shareholder value.
-
3.
-
Institutional
stability. Staggered boards permit companies to benefit from the directors' experience, time and knowledge of a corporation's business.
-
4.
-
Respect
for business judgment. Directors can exercise their best judgment on all matters pertaining to the operation of the company without fear of retribution.
-
5.
-
Long-term
focus. Multiyear terms provide the board with the ability to emphasize long-term business oversight and strategy rather than short-term
day-to-day objectives. Multiyear terms are also consistent with the Sarbanes-Oxley Act of 2002 which, among other things, seeks to avoid the abuses often caused by only a
short-term focus on the operation of the business.
The
proponent references an academic study concluding that a significant positive link exists between governance practices favoring shareholders (such as annual directors election) and
firm value. The proponent cites no evidence for this conclusion. The study did not include evidence of the Corporation's performance and, in fact, states that no strong claims about causality can be
made based on the study.
The
Board and our management have demonstrated accountability to the shareholders through the financial performance of the Corporation. In particular, we note that:
-
-
Since
January 1, 2001, the Board increased the dividends payable to shareholders on three separate occasions.
-
-
The
Corporation has split its Common Stock (on a two-for-one basis) on February 22, 2002, and August 23, 2004.
-
-
The
Corporation recorded in the year 2007 the highest sales, earnings and cash flow in the history of the Corporation.
-
-
The
Corporation has consistently reported increased earnings per share and substantial free cash flow.
40
The
Board believes that the continuity and stability provided by having a classified Board enhances the Corporation's ability to implement its long-term strategies and
sustain its long-term financial health and performance.
The
Board in its present form is accountable to the shareholders and committed to sound corporate governance practices. A majority of the Board is comprised of independent directors and
all directors owe fiduciary duties to the Corporation and its shareholders regardless of the length of the term for which they are elected. In addition, the Board has implemented measures to further
foster accountability, including the adoption of Corporate Governance Guidelines (that focus on the independence and quality of members of the Board and its effective functioning) and regular annual
self-evaluations of the Board and its four committees.
The
Board believes that the continuity and stability provided by having a classified Board enhances the Corporation's ability to implement its long-term strategies and
sustain its long-term financial health and performance.
For the reasons set forth above, the Board of Directors recommends that shareholders vote "AGAINST" this shareholder
proposal.
SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
To be eligible for inclusion in the Corporation's Proxy Statement for the 2009 Annual Meeting of Shareholders, proposals of
shareholders must be in writing and be received by the Corporate Secretary at the Corporation's principal executive offices, 10 Longs Peak Drive, Broomfield, Colorado 80021-2510, by
November 17, 2008.
If
a shareholder desires to bring business before the 2009 Annual Meeting of Shareholders, which is not the subject of a proposal submitted for inclusion in the Proxy Statement, the
shareholder must notify the Corporation of the shareholder's proposal, which must be delivered to or mailed and received at the principal executive offices of the Corporation between
December 24, 2008, and January 23, 2009, or the proposal may be considered untimely. The appointed proxies may exercise their discretionary authority to vote previously solicited proxies
against such proposal if it is raised at the 2009 Annual Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As a result of an administrative error, the Form 4 report regarding a Restricted Stock Award for 1,500 units, Stock Appreciation
Rights Award for 5,000 shares and a Stock Option Award for 4,000 shares to Mr. Leroy J. Williams on April 25, 2007, was not timely reported. The preceding Awards were reported on a
Form 4 filed on May 1, 2007. Also, as a result of an administrative error, the Form 4 report regarding a loan to Mr. Leroy J. Williams of 23 shares from his 401(k) plan on
June 27, 2007, was not timely reported. The loan was
reported on a Form 4 filed on August 22, 2007. Additionally, as a result of an administrative error, the Form 4 report regarding a Restricted Stock Award for 3,000 units, Stock
Appreciation Rights Award for 6,424 shares and a Stock Option Award for 2,576 shares to Ms. Lisa A. Pauley on April 25, 2007, was not timely reported. The preceding Awards were reported
on a Form 4 filed on April 30, 2007. To the best of the Corporation's knowledge, all of the other filings for its executive officers and directors were made on a timely basis in 2007.
SOLICITATION AND OTHER MATTERS
The Corporation will pay the cost of soliciting proxies. Georgeson Shareholder has been retained to assist in the solicitation of
proxies for a fee of $7,500. In addition to solicitations by mail, proxies also may be solicited personally, or by telephone or electronic means by some directors, officers and regular employees of
the Corporation, without additional compensation, as well as by employees of Georgeson Shareholder. The Corporation will reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material, Annual Report and other shareholder materials to the beneficial owners of Common Stock.
As
of the date of this Proxy Statement, the Board of the Corporation has no knowledge of any matters to be presented for consideration at the Annual Meeting other than those referred to
above. However, the persons named in the accompanying proxy card shall have authority to vote such proxy as to any other matters that properly come before the meeting and as to matters incidental to
the conduct of the meeting, according to their discretion.
|
|
By Order of the Board of Directors
|
|
|
David A. Westerlund
Corporate Secretary
|
March 17, 2008
Broomfield, Colorado
41
Annex I
Ball Corporation
Audit Committee Charter
I. Purpose
The primary purposes of the Audit Committee (the "Committee") are to assist the Board of Directors (the "Board") in fulfilling its responsibility with regard to
management's conduct and the integrity of Ball Corporation's (the "Corporation") public financial reporting process, the Corporation's compliance with legal and regulatory requirements, the accounting
policies and the system of internal control over financial reporting, disclosure controls and procedures, the performance of the Corporation's outside auditor and internal audit department, the
outside auditor's qualifications and independence, preparation of the report required by the Securities and Exchange Commission ("SEC") proxy rules and carrying out the responsibilities required of
Audit Committees by the New York Stock Exchange ("NYSE") and the SEC.
The
Committee shall review the adequacy of this Charter on an annual basis.
II. Membership
The Committee shall be comprised of not less than three members of the Board. The Committee's composition will comply with the independence and experience
requirements of the NYSE rules for serving on the Committee as determined in the business judgment of the Board. At least one member of the Committee will meet the requirements of and be designated as
having accounting or related financial management expertise and an Audit Committee Financial Expert as required by the NYSE and the SEC, all as determined in the business judgment of the Board.
The
members of the Committee and the Committee Chair shall be elected by the Board at the annual organizational meeting of the Board and shall serve until their successors shall be duly
elected and qualified by the Board.
III. Responsibilities and Duties
The Committee's role is generally one of oversight and it recognizes that the Corporation's management is responsible for preparing the Corporation's consolidated
financial statements and that the outside auditor is responsible for auditing or reviewing those financial statements and performing any required audit of internal control over financial reporting. In
carrying out its responsibilities, the Committee and its members are not providing any expert or special assurance as to the Corporation's financial statements, internal control over financial
reporting or any professional certification as to any auditor's work.
The
following matters comprise the recurring activities of the Committee. The responsibilities and duties of a member of the Committee are in addition to those duties set out for a
member of the Board.
-
1.
-
With
regard to selection, evaluation, compensation and termination of the outside auditor, the Committee shall:
-
(a)
-
appoint
the firm of independent outside auditors to act as the outside auditor for the Corporation and its subsidiaries for each fiscal year, subject to ratification as needed by the
Board and shareholders;
-
(b)
-
evaluate
the performance (including the performance of the engagement partner) and approve the compensation of the Corporation's outside auditor with regard to the annual audit and
quarterly review of the Corporation's public financial statements and audit of internal control over financial reporting and present the Committee's conclusions and decisions annually to the Board;
-
(c)
-
request
from the outside auditor annually, a report describing the firm's internal quality control procedures, any material issues raised by the most recent internal quality control
review or peer review of the firm or by any inquiry or investigation by governmental or professional authorities within the preceding five years regarding any independent audits, interim financial
statement reviews or audits of internal control over financial reporting carried out by the outside auditor and any steps taken to deal with any of the issues raised by the review, inquiry or
investigation;
I-1
-
(d)
-
request
from the outside auditor annually, a formal written statement delineating all relationships between the auditor and the Corporation consistent with Independence Standards
Board Standard No. 1, discuss with the outside auditor any such disclosed relationships and their impact on the outside auditor's independence, if any, and, where circumstances warrant, take
appropriate action in response to the outside auditor's report to satisfy itself of the outside auditor's independence or recommend to the Board that the Board take such action;
-
(e)
-
have
the authority to terminate or otherwise sanction the outside auditor if circumstances warrant or recommend to the Board such action; and
-
(f)
-
approve
in advance the audit, audit-related and non-audit services to be performed by the outside auditor and receive a report from management or the outside auditor
annually regarding audit, audit related, tax and all other fees paid by the Corporation to the outside auditor for services rendered in the immediately preceding two fiscal years and consider whether
the fees for non-audit or audit related services are compatible with maintaining the auditor's independence.
-
2.
-
With
regard to the annual audit, interim reviews of the consolidated financial statements of the Corporation and the required attestation on management's report with regard to internal
control over financial reporting, the Committee shall:
-
(a)
-
review
an annual audit plan or plans for the audit and review of financial statements and audit of internal control over financial reporting of the Corporation's outside auditor,
including the scope of audit and review activities, which management confirms they have reviewed with the outside auditor;
-
(b)
-
discuss
with management and the outside auditor the audited consolidated financial statements, which form the basis for those consolidated financial statements to be included in the
Corporation's Form 10-K, management's assessment of the effectiveness of internal control over financial reporting and the audit by the outside auditor of such internal control, and
discuss with management and the outside auditor the matters required to be communicated by Statement of Auditing Standards ("SAS"), the Public Company Accounting Oversight Board Auditing Standards
("PCAOB Standards") and the General Commentary to Section 303A.07(c)(A), (B) and (C) of the NYSE Listing Manual, as may be amended or supplemented;
-
(c)
-
discuss
with management and the outside auditor the Corporation's unaudited interim consolidated financial statements, which form the basis for those to be included in the
Corporation's Quarterly reports on Form 10-Q including the review by the outside auditor in accordance with SAS and PCAOB Standards as may be amended or supplemented (The Chair of
the Committee or a member of the Committee designated by the Chair may hold the discussion specified in 2(c).); and
-
(d)
-
review
with the outside auditor any audit or review problems or difficulties and management's response.
-
3.
-
With
regard to financial reporting practices, disclosure controls and procedures and internal control over financial reporting, the Committee shall:
-
(a)
-
inquire
of management, the outside auditor and the director of internal audit as to the adequacy of internal control over financial reporting and disclosure controls and procedures;
-
(b)
-
discuss
with management and the outside auditor the Corporation's disclosures in "Management's Discussions and Analysis of Financial Condition and Results of Operations" contained in
the most recent 10-K or 10-Q periodic reports to the SEC;
-
(c)
-
discuss
generally with management earnings press releases, including the type and presentation of information to be included, such as non-GAAP financial measures and
financial information and earnings guidance, if any, provided to credit rating agencies, analysts and the public; and
-
(d)
-
receive
an annual audit plan of the Corporation's internal audit department, including scope and periodic reports on the progress, results, and changes, if any, with regard to the
plan during the fiscal year.
-
4.
-
With
regard to other matters, the Committee shall:
-
(a)
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oversee
the Corporation's compliance with legal and regulatory requirements by inquiring of the Chair of the Corporate Compliance Committee, the General Counsel and senior executive
officers regarding the company's ethical standards, utilization of the Corporation's hotline reporting system and the compliance by the company and its officers, employees and directors with the
ethical standards and the law and meeting annually with the general counsel to review legal matters, including any matters that may have a material impact on the financial statements of the
Corporation;
I-2
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(b)
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establish
procedures for the receipt, retention and treatment of complaints regarding accounting, internal control over financial reporting, auditing, ethical or legal compliance
matters, including procedures for confidential, anonymous submission by employees of Ball or other interested parties of concerns regarding questionable accounting, auditing, ethical or legal
compliance matters;
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(c)
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discuss
with the Chief Financial Officer, Treasurer and senior executive management the guidelines and policies governing risk assessment and risk management of the Corporation;
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(d)
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set
clear hiring policies for employees or former employees of the outside auditor;
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(e)
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receive
from management or the outside auditor any information which must be delivered pursuant to Section 10A of the Securities Exchange Act of 1934;
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(f)
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review
and approve the report regarding the Committee to be included in each annual proxy statement of the Corporation which includes the matters required by the SEC; and
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(g)
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perform
such other functions within the purposes, responsibilities and duties of the Committee as may be directed by the Board.
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5.
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In
the process of carrying out the duties and responsibilities, the Committee shall:
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(a)
-
keep
regular minutes of its meetings and report any actions taken to the Board at its next meeting;
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(b)
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have
the authority to investigate any matters brought to its attention with full access to all the books, records, facilities and personnel of the Corporation;
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(c)
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have
the authority to secure outside counsel, accountants or other experts with appropriate budgeting and funding from the Corporation to pay the advisors as determined by the
Committee to assist the Committee in fulfilling its responsibilities and duties;
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(d)
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have
the authority to provide for appropriate funding from the Corporation for payment of compensation to any outside auditor with regard to the annual audit of financial statements
and internal control over financial reporting and quarterly review of the Corporation's interim financial statements;
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(e)
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have
the authority to provide for appropriate funding for the payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its
responsibilities and duties;
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(f)
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meet
separately, periodically with management, the engagement partner of the Corporation's outside audit firm and the director of internal audit;
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(g)
-
resolve
any disagreements between management and the outside auditor; and
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(h)
-
report
annually to the Board concerning the performance of the Committee and discuss any needed action items for the Committee.
While
the Committee has the duties and responsibilities set forth in this Charter, the Committee is not responsible for planning or conducting audits and interim reviews, performing
management's assessment of internal control over financial reporting, determining whether the Corporation's financial statements are complete and accurate and in accordance with generally accepted
accounting principles or management's report on internal control over financial reporting is appropriate for attestation by the outside auditor. Similarly, it is not the Committee's responsibility to
ensure that the Corporation complies with all laws and regulations or its policies, procedures and practices.
I-3
Annex II
Ball Corporation
Nominating/Corporate Governance
Committee Charter
I. Purpose
The primary purpose of the Nominating/Corporate Governance Committee (the "Committee") is to assist the Board of Directors (the "Board") of Ball Corporation (the
"Corporation") in fulfilling its responsibility to identify qualified individuals to become Board members, recommend to the Board the selection of Board nominees for the next annual meeting of
shareholders, and address the independence and effectiveness of the Board by advising and making recommendations on matters involving the organization and operation of the Board, corporate governance
guidelines and directorship practices and overseeing the evaluation of the Board and its Committees.
II. Membership
The Committee shall be comprised entirely of independent directors as defined by the New York Stock Exchange (the "NYSE") for serving on the Committee as
determined in the business judgment of the Board. The members of the Committee and the Committee Chair shall be elected by the Board at the annual organizational meeting of the Board and shall serve
until their successors are duly elected and qualified by the Board.
III. Responsibilities and Duties
The Committee's role is generally one of oversight and it recognizes that the Board is responsible for the selection of and initial approval of Board nominees and
the conduct of the annual evaluation of Board performance. In carrying out its responsibilities the Committee and its members are not providing any expert or special assurance as to Director,
committee or Board performance.
The
following matters comprise the recurring activities of the Committee in carrying out its functions. The responsibilities and duties of a member of the Committee are in addition to
his or her duties as a member of the Board.
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1.
-
Identify
and consider qualified candidates for Board membership consistent with policies and criteria approved by the Board, develop and maintain a list of candidates to fill vacancies
on the Board and aid in attracting qualified individuals to the Corporation's Board. The Committee shall consider nominees for directorships submitted by shareholders.
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2.
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Recommend
to the Board director candidates to fill vacancies occurring on the Board.
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3.
-
Recommend
to the Board annually a slate of director nominees to be elected by the shareholders at each annual meeting of the shareholders and recommend to the Board the inclusion of
the slate in the Proxy Statement.
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4.
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Review
and assess the Corporation's Sustainability activities and performance.
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5.
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Develop
and recommend to the Board any needed policies and criteria for selection of new directors, as it deems necessary.
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6.
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Develop
and recommend to the Board any needed policies and standards for ongoing service on the Board and its committees, as it deems necessary.
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7.
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Develop
and recommend any changes in the size, composition, organization and operational structure of the Board and its standing or ad hoc committees, as it deems necessary.
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8.
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Develop
and recommend to the Board a set of corporate governance guidelines applicable to the Corporation.
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9.
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Develop
and recommend to the Board ethical standards and ethics and legal compliance requirements for Directors and executive officers of the Corporation.
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10.
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Develop,
recommend and oversee a Board, Board committee and Director evaluation process.
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11.
-
Budget
for and hire experts as are deemed appropriate to advise the Committee in the performance of its duties, including the hiring of director search firms.
II-1
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12.
-
Keep
regular minutes of its meetings and report any actions taken to the Board at its next meeting.
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13.
-
Review
the adequacy of this Charter on an annual basis.
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14.
-
Report
annually to the Board concerning the performance of the Committee and discuss any needed action items for the Committee.
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15.
-
Provide
reports required of the Committee by the NYSE or Securities and Exchange Commission.
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16.
-
Provide
such other functions within the purposes, duties and responsibilities of the Committee as may be directed by the Board.
IV. Other
A. Policy with respect to Newly Created Directorships
In keeping with the Corporation's current practice, the Board will ensure that any person filling a newly created directorship shall stand for election at the
annual meeting of shareholders immediately following such person's election by the Board.
B. Policy with respect to Material Change in Director's Primary Employment
In keeping with the Corporation's current practice, any Director who suffers a material change in his or her primary employment will promptly tender to the
Chairman of the Board a letter containing his or her offer to resign from the Board together with a brief explanation of the nature of the change in primary employment. The Chairman will bring the
matter before the next regularly scheduled Board meeting and the Board may, in its sole discretion, accept or reject such Director's offer to resign.
II-2
Annex III
Ball Corporation
Human Resources Committee Charter
I. Purpose
The primary purpose of the Human Resources Committee (the "Committee") is to assist the Board of Directors (the "Board") of Ball Corporation (the "Corporation")
in fulfilling its responsibilities related to the evaluation of the Chief Executive Officer and Chairman of the Board (the "CEO") and the compensation for the position, overseeing the compensation of
other executive officers, and to provide any report required of the Committee by the Securities and Exchange Commission ("SEC") or New York Stock Exchange ("NYSE"). It is not the intent of this
Charter to preclude the discussion of CEO or other executive officer compensation as deemed appropriate by the Board.
II. Membership
The Committee shall be comprised of not fewer than three members of the Board. The Committee's composition will comply with the independence requirements of the
NYSE for the Committee as determined in the business judgment of the Board.
The
members of the Committee and the Committee Chair shall be elected by the Board at the annual organizational meeting of the Board and shall serve until their successors shall be duly
elected and qualified by the Board.
III. Responsibilities and Duties
The Committee's role is generally one of oversight and it recognizes that management is responsible for designing and modifying salary ranges and grades,
incentive compensation programs, compensation strategy and practices, performance evaluation systems, succession planning, and the conduct and funding of the various retirement plans of the
Corporation. In carrying out its responsibilities the Committee and its members are not providing any expert or special assurance as to the matters identified in this Charter, exercising discretion,
authority or control over the management, funding and assets of the retirement plans or any professional certifications as to any auditor's work on the retirement plans.
The
Committee has the direct responsibility to review and approve the corporate goals and objectives relevant to the CEO's compensation and evaluate the performance of the CEO in light
of these goals and objectives. The following matters comprise the recurring activities of the Committee in carrying out its functions. The responsibilities and duties of a member of the Committee are
in addition to his or her duties as a member of the Board.
-
1.
-
Review
and approve corporate goals and objectives relevant to the CEO, evaluate the performance of the CEO in light of the goals and objectives, either as a Committee or together with
other independent directors as directed by the Board, determine and approve the CEO's compensation based on this evaluation, and determine the Corporation's policy with respect to the application of
Internal Revenue Code Section 162(m).
-
2.
-
Approve
the compensation of all other executive officers and other employees of the Corporation, as the Board may determine and direct from time to time.
-
3.
-
Approve
the Corporation's schedule of salary ranges and grades for all salaried employees.
-
4.
-
Approve
the Corporation's incentive compensation programs, including their design, participation basis and participation rates, as they apply to all executive officers and other
employees of the Corporation as the Board may determine and direct from time to time.
-
5.
-
Approve
and receive reports on the major benefit plans, plan changes, additions, terminations and discontinuations.
-
6.
-
Direct
the administration of the Corporation's various stock equity plans and deferred compensation plans, in accordance with such plans.
-
7.
-
Designate
from time to time those executive officers and other employees to whom stock option and/or restricted stock awards are to be granted and approve the number of shares to be
optioned and/or granted from time to time to employees of the Corporation.
III-1
-
8.
-
Review
periodically, as deemed necessary by the Committee, the compensation strategy and practices of the Corporation.
-
9.
-
Discuss
with the CEO and chief human resources officer of the Corporation, as deemed necessary by the Committee, the performance evaluation systems and succession planning of the
Corporation. In this connection the Committee shall discuss with the CEO the succession plan for the CEO.
-
10.
-
Review
and report to the Board the status of the Corporation's compensation program for Directors of the Corporation. Any changes in Director compensation should come upon the
recommendation of the Committee, but with final approval by the Board.
-
11.
-
In
carrying out the responsibilities the Committee shall have the authority to budget for and hire experts, including executive compensation consultants, as are deemed appropriate to
advise the Committee.
-
12.
-
Provide
reports required of the Committee by the SEC or NYSE, including the annual report on executive compensation in the Corporation's Proxy Statement.
-
13.
-
Keep
regular minutes of its meetings and report any actions taken to the Board at its next meeting.
-
14.
-
Review
the adequacy of this Charter on an annual basis.
-
15.
-
Report
annually to the Board concerning the performance of the Committee and discuss any needed action items for the Committee.
-
16.
-
Perform
such other functions within the purposes, duties and responsibilities of the Committee as may be directed by the Board.
III-2
Annex IV
Ball Corporation
Finance Committee Charter
I. Purpose
The primary purpose of the Finance Committee (the "Committee") is to assist the Board of Directors (the "Board") of Ball Corporation (the "Corporation") in
fulfilling its responsibility to oversee management's conduct of the financing of the Corporation, status of the Corporation's employee retirement plans and insurance policies and the Corporation's
policies relating to interest rate, commodity and currency hedging.
II. Membership
The Committee shall be comprised of members of the Board with a majority consisting of non-management directors.
The
members of the Committee and the Committee Chair shall be elected by the Board at the annual organizational meeting of the Board and shall serve until their successors shall be duly
elected and qualified by the Board.
III. Responsibilities and Duties
The Committee's role is one of oversight and it recognizes that the Corporation's management is responsible for preparing and executing the financing plans of the
Corporation, developing and implementing policies on hedging, deciding the type and level of insurance to purchase, if any, and the conduct and funding of the various employee retirement plans of the
Corporation. In carrying out its oversight responsibilities the Committee and its members are not providing any expert or special assurance as to the matters identified in this Charter, exercising
discretion, authority or control over the management, funding and assets of the retirement plans, or any professional certifications as to any auditor's work on the retirement plans.
The
following matters comprise the recurring activities of the Committee in carrying out its oversight function. The responsibilities and duties of a member of the Committee are in
addition to those duties set out for a member of the Board.
-
1.
-
Review
and recommend for Board approval the annual financing plans of the Corporation.
-
2.
-
Receive
periodic reports regarding the status of the Corporation's employee retirement plans.
-
3.
-
Receive
periodic reports regarding the Corporation's continuing relationships with financial institutions and credit rating agencies.
-
4.
-
Review
and recommend for Board approval any significant financing and credit arrangements requiring approval by the Board.
-
5.
-
Receive
periodic reports from management concerning policies and practices related to interest rate, commodity and currency hedging activities, as deemed necessary by the Committee.
-
6.
-
Receive
periodic reports from management concerning the insurance policies and practices of the Corporation, as deemed necessary by the Committee.
-
7.
-
Budget
for and hire experts as are deemed appropriate to advise the Committee in the performance of its duties.
-
8.
-
Keep
regular minutes of its meetings, and report any actions taken to the Board at its next meeting.
-
9.
-
Review
the adequacy of this Charter on an annual basis.
-
10.
-
Report
annually to the Board concerning the performance of the Committee and discuss any needed action items for the Committee.
-
11.
-
Provide
reports required of the Committee by Securities and Exchange Commission and New York Stock Exchange, if any.
-
12.
-
Provide
such other functions within the purposes, duties and responsibilities of the Committee as may be directed by the Board.
IV-1
Ball Corporation
10 LONGS PEAK DRIVE
BROOMFIELD, COLORADO 80021-2510
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Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 A.M., Central Time, on April 23, 2008.
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[COMPUTER GRAPHIC]
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Vote by Internet
Log on to the Internet and go to
www.investorvote.com
Follow the steps outlined on the secured website.
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[TELEPHONE GRAPHIC]
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Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the United States, Canada & Puerto Rico any time on a touch tone telephone. There is
NO CHARGE
to you for the
call.
Follow the instructions provided by the recorded message.
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Using a
black ink
pen, mark your votes with an
X
as shown in
this example. Please do not write outside the designated areas.
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Annual Meeting Proxy Card
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123456
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IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
[A] Election of Directors The Board of Directors recommends a vote
FOR
the election of directors.
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1.
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Nominees:
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For
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Withhold
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01 Robert W. Alspaugh
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02 George M. Smart
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o
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o
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03 Theodore M. Solso
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o
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o
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04 Stuart A. Taylor II
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o
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o
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[B] Issues The Board of Directors recommends a vote
FOR
Proposal 2 and
AGAINST
Proposal 3.
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For
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Against
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Abstain
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For
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Against
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Abstain
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2.
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Proposal to ratify the appointment of PricewaterhouseCoopers LLP as the independent auditor for the Corporation for 2008.
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o
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o
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o
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3.
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Proposal to declassify the Board of Directors so that all directors are elected annually.
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o
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o
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o
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[C] Non-Voting Items
Change of Address
Please print new address below.
[D] Authorized Signatures This section must be completed for your vote to be
counted. Date and Sign Below
Please sign exactly as name(s) appears hereon. All owners should each sign. When signing as attorney, executor, administrator, corporate
officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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/
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IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
Meeting Details
The 2008 Ball Corporation Annual Meeting of Shareholders will be held at 9:00 A.M. (MDT), Wednesday, April 23, 2008, at Ball Corporation's
offices,
10 Longs Peak Drive, Broomfield, Colorado 80021-2510.