UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.
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Filed by the Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Brunswick Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which the transaction applies:
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Aggregate number of securities to which the transaction applies:
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Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of the transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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March 25, 2010
Dear Brunswick Shareholder:
We are pleased to invite the shareholders of Brunswick Corporation to attend the Annual Meeting of
Shareholders of Brunswick Corporation, to be held on Wednesday, May 5, 2010, at 9:00 a.m. CDT at Brunswicks corporate offices, 1 N. Field Court, Lake Forest, Illinois.
We will begin mailing a notice to our shareholders on March 25, 2010, containing instructions on how to access our 2010 Proxy Statement and our 2009 Annual Report on Form 10-K online, as well as
instructions on how to receive paper copies of these documents for shareholders who so elect.
Your vote is very important. Whether or not you
plan to attend the meeting, we urge you to vote either by telephone, via the Internet or by signing and returning a proxy card. Please vote as soon as possible so that your shares will be represented.
Thank you for your continued support of Brunswick.
Sincerely,
Dustan E. McCoy
Chairman and Chief Executive Officer
Brunswick Corporation 1 N. Field Court Lake Forest, IL 60045-4811
Telephone 847.735.4700
Notice of Annual Meeting
March 25, 2010
Dear Brunswick Shareholder:
The Annual Meeting of Shareholders of Brunswick Corporation will be held at Brunswicks corporate
offices, 1 N. Field Court, Lake Forest, Illinois, on Wednesday, May 5, 2010, at 9:00 a.m. CDT. At the Annual Meeting, we will consider and vote upon the following matters:
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The election as directors of the four nominees named in the attached Proxy Statement;
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The ratification of the Audit Committees selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2010; and
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Any other business that may properly come before the meeting.
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Sincerely,
Kristin M. Coleman
Secretary
Brunswick Corporation 1 N. Field Court Lake Forest, IL 60045-4811
Telephone 847.735.4700
Proxy Statement
The Board of Directors of Brunswick Corporation (Brunswick or the Company) is soliciting proxies from Brunswicks shareholders for the annual meeting to be held at
Brunswicks corporate offices, 1 N. Field Court, Lake Forest, Illinois, on Wednesday, May 5, 2010, at 9:00 a.m. CDT (the Annual Meeting). As required by rules adopted by the Securities and Exchange Commission (the
SEC), Brunswick is making this Proxy Statement and its Annual Report on Form 10-K available to its shareholders electronically via the Internet. In addition, Brunswick is using the SECs Notice and Access Rules to provide
shareholders with more options for receipt of these materials. Accordingly, on March 25, 2010, Brunswick will begin mailing a Notice of Internet Availability of Proxy Materials and Notice of Annual Meeting (together, the Notice) to
its shareholders containing instructions on how to access this Proxy Statement and Brunswicks Annual Report via the Internet, how to vote online or by telephone, and how to receive paper copies of the documents and a proxy card.
ABOUT THE MEETING
What
is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon matters described in the Notice,
including the election as directors of the four nominees named in this Proxy Statement and the ratification of the Audit Committees selection of Ernst & Young LLP as Brunswicks independent registered public accounting firm.
Who may vote at the Annual Meeting?
Only holders of one or more of the 88,445,206 shares of Brunswick Common Stock issued and outstanding as of the close of business on March 8, 2010 (the Record Date) will be entitled to
vote at the meeting. Each holder as of the Record Date is entitled to one vote for each share of Brunswick Common Stock held.
Who can
attend the meeting?
Only shareholders who owned Brunswick Common Stock as of the Record Date, or their duly appointed
proxies, will be entitled to attend the Annual Meeting. If you hold your shares through a broker, bank or other nominee, you will not be admitted to the Annual Meeting unless you bring a copy of a statement (such as a brokerage statement) from your
nominee reflecting your stock ownership as of the Record Date.
How do I vote?
If you are a shareholder of record as of the Record Date, you can vote: (i) by attending the Annual Meeting; (ii) by following the
instructions on your Notice for voting by telephone or via the Internet at
www.proxyvote.com
; or (iii) by signing, dating and mailing in a proxy card. The deadline for voting by telephone or via the Internet is 5:00 p.m. EDT on
May 4, 2010. You may vote your shares for all, some or none of the nominees for director and for or against ratification of the Audit Committees selection of Ernst & Young LLP as Brunswicks independent registered public
accounting firm.
If you hold your shares through a broker, bank or other nominee, that institution will instruct you as to
how your shares may be voted by proxy, including whether telephone or Internet voting options are available. If you hold your shares through a broker, bank or other nominee and would like to vote in person at the meeting, you must first obtain a
proxy issued in your name from the institution that holds your shares.
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Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the meeting, including by voting via the Internet or by
telephone (only your latest Internet or telephone proxy timely submitted prior to the meeting will be counted), by signing and returning a new proxy card with a later date, or by attending the meeting and voting in person. However, your attendance
at the Annual Meeting will not automatically revoke your proxy unless you vote again at the meeting or specifically request in writing that your prior proxy be revoked.
Who will count the votes?
Brunswicks tabulator, Broadridge
Financial Solutions, Inc., will count the votes. Representatives of Brunswicks Shareholder Services Department will act as inspectors of election.
How will my shares be voted if I sign, date and return a proxy card?
If
you sign, date and return a proxy card and indicate how you would like your shares to be voted, your shares will be voted as you have instructed. If you sign, date and return a proxy card but do not indicate how you would like your shares to be
voted, your proxy will be voted for the election of the four director nominees named in this Proxy Statement and for the ratification of the Audit Committees selection of Ernst & Young LLP as Brunswicks independent registered
public accounting firm for the Companys fiscal year ending December 31, 2010.
What are the Boards recommendations?
The Board recommends a vote for the election of the four director nominees named in this Proxy Statement. The Board and the
Audit Committee recommend the ratification of the Audit Committees selection of Ernst & Young LLP as Brunswicks independent registered public accounting firm for the fiscal year ending December 31, 2010. With respect to any
other matter that is properly brought before the meeting, the proxy holders will vote the proxies held by them in accordance with their best judgment.
What vote is required to approve each matter to be considered at the Annual Meeting?
Election of
Directors.
Brunswick amended its By-laws in February 2010 to replace its plurality voting model with majority voting. As a result, the four director nominees shall be elected to the Board of Directors if they each receive a majority
of the votes cast at the Annual Meeting, in person or by proxy. Under Brunswicks majority vote by-law provision for uncontested elections, if the number of votes cast For a director nominees election does not exceed the
number of votes cast Against election, then the director nominee must tender his resignation from the Board promptly after certification of the shareholders vote. The Board will decide within 120 days of that certification, through
a process managed by the Nominating and Corporate Governance Committee and excluding the director nominee in question, whether to accept the resignation. Because Brunswick has adopted a majority voting model for the uncontested election of
directors, abstentions will have no effect on the election of director nominees. If any one or more of the four director nominees is unable to serve, votes will be cast, pursuant to authority granted by the enclosed proxy, for the alternate
individual or individuals whom the Board designates.
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Ratification of Independent Registered Public Accounting Firm.
The
affirmative vote of the holders of a majority of the shares represented, in person or by proxy and entitled to vote, will be required for the ratification of the Audit Committees selection of Ernst & Young LLP as Brunswicks
independent registered public accounting firm. Because the vote to ratify the independent registered public accounting firm requires a majority of the shares represented and entitled to vote at the meeting, abstentions will have the same effect as
votes against ratification.
What constitutes a quorum?
The Annual Meeting will be held only if a quorum is present. A quorum will be present if a majority of the 88,445,206 shares of Brunswick Common Stock issued and outstanding on the Record Date are
represented, in person or by proxy, at the Annual Meeting. Shares represented by properly completed ballots either marked Abstain or Withhold authority to vote, or returned without voting instructions, are counted as present
for the purpose of determining whether a quorum is present. In addition, broker non-votes will be counted as present for quorum purposes.
How will broker non-votes be treated?
Broker non-votes occur when a broker lacks discretionary authority to
vote on a proposal and the beneficial owner has not provided an indication as to how to vote. Brunswick will treat broker non-votes as present to determine whether or not there is a quorum at the Annual Meeting, but they will not be treated as
entitled to vote on the proposals, if any, for which the broker indicates it does not have discretionary authority. This means that broker non-votes will not have any effect on whether a proposal passes. Additionally, brokers will no longer be
permitted to engage in discretionary voting in uncontested director elections and, accordingly, we expect that there will be broker non-votes with respect to our proposal to elect the director nominees.
Will my vote be kept confidential?
Yes. As a matter of policy, shareholder proxies, ballots and tabulations that identify individual shareholders are kept secret and are available only to Brunswicks tabulator and inspectors of election, who are required to acknowledge
their obligation to keep your votes confidential.
Who pays to prepare, mail and solicit the proxies?
Brunswick pays all of the costs of preparing, mailing and soliciting proxies. Brunswick asks brokers, banks, voting trustees and other
nominees and fiduciaries to forward notices and, when requested, proxy materials to the beneficial owners and to obtain authority to execute proxies. Brunswick will reimburse the brokers, banks, voting trustees and other nominees and fiduciaries
upon request. In addition to solicitation by mail, telephone, facsimile, Internet or personal contact by its designated officers and employees, Brunswick has retained the services of Georgeson Inc. to solicit proxies for a fee of $9,900 plus
expenses.
What if other matters come up during the meeting?
If any matters other than those referred to in the Notice properly come before the meeting, the individuals named in the accompanying form
of proxy will vote the proxies held by them in accordance with their best judgment. Brunswick is not aware of any business other than the items referred to in the Notice that may be considered at the meeting.
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Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials
instead of a full set of printed proxy materials?
Pursuant to rules adopted by the SEC, Brunswick is required to provide
access to its proxy materials via the Internet and has elected to use the SECs Notice and Access Rules for soliciting proxies. Accordingly, Brunswick is sending a Notice to all of its shareholders as of the Record Date. All shareholders may
access Brunswicks proxy materials on the Web site referred to in the Notice. Shareholders may also request to receive a printed set of the proxy materials. Instructions on how to access Brunswicks proxy materials via the Internet or to
request a printed copy can be found in the Notice. Additionally, by following the instructions in the Notice, shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. Choosing to
receive your future proxy materials by e-mail will save Brunswick the cost of printing and mailing documents to you and will reduce the impact of the Companys annual meetings on the environment. If you choose to receive future proxy materials
by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.
Multiple individuals residing in my home are beneficial owners of shares of Brunswick Common Stock. Why did we receive only one mailing?
Brunswick is sending only one envelope with multiple Notices to you if you share a single address with another
shareholder, unless we received instructions to the contrary from you. This practice, known as householding, is designed to eliminate duplicate mailings, conserve natural resources and reduce Brunswicks printing and mailing costs.
If you wish to receive duplicate mailings in the future, you may contact Brunswick Shareholder Services by telephone at 847-735-4294, by mail at 1 N. Field Court, Lake Forest, IL 60045, or by e-mail at
services@brunswick.com
. If you currently
receive multiple envelopes, you can request householding by contacting Brunswick Shareholder Services. If you own your shares through a broker, bank or other holder of record, you can request householding by contacting the holder of record.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
At the Annual Meeting, shareholders will elect four individuals to serve on the Board of Directors. The current Board of Directors, acting pursuant to a recommendation from the Nominating and Corporate
Governance Committee, has nominated Nolan D. Archibald, Jeffrey L. Bleustein, Graham H. Phillips and Lawrence A. Zimmerman for election as directors to serve for terms expiring at the 2013 Annual Meeting or until their respective successors have
been elected and qualified. Mr. Archibald, Mr. Bleustein, Mr. Phillips and Mr. Zimmerman have served as directors since 1995, 1997, 2002 and 2006, respectively.
The Board of Directors currently has ten members divided among three classes. Two classes consist of three directors and the other consists
of four directors.
Biographical information follows for each person nominated and each person whose term of office will
continue after the Annual Meeting. Additional information is set forth below regarding the specific experience, qualifications, attributes or skills of each member of the Board that led the Board of Directors to conclude that those individuals
should serve on the Board in light of the Companys business operations and needs.
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Nominees for Election for Terms Expiring at the 2013 Annual Meeting:
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Nolan D. Archibald
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Director since 1995
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Executive Chairman, Stanley Black & Decker, since
March 2010; President and Chief Executive Officer of The Black & Decker Corporation, a consumer and commercial products company, 1986 to March 2010; recipient of American Marketing Associations Edison Achievement Award; director of
Lockheed Martin Corporation and Huntsman Corporation; age 66.
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Mr. Archibalds more than 20 years of
experience as Chairman and Chief Executive Officer of a global consumer and commercial products company enables him to provide unique strategic, operational, policy and governance advice and guidance to our Companys management and
Board.
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Jeffrey L. Bleustein
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Director since 1997
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Retired; Chairman of the Board of Harley-Davidson,
Inc., a motorcycle manufacturer, 1998 to 2009; Chief Executive Officer of Harley-Davidson, Inc., 1997 to 2005; President and Chief Operating Officer of the Motorcycle Division of Harley-Davidson, Inc., 1993 to 1997; member of Presidents
Council on the 21st Century Workforce; director of Kohler Co. and Freedom Group, Inc.; age 70.
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Mr. Bleusteins extensive career experience
and varied leadership roles, including Chairman and Chief Executive Officer with a leading high-end recreational products business, allows him to provide invaluable product development, brand management and distribution advice and guidance to our
Companys management and Board.
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Graham H. Phillips
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Director since 2002
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Retired; Chairman and Chief Executive Officer of Young
& Rubicam Advertising, a global marketing and communications organization, 1999 to 2000; Chairman of Burson-Marsteller, the perception management division of Young & Rubicam, Inc., 1997 to 1999; Chairman and Chief Executive Officer of Ogilvy
& Mather Worldwide, a marketing communications company, 1989 to 1992; age 71.
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Mr. Phillips background and leadership
experience, including roles as Chairman and Chief Executive Officer at two companies engaged in global communications and marketing, enable him to provide extensive marketing, public relations, advertising and consumer research and management advice
and guidance to our Companys management and Board.
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Lawrence A. Zimmerman
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Director since 2006
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Vice Chairman of Xerox Corporation, a document
management company, since July 2009, and Chief Financial Officer of Xerox Corporation, since 2002; Vice President, Finance and Planning, Server and Technology division of International Business Machines Corporation, 1996 to 1998; director of Stanley
Black & Decker and Delphi Automotive, LLP; age 67.
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Mr. Zimmermans broad experience as a
financial executive, which includes strategic planning and leading restructuring and cost reduction efforts, allows him to provide significant financial, accounting and compliance advice and guidance to our Companys management and
Board.
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Your Board of Directors recommends a vote FOR the nominees named above.
Directors Continuing in Office Until the 2012 Annual Meeting:
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Anne E. Bélec
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Director since 2008
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Vice President Chief Marketing Officer for
Navistar, Inc., since December 2010; Chief Executive Officer of Mosaic Group, LLC, a business and brand strategy consulting group, since June 2009; Director of Global Marketing of Ford Motor Company, March 2008 to January 2009; employed by Volvo Car
Corporation and its affiliates from 2003 to 2008, most recently as President and Chief Executive Officer of Volvo Cars of North America; member of the University of California-Irvine Paul Merage School of Business/Graduate School of Management
Advisory Board; Trustee of the Marketing Science Institute; member of the Association of National Advertisers; Board member of Industrial Alliance Group; age 47.
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Ms. Bélecs broad experience in
marketing, brand development and management for cars and trucks, including a role as Chief Executive Officer of a business units operations, enables her to provide marketing, product development, consumer research and development, and
distribution advice and guidance to our Companys management and Board.
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Manuel A. Fernandez
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Director since 1997
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Non-executive Chairman of Sysco Corporation, a
marketer and distributor of foodservice products, since 2009; Chairman Emeritus of Gartner, Inc., an information technology company, since 1999; Managing Director of SI Ventures, LLC, a venture capital partnership, since 1998; Chairman, President
and Chief Executive Officer of Gartner, Inc., 1991 to 1999; director of Stanley Black & Decker, Flowers Foods, Inc. and Sysco Corporation. Previously served as director of OpenNetwork Technologies, Relay Health Corp. and RealVue Simulation
Technologies, Inc.; and Chairman of the University of Florida Board of Trustees; age 63.
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Mr. Fernandezs extensive experience in
information technology, including his role as Chairman and Chief Executive Officer of a leading information technology company, as well as with a variety of businesses with strong commercial product offerings, allows him to provide invaluable
information technology strategy and operations, acquisition and strategic planning advice and guidance to our Companys management and Board.
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J. Steven Whisler
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Director since 2007
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Retired; Chairman and Chief Executive Officer of
Phelps Dodge Corporation, a mining and manufacturing company, 2000 to 2007; employed by Phelps Dodge Corporation in a number of positions since 1976, including President and Chief Operating Officer; director of International Paper Company, U.S.
Airways Group Inc. and Aleris International. Previously served as director of Burlington Northern Santa Fe Corporation; age 55.
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Mr. Whislers extensive experience with,
including the role of Chairman and Chief Executive Officer, a mining and manufacturing company with operations on several continents, which are subject to significant local political and regulatory considerations, enables him to provide essential
global operations, financial, human resources and strategic advice and guidance to our Companys management and Board.
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Directors Continuing in Office Until the 2011 Annual Meeting:
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Cambria W. Dunaway
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Director since 2006
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Executive Vice President, Sales and Marketing,
Nintendo of America, a maker of video game hardware and software, since November 2007; Chief Marketing Officer of Yahoo! Inc., a global Internet destination, 2003 to 2007; Vice President of Kids & Teens Brands for Frito Lay North America, a
division of PepsiCo, Inc., 2000 to 2003; Board member of the American Marketing Association; age 47.
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Ms. Dunaways broad experience in and
leadership of sales and marketing in businesses with strong consumer appeal enables her to provide unique sales, marketing, consumer research, acquisition and retention, including the use of technology, advice and guidance to our Companys
management and Board.
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Dustan E. McCoy
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Director since 2005
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Chairman and Chief Executive Officer of Brunswick
Corporation since December 2005; President of Brunswick Boat Group, 2000 to 2005; Vice President, General Counsel and Corporate Secretary of Brunswick, 1999 to 2000; Executive Vice President of Witco Corporation, a specialty chemicals company,
January to September 1999; Senior Vice President, General Counsel and Corporate Secretary of Witco Corporation, 1996 to 1998; director of Louisiana-Pacific Corporation and Freeport-McMoRan Copper & Gold Inc.; age
60.
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Mr. McCoys day-to-day leadership role as
Chairman and Chief Executive Officer of Brunswick Corporation provides him with intimate knowledge of our business operations and our industry and allows him to communicate effectively about our business operations and strategy with our
Board.
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Ralph C. Stayer
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Director since 2002
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Chairman, President and Chief Executive Officer of
Johnsonville Sausage, LLC, a maker of sausage products, since 1978; Founder of Leadership Dynamics, a consulting firm; National Trustee of Boys and Girls Clubs Midwest Region; Chairman of Marian College Board of Trustees; Board member of
PAVE, an organization dedicated to improving education opportunities for urban students in Milwaukee; age 66.
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Mr. Stayers extensive experience in owning
and leading a successful consumer-focused private enterprise, and his writing, teaching and consulting relating to organizational development and leadership, enable him to provide unique strategic, organizational and individual development,
competitive, product and distribution advice and guidance to our Companys management and Board.
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CORPORATE GOVERNANCE
Overview
The Board of Directors has adopted written Principles and
Practices (the Principles) to assist it in the performance of its duties and the exercise of its responsibilities. The Principles are available at Brunswicks Web site,
www.brunswick.com/company/governance/principlespractices.php
, or in print upon request by any Brunswick shareholder. The Principles set the framework for Brunswicks governance structure. The Board believes that good corporate governance
is a source of competitive advantage for Brunswick. Good governance allows the skills, experience and judgment of the Board to support Brunswicks executive management team, enabling management to improve Brunswicks performance and
maximize shareholder value.
The Board of Directors met six times during 2009. All directors attended 75 percent or more of
the Board meetings and meetings of Committees of which they were members during 2009, with the exception of Mr. Stayer, whose attendance was 67% due to prior commitments and a family emergency, and Mr. Zimmerman, whose attendance at the
Executive Committee meetings was 60% due to prior commitments that conflicted with two of the five Executive Committee meetings, which were called on short notice in 2009. The Principles provide that all members of the Board are requested to attend
Brunswicks Annual Meeting of Shareholders in person and all members of the Board attended the 2009 Annual Meeting of Shareholders.
The non-management directors regularly meet without members of management present. The Lead Independent Director acts as the Boards leader when it meets in executive session or when the Chairman and
Chief Executive Officer is unable to lead the Boards deliberations. Additionally, the Lead Independent Director serves as a liaison between management and the Board and is responsible for consulting with the Chairman and Chief Executive
Officer on Board and Committee meeting agendas.
Brunswick Ethics Program
In 2000, Brunswick adopted a formal Code of Ethics,
Making the Right Choice: The Brunswick Guide to Conduct in the Workplace
(the
Guide). The Guide applies to all employees, officers and directors of the Company, and includes standards and procedures for addressing potential conflicts of interest, as well as a general code of conduct which offers guidance regarding
how to conduct business in an ethical manner. The Board has adopted an additional Code of Ethics for Senior Financial Officers and Managers (the Financial Officer Code of Ethics). The Financial Officer Code of Ethics, which applies to
Brunswicks Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller, and other Brunswick employees designated by the Board, sets forth standards to which these officers and employees are to adhere in areas
such as conflicts of interest, disclosure of information and compliance with law. The Financial Officer Code of Ethics supplements the Guide. These policies are overseen and administered by the Nominating and Corporate Governance Committee and the
Companys Ethics Office. The Guide is available at
www.brunswick.com/company/ethics/index.php
and the Financial Officer Code of Ethics is available at
www.brunswick.com/company/governance/codeofethics.php
or in print upon request
by any Brunswick shareholder
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If it grants a waiver of the policies set forth in the Guide or the Financial Officer Code of Ethics, Brunswick will, to the extent required by applicable law or regulation, disclose that waiver by making an
appropriate statement on its Web site at www.brunswick.com.
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Shareholder Communications with the Board
The Principles provide that Brunswick shareholders may, at any time, communicate in writing with the Board, the Lead Independent Director,
or the non-management directors as a group, by writing to such director(s) at: Brunswick Corporation, 1 N. Field Court, Lake Forest, IL 60045; Attention: Corporate Secretarys Office (fax no. 847-735-4433; e-mail
corporate.secretary@brunswick.com
). Copies of written communications received at this address will be provided to the Board, the Lead Independent Director or the non-management directors as a group unless such communications are considered,
in consultation with the non-management directors, to be improper for submission to the intended recipient(s). Other interested parties may also use this procedure for communicating with the Board, individual directors or any group of directors.
Director Independence, Compensation Committee Interlocks and Insider Participation
The Principles require that independent directors must constitute a substantial majority of the Board and that no more than two members of
management may serve on the Board at the same time. The Principles provide that a director shall be considered to be independent if he or she satisfies the general director independence standards established by the New York Stock Exchange (the
NYSE). The NYSE standards provide that a director will not be independent unless the Board affirmatively determines that the director has no material relationship with Brunswick (either directly or as a partner, shareholder or officer of
an organization that has a relationship with Brunswick). In addition, the NYSE standards provide that a director is not independent if:
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The director is, or within the prior three years has been, an employee of Brunswick, or a member of the directors immediate family is, or within
the prior three years has been, an executive officer of Brunswick;
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The director or an immediate family member of the director has received, during any 12-month period within the prior three years, more than $120,000 in
direct compensation from Brunswick (excluding fees for Board and Board committee service, pension or other forms of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service);
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Certain specified relationships exist between the director, a member of the directors immediate family, and a firm that serves or has served as
Brunswicks internal or external auditor:
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the director is a partner or employee of a firm that is Brunswicks internal or external auditor;
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a member of the directors immediate family is a partner of a firm that is Brunswicks internal or external auditor, or is an employee of
such a firm and personally works on Brunswicks audit; or
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the director or an immediate family member was within the last three years a partner or employee of a firm that is or was Brunswicks internal or
external auditor and personally worked on Brunswicks audit during that time;
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The director or a member of the directors immediate family is, or within the prior three years has been, employed as an executive officer of any
other business organization where any of Brunswicks present executive officers serve or served on that business organizations compensation committee; or
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The director is an employee of, or a member of the directors immediate family is a director or an executive officer of, a business organization
that has made payments to, or received payments from, Brunswick for property or services, in an amount which, in any of the last three fiscal years, exceeds the greater of $1.0 million or 2 percent of the business organizations consolidated
gross revenues.
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Applying the NYSE standards described above, and considering all relevant facts and
circumstances, the Board has made an affirmative determination that all of the non-management directors have no material relationship with Brunswick and are otherwise independent. Previously, Mr. Whisler was not considered independent under the
NYSE rules because, from May 2006 to March 2007, Mr. McCoy was a member of the Compensation Committee of Phelps Dodge Corporation while Mr. Whisler served as its Chairman and Chief Executive Officer. Mr. Whisler became eligible for
independent status in March 2010, after three years had passed since this prior affiliation terminated.
Review, Approval or Ratification
of Transactions with Related Persons
Pursuant to its charter, the Nominating and Corporate Governance Committee of the
Companys Board of Directors is tasked with the recommendation and review of all corporate governance principles, policies and programs designed to ensure the Companys compliance with high ethical standards and with all applicable legal
and regulatory requirements, including those relating to conflicts of interest and other business practices that reflect upon the Companys role as a responsible corporate citizen. The Nominating and Corporate Governance Committee oversees the
implementation of
Making the Right Choice: The Brunswick Guide to Conduct in the Workplace
, which contains Brunswicks Conflicts of Interest Policy.
The Nominating and Corporate Governance Committee reports on these compliance
matters to the Board of Directors, which is the body responsible for overseeing the Companys ethical and legal compliance, including information involving transactions with related persons. Related persons include
executive officers, directors, nominees for director, any person who is known to be the beneficial owner of more than 5 percent of any class of the Companys voting securities and any immediate family member of any of the foregoing persons.
In 2009, no transaction was identified as a related person transaction and, therefore, no reported transaction was referred
to the Board or other Committee of the Board for review.
Director Nomination Process
The Nominating and Corporate Governance Committee is responsible for, among other things, identifying, screening, personally interviewing
and recommending director nominee candidates to the Board. The Nominating and Corporate Governance Committee considers nominees on the basis of their integrity, experience, achievements, judgment, intelligence, personal character, ability to make
independent analytical inquiries, willingness to devote adequate time to Board duties, and the likelihood that they will be willing to serve on the Board for a sustained period. The Company does not have a formal policy with respect to diversity as
a consideration in the identification of nominees for the Board of Directors. However, the Board and the Nominating and Corporate Governance Committee believe that it is important that the Board reflect different viewpoints and, therefore, as set
forth in the Principles, additional consideration is given to achieving an overall diversity of perspectives, backgrounds and experiences in Board membership. The Nominating and Corporate Governance Committee may retain a third-party search firm to
assist it with identifying qualified candidates that meet the needs of the Board at that time.
The Nominating and Corporate
Governance Committee will consider qualified director candidates who are suggested by shareholders in written submissions to Brunswicks Secretary at Brunswick Corporation, 1 N. Field Court, Lake Forest, Illinois 60045; Attention: Corporate
Secretarys Office (fax no. 847-735-4433; e-mail
corporate.secretary@brunswick.com
). Any
11
recommendation submitted by a shareholder must include the name of the candidate, a description of the candidates educational and professional background, contact information for the
candidate and a brief explanation of why the shareholder believes the candidate is suitable for election. The Nominating and Corporate Governance Committee will apply the same standards in considering director candidates recommended by shareholders
as it applies to other candidates.
In addition to recommending director candidates to the Nominating and Corporate Governance
Committee, shareholders may also, pursuant to procedures established in the By-laws, directly nominate one or more director candidates to stand for election at an annual or special meeting of shareholders. For an annual meeting of shareholders, a
shareholder wishing to make such a nomination must deliver written notice of the nomination to Brunswicks Secretary not less than 90 days or more than 120 days prior to the anniversary date of the immediately preceding annual meeting of
shareholders. For a special meeting of shareholders, a shareholder wishing to make such a nomination must deliver written notice of the nomination to Brunswicks Secretary not later than the close of business on the tenth day following the date
on which notice of the meeting is first given to shareholders. In either case, a notice of nomination submitted by a shareholder must include information concerning the nominating shareholder and the shareholders nominee(s) as required by the
By-laws.
Board Leadership Structure
The Board of Directors believes that having the Companys Chief Executive Officer serve as Chairman of the Board is in the best interests of its shareholders because it ensures a seamless flow of
communication between management and the Board, in particular with respect to the Boards oversight of the strategic direction of the Company and its ability to ensure managements execution of that strategy. The Board believes that the
combined role of Chairman and Chief Executive Officer, together with the appointment of a Lead Independent Director, a substantial majority of independent directors, and the use of regular executive sessions of the non-management directors, achieves
an appropriate balance between the effective development of key strategic objectives and independent oversight of managements execution of those initiatives.
Additionally, the Board believes that because the Chairman and Chief Executive Officer is the director most familiar with the Companys business, industry and day-to-day operations, he is well
positioned to help the Board focus on those issues of greatest importance to the Company and its shareholders and to assist the Board with identifying Brunswicks strategic priorities, as well as the short-term and long-term risks and
challenges facing the Company. While independent directors have invaluable experience and expertise from outside the Company and its industries, giving them different perspectives regarding the development of the Companys strategic goals and
objectives, the Chief Executive Officer is well suited to bring Company-specific experience and industry expertise to these discussions.
12
Board Committees
The Board of Directors has Audit, Finance, Human Resources and Compensation, Nominating and Corporate Governance, Qualified Legal Compliance and Executive Committees. Each Committee is now comprised
solely of independent directors, as that standard is determined in the Principles and in the New York Stock Exchange Listed Company Manual, with the exception of the Executive Committee, of which Mr. McCoy is a member; however, prior to
Mr. Whisler becoming eligible for independent status in March 2010, the Finance Committee was comprised of one independent director and one director who was not independent. Each of the Committees may, at its sole discretion and at
Brunswicks expense, obtain advice and assistance from outside legal, financial, accounting or other experts and advisors. The following table shows the membership of these Committees:
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Name
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Audit
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Finance
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Human Resources
and Compensation
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Nominating and
Corporate
Governance
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Qualified
Legal
Compliance
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Executive
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Nolan D.
Archibald
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X *
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X
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Anne E.
Bélec
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X
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X
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Jeffrey
L. Bleustein
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X *
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X *
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X
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Cambria
W. Dunaway
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X
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X
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Manuel
A. Fernandez
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X
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X
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Dustan
E. McCoy
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X
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Graham
H. Phillips
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X *
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X
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Ralph C.
Stayer
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X
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X
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J.
Steven Whisler
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X
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Lawrence A. Zimmerman
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X *
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X
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The principal
responsibilities of each of these Committees are described generally below, and in detail in their respective Committee Charters, which are available at
www.brunswick.com/company/governance/committees.html
or in print upon request by any
Brunswick shareholder.
Audit Committee
Members of the Audit Committee are Mr. Zimmerman (Chair), Ms. Bélec and Mr. Stayer. The Board has determined that each
member of the Audit Committee is financially literate, as that term is used in the NYSE listing standards, and that Mr. Zimmerman is an Audit Committee financial expert, as such term is defined by the rules of the
Securities and Exchange Commission.
The Audit Committee assists the Board in overseeing Brunswicks accounting, auditing
and reporting practices, its independent auditors and system of internal controls and the integrity of its financial information and disclosures. The Committee reviews certain regulatory and compliance matters, policies regarding risk assessment and
risk management and corporate tax strategy. The Audit Committee maintains free and open communication with, and meets separately at each regularly scheduled Board meeting with, the Companys independent registered public accounting firm, the
internal auditors and management.
The Audit Committee met eleven times during 2009.
Finance Committee
Members of the Finance Committee are Mr. Archibald (Chair) and Mr. Whisler. The Finance Committee assists the Board in overseeing Brunswicks financial performance, financial structure,
including debt structure, financial policies and procedures, capital expenditures and budgets. The Committee also reviews proposals for corporate financing, short-term and long-term borrowings, the declaration and distribution of dividends, material
investments and divestitures, insurance coverage and related matters, as well as the funding and performance of Brunswicks pension plans.
13
The Finance Committee met five times during 2009.
Human Resources and Compensation Committee
Members of the Human Resources and Compensation Committee are Mr. Phillips (Chair), Ms. Bélec and Mr. Fernandez. The Human Resources and Compensation Committees authority
includes, among other duties, the following responsibilities:
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Annually review and approve goals and objectives relative to Brunswicks senior executives; together with the Chairman and Chief Executive
Officer, evaluate the performance of senior executives in light of these criteria; and oversee management development and succession planning.
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Review on an annual basis, and make recommendations to the Board of Directors regarding, the compensation (including salary, annual incentive and other
cash compensation) of the Chairman and Chief Executive Officer and, together with the Nominating and Corporate Governance Committee, oversee the annual review of the Chairman and Chief Executive Officers performance.
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Approve equity awards to the Chairman and Chief Executive Officer and compensation (including salary, annual incentive, stock options and other
equity-based and other incentive compensation) to be paid to other senior executives, and authorize senior executives to approve awards to employees who are not senior executives based upon criteria established by the Committee.
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Oversee the development of a compensation philosophy for the Company that is consistent with its long-term strategic goals.
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The Committee meets in conjunction with regularly scheduled meetings of the Board of Directors and as
otherwise required. Meeting materials are sent to members of the Committee six to seven days prior to the meeting. Major issues are typically reviewed during two meetings prior to being approved. For example, anticipated performance against
Brunswick Performance Plan performance criteria; potential award issues such as automatic deferrals; suggested changes to equity award terms and conditions; and proxy statement disclosures, are reviewed at the Committees December and February
meetings. Meetings are regularly attended by the Chairman and Chief Executive Officer, and Vice President and Chief Human Resources Officer. At each meeting, the Committee meets in executive session.
The Human Resources and Compensation Committee delegates to the Chairman and Chief Executive Officer responsibility for developing incentive
funding formulas for Brunswick divisions, and for conducting performance evaluations and development and succession planning for senior executives. The Committee delegates to Brunswicks senior executives authority to allocate equity awards to
employees who are not senior executives based on criteria established by the Committee, and to Brunswicks Human Resources Department responsibility to oversee policies for the administration of compensation and benefit plans.
The Chairman and Chief Executive Officer is responsible for establishing strategies to achieve the Companys objectives. To ensure that
executive compensation is consistent with those objectives, the Chairman and Chief Executive Officer is responsible for making recommendations to the Committee regarding the following: compensation goals and principles; the peer group of companies
to be used to determine compensation ranges; selection of performance targets for incentive plans, with input from other senior executives; performance rating and compensation actions to be taken; and salary increases, incentive awards and equity
grants for senior executives.
14
In 2009, the Human Resources and Compensation Committee engaged Deloitte Consulting, LLP to
provide advice on various aspects of Brunswicks executive compensation programs, including selecting an appropriate peer group, evaluating incentive plan performance criteria and targets, reviewing benchmarking methodology and providing
updates on trends and technical developments. For 2010, the Human Resources and Compensation Committee engaged Frederic W. Cook & Co., Inc. to provide advice on various aspects of Brunswicks executive compensation programs. The
Committee meets with the consultant in executive session on a regular basis and the consultant reports directly to the Committee. The aggregate fees billed by Deloitte Consulting, LLP for 2009 totaled $317,033 and were as follows:
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$60,501 for consulting in regard to executive compensation;
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$0 for consulting in regard to director compensation; and
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$256,532 for other services provided to the Company, including pension and actuarial services and employee benefit consulting services.
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The Human Resources and Compensation Committee met eight times during 2009.
Nominating and Corporate Governance Committee
Members of the Nominating and Corporate Governance Committee are Mr. Bleustein (Chair) and Ms. Dunaway. The Nominating and Corporate Governance Committee assists the Board in overseeing policies
and programs designed to ensure Brunswicks adherence to high corporate governance and ethical standards and compliance with all applicable legal and regulatory requirements. Together with the Human Resources and Compensation Committee, it
oversees the annual review of the Chairman and Chief Executive Officers performance. The Committee identifies, screens, interviews and recommends to the Board potential director nominees, and oversees other matters related to Board
composition, performance, standards, size and membership, including the development of guidelines to ensure appropriate diversity of perspective, background and experience in Board membership.
The Nominating and Corporate Governance Committee of the Board of Directors has responsibility for recommending director compensation design
to the Board of Directors for review and action. Brunswicks Human Resources Department and the Companys outside consultants provide the Nominating and Corporate Governance Committee with director compensation data as reported in proxy
statements, including data relating to peer group and other similarly-sized companies, as well as data from published surveys.
The Nominating and Corporate Governance Committee met five times during 2009.
Qualified Legal Compliance
Committee and Executive Committee
Members of the Qualified Legal Compliance Committee are Mr. Bleustein (Chair),
Ms. Dunaway and Mr. Stayer. The Qualified Legal Compliance Committee receives and investigates reports made to it concerning possible material violations of law or breaches of fiduciary duty by the Company or any of its officers,
directors, employees or agents. During 2009, no reports were made to the Qualified Legal Compliance Committee and, therefore, it did not meet.
15
In addition to its standing Committees, the Board of Directors has an Executive Committee,
comprised of the Chairman of the Board, the Lead Independent Director and the Chairs of the Audit Committee, Finance Committee, Human Resources and Compensation Committee and Nominating and Corporate Governance Committee. The Executive Committee
meets from time to time at the request of the Chairman of the Board. The Executive Committee met five times during 2009.
Risk Management
As set forth in the Principles, the Boards responsibilities include overseeing and directing the Companys
management in building long-term value for shareholders. The Chief Executive Officer and the Companys senior management team are responsible for managing Brunswicks day-to-day business operations and for presenting regular updates to the
Board about the Companys business. The Board offers the Chief Executive Officer and management constructive advice and counsel and may, at its sole discretion and at the Companys expense, obtain advice and counsel from independent legal,
financial, accounting and other advisors.
The Board of Directors has an active role in overseeing effective management of the
Companys risks, and regularly reviews information regarding the Companys credit, liquidity, cash flow and business operations, as well as the associated risks. This responsibility of risk oversight is also handled by the Boards
individual committees. The Audit Committee oversees the Companys accounting, auditing and reporting practices, including those associated with its internal controls, and reviews policies regarding risk assessment and risk management. The
Nominating and Corporate Governance Committee oversees the management of risks concerning the independence of the Board of Directors, legal and regulatory compliance and potential conflicts of interest. The Human Resources and Compensation Committee
is responsible for overseeing the management of risks relating to the Companys executive compensation plans and its overall compensation philosophy, and the Finance Committee oversees the management of the Companys financial risks,
including its financial performance and structure. While each Committee is responsible for evaluating certain risks and overseeing the management of such risks, the Board of Directors as a whole receives regular updates about such risks through the
Committee reports which are provided at each meeting of the Board of Directors. Additionally, the Board receives reports from management about the Companys efforts to identify and address the risks facing the Company.
Recently, publicly-traded companies have received increased scrutiny in connection with their risk management policies and procedures,
including analysis and discussion regarding whether a companys compensation programs contribute to unnecessary risk-taking. Historically, Brunswick has maintained a level of financial prudence associated with its compensation programs, which
it plans to continue. Examples of this prudence include managements decisions: (1) to exercise its discretion to eliminate the payment of bonuses which otherwise would have been paid for 2008; and (2) to fund bonuses for 2009 well
below the target earned amounts. The Company does engage in a process to evaluate whether its compensation policies and practices result in risks that are reasonably likely to have a material adverse effect on the Company, and has
concluded that they do not.
16
STOCK HELD BY DIRECTORS, EXECUTIVE OFFICERS
AND PRINCIPAL SHAREHOLDERS
Each director and nominee for director, each executive officer listed in the Summary Compensation Table, and all directors and executive officers as a group, owned the number of shares of Brunswick Common
Stock set forth in the following table, with sole voting and investment power except as otherwise indicated:
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Name of Individual or Persons in Group
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Number of Shares
Beneficially Owned
as of March 8, 2010
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Percent
of
Class
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Nolan D. Archibald
|
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108,738
|
(1)
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*
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Anne E. Bélec
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19,296
|
(1)
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*
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Jeffrey L. Bleustein
|
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71,510
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(1)
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*
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Cambria W. Dunaway
|
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24,537
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(1)
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*
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Manuel A. Fernandez
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107,547
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(1)
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*
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Graham H. Phillips
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42,850
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(1)
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*
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Ralph C. Stayer
|
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100,815
|
(1)
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*
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J. Steven Whisler
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22,859
|
(1)
|
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*
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Lawrence A. Zimmerman
|
|
66,778
|
(1)
|
|
*
|
Dustan E. McCoy
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|
762,207
|
(2)
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*
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Peter B. Hamilton
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|
272,537
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(2)
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*
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Andrew E. Graves
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68,630
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(2)
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|
*
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Mark D. Schwabero
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|
76,354
|
(2)
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*
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B. Russell Lockridge
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|
121,052
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(2)
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*
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All directors and executive officers as a group.
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2,426,136
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(1,2)
|
|
2.7%
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(1)
|
Includes the following shares of Brunswick Common Stock issuable to non-employee directors, receipt of which has been deferred until the date of the directors
retirement from the Board: Mr. Archibald 37,364 shares, Ms. Bélec 765 shares, Mr. Bleustein 19,294 shares, Ms. Dunaway 2,611 shares, Mr. Fernandez 40,811 shares, Mr. Phillips 36,850 shares, Mr. Stayer 10,981
shares, Mr. Whisler 15,791 shares, Mr. Zimmerman 39,529 shares, and all non-employee directors as a group 203,996 shares. Also includes the following shares of Brunswick Common Stock issuable pursuant to stock options exercisable within 60
days of March 8, 2010: Messrs. Archibald 9,000 shares, Bleustein 9,000 shares, Fernandez 9,000 shares, Phillips 6,000 shares and Stayer 9,180 shares. None of these shares has been pledged as security, with the exception of 3,030 of
Ms. Bélecs shares.
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Excludes 26,980 shares of Brunswick Common Stock issuable to Mr. Stayer, receipt of which has been deferred. Mr. Stayer will be entitled to receive these
deferred shares in predetermined installments, which will commence at varying times in accordance with his election following his retirement from the Board of Directors.
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(2)
|
Includes the following shares of Brunswick Common Stock issuable pursuant to stock options exercisable within 60 days of March 8, 2010: Messrs. McCoy 681,950
shares, Hamilton 174,000 shares, Schwabero 65,050, Graves 66,600 shares, Lockridge 88,400 shares, and all executive officers as a group 1,526,810 shares.
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Includes the following shares of Brunswick Common Stock held by the Brunswick Savings Plan as of December 31, 2009: Mr. McCoy 102 shares, and all executive
officers as a group 2,953 shares.
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Excludes the following shares of Brunswick Common Stock issuable to officers, receipt of which has been deferred: Messrs. McCoy 62,840 shares, Schwabero 564 shares, and
all executive officers as a group 66,004 shares. These officers will be entitled to receive these deferred shares in predetermined installments which will commence at varying times, in accordance with each officers individual election.
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None of these shares has been pledged as security.
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17
Those shareholders known to Brunswick that beneficially own more than 5 percent of
Brunswicks outstanding Common Stock are:
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|
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Name and Address of Beneficial Owner
|
|
Shares
Beneficially
Owned as of
December 31, 2009
|
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|
Percent
of
Class
|
|
|
|
|
FMR LLC
and certain of its affiliates
82 Devonshire Street
Boston, MA 02109
|
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13,244,265
|
(1)
|
|
14.99
|
%
|
|
|
|
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
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|
6,825,900
|
(2)
|
|
7.7
|
%
|
|
|
|
BlackRock, Inc.
40 East 52
nd
Street
New York, NY 10022
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6,503,425
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(3)
|
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7.37
|
%
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|
|
Dimensional Fund Advisors
Palisades West, Building One
6300 Bee Cave Road
Austin, Texas 78746
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4,696,118
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(4)
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5.32
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%
|
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(1)
|
This information is based solely upon a Schedule 13G filed by FMR LLC (FMR) with the Securities and Exchange Commission on February 16, 2010. The FMR
reporting entities are Fidelity Management & Research Company (Fidelity), a wholly-owned subsidiary of FMR that is the beneficial owner of 13,244,265 shares or 14.99% of the Common Stock outstanding at December 31, 2009;
and Edward C. Johnson 3d and members of his family. FMR has sole dispositive power over 13,244,265 shares or 14.99% of the Common Stock outstanding at December 31, 2009.
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(2)
|
This information is based solely upon a Schedule 13G filed by T. Rowe Price Associates, Inc. (T. Rowe Price) with the Securities and Exchange Commission on
February 11, 2010. T. Rowe Price Associates has sole voting power over 713,200 shares and sole dispositive power over 6,825,900 shares or 7.7% of the Common Stock outstanding at December 31, 2009.
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(3)
|
This information is based solely upon a Schedule 13G filed by BlackRock, Inc. (BlackRock) with the Securities and Exchange Commission on January 29,
2010, which amended the previous Schedule 13G filed by Barclays Global Investors, NA (Barclays), as Barclays was acquired by BlackRock on December 1, 2009. BlackRock has sole dispositive and voting power over 6,503,425 shares or
7.37% of the Common Stock outstanding as of December 31, 2009.
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|
(4)
|
This information is based solely upon a Schedule 13G filed by Dimensional Fund Advisors LP (Dimensional) with the Securities and Exchange Commission on
February 8, 2010. Dimensional has sole voting power over 4,572,940 shares and dispositive power over 4,696,118 shares or 5.32% of the Common Stock outstanding at December 31, 2009.
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18
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Summary
The difficult economic environment of 2009 presented significant challenges to Brunswick. The highly discretionary nature of
most of the Companys products led to weak sales and a strong focus on cash preservation. As such, the Company re-evaluated its compensation plans and structured the 2009 Brunswick Performance Plan (BPP) to focus on a single performance
measure: year-end cash-on-hand. By providing an incentive to management to focus on activities that would generate or preserve cash for 2009, Brunswick was able to end the year with cash-on-hand at near-record levels while also motivating and
retaining our employees by providing a strong incentive to contribute to the generation and preservation of cash.
In 2009,
Brunswick faced limits on the availability of equity under our 2003 Stock Incentive Plan. Providing equity awards consistent with targeted economic competitive values would have caused the Company to use far more shares than were available under our
Stock Plan, despite authorization by shareholders for additional shares in 2009. As a result, the Company granted awards of Stock-Settled Stock Appreciation Rights (SARs) that had grant-date fair values below competitive levels. By granting SARs in
such amounts, Brunswick was able to balance the Companys need to provide adequate long-term incentives to management while still limiting share usage to acceptable burn rate levels.
As reported in the Summary Compensation Table, total compensation for the Chief Executive Officer, Mr. McCoy, decreased in 2009 by
approximately 47% versus 2008. Part of this reduction was attributable to a 20 percent base salary reduction for five weeks during the summer months as part of the Companys overall cost cutting initiatives in 2009. Finally, comparing
Mr. McCoys actual pay delivered to his target opportunity since becoming CEO of Brunswick, Mr. McCoy has realized, on average, 58 percent of his total target compensation as a result of the impact of performance-based compensation
that has not paid out. For the remaining officer group, 71 percent of target opportunity has been realized in actual pay during the same four-year period.
19
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Brunswicks compensation program
objectives and key design principles are:
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Objectives:
Compensation programs for named executive officers (NEOs), as well as other senior managers, are designed to:
Ensure that compensation reinforces achievement of business objectives and execution of
strategy and is consistent with results;
Attract, retain and motivate the
talent required to ensure Brunswicks continued success;
Reward
performance in a given year and achievements over a sustained period; and
Reinforce Brunswicks pay-for-performance culture.
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Design Principles:
Brunswicks compensation philosophy incorporates the following design principles in support of the objectives identified above:
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Competitive compensation
|
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A competitive compensation program is critical in attracting and retaining
the talent Brunswick needs to achieve its established objectives.
Brunswick assesses the competitiveness of management compensation every two years using survey data from Hewitt Associates LLC. Although a review was completed in 2008, given the dramatic decline in the size of the Company relative to the
existing peers, in 2009, Brunswick modified its peer group to better reflect the Companys size, in terms of revenue and market capitalization. Therefore, for 2009, Brunswick examined the executive compensation practices of a revised peer group
of 18 publicly-traded companies with annual revenue comparable to Brunswicks to assess the competitiveness of the Companys total compensation and pay mix. Most, but not all, of these companies have manufacturing operations.
Brunswicks target pay mix and total compensation opportunities are designed to reflect the median of this peer group. Criteria used to identify the peer group include:
Size: Companies with revenues that generally range from one-half to two times
Brunswicks total annual revenue.
Business Focus: Generally
publicly-traded manufacturing companies, but also representation by non-manufacturing businesses in consideration of the Companys broad business portfolio and to avoid having too narrow a peer group.
Consistency: The peer group should be relatively stable. Companies historically
have been eliminated because of lack of participation in the Hewitt survey, growth exceeding two times Brunswicks revenue or if they have been acquired.
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The current peer group consists of:
|
|
|
Black & Decker
BorgWarner
*
Briggs & Stratton
*
Cooper Industries
|
|
Crane Co
*
Curtiss-Wright
*
Fortune Brands
Flowserve Corp
*
Gardner Denver
*
|
|
Harley-Davidson
Hasbro
*
Jarden Corp
*
Leggett & Platt
*
Mattel
|
|
Polaris Industries
*
Snap-On Tools
SPX Corp
Timken Co
*
|
|
|
|
|
* New for 2009
|
|
|
|
|
The companies that were eliminated from the peer group as a result of not meeting the criteria referenced above
include:
|
|
|
|
|
AutoZone
Ball Corporation
Clorox
Dover Corporation
W.W.
Grainger
|
|
ITT
Industries
MeadWestvaco
Newell Rubbermaid
Pactiv
Starwood Hotel
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Brunswick anticipates removing
Black & Decker from the peer group in 2010 as a result of its merger with Stanley Works.
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Brunswick is the largest publicly-traded company in the marine industry, with revenues approximately 51 times those of the only other publicly-traded boat manufacturer (Marine Products). As a result, Brunswick does not have any direct
competitors against which to assess relative performance by including them in the compensation peer group.
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Internal equity
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Brunswick establishes similar compensation ranges for positions
with similar characteristics and scope of responsibility, including NEO positions, even if such ranges differ somewhat from comparable positions in other companies. Balancing competitiveness with internal equity helps support management development
and movement of talent throughout Brunswicks worldwide operations. Differences in actual compensation between employees in similar positions will reflect individual performance, future potential and business unit results. This effort also
helps Brunswick promote talented managers to positions with increased responsibilities and provides meaningful developmental opportunities.
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Reward corporate, business unit and individual performance
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Recognizing corporate, business unit and individual performance in compensation helps reinforce the importance of working together and furthers Brunswicks pay-for-performance philosophy. Brunswick funds incentives for NEOs based on
overall corporate and division performance and allocates incentives based on individual contributions. Compensation for those NEOs with business unit responsibility was historically driven by financial business unit performance. However, due to
Brunswicks focus on cash conservation and generation, in 2009, the Company focused incentives on one company-wide cash goal.
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Managing compensation in cyclical industries
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Brunswick has a strong
pay-for-performance culture and strives to establish consistent incentive performance targets and awards despite the cyclical nature of the industries in which it competes. Historically, the marine industry has been negatively affected early in
economic downturns and has lagged behind other industries during periods of economic recovery. As a result, Brunswick has experienced significant swings in funding from one performance period to another and annual incentive funding as a percent of
target from 2004 through 2009 ranged from a high of 200 percent of target to a low of 0 percent, and averaged 63 percent of target. For a given year, funding also can vary significantly between business units. Based on contribution to business unit
success, individual awards typically range from a high of 140 percent of an individuals prorated portion of the funding pool to a low of 0 percent. In 2009, performance against targets would have resulted in payout levels exceeding target;
however, management recommended and the Human Resources and Compensation Committee approved payouts, on average, of 100% in order to manage and preserve cash while still recognizing the uncertainties that remain in the overall economy. Payouts were
calculated on annual salary rather than making a reduction for furlough days.
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Focus on the creation of longer-term shareholder
value
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Brunswicks senior
executives are responsible for setting and achieving long-term strategic goals. In support of this responsibility, compensation is weighted towards rewarding long-term value creation for shareholders. For Mr. McCoy, approximately 63 percent of
targeted total compensation is based on long-term performance, and for other senior executives, it is approximately 37 percent. For Mr. McCoy, approximately 22 percent of targeted total compensation is based on annual performance against established
performance criteria and for other senior executives, it is approximately 31 percent. The balance consists of base salary (15 percent for Mr. McCoy and 32 percent for other senior executives).
For senior executives with corporate-wide responsibilities, incentive metrics are based
on Brunswicks overall results. Historically, for senior managers within a division, annual incentive metrics are based on a combination of division and overall Brunswick results. However, in 2009 and continuing in 2010, all senior
executives annual incentive metrics are based on consolidated Brunswick results. All long-term incentives are based on Brunswicks overall results.
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What is Rewarded:
Brunswick designs
NEO compensation to reward achievement of budgeted financial results (e.g., cash-on-hand), Brunswick stock price performance and individual performance.
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Cash
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For 2009, Brunswick established a single
metric to determine the funding of annual incentives pursuant to the Brunswick Performance Plan (BPP) - cash-on-hand as of December 31, 2009. This contrasted with past incentive metrics which were based on a combination of BVA (economic earnings
less economic capital multiplied by cost of capital) and earnings per share (EPS); however, the Human Resources and Compensation Committee recognized the need for the Company to focus solely on cash in light of current economic
conditions.
For 2010, due to continued uncertainty around market and
business conditions, the Company has chosen again to focus on one measure - the generation of, and efficient management of, cash. As such, funding of annual incentives will be based on free cash flow, which will drive the Company to transition to a
profitable state, as stronger free cash flow translates into stronger earnings.
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Stock Price Appreciation
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Stock price appreciation is a significant
component of total shareholder return and thus shareholder value creation. Stock price appreciation affects the value of Brunswicks equity grants, including stock-settled stock appreciation rights, restricted stock units and performance
shares.
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Individual Performance
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Individual performance is assessed via the
Performance Management Process (PMP). PMP was created to help employees better understand Brunswick and division-specific goals, as well as their own role in achieving these goals. The Company believes that PMP is an effective tool in assessing
performance against individual goals.
Once Brunswick and division goals
are established, salaried employees (including NEOs) set individual goals aligned with the Companys strategic direction. Employees establish goals for specific initiatives, major responsibilities key to their position, critical success
factors, and individual developmental requirements. Beginning in 2010, Brunswick is transitioning from this model to a competency-based approach, which will better define behaviors needed for individual success. At year-end, salaried employee
performance is assessed against these established goals. The CEOs performance is assessed by the Human Resources and Compensation and Nominating and Corporate Governance Committees of the Board of Directors with input from all members of the
Board of Directors. Performance for other NEOs is assessed by the CEO with review by the Human Resources and Compensation Committee. Individual performance affects base salary increases, annual incentives and equity grant decision making.
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Elements of Compensation:
A summary of each element of compensation, why it was chosen, how the amount and formula are determined, and how decisions regarding that element fit into the
overall compensation objectives and affect decisions regarding other compensation elements are presented below.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Base Salary
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Provides a minimum level of pay warranted by individual performance. This is especially important for a company in a cyclical business, such
as Brunswicks marine businesses.
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Reflects:
Peer median for positions with similar responsibilities and business
size.
An executives responsibilities and performance, as
demonstrated over time.
Salaries are reviewed annually to ensure they are
externally competitive, reflect individual performance and are internally equitable relative to other Brunswick executives.
In 2009, the Company implemented various temporary base salary reductions, including for each of the NEOs, other than Mr. Schwabero.
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Foundation of total pay, as incentives and
benefits are a function of base salary.
Links performance and
pay.
A competitive base salary in a cyclical industry is important to
attracting and retaining talent.
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Annual
Incentive:
Brunswick Performance Plan (BPP)
There are approximately 224 individuals who were participants in 2009, including each of the NEOs.
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Primary compensation element to recognize performance against established business goals and reward accomplishments within a given
year.
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Brunswick sets target funding based on planned performance for
the year, as approved by the Board of Directors. Funding has historically been limited to 200 percent of target funding. The Human Resources and Compensation Committee has the ability to adjust funding for unusual items, but has not done so for
corporate headquarters funding, except to reduce or cap funding.
In 2009,
the BPP was structured to emphasize the companys focus on cash preservation and generation. As such, the 2009 BPP was measured 100% on year-end cash-on-hand.
Target funding is equal to salary paid in the year multiplied by the individual percentage target for each participant. When establishing individual BPP
targets for NEOs and other employees, peer median total direct compensation (base salary plus bonus plus long-term incentive) minus Brunswick base salary is used to establish the foundation of variable compensation. This amount is then split between
short-term and long-term incentives at a ratio that the Committee feels is appropriate for a company like Brunswick. For 2009, the percentage of salary targets for NEOs range from 100 percent to 150 percent.
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Signals what is important and
what is expected for the year from the standpoint of corporate, division, unit and/or individual results.
Focuses executives on achieving current objectives, which are necessary to attain longer-term goals.
Establishes appropriate performance and annual incentive relationships.
Rewards business units and individuals within those units for actual performance.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Individual awards are determined on a discretionary basis using overall funding as approved by
the Human Resources and Compensation Committee and the individuals pro-rata portion of approved funding as adjusted for individual performance and other factors deemed to be relevant.
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For 2009, financial performance far exceeded target and would have resulted in a payout exceeding
the target level. However, management recommended and the Human Resources and Compensation Committee approved payouts, on average, of 100%, calculating payouts according to annual base salary, rather than actual earnings, which would have been
reduced due to the 2009 furloughs. Financial performance that was required to support target funding for all NEOs in 2009 was:
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100% Target
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Y/E Cash on Hand
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$360 million
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For our fiscal year ending December 31, 2010, BPP funding will be based on the
achievement of free cash flow, subject to the discretion of the Human Resources and Compensation Committee. Free cash flow is defined as the sum of cash flows from operating activities and cash flows from investing activities. Excluded from the
calculation will be cash flows from financing activities. Items that will be excluded from the calculation are voluntary pension contributions that vary from budget, the impact on working capital of any change in financing, certain changes in
tooling capital versus budget, the proceeds from the acquisition/sale of strategic assets and the impact of cash restructuring activities versus budget.
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Long-Term Incentives:
The cyclical nature of the marine industry affects the design of long-term incentives in several ways. For example,
the ability to link long-term incentives to multi-year performance measures is difficult, given external market pressures and volatility. Accordingly, for 2009, stocksettled stock appreciation rights (SARs) were identified as the sole award
used to provide annual long-term incentive opportunities to better align interests of management with those of shareholders.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Stock-Settled Stock Appreciation
Rights
Approximately 234 individuals received awards in 2009, including
each of the NEOs.
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Maximize the reward for management team successfully driving stock price appreciation. Widely
used compensation element.
SARs are more efficient than stock options as
they eliminate the need for those exercising to arrange financing of the exercise price and reduce the number of issued shares.
Accounting for stock-settled SARs is the same as for non-qualified stock options. Accounting treatment did not influence the decision to use
SARs.
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For NEOs, SAR grant size is based on several factors:
Peer median total direct target compensation minus target cash compensation
(base salary plus individual BPP cash incentive targets). This determines the dollar value of the total equity grant target and is consistent with targeting median pay for consistently solid Company and individual performance.
Grant size represents a fixed dollar target that is established every two years
when competitive peer compensation information is updated. The fixed dollar target for each NEO has historically been determined by dividing the target SAR value by a representative Black-Scholes value per share using the Companys average
stock price for the previous two years. For 2009, given the significant decline in the Companys stock price, the Committee decided that the use of Black-Scholes, which would have resulted in excessive share utilization to accommodate
competitive awards, was not appropriate. Therefore, the Committee utilized an expected value approach to determine share awards. However, in 2010, the Company transitioned to using the Black-Scholes stock price on the date of the grant rather than
the two-year average.
Four-year ratable vesting and 10-year term are
consistent with further aligning senior managements focus with long-term goals.
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Increases linkage to shareholders by
rewarding stock price appreciation and tying wealth accumulation to performance.
Reinforces team performance.
Encourages senior managers to focus
on long-term performance.
Provides retention incentive through the
vesting period.
Every outstanding stock option and/or stock-settled SAR
equity award granted prior to November 2008 is significantly underwater as of December 31, 2009, and therefore believed to be of little to no retention value.
The 2003 Stock Incentive Plan does not permit grant re-pricing.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Restricted Stock Units (RSUs)
Only Mr. Graves received a grant in 2009.
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Three-year cliff vesting, consistent with encouraging senior executives to focus on the
Companys long-term performance.
Support retention of individuals
deemed critical to future success.
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For 2008 and 2009, other than for new hire or promotion situations, the regular use of RSUs was
discontinued. In 2009, Mr. Graves was the only NEO to receive an award of RSUs in recognition of his promotion to President Brunswick Boat Group.
The use of RSUs as part of annual long-term incentive grants, including those to the NEOs, will resume in 2010.
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Reinforces retention of senior executives and team performance.
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Performance Shares (PSs)
There were no grants of PSs in 2009, nor are there any awards contemplated in 2010.
In 2008, there was a special PS award to select individuals, including
each of the NEOs.
Prior to 2008, only Mr. McCoy had received PSs.
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PSs rather than RSUs were historically granted to Mr. McCoy to reinforce his
pay-for-performance relationship.
Strengthens pay-for-performance
philosophy and aligns management to key strategic initiatives.
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For Mr. McCoys 2007 award, the number of performance shares earned was based on the
average BPP payout percentage for corporate headquarters employees for 2007, 2008 and 2009, multiplied by 26,000, the target award level.
The BPP payout percentage for corporate headquarters employees was 0 percent in 2007, 0 percent in 2008 and 100 percent in 2009, averaging 33 percent. As a
result, Mr. McCoy earned 8,667 performance shares.
With respect to the
special 2008 PS award, the number of PSs earned will be based on performance against several key strategic factors by the end of 2010. Those measures and target performance include Sales Per Salaried Employee (7 percent increase versus 2007), Sales
Per Capital Employed (3.2) and Return on Capital Employed (11%). Payout of 50 percent to 125 percent of target award is based solely on those performance criteria. An additional 25 percent of target award could be earned if Brunswicks stock
price exceeds $25 and relative total shareholder return versus the companies in the S&P 500 is equal to or greater than the 60th percentile. There is, however, a minimum Company stock price threshold of $20 per share, before any award may be
earned. Should termination of employment occur following a Change in Control, the award provides for the payment of a pro rata portion of the target based on the time elapsed during the performance period.
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Recognizes Mr. McCoys role in
achieving overall results.
Provides an element of retention for
individuals key to driving strategic initiatives while also strengthening pay-for-performance philosophy and linkage to shareholders.
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Stock Ownership Requirements
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Brunswick adopted fixed-share ownership requirements for the Companys executive officers because of the
difficulty of establishing share ownership guidelines based on salary level multiples in a company with a cyclical business.
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Tier
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Management Level
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Ownership
Requirement
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I
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Chief Executive Officer
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175,000
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II
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Large Group Presidents and
Chief Financial Officer
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45,000
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III
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Other Group Presidents, Controller, Chief Legal Counsel, Chief Human Resources Officer, Vice President Manufacturing
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17,500
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IV
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Other Officers
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10,000
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Senior executives must satisfy
these stock ownership requirements within five years from the later of attainment of executive officer status or promotion to a position with a higher ownership requirement. For those approaching retirement, ownership requirements are reduced as
follows: 100 percent of target for those less than age 63; 80 percent of target for those age 63; 60 percent for those age 64; and 50 percent for those age 65 and above.
Executive officers not meeting the requirements have their BPP award automatically
deferred into RSUs. For purposes of calculating compliance, shares owned include: shares directly owned, shares held in trust, share equivalents held in the Companys tax-qualified defined contribution plans and deferred
compensation plans and RSUs. Unexercised stock options and stock-settled SARs and outstanding performance shares are not counted as owned.
All NEOs currently have stock ownership levels that meet or exceed these requirements. Compliance with these ownership requirements is reviewed by the Board
of Directors annually.
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Claw Backs:
The Human Resources and Compensation Committee can require the repayment of all or a portion of previous BPP or Strategic Incentive Plans (SIP) awards or gains from stock
options or SARs exercised or RSUs distributed as deemed appropriate by the Human Resources and Compensation Committee in the event of misconduct that causes a restatement of financial results. In addition, in 2008, for those who have entered into
Terms and Conditions of Employment with Brunswick, including each of the NEOs, the Human Resources and Compensation Committee expanded the types of payments that the Company would be entitled to recover in the event of a violation of the restrictive
covenants, including non-competition and non-solicitation restrictive covenants (effective for 24 months from date of termination for Mr. McCoy and for 18 months following termination for all other NEOs) and non-disclosure and non-disparagement
restrictive covenants (with no termination date), to include any severance payments received by the executive and any gain realized as a result of the exercise or vesting of equity awards beginning 12 months prior to termination.
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Post-Employment Compensation:
Post-employment compensation elements that are not offered to salaried employees in general are summarized below.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Supplemental Salaried Pension Plan
There are approximately 23 active employees with non-qualified benefits.
Effective 12/31/2009, the Supplemental Salaried Pension Plan was frozen and all benefit
accruals ceased at that time. Participation thereafter in any supplemental pension plan will be through the Brunswick Restoration Plan.
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Ensures that employees with covered compensation or pension benefits above Internal Revenue Service (IRS) defined benefit qualified plan
limits receive the full amount of their intended pension benefits.
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The difference between an employees earned defined benefit pension and that permissible by IRS qualified limits is paid on a
non-qualified basis by the Company and is subject to the claims of creditors.
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Provides a retirement benefit that is consistent with those who are not affected by the IRS compensation and benefit limits
and reflects an individuals full career and covered pay earned.
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Brunswick
Restoration Plan
There are approximately 163 active participants,
including all NEOs, in this plan.
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Ensures that employees with covered compensation or retirement plan
contributions above IRS qualified defined contribution plan limits receive the full amount of their intended retirement benefits.
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If an employee elects to
participate in the Restoration Plan, 401(k) contributions and Brunswicks match of these contributions above the IRS limit are credited to this plan. In addition, Brunswick variable retirement contributions for eligible employees are
automatically credited to their Restoration Plan accounts. This is a non-qualified plan and is subject to the claims of creditors.
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Provides a retirement benefit consistent with that of
employees who are not affected by the IRS compensation and benefit limits. Without the Restoration Plan, these individuals would not be able to take full advantage of this defined contribution pension program.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Elective Deferral Plan
There are approximately 33 active participants who maintain a balance within the plan.
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Provides eligible employees the opportunity to save in a tax-deferred manner.
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In 2008, as a result of the elimination of the SIP (participation
in which defined eligibility in the Elective Deferral Plan), the Company suspended participation in the plan.
In addition, the plan was amended as a result of the transition rules afforded under Internal Revenue Code (IRC) Section 409A to allow for a voluntary one-time irrevocable election by participants to
release their previously deferred vested shares under the plan.
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Encourages ownership of Brunswick stock, thus
increasing alignment of economic interests with shareholders.
Provides
flexibility in the individual management of long-term savings.
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Automatic Deferred Compensation Plan
Mr. McCoy is currently the only participant who has Automatic
Deferrals.
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Defers payment of certain compensation that would otherwise be non-tax-deductible to Brunswick by reason of IRC
Section 162(m) until six months after employment ends. Deferred amounts that were earned and vested prior to 12/31/2004 are remitted to the executive at such time as tax-deductible by Brunswick.
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Senior executives are required to defer receipt of non-deductible compensation in excess of $1.5 million in
order to limit non-deductible compensation under IRC Section 162(m). Financial returns on required automatic deferrals are based on either: (i) an interest rate equal to the greater of the prime rate at J.P. Morgan Chase plus 2 percentage points, or
Brunswicks short-term borrowing rate; or (ii) securities selected by the participant. The 2 percentage point increment is used to recognize that the NEO does not receive the BPP award otherwise earned until some time in the future, typically
upon retirement or other termination of employment.
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Preserves tax deductibility of senior executives compensation by
Brunswick.
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Split-Dollar Life
Insurance Replacement
Seven individuals, including Messrs. McCoy,
Hamilton and Lockridge, have replacement policies.
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Provides an insured death benefit and allows for capital accumulation. Changes
in tax law and the Sarbanes-Oxley Act eliminated the Companys ability to offer split-dollar life insurance policies. To meet existing obligations, policies were restructured in January 2004.
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Policies were restructured to
eliminate loans and approximate as closely as possible the death benefit and cash value at maturity of the policy as originally issued. Premiums were reduced because they no longer had to support repayment of loans. Payments to executives to pay
policy premium were structured so that the net present value cost to Brunswick of the program did not increase.
Pre-2003 loans on these policies were grandfathered under Sarbanes-Oxley and remain outstanding. The loans must be repaid when the policy matures.
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Executives with
split-dollar life insurance replacements do not receive Company-provided basic life insurance coverage.
Executives hired since 2003 receive basic life insurance coverage on the same terms as other salaried employees, except that the Company continues a life insurance policy for Mr. Schwabero that was
provided by his former employer.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Terms and
Conditions of Employment
15 individuals have agreements, including all
NEOs.
In 2008, certain terms and conditions were modified to address the
requirements of IRC Section 409A.
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Describes duties of executive and
memorializes at will nature of employment relationship.
Sets
out a detailed listing of the executives compensation, benefits, and perquisites.
Consolidates restrictive covenants that exist during and after employment (e.g. non-competition, confidentiality, non-solicitation).
Establishes and limits compensation and benefits to which an executive is entitled in
the event of termination.
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Agreements define severance terms
if Brunswick terminates the executives employment without cause or the executive terminates for Good Reason (as defined below).
Termination within 24 months following a Change in Control (as defined in Other Potential Post-Employment Payments):
Severance payment of three times the sum of the annual base salary and target
BPP and SIP incentives and other benefits and perquisites for up to 36 months, including retirement benefits. With respect to the SIP, any termination of employment after December 31, 2010, shall exclude SIP incentives from the severance
calculation.
All equity awards held by the executive will become
fully vested and, if applicable, immediately exercisable and will remain outstanding pursuant to their terms. All PS awards, other than the 2008 PS award, will be deemed to have been earned at maximum performance levels.
With respect to the 2008 PS award, upon a Change in Control, a pro rata portion
of the target award will vest based on the number of days that have elapsed since the beginning of the performance period.
For agreements executed prior to 2009, indemnification, on a grossed-up basis, would be provided for any tax imposed by Section 4999 of the Code on
excess parachute payments (as defined in IRC Section 280G), except that benefits will be reduced by up to 10 percent if doing so would avoid such excise taxes. In 2009, the Company modified Mr. Hamiltons agreement (and
all
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Helps assure
retention of executive experience, skills, knowledge, and background for the benefit of the Company, and the efficient achievement of the long-term strategy of the Company.
Reinforces and encourages continued attention and dedication to duties without
distraction arising from the possibility of a Change in Control.
Requires
senior executives to agree to provisions relating to non-competition and non-solicitation.
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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executive agreements entered into thereafter) to eliminate the excise tax gross-up. Pursuant to the Amendment,
Mr. Hamilton is no longer entitled to a gross-up for any excise tax imposed on excess parachute payments. Instead, Mr. Hamilton will either be required to pay the excise tax or have his payments reduced if it would be more favorable to
him on an after-tax basis. The Company plans to exclude excise tax gross-ups from any executive agreements entered into in the future.
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Termination other than following a Change in Control:
Severance payment of two times for Chairman and Chief Executive Officer, and
1.5 times for the other NEOs, the sum of base salary, BPP (at the discretion of Chairman and Chief Executive Officer for the other NEOs), and other benefits and perquisites for up to 24 months for the Chairman and Chief Executive Officer and up to
18 months for other NEOs, including retirement benefits.
Brunswick may
terminate the Terms and Conditions of Employment upon six months notice, except that after a Change in Control, Brunswick may not terminate until the second anniversary of the Change in Control.
There are no severance benefits for those terminating due to death, long-term
disability or for cause. Mr. Hamilton is not entitled to severance benefits upon a termination prior to a Change in Control.
Good Reason
means any of the following without the executives express written consent:
Material breach of provisions of employment agreement;
Failure to provide benefits generally provided to similarly-situated senior
executives;
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Compensation
Element
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Why Chosen
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How Designed and Determined
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Role Within Total
Compensation
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Reduction in title, authority or responsibility;
Reduction in compensation not applicable to similarly-situated senior executives;
Relocation beyond a reasonable commuting distance;
Following a Change in Control, failure to obtain a satisfactory agreement from any successor to assume and agree to abide by employment agreement terms; and
Following a Change in Control, reduction in nature, scope or status of
authorities or duties.
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This protects executives from being effectively demoted or
having their pay reduced in an effort to force them to quit. In addition, the CEO may terminate employment for any reason during the 30-day period commencing on the first anniversary of a Change in Control and receive severance.
The Terms and Conditions of Employment contain non-competition and non-solicitation
restrictive covenants effective during the two-year period following termination of employment for the CEO, and for 18 months following termination for all other NEOs, and non-disclosure and non-disparagement restrictive covenants effective at all
times.
In the event of a violation of the restrictive covenants, the
Company may recover any severance payments received by the executive and any gain realized as a result of the exercise or vesting of equity awards beginning 12 months prior to termination and ending on the date of payment to the
Company.
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Perquisites:
Outlined below are the benefits for NEOs that are not offered to salaried employees in general. These low-cost, but highly-valued, perquisites help NEOs enhance their understanding of Brunswick products and
protect their physical health and thus Brunswicks investment in their development.
|
Executive Product Program
|
|
The product program is designed to encourage the use of Brunswick products to enhance understanding and
appreciation of Brunswicks businesses and identify product and business enhancement opportunities.
|
|
NEOs are provided with Brunswick products on an annual basis as follows: The Chief Executive
Officer and the Chief Financial Officer are each eligible to select products with an aggregate annual value of up to $15,000. Other NEOs are each eligible to select products with an aggregate annual value of up to $10,000.
|
Executive Physical Program
|
|
A physical examination program for senior executives to protect
Brunswicks investment in its leadership.
|
|
Senior executives are required by the Human Resources and
Compensation Committee to have an annual physical examination and have rapid access to healthcare providers.
|
Tax
Deductibility of Executive Compensation:
|
Section 162(m) of the Internal Revenue Code
limits the deductibility for federal income tax purposes of executive compensation paid to the Chief Executive Officer and the three other most highly compensated officers other than the Chief Financial Officer of a public company to $1,000,000 per
year. Compensation that is performance-based under the Internal Revenue Codes definition is exempt from this limit. The Human Resources and Compensation Committees policy is to qualify its executive compensation for
deductibility under applicable tax laws to the extent practicable. Income related to stock appreciation rights and stock options granted under our equity compensation plans generally qualifies for an exemption from these restrictions imposed by
Section 162(m). Furthermore, under the Companys Automatic Deferred Compensation Plan, participants are required to defer any non-deductible annual earnings in excess of $1.5 million to protect the tax deductibility to the Company of such
compensation under Section 162(m) of the Internal Revenue Code. In the future, the Human Resources and Compensation Committee will continue to evaluate the appropriateness of qualifying the Companys executive compensation for full
deductibility.
|
Total
Compensation Decisions:
|
|
Total compensation decisions normally are made by the Human Resources and Compensation Committee and Board of Directors at their first meetings of each year. Decisions with respect to the previous
years performance and resulting BPP awards, as well as equity awards and base salary increases for the current year, are made at this meeting. Base salary increases are generally effective the first full pay period in April.
Brunswick has not adopted a formal policy regarding the granting of equity awards when
the Company is in possession of material non-public information. However, equity grant terms and conditions and number of shares for NEOs and other senior executives are reviewed and approved by the Human Resources and Compensation Committee at this
first meeting of the year, which is generally held during the week after Brunswick publicly discloses its financial results for the previous year. The effective date of NEO equity grants is typically one week after the Human Resources and
Compensation Committee meeting. The exercise price is set at 100 percent of the closing price on the effective date. For 2009, awards were granted in May shortly after approval of the share authorization at the Annual Meeting of Shareholders. Stock
option or SAR grants for new hires, if applicable, are made on the first business day of the month following Brunswicks quarterly earnings release.
|
33
Human Resources and Compensation Committee Report (CCR)
Compensation Committee Report
The Human
Resources and Compensation Committee reviewed and discussed the Compensation Discussion & Analysis with the Chairman and Chief Executive Officer.
Based on that review and discussion, the Committee recommended to the Board of Directors of Brunswick Corporation that the Compensation Discussion and Analysis be included in the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2009, and the Companys Proxy Statement to be filed in conjunction with the Companys 2010 Annual Meeting.
Graham H. Phillips, Chairman
Anne E. Bélec
Manuel A. Fernandez
34
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation earned by each of the Companys NEOs for the year ended December 31, 2009.
|
|
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|
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|
Name and
Principal Position
|
|
Year
|
|
|
Salary
(1)
|
|
|
Bonus
|
|
Stock
Awards
(2
)
|
|
|
Option
Awards
(3
)
|
|
|
Non-Equity
Incentive Plan
Compensation
(4
)
|
|
|
Change in
Pension Value
and
Non-
qualified
Deferred
Compensation
Earnings
(5
)
|
|
|
All Other
Compensation
(6
)
|
|
|
Total
|
|
Dustan E. McCoy
|
|
2009
|
|
|
$878,123
|
|
|
$ -
|
|
$ -
|
|
|
$2,468,025
|
|
|
$1,459,000
|
|
|
$ 14,580
|
|
|
$ 102,247
|
|
|
$4,921,975
|
|
Chairman and Chief Executive Officer
|
|
2008
|
|
|
888,577
|
|
|
-
|
|
4,746,000
|
|
|
3,320,738
|
|
|
-
|
|
|
58,232
|
|
|
320,796
|
|
|
9,334,343
|
|
|
2007
|
|
|
876,077
|
|
|
-
|
|
858,000
|
|
|
1,876,950
|
|
|
483,600
|
|
|
121,258
|
|
|
344,272
|
|
|
4,560,157
|
|
Peter B. Hamilton
|
|
2009
|
|
|
$518,538
|
|
|
$ -
|
|
$ -
|
|
|
$ 331,890
|
|
|
$ 668,800
|
|
|
$455,505
|
|
|
$ 158,291
|
|
|
$2,133,024
|
|
Senior Vice President
and Chief Financial
|
|
2008
|
|
|
144,038
|
|
|
-
|
|
771,600
|
|
|
123,320
|
|
|
-
|
|
|
401,336
|
|
|
465,909
|
|
|
1,906,203
|
|
|
2007
|
|
|
92,596
|
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
|
|
203,934
|
|
|
2,044,155
|
|
|
2,340,685
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew E. Graves
(7)
|
|
2009
|
|
|
$384,346
|
|
|
$ -
|
|
$ 103,100
|
|
|
$ 274,108
|
|
|
$ 404,700
|
|
|
$ -
|
|
|
$ 30,609
|
|
|
$1,196,863
|
|
Vice
President &
President Boat Group
|
|
2008
|
|
|
371,731
|
|
|
-
|
|
553,700
|
|
|
384,174
|
|
|
-
|
|
|
-
|
|
|
74,342
|
|
|
1,383,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark D. Schwabero
(8
)
|
|
2009
|
|
|
$403,231
|
|
|
$ -
|
|
$ -
|
|
|
$ 290,703
|
|
|
$ 400,000
|
|
|
$ -
|
|
|
$ 46,893
|
|
|
$1,140,827
|
|
Vice President &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President Mercury
Marine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Russell Lockridge
|
|
2009
|
|
|
$355,781
|
|
|
$ -
|
|
$ -
|
|
|
$ 274,108
|
|
|
$ 367,100
|
|
|
$ -
|
|
|
$ 67,732
|
|
|
$1,064,721
|
|
Vice President, Chief Human Resources
|
|
2008
|
|
|
352,096
|
|
|
-
|
|
553,700
|
|
|
387,683
|
|
|
-
|
|
|
-
|
|
|
83,333
|
|
|
1,376,812
|
|
|
2007
|
|
|
347,007
|
|
|
-
|
|
59,400
|
|
|
166,840
|
|
|
$ 119,700
|
|
|
-
|
|
|
147,553
|
|
|
840,500
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts shown in this column constitute actual base salary paid. Mr. Schwaberos salary paid in 2009 includes a small amount that should have been paid in
2008; however, due to administrative delay the last 2008 payroll deadline was missed, causing the amount to be paid in the first paycheck of 2009. Annual salaries as of December 31, 2009, were:
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
|
|
|
|
|
$906,000
|
|
$535,000
|
|
$410,000
|
|
$400,000
|
|
$370,000
|
Mr. McCoys base salary has not increased since 2007 and is not expected to increase in 2010.
Mr. Hamilton left the Company on January 31, 2007 and rejoined the Company on September 15, 2008.
(2)
|
The amounts shown in this column constitute the aggregate grant date fair value of restricted stock units and performance shares granted under the 2003 Stock Incentive
Plan during the applicable year, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 Compensation Stock Compensation (FASB ASC Topic 718). For assumptions used in the valuation
of such awards, see Note 16 to the financial statements included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2009. For further information on these awards, see the Grants of Plan-Based Awards table.
|
(3)
|
The amounts shown in this column constitute the aggregate grant date fair value of stock-settled stock appreciation rights granted under the 2003 Stock Incentive Plan
during the applicable year, computed in accordance with FASB ASC Topic 718. For assumptions used in the valuation of such awards, see Note 16 to the financial statements included in the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2009. For further information on these awards, see the Grants of Plan-Based Awards table.
|
35
(4)
|
The amounts shown in this column constitute payments made under the annual Brunswick Performance Plan (BPP) and, prior to 2008, the mid-term Strategic Incentive Plan
(SIP). From Mr. McCoys 2009 BPP payment, $1,056,043 was deferred in February 2010 pursuant to the 2005 Automatic Deferred Compensation Plan.
|
(5)
|
The amounts shown in this column include:
|
|
|
|
For Mr. McCoy in 2007, 2008 and 2009, and Mr. Hamilton, in 2007 only, above-market interest paid on required automatic deferrals. Senior
executives with compensation in excess of $1.5 million that is not qualified under Section 162(m) of the Internal Revenue Code automatically have such excess compensation deferred. Deferred cash equivalent balances are credited with:
(i) an interest rate equal to the greater of the prime rate at JP Morgan Chase plus 2 percent (plus 4 percent prior to 2008), or Brunswicks short-term borrowing rate; or (ii) returns on securities selected by the officer. Interest
earned on securities selected by the officer is a market rate of return and is therefore not included in this column. Interest credited to deferred cash equivalent balances for fiscal year 2009 in excess of 120 percent of the IRS Applicable Federal
Rate totaled $14,580 for Mr. McCoy.
|
|
|
|
The aggregate of the increase in actuarial values of benefits under Brunswicks Salaried Pension Plan and Supplemental Pension Plan equaled
$455,505 for Mr. Hamilton for fiscal year 2009. Although Mr. Hamilton is no longer an active participant and is no longer accruing benefits under these plans, the actuarial value of benefits on December 31, 2009 increased by $63,538
as compared to December 31, 2008 as a result of a reduction in the discount rate used to calculate the value. Additionally, as shown in the Pension Benefits Table, Mr. Hamilton also received pension payments in the amount of $391,967 in
2009.
|
(6)
|
The amounts shown in this column include the following for fiscal year 2009:
|
Defined Contribution Plan Contributions:
Brunswick contributions to defined contribution programs, including both
qualified and non-qualified programs (to provide for contributions in excess of IRS limits) per the contribution formulas detailed in the Narrative to Non-Qualified Deferred Compensation Table are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
Qualified
|
|
$
|
9,400
|
|
$
|
9,800
|
|
$
|
9,800
|
|
$
|
4,400
|
|
$
|
9,800
|
Non-Qualified
|
|
$
|
25,725
|
|
$
|
11,765
|
|
$
|
5,574
|
|
$
|
11,732
|
|
$
|
4,431
|
Product
Program:
In 2005, Brunswick adopted a product program for Company officers. This program is designed to encourage the use of Brunswick products to enhance understanding and appreciation of Brunswicks businesses and identify
product integration opportunities. Each year, the Chairman and Chief Executive Officer and the Chief Financial Officer are each eligible to select products with an aggregate annual value of up to $15,000. Other officers are each eligible to select
products with an aggregate annual value of up to $10,000. Previously, unused amounts could be carried over to subsequent years, but were subject to forfeiture if not used by March 15, 2007. This carryover feature has since been removed from the
program. Because of the payroll and tax reporting cutoffs, the gross-ups reported are related to the taxable benefit reported for the year. As such, the gross-ups listed below may exceed the product cost in some instances. Additionally, the Product
Programs fiscal year ends on October 31 of each year and Mr. Graves used a portion of his Product Program allowance to purchase product after October 31, 2009. As a result, as of December 31, 2009, the Company had not yet
incurred the associated gross-up costs.
The incremental cost of products selected, based on wholesale cost and gross-ups for
the payment of taxes in the current period, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
Cost
|
|
Gross-up
|
|
Cost
|
|
Gross-up
|
|
Cost
|
|
Gross-up
|
|
Cost
|
|
Gross-up
|
|
Cost
|
|
Gross-up
|
$13,502
|
|
$5,904
|
|
$ -
|
|
$ -
|
|
$10,000
|
|
$ -
|
|
$10,000
|
|
$6,515
|
|
$10,000
|
|
$7,998
|
Boat
Program:
Brunswick encourages active participation in boating on the part of Company officers. Boats made available to officers are used for marketing purposes, hosting civic events, personal usage and to enhance product knowledge.
Due to cost reduction efforts, the Boat Program was suspended for 2008 and 2009.
36
Life Insurance:
The Sarbanes-Oxley Act of 2002 prohibits loans to
executive officers. As a result of this loan prohibition, combined with changes in taxation of split-dollar life insurance, Brunswick restructured existing split- dollar life insurance policies in 2004 such that the net present value cost to
Brunswick did not increase. Executives are now responsible for payment of annual premiums and keeping their policies current. Annual payments to NEOs related to premiums are:
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Lockridge
|
|
|
$38,865
|
|
$130,935
|
|
$29,172
|
Policy Maturity Date
|
|
7/1/2014
|
|
1/1/2012
|
|
7/1/2014
|
These individuals
are not provided any life insurance through the Companys basic life program for employees.
Part of Brunswicks
offer to Mr. Schwabero at the time of his hire in 2004 included the continuation of a life insurance policy as provided by his former employer. Brunswick pays the annual premium on the policy, which was $9,300 for 2009. This amount is imputed
as taxable income to Mr. Schwabero and is not grossed-up for taxes.
Other Benefits:
Each of the NEOs
also received some or all of the following perquisites and other personal benefits, none of which exceeded $25,000 or 10 percent of the perquisites and other personal benefits for that NEO: (a) an annual executive physical examination; and
(b) a service providing 24-hour access to immediate healthcare. The aggregate of gross-ups provided to each NEO in relation to these items was $945.
(7)
|
Mr. Graves was not a named executive officer in 2007. Therefore, this table does not provide 2007 data for him.
|
(8)
|
Mr. Schwabero was not a named executive officer in 2007 or 2008. Therefore, this table does not provide 2007 or 2008 data for him.
|
37
GRANTS OF PLAN-BASED AWARDS
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|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(1)
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(2)
|
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(
3
)
|
|
|
|
Exercise or
Base Price
of Option
Award
($/Sh)
|
|
|
|
Grant Date
Fair
Value
of Stock and
Option
Awards
|
Dustan E. McCoy
|
|
1/1/2009
|
|
|
|
$339,800
|
|
|
|
$
|
1,359,000
|
|
|
|
$
|
2,718,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
$3.71
|
|
|
|
$ 642,630
|
|
|
5/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
550,000
|
|
|
|
$5.86
|
|
|
|
$1,825,395
|
Peter B. Hamilton
|
|
1/1/2009
|
|
|
|
$167,200
|
|
|
|
$
|
668,800
|
|
|
|
$
|
1,337,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
$5.86
|
|
|
|
$ 331,890
|
Andrew E. Graves
|
|
1/1/2009
|
|
|
|
$101,200
|
|
|
|
$
|
404,700
|
|
|
|
$
|
809,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
$3.71
|
|
|
|
$ 74,974
|
|
|
5/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
$5.86
|
|
|
|
$ 199,134
|
|
|
10/29/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
$ 103,100
|
Mark D. Schwabero
|
|
1/1/2009
|
|
|
|
$100,000
|
|
|
|
$
|
400,000
|
|
|
|
$
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
$3.71
|
|
|
|
$ 74,974
|
|
|
5/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
$5.86
|
|
|
|
$ 215,729
|
B. Russell Lockridge
|
|
1/1/2009
|
|
|
|
$ 91,800
|
|
|
|
$
|
367,100
|
|
|
|
$
|
734,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
$3.71
|
|
|
|
$ 74,974
|
|
|
5/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
$5.86
|
|
|
|
$ 199,134
|
(1)
|
Consists of targeted awards under the 2009 Brunswick Performance Plan.
|
(2)
|
Consists of RSUs awarded under the 2003 Stock Incentive Plan in recognition of Mr. Graves promotion to President Brunswick Boat Group. Awards vest on
the third anniversary of the grant date.
|
(3)
|
Consists of SARs awarded under the 2003 Stock Incentive Plan. Awards vest one-fourth on each of the first through fourth anniversaries of the grant date.
|
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Terms and Conditions of Employment
In January 2007, the Company modified its executive Terms and Conditions of Employment to incorporate a double trigger (effective termination of employment by the Company following a Change in Control of the Company) for senior
executives other than the Chairman and Chief Executive Officer, rather than the modified single trigger (executive decision to terminate employment following a Change in Control of the Company) in earlier agreements. In addition to
incorporating a double trigger, the Company revised the agreements to include all employment terms and conditions. The Terms and Conditions of Employment confirm that employment is at will and outline the senior executives roles and
responsibilities and compensation, benefits and eligibility for certain perquisites provided in exchange for their services.
38
The Terms and Conditions of Employment also contain provisions regarding termination of
employment. Please see the Other Potential Post-Employment Payments section of this Proxy Statement for an additional discussion of the Terms and Conditions of Employment.
In 2009, the Company modified Mr. Hamiltons agreement to eliminate certain provisions that entitled Mr. Hamilton to
indemnification, on a grossed-up basis, for any tax imposed by Section 4999 of the Code on excess parachute payments (as defined in Section 280G of the Code) in connection with a Change of Control. Pursuant to the amendment to
his agreement, Mr. Hamilton is no longer entitled to a gross-up for any excise tax imposed on excess parachute payments. Instead, Mr. Hamilton will either be required to pay the excise tax or have his payments reduced if it
would be more favorable to him on an after-tax basis. Excise tax gross-ups will be excluded from any subsequent agreement executed with any executive officer.
Equity Compensation Plan Information and Awards
Grants of SARs were made
to all NEOs in 2009 pursuant to the Brunswick 2003 Stock Incentive Plan. SARs are generally granted annually and typically vest one-fourth on each of the first through fourth anniversaries of the grant date. In 2009, annual grants were split into
two grants. In February 2009, grants of SARs were made to the extent shares were available under the Plan. In May 2009, following the shareholder authorization of additional shares, the balance of the grants were made. The Company later modified the
terms of the May 2009 SAR award to reflect the use of the Rule of 70 or Age 62, along with the inclusion of an additional provision that would pro-rate the grant in the event of termination prior to the first anniversary of the date of
grant, provided the participant had met the appropriate retirement age definition. Prior to the changes, Brunswicks grants of SARs accommodate retirement by providing for continued vesting and up to five years of exercisability upon
termination if age plus years of service equals 70 or more and age is 62 or more. The Company determined, with the assistance of outside consultants, that its double trigger provision (e.g., age and service equal to 70 and age 62) was
more restrictive than competitive practice. Providing for a pro-rated grant serves to keep the decision about retirement timing independent of the vesting schedule of equity-based compensation.
Please see the Compensation Discussion and Analysis section of this Proxy Statement for a detailed description of awards granted
to the NEOs during 2009 and the amount of salary and bonus in proportion to total compensation for each NEO for 2009.
39
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
(2)
|
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
|
|
Equity Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
|
|
|
|
Option
Exercise
Price
|
|
|
|
Option
Expiration
Date
|
|
|
|
Number
of Shares
or Units of
Stock
Held That
Have Not
Vested
|
|
|
|
Market
Value of
Shares or
Units of
Stock Held
That Have
Not Vested
|
|
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other Rights
That
Have Not
Vested
|
|
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units
or
Other
Rights
That Have Not
Vested
|
|
|
Dustan E.
McCoy
|
|
6,000
12,000
20,000
112,500
90,000
141,975
-
-
|
|
|
|
-
-
-
37,500
90,000
425,925
300,000
550,000
|
|
|
|
-
|
|
|
|
$21.83
$38.36
$46.12
$39.15
$33.00
$17.06
$ 3.71
$ 5.86
|
|
|
|
4/30/2013
2/18/2014
1/31/2015
2/14/2016
2/13/2017
2/28/2018
2/9/2019
5/12/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,667
300,000
|
|
|
|
$ 110,158
$3,813,000
|
|
|
Peter B.
Hamilton
|
|
45,000
90,000
12,000
12,000
15,000
-
-
|
|
|
|
-
-
-
-
-
100,000
100,000
|
|
|
|
-
|
|
|
|
$18.88
$19.92
$21.83
$38.36
$46.12
$ 3.59
$ 5.86
|
|
|
|
7/26/2010
2/6/2011
4/30/2013
2/18/2014
1/31/2015
11/3/2018
5/12/2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
$ 762,600
|
|
|
Andrew E.
Graves
|
|
8,000
3,750
8,000
16,425
-
-
|
|
|
|
-
1,250
8,000
49,275
35,000
60,000
|
|
|
|
-
|
|
|
|
$39.45
$39.15
$33.00
$17.06
$ 3.71
$ 5.86
|
|
|
|
11/8/2015
2/14/2016
2/13/2017
2/28/2018
2/9/2019
5/12/2019
|
|
|
|
1,897
10,537
10,045
|
|
|
|
$ 24,108
$133,931
$127,668
|
|
|
|
35,000
|
|
|
|
$ 444,850
|
|
|
Mark D.
Schwabero
|
|
3,000
10,000
6,000
6,000
13,150
-
-
|
|
|
|
-
-
2,000
6,000
39,450
35,000
65,000
|
|
|
|
-
|
|
|
|
$41.84
$46.12
$39.15
$33.00
$17.06
$ 3.71
$ 5.86
|
|
|
|
4/12/2014
1/31/2015
2/14/2016
2/13/2017
2/28/2018
2/9/2019
5/12/2019
|
|
|
|
1,370
94
|
|
|
|
$ 17,411
$ 1,200
|
|
|
|
35,000
|
|
|
|
$ 444,850
|
|
|
B. Russell
Lockridge
|
|
3,500
7,000
12,000
9,000
8,000
16,575
-
-
|
|
|
|
-
-
-
3,000
8,000
49,725
35,000
60,000
|
|
|
|
-
|
|
|
|
$21.83
$38.36
$46.12
$39.15
$33.00
$17.06
$ 3.71
$ 5.86
|
|
|
|
4/30/2013
2/18/2014
1/31/2015
2/14/2016
2/13/2017
2/28/2018
2/9/2019
5/12/2019
|
|
|
|
10,733
1,897
|
|
|
|
$136,415
$ 24,108
|
|
|
|
35,000
|
|
|
|
$ 444,850
|
|
|
(1)
|
Options typically vest at a rate of 25 percent per year over the first four years of the 10-year option term, except that Mr. Hamiltons grant on
November 3, 2008 vests 100 percent at the end of three years from the date of grant.
|
(2)
|
Annual RSU Grants and RSUs awarded under the deferred SIP premium, a premium that provides a 20 percent premium on SIP deferred as stock, vest 100
percent on the third anniversary of the date of grant. Retention RSUs awarded in 2006 vest 100 percent at the end of four years from the date of grant. Performance shares convert to shares of Brunswick common stock at the end of a three-year
performance period based on performance against the following criteria: Sales Per Salaried Employee (7% increase vs. 2007 results), Sales Per Capital Employed (3.2) and Return on Capital Employed (11%). Payout of 50 percent to 125 percent of
target award is based solely on performance against these performance criteria. An additional 25 percent of target award could be earned if the stock price exceeds $25 and relative total shareholder return versus the companies in the S&P 500 is
equal to or greater than the 60
th
percentile. In addition, there is a minimum Company stock price threshold of $20 per share prior to any award being earned.
|
40
OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
(1,2)
|
Name
|
|
Number of Shares
Acquired On
Exercise
|
|
Value Realized on
Exercise
|
|
Number of Shares
Acquired
on Vesting
|
|
Value Realized
on Vesting
|
|
|
|
|
|
Dustan E. McCoy
|
|
-
|
|
$ -
|
|
29,009
|
|
$319,456
|
Peter B. Hamilton
|
|
-
|
|
$ -
|
|
-
|
|
$ -
|
Andrew E. Graves
|
|
-
|
|
$ -
|
|
1,068
|
|
$ 3,717
|
Mark D. Schwabero
|
|
-
|
|
$ -
|
|
3,491
|
|
$ 12,149
|
B. Russell Lockridge
|
|
-
|
|
$ -
|
|
2,420
|
|
$ 8,422
|
(1)
|
Includes the following number of vested RSUs awarded under the annual SIP premium deferred on February 14, 2006, and vesting on February 17, 2009, using a
market price of $3.48 per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
|
|
|
|
|
|
Shares
|
|
2,297
|
|
-
|
|
1,068
|
|
3,491
|
|
2,420
|
Value
|
|
$7,994
|
|
$ -
|
|
$3,717
|
|
$12,149
|
|
$8,422
|
(2)
|
Includes the following number of vested RSUs awarded on December 6, 2005, and vesting on December 4, 2009, using a market price of $11.66 per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
|
|
|
|
|
|
Shares
|
|
26,712
|
|
-
|
|
-
|
|
-
|
|
-
|
Value
|
|
$311,462
|
|
$ -
|
|
$ -
|
|
$ -
|
|
$ -
|
PENSION
BENEFITS
|
|
|
|
|
|
|
|
|
Name
(1)
|
|
Plan Name
|
|
Number of Years
Credited
Service
(2,3)
|
|
Present Value of
Accumulated
Benefit
|
|
Payments During Last
Fiscal Year
|
|
|
|
|
|
Peter B. Hamilton
|
|
Salaried Pension Plan
|
|
11.17
|
|
$1,038,090
|
|
$88,093
|
|
|
|
|
|
|
|
Supplemental Salaried Pension Plan
|
|
23.67
|
|
$3,580,852
|
|
$303,874
|
(1)
|
Mr. Hamilton is the only NEO who is a participant in the Salaried Pension Plan or the Supplemental Salaried Pension Plan.
|
(2)
|
Upon rejoining Brunswick on September 15, 2008, Mr. Hamilton began participation in the Brunswick Rewards defined contribution plan and is no longer accruing
a benefit under the defined benefit pension plan.
|
(3)
|
Under an agreement with Brunswick, Mr. Hamiltons years of service credited under the Supplemental Salaried Pension Plan include credit for 12.5 years of
service with a previous employer. Mr. Hamiltons pension under this plan is reduced by the pension he receives from that employer. The values shown in the above table include this reduction.
|
41
Narrative to Pension Benefits Table
The Salaried Pension Plan is a non-contributory plan providing for benefits following retirement under a formula based upon age, years of
participation in the plan up to 30 years and the average of the three highest consecutive years earnings (salaries, annual BPP and commissions, but excluding payouts under the SIP). Participation in the salaried pension plan is frozen, with no
new participants being added after April 1, 1999. Effective December 31, 2009, all benefit accruals were frozen and all remaining salaried pension plan participants became eligible for the Companys primary Defined Contribution Plan,
the Rewards Plan, as of January 1, 2010.
Assumptions used in determining the present value of accumulated benefit are as
follows:
|
|
|
Pre- and Post-Retirement Mortality according to the RP2000 Generational Combined White-Collar Adjustment Table for annuity benefits
|
|
|
|
5.85 percent and 6.25% discount rates for annuity benefits for 2009 and 2008, respectively.
|
NON-QUALIFIED DEFERRED COMPENSATION
Restoration Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last FY
(1)
|
|
Company
Contributions in
Last FY
(1)
|
|
Earnings in
Last FY
|
|
|
Withdrawals /
Distributions
|
|
Balance
at
Last
FYE
|
|
|
|
|
|
|
Dustan E. McCoy
|
|
$159,125
|
|
$25,725
|
|
$140,434
|
|
|
$ -
|
|
$
|
2,743,138
|
Peter B. Hamilton
|
|
14,706
|
|
11,765
|
|
(31
|
)
|
|
-
|
|
|
26,439
|
Andrew E. Graves
|
|
6,967
|
|
5,574
|
|
119,912
|
|
|
-
|
|
|
196,216
|
Mark D. Schwabero
|
|
43,985
|
|
11,732
|
|
675,249
|
|
|
-
|
|
|
1,069,400
|
B. Russell Lockridge
|
|
6,647
|
|
4,431
|
|
1,127,023
|
|
|
-
|
|
|
1,863,079
|
Elective Incentive Deferred
Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last FY
(1)
|
|
Company
Contributions in
Last FY
(1)
|
|
Earnings in
Last FY
|
|
Withdrawals /
Distributions
|
|
Balance
at
Last FYE
|
|
|
|
|
|
|
Dustan E. McCoy
|
|
$ -
|
|
$ -
|
|
$16,336
|
|
$71,312
|
|
$700,024
|
Peter B. Hamilton
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Andrew E. Graves
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Mark D. Schwabero
|
|
-
|
|
-
|
|
115,683
|
|
9,126
|
|
177,312
|
B. Russell Lockridge
|
|
-
|
|
-
|
|
330,987
|
|
90,022
|
|
591,305
|
Automatic
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last FY
(1)
|
|
Company
Contributions in
Last FY
(1)
|
|
Earnings in
Last FY
(2)
|
|
Withdrawals /
Distributions
|
|
Balance
at
Last FYE
|
|
|
|
|
|
|
Dustan E. McCoy
|
|
$ -
|
|
$ -
|
|
$108,250
|
|
$ -
|
|
$2,121,013
|
Peter B. Hamilton
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Andrew E. Graves
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Mark D. Schwabero
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
B. Russell Lockridge
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
(1)
|
100 percent of the amount for each NEO in this column is reported in the Salary and All Other Compensation columns of the Summary Compensation
Table.
|
(2)
|
Amounts in this column include above-market interest reported in the Change in Pension Value and Non-qualified Deferred Compensation Earnings column of the
Summary Compensation Table.
|
42
Narrative to Non-Qualified Deferred Compensation Table
The Non-Qualified Deferred Compensation table presents amounts deferred in 2009 under the Elective Incentive Deferred Compensation,
Restoration (non-qualified plan to provide for contributions in excess of IRS limits) and Automatic Deferred Compensation plans and includes previous deferrals.
Under the Elective Incentive Deferred Compensation Plan participants may defer up to 100 percent of BPP awards in either cash or stock. The Company calculates the value of cash deferrals based on the rate
of return of mutual funds selected by the executive. The investment options mirror those of the qualified 401(k) plan and participants manage fund elections in the same manner. The Company calculates the value of stock deferrals on the same basis as
Brunswick common stock. In December 2008, the Company extended a voluntary one-time in-service withdrawal election afforded by Internal Revenue Code Section 409A to those participants who maintained share balances. The election had to be
received by the Company no later than December 31, 2008 for release of shares no sooner than January 15, 2009. The election only pertained to amounts credited to a participants share balance. The Company will distribute all other
remaining balances pursuant to the participants original election.
Under the Restoration Plan, participants may defer
up to 40 percent of their base salary and BPP awards. These deferrals are credited with earnings and losses based on the rate of return of mutual funds selected by the executive. The investment options mirror those of the qualified 401(k) plan,
which the participant manages in the same manner. Brunswick contributes to this plan according to the following formula:
One
dollar for every dollar contributed by the employee, up to 3 percent of annual pay, and 50 cents for every dollar on the next 2 percent, plus an annual variable retirement contribution of up to 9 percent based on company performance.
The rate of return in 2009 for each fund and the NEOs who selected those funds in the Elective Incentive Deferred Compensation Plan and the
Restoration Plan are indicated in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Rate of
Return
|
|
|
|
McCoy
|
|
|
|
Hamilton
|
|
|
|
Graves
|
|
|
|
Schwabero
|
|
|
|
Lockridge
|
Vanguard
500 Index Investor Shares
|
|
26.49%
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
X
|
Brunswick ESOP Company Stock Fund
|
|
200.78%
|
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
Brunswick Short-Term Bond Fund
|
|
5.64%
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
X
|
Vanguard
Morgan Growth Fund Investor Shares
|
|
36.10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
Vanguard
Prime Money Market Fund
|
|
0.53%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
Vanguard
Total International Stock Index
|
|
36.73%
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
Vanguard
Wellington Fund
|
|
22.20%
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
|
|
|
Under the Automatic Deferred Compensation Plan, participants are required to defer any annual earnings in excess of $1.5 million to protect the tax deductibility to the Company of such compensation under
Section 162(m) of the Internal Revenue Code. Deferred cash equivalent balances are credited with: (i) an interest rate equal to the greater of the prime rate at JP Morgan Chase plus 2 percent, or Brunswicks short-term borrowing rate;
or (ii) returns on securities selected by the executive. If the executive has an election in place to defer awards into stock, automatic deferrals are deferred as stock.
Distributions of deferrals are made six months after the termination of the executives employment with the Company.
43
Other Potential Post-Employment Payments
Brunswick has entered into severance and Change in Control agreements with certain of its senior executives, including each of the NEOs,
incorporated in the Terms and Conditions of Employment.
Agreements
Under an agreement with Brunswick dated September 18, 2006, as amended, Mr. McCoy is entitled to certain severance benefits if his
employment is terminated by Brunswick other than for cause or disability. The agreement defines termination to include resignation by Mr. McCoy for Good Reason, including a substantial change in the terms and conditions of Mr. McCoys
employment. Please see the Compensation Discussion and Analysis section of this Proxy Statement for a detailed definition of Good Reason. Mr. McCoy is also entitled to severance benefits if he resigns for any reason
during the 30-day period commencing on the first anniversary of a Change in Control.
If a termination covered by the
agreement occurs prior to a Change in Control, Mr. McCoy is entitled to a severance payment equal to two times the sum of: (i) annual salary; (ii) targeted annual award under the BPP; and (iii) the Companys 401(k) match,
variable retirement contribution and other Company contributions made on his behalf to the Companys tax-qualified and non-qualified defined contribution plans during the 12-month period prior to the date of termination. If the termination
occurs after a Change in Control, Mr. McCoy is entitled to a severance payment equal to three times the sum of: (i) annual salary; (ii) the larger of targeted annual award under BPP for the year of termination or the year in which the
Change in Control occurs; (iii) most recent full-cycle target award under SIP (except, however, should termination occur after December 31, 2010, SIP shall be excluded from the severance multiple); and (iv) the Companys 401(k)
match, variable retirement contribution and other Company contributions made on his behalf to the Companys tax-qualified and non-qualified defined contribution plans during the 12-month period prior to the date of termination. In addition to
these severance payments, Mr. McCoy would be entitled to receive: any annual BPP award earned for the preceding year that had not yet been paid at the time of termination; and medical, dental, vision, and prescription coverage for up to two
years (three years if there is a Change in Control). If termination occurs within 24 months following a Change in Control, Mr. McCoy would fully vest in all outstanding stock options, stock appreciation rights, restricted stock unit awards and
performance shares other than in the 2008 performance share award. With respect to the 2008 performance share award, Mr. McCoy would vest in a pro-rata portion based on the number of days that have elapsed since the beginning of the performance
period. All remaining shares would be forfeited. In addition, Mr. McCoy is entitled to a full gross-up for any excise tax on excess parachute payments, as defined in IRC Section 280G, if total payments exceed 110 percent of the
safe harbor limit. If total payments exceed the safe harbor limit by less than 110 percent, total payments will be cut back to the safe harbor limit.
The definition of Change in Control includes: (i) the acquisition of 25 percent or more of the outstanding voting stock of Brunswick by any person other than an employee benefit plan of Brunswick;
(ii) the failure of the incumbent Board of Directors to constitute a majority of Brunswicks Board of Directors, excluding new directors who (a) are approved by a vote of at least 50 percent of the members of the incumbent Board of
Directors and (b) did not join the Board following a contested election of directors; (iii) a merger of Brunswick with another corporation, other than a merger in which Brunswicks shareholders receive at least 60 percent of the
voting stock outstanding after the merger or a merger effected to implement a recapitalization of Brunswick in which no person acquires more than 25 percent of Brunswicks voting stock and the Board of Directors is comprised of a majority
incumbent directors; or (iv) a complete liquidation or dissolution of Brunswick or sale of substantially all of Brunswicks assets.
44
The terms of the agreement require Mr. McCoy to consent to certain confidentiality,
non-competition and non-solicitation provisions, and to execute a general release.
Brunswicks other NEOs are entitled
to severance and Change in Control benefits substantially similar to those described above for Mr. McCoy, except that after a Change in Control, benefits are paid only upon effective termination and not in the event of a voluntary resignation
following a Change in Control. Additionally, in the case of effective termination prior to a Change in Control, the multiplier used to determine severance benefits is one and one-half times (1.5x), and payout under the BPP is at the discretion of
the Chairman and Chief Executive Officer. Mr. Hamilton is not entitled to severance benefits upon a termination prior to a Change in Control and he is not entitled to any excise tax gross-up.
The terms of the agreements require the other NEOs to consent to certain confidentiality, non-competition and non-solicitation provisions,
and to execute a general release. Furthermore, the agreements were amended to address requirements under Internal Revenue Code Section 409(A) and to expand the types of payments that the Company would be entitled to recover in the event of a
violation of the restrictive covenants to include any severance payments received by the executive. The amendments are described earlier in this section under Narrative to Summary Compensation Table and Plan-Based Awards Table
Amendments to Terms and Conditions of Employment.
Payment Obligations Under Termination Scenarios
The following table indicates the Companys estimated payment obligations resulting from effective termination before and after a
Change in Control, using December 31, 2009 as the hypothetical termination date.
|
|
|
|
|
|
|
Termination
prior to
Change in
Control
|
|
Termination
within 24
months after
Change in
Control
|
Payment equal to multiple of Base Salary, BPP and Defined Contribution Plan contributions
|
|
X
(1)
|
|
X
(2)
|
Payment equal to multiple of SIP
|
|
|
|
X
(3)
|
Stock Options/SARs
|
|
|
|
X
(4)
|
RSUs
|
|
|
|
X
(5)
|
Performance Shares
|
|
|
|
X
(5)
|
Benefits
(6)
|
|
X
|
|
X
|
(1)
|
Payment is two times the sum of salary, BPP and defined contribution plan contributions for Mr. McCoy and one and one-half times the salary and defined
contribution plan contributions for the other NEOs. The amounts payable to each NEO would be:
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
$4,601,050
|
|
$ -
|
|
$638,061
|
|
$624,199
|
|
$576,347
|
Payment of BPP
for NEOs other than Mr. McCoy is at the discretion of the Chairman and Chief Executive Officer and would represent the following amounts if paid at target:
|
|
|
|
|
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
$ -
|
|
$410,000
|
|
$400,000
|
|
$370,000
|
45
(2)
|
Payment multiple is three times for all NEOs. The amounts payable to each NEO would be as follows:
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
$6,901,575
|
|
$2,144,301
|
|
$2,506,122
|
|
$2,448,397
|
|
$2,262,694
|
(3)
|
Payment multiple is three times for all NEOs. These amounts are only applicable to termination of employment prior to December 31, 2010. After that date, SIP is
excluded from the severance multiple. The amounts payable to each NEO would be as follows:
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
$3,153,876
|
|
$929,182
|
|
$776,250
|
|
$676,014
|
|
$780,765
|
(4)
|
All unvested stock options/SARs immediately vest. The values of each NEOs unvested holdings as of December 31, 2009, that would be accelerated under a Change
in Control, using a market price of $12.71/share, are as follows:
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
$869,936
|
|
$374,078
|
|
$173,381
|
|
$182,056
|
|
$99,401
|
(5)
|
All unvested RSUs immediately vest. Mr. McCoys 2007 Performance Share grant immediately vests at maximum (130% of target) performance. The 2008 Performance
Shares for Mr. McCoy and each of the other NEOs immediately vest on a pro-rata basis. The values of each NEOs unvested holdings as of December 31, 2009, that would be accelerated under a Change in Control, using the December 31,
2009 market price of $12.71/share, are as follows:
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
$2,542,000
|
|
$508,400
|
|
$361,884
|
|
$296,758
|
|
$298,335
|
(6)
|
Each of the NEOs is entitled to Company-provided continuation of benefits for himself and his eligible dependents, on substantially the same terms of such coverage that
are in existence immediately prior to the NEOs date of termination, until the earlier of: (i) the date on which the NEO becomes employed by another employer; or (ii) the end of the NEOs severance period (which is 24 months for
the Chairman and Chief Executive Officer and 18 months for the other NEOs in the case of termination prior to a Change in Control, and 36 months for all NEOs in the case of termination following a Change in Control); provided, however, that such
coverage shall run concurrently with any coverage available to the NEO and eligible dependents under COBRA; and provided further, that the NEO shall immediately notify the Company if he becomes covered under Medicare or another employers group
health plan, at which time the Companys provision of medical coverage for the NEO and eligible dependents at the subsidized rate will cease.
|
The estimated present value of these benefits provided during the severance period, based on current COBRA rates, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
Severance
|
|
$25,738
|
|
$ -
|
|
$19,477
|
|
$14,343
|
|
$14,517
|
Change in Control
|
|
$38,607
|
|
$22,151
|
|
$38,953
|
|
$28,687
|
|
$29,033
|
(7)
|
If any element of compensation or benefit provided to any NEO, except Mr. Hamilton, as a result of a Change in Control constitutes an excess parachute
payment and subjects such NEO to the excise tax pursuant to Section 4999 of the Internal Revenue Code, then the payment shall be grossed-up to cover the excise tax and any additional income tax attributable to the excise tax gross-up. If
it is determined that the aggregate amount of the payment that would be payable to the NEO does not exceed 110 percent of the safe harbor limit (amount that could be paid to the NEO without giving rise to any liability for excise taxes) no excise
tax gross-up shall be made, and the payment to the NEO shall be reduced to the largest amount which would not cause any excise taxes to be payable by the NEO.
|
|
For Mr. Hamilton, if any element of compensation or benefit provided as a result of a Change in Control constitutes an excess parachute payment and
subjects Mr. Hamilton to the excise tax pursuant to Section 4999 of the Internal Revenue Code, then Mr. Hamiltons payment may be reduced so that he is in a best after-tax situation.
|
Had a termination occurred on December 31, 2009, as a result of a Change in Control, the following additional gross-up payments would
be required:
|
|
|
|
|
|
|
|
|
McCoy
|
|
Hamilton
|
|
Graves
|
|
Schwabero
|
|
Lockridge
|
$5,639,353
|
|
$ -
|
|
$1,705,151
|
|
$1,515,740
|
|
$ -
|
46
DIRECTOR COMPENSATION
Director Compensation Table
The table below summarizes the compensation
paid by the Company to non-employee directors for the fiscal year ended December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(1)
|
|
Fees
Earned:
Paid in
Cash
(2)
|
|
Stock
Awards
(3)
|
|
Option
Awards
(4)
|
|
Non-Equity
Incentive Plan
Compensation
(5)
|
|
Change in
Pension
Value
and Non-
qualified
Deferred
Compensation
Earnings
(6)
|
|
All Other
Compensation
(7)
|
|
Total
|
Nolan D. Archibald
|
|
$
|
147,491
|
|
$14,745
|
|
-
|
|
-
|
|
-
|
|
$21,740
|
|
$
|
183,976
|
Anne E. Bélec
|
|
|
148,743
|
|
-
|
|
-
|
|
-
|
|
-
|
|
8,256
|
|
|
156,999
|
Jeffrey L. Bleustein
|
|
|
147,496
|
|
-
|
|
-
|
|
-
|
|
-
|
|
51,221
|
|
|
198,717
|
Michael J. Callahan
(8)
|
|
|
58,749
|
|
-
|
|
-
|
|
-
|
|
-
|
|
906
|
|
|
59,655
|
Cambria W. Dunaway
|
|
|
139,995
|
|
-
|
|
-
|
|
-
|
|
-
|
|
31,588
|
|
|
171,583
|
Manuel A. Fernandez
|
|
|
162,496
|
|
16,240
|
|
-
|
|
-
|
|
-
|
|
18,056
|
|
|
196,792
|
Graham H. Phillips
|
|
|
144,996
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
144,996
|
Ralph B. Stayer
|
|
|
149,993
|
|
15,003
|
|
-
|
|
-
|
|
-
|
|
10,595
|
|
|
175,591
|
J. Steven Whisler
|
|
|
139,995
|
|
-
|
|
-
|
|
-
|
|
-
|
|
33,814
|
|
|
173,809
|
Lawrence A. Zimmerman
|
|
|
159,996
|
|
15,995
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
175,991
|
(1)
|
Dustan E. McCoy, the Companys Chairman and Chief Executive Officer, is not included as he is an employee of the Company and received no additional compensation
for his service as a director. The compensation received by Mr. McCoy as an employee of the Company is shown in the Summary Compensation Table.
|
(2)
|
Amounts in this column reflect 2009 annual fees earned by each non-employee director, the amount of which was increased from $100,000 to $180,000 in May 2009. The
following table shows the amount of fees that each director elected to receive in the form of Common Stock rather than cash. As explained further below, directors may elect to take their cash fees in the form of currently distributable Common Stock
(at market value) or deferred Common Stock (with a 20 percent premium).
|
|
|
|
Name
|
|
Fees Paid in Common Stock
|
Nolan D. Archibald
|
|
$147,491
|
Anne E. Bélec
|
|
74,368
|
Jeffrey L. Bleustein
|
|
73,746
|
Michael J. Callahan
|
|
29,374
|
Cambria W. Dunaway
|
|
69,995
|
Manuel A. Fernandez
|
|
162,496
|
Graham H. Phillips
|
|
72,496
|
Ralph B. Stayer
|
|
149,993
|
J. Steven Whisler
|
|
69,995
|
Lawrence A. Zimmerman
|
|
159,996
|
47
(3)
|
This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2009 fiscal year in accordance with FASB ASC Topic
718. Amounts in this column include both the 2009 annual RSU grants and, for directors who have elected to receive a portion of their fee in deferred Common Stock, the portion of any such grant of deferred Common Stock that is attributable to the 20
percent premium that is applied in determining the size of all such grants. For assumptions used in the valuation of such awards, see Note 16 to the financial statements included in the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2009. The grant date fair value of awards in this column is as follows:
|
|
|
|
|
|
Name
|
|
|
|
Grant Date
Fair Values of
Shares
Attributable to
20% Premium
Applied to
Deferral of
Fees
|
Nolan D. Archibald
|
|
|
|
$14,745
|
Anne E. Bélec
|
|
|
|
-
|
Jeffrey L. Bleustein
|
|
|
|
-
|
Michael J. Callahan
|
|
|
|
-
|
Cambria W. Dunaway
|
|
|
|
-
|
Manuel A. Fernandez
|
|
|
|
16,240
|
Graham H. Phillips
|
|
|
|
-
|
Ralph B. Stayer
|
|
|
|
15,003
|
J. Steven Whisler
|
|
|
|
-
|
Lawrence A. Zimmerman
|
|
|
|
15,995
|
The
following table discloses certain additional information with respect to stock awards to non-employee directors:
|
|
|
|
|
Name
|
|
|
|
Aggregate Number of
Stock Awards
Outstanding at
December 31, 2009
|
Nolan D. Archibald
|
|
|
|
4,236
|
Anne E. Bélec
|
|
|
|
765
|
Jeffrey L. Bleustein
|
|
|
|
4,236
|
Michael J. Callahan
|
|
|
|
-
|
Cambria W. Dunaway
|
|
|
|
2,611
|
Manuel A. Fernandez
|
|
|
|
4,236
|
Graham H. Phillips
|
|
|
|
4,236
|
Ralph B. Stayer
|
|
|
|
4,236
|
J. Steven Whisler
|
|
|
|
1,547
|
Lawrence A. Zimmerman
|
|
|
|
3,415
|
(4)
|
This column is not applicable because non-employee directors do not receive options.
|
(5)
|
This column is not applicable because non-employee directors do not participate in any non-equity incentive plans.
|
(6)
|
This column is not applicable because non-employee directors do not participate in any defined benefit or actuarial pension plans (including supplemental plans) or
receive any dividends on deferred compensation.
|
48
(7)
|
The amounts shown in this column include the value of the following perquisites and benefits provided to directors:
|
Product Program:
The incremental cost to Brunswick of products and boat leases provided during the Companys fiscal
year ended December 31, 2009, and gross-ups for taxes incurred during the Companys fiscal year ended December 31, 2008 and paid during the Companys fiscal year ended December 31, 2009, are as follows:
|
|
|
|
|
|
|
Name
|
|
Product
Cost
(
9
)
|
|
Boat
Lease Cost
|
|
Gross-up
|
Nolan D. Archibald
|
|
$11,208
|
|
$ -
|
|
$10,532
|
Anne E. Bélec
|
|
4,686
|
|
-
|
|
3,570
|
Jeffrey L. Bleustein
|
|
-
|
|
46,331
|
|
4,890
|
Cambria W. Dunaway
|
|
8,240
|
|
17,742
|
|
5,606
|
Manuel A. Fernandez
|
|
637
|
|
8,776
|
|
8,643
|
Graham H. Phillips
|
|
-
|
|
-
|
|
-
|
Ralph B. Stayer
|
|
2,466
|
|
2,236
|
|
5,892
|
J. Steven Whisler
|
|
11,179
|
|
11,939
|
|
10,695
|
Lawrence A. Zimmerman
|
|
-
|
|
-
|
|
-
|
Other Perquisites and Benefits:
In addition to the availability of the Product Program described above, Ms. Dunaway
and Messrs. Bleustein, Fernandez, Stayer and Whisler participated in Brunswicks boat leasing program for directors that allowed each of them to lease a boat without charge during 2009. At the end of the lease terms, the leased boats will be
sold by the Company and the costs associated with each sale will vary according to market factors; however, the estimated incremental costs associated with this program are calculated as: the sum of the projected discount incurred at the end of the
lease term when the boat is sold, the cost of freight to deliver the boat and other incidental expenses paid by the Company. That cost is then pro-rated to the current calendar year, based on the number of days of the lease term in the current year
over the total number of days in the lease term.
(8)
|
Mr. Callahan retired from the Board of Directors on May 6, 2009.
|
(9)
|
The Product Programs fiscal year ends on October 31 of each year. For those directors who elected to use their Product Program allowance to purchase products
after October 31, 2009, the Company had not yet incurred the associated gross-up costs as of December 31, 2009.
|
Narrative to Director Compensation Table
Annual Fee and Deferred Stock Awards.
Non-employee directors
are entitled to an annual fee of $180,000. The Lead Independent Director and the director who is the Chair of the Audit Committee are entitled to an additional fee of $20,000 each, and the other members of the Audit Committee are entitled to an
additional fee of $10,000 due to the increased time commitment required of those directors. The director who chairs the Human Resources and Compensation Committee also is entitled to an additional annual fee of $10,000. The directors who chair the
Finance and Nominating and Corporate Governance Committees are entitled to an additional annual fee of $7,500 each. Each director who serves on more than one Committee is entitled to an additional annual fee of $7,500, unless the director already
receives additional fees as a result of serving on both of those Committees. One-half of each directors total annual fee is paid in Brunswick Common Stock, the number of shares of which is determined by the closing price of Brunswick Common
Stock on the date of the award. The receipt of these shares may be deferred until a director retires from the Board. Each director may elect to have the remaining one-half of the annual fee paid as follows:
|
|
|
In Brunswick Common Stock distributed currently; or
|
|
|
|
In deferred Brunswick Common Stock with a 20 percent premium.
|
For directors who elect to receive deferred Brunswick Common Stock, the number of shares to be received upon retirement is determined by
multiplying the cash amount by 1.2, then dividing that amount by the closing price of Brunswick Common Stock on the date of award.
49
Prior to May 2009, each non-employee director received an annual grant, on the date of the
annual meeting, of 1,000 Restricted Stock Units (RSUs), deferred until the director retired from the Board. A director joining the Board during the course of a year was entitled to a pro-rata number of RSUs for the next grant awarded, giving the
director credit for serving on the Board in the first calendar quarter that commences after the date on which the director joined the Board. This practice was discontinued in May 2009 and the last grant of RSUs was made in May 2008.
Stock Ownership Guidelines.
As set forth in the Companys Principles and Practices, within three years of the date on
which a director first becomes a director and thereafter for so long as each director is a director of the Company, each director is required to own common stock and deferred stock units of the Company totaling 10,000 shares and, within five years
of the date on which a director first becomes a director, each director is required to own common stock and deferred stock units of the Corporation totaling 20,000 shares.
Brunswick Product Program.
Directors are encouraged to use Brunswick products to enhance their understanding and
appreciation of Brunswicks business. Directors may receive Brunswick products with an aggregate value of up to $15,000 annually. The value of the products is included in the directors taxable income, and Brunswick reimburses directors
for the applicable tax liability associated with the receipt of products. In addition, each director may lease a boat from Brunswick at no charge except for the payment of applicable taxes, and all or a portion of a directors $15,000 product
allowance may be applied to defray those taxes. Directors also may purchase additional Brunswick products at the discounted rates established pursuant to the Employee Purchase Program.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Brunswicks directors, executive officers and any persons who own more than 10 percent of Brunswick Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission. Based on a review of the copies of such forms furnished to the Company and written representations from the Companys directors and executive officers, the Company believes that
all forms were filed in a timely manner during 2009.
REPORT OF THE AUDIT COMMITTEE
To the Shareholders of Brunswick Corporation:
The following is the report of the Audit Committee with respect to Brunswicks audited financial statements for the fiscal year ended December 31, 2009.
Overview of Audit Committee Function
The Audit Committee oversees Brunswicks financial reporting process. Management has the primary responsibility for the financial statements and the reporting process, including the systems of
internal controls.
Audit Committee Charter
The Audit Committee operates pursuant to a written charter, a copy of which is available at Brunswicks website,
www.brunswick.com
.
Independence of Audit Committee Members
The Board of Directors has determined that all members of the Audit Committee are independent, within the meaning of the New York Stock Exchange Listed Company Manual.
50
Review with Management
The Audit Committee has reviewed and discussed Brunswicks audited financial statements with management.
Review and Discussions with Independent Auditors
The Audit Committee has
discussed with Ernst & Young LLP (Ernst & Young), Brunswicks independent registered public accounting firm for the fiscal year ended December 31, 2009, who are responsible for expressing an opinion on the
conformity of those audited financial statements with generally accepted accounting principles, the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, other
professional standards and regulatory requirements currently in effect. Statement on Auditing Standards No. 61 requires an auditor to discuss with the audit committee, among other things, the auditors judgments about the quality, not just
the acceptability, of the accounting principles applied in the companys financial reporting.
The Audit Committee has
also received the written disclosures and the letter from Ernst & Young required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Youngs communications with the Audit Committee
concerning independence, and has discussed with Ernst & Young its independence from Brunswick. The Audit Committee has also reviewed the non-audit services provided by Ernst & Young and has considered whether the provision of those
services was compatible with maintaining Ernst & Youngs independence.
Conclusion
Based on the review and discussions referred to above, the Audit Committee recommended to Brunswicks Board of Directors that the
audited financial statements be included in Brunswicks Annual Report on Form 10-K for the fiscal year ended December 31, 2009, for filing with the Securities and Exchange Commission.
Submitted by the Members of the Audit Committee of the Board of Directors.
Lawrence A. Zimmerman (Chair)
Anne E. Bélec
Ralph C. Stayer
51
PROPOSAL NO. 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young, independent registered public accounting firm, as auditors for Brunswick and its subsidiaries for its fiscal year ending December 31, 2010. Although the Company is not required
to seek shareholder approval of this appointment, the Board of Directors has determined that in keeping with the principles of sound corporate governance, the appointment will be submitted for ratification by the shareholders. The Board of Directors
and the Audit Committee recommend that shareholders ratify the appointment of Ernst & Young as the independent registered accounting firm for Brunswick and its subsidiaries. If shareholders do not ratify the appointment, the Audit Committee
will investigate the basis for the negative vote and will reconsider its selection in light of the results of such investigation. Ernst & Young has served as independent registered public accounting firm for Brunswick and its subsidiaries
since 2002. Representatives of Ernst & Young will be present at the Annual Meeting and be afforded an opportunity to make a statement, if they desire to do so, and to respond to questions from shareholders.
Your Board of Directors and the Audit Committee
recommend a vote FOR this proposal.
Fees Incurred for Services of Ernst &
Young
Brunswick incurred the following fees for services rendered by Ernst & Young, Brunswicks independent
auditor, during the fiscal years ended December 31, 2009 and 2008:
Audit Fees:
The aggregate fees
billed by Ernst & Young for professional services rendered for the audit of Brunswicks annual financial statements for fiscal years 2009 and 2008, reviews of the financial statements included in Brunswicks related Quarterly
Reports on Form 10-Q during such fiscal years, registration statements and accounting and financial reporting consultations were $5,012,856 and $5,361,206, respectively.
Audit-Related Fees
: The aggregate fees billed by Ernst & Young for professional services rendered for audit-related activities for Brunswick for 2009 and 2008 were $110,000 and
$125,000, respectively. Audit-related services principally include employee benefit plan audits.
Tax
Fees:
The aggregate fees billed by Ernst & Young for fiscal years 2009 and 2008 for tax-related services were $275,000 and $580,947, respectively. Such fees involved the following activities: tax compliance services and tax
consulting services.
All Other Fees:
There were no fees billed by Ernst & Young for fiscal years
2009 and 2008 for services other than those described in the preceding paragraphs. All of the services described above were pre-approved by the Audit Committee.
Approval of Services Provided by Independent Registered Public Accounting Firm
The Audit Committee is responsible for pre-approving all audit and non-audit services to be provided by Brunswicks independent registered public accounting firm. The Audit Committee has adopted a two-tiered approach toward granting
such pre-approvals. Each year it approves an overall budget for specified audit and non-audit services, after which the Audit Committee must pre-approve either: (i) any proposed specified service that would result in total fees exceeding the
budget; or (ii) any proposed service not specified in the budget.
52
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in Brunswicks proxy materials for its 2011 annual meeting, a shareholder proposal must be
received at Brunswicks principal executive offices at 1 N. Field Court, Lake Forest, Illinois 60045-4811 (fax no. 847-735-4433; e-mail
corporate.secretary@brunswick.com
) by November 25, 2010.
In addition, a shareholder may wish to have a proposal presented at the 2011 annual meeting, but not to have such proposal included in
Brunswicks proxy materials relating to that meeting. Brunswicks By-laws establish an advance notice procedure for shareholder proposals to be brought before an annual meeting of shareholders, including proposed nominations of persons for
election to the Board. A shareholder proposal or nomination intended to be brought before the 2011 annual meeting must be delivered to the Secretary between January 5, 2011 and February 4, 2011.
* * *
Brunswick
encourages you to vote on the matters that will be presented to Brunswick shareholders at the Annual Meeting. Please vote as soon as possible so that your shares will be represented.
By order of the Board of Directors,
Kristin M. Coleman
Secretary
Lake
Forest, Illinois
March 25, 2010
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VOTE BY INTERNET - www.proxyvote.com
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Use the Internet to transmit your voting instructions and for electronic delivery of information up until 5:00 P.M. Eastern Time on Tuesday, May 4, 2010.
Have your proxy card in hand when you access the Web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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Electronic Delivery of Future PROXY
MATERIALS
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If you would like to reduce the costs incurred by Brunswick Corporation in mailing proxy materials, you can consent to receiving all future proxy statements, proxy
cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
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VOTE BY PHONE -
1-800-690-6903
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Use any touch-tone telephone to transmit your voting instructions up until 5:00 P.M. Eastern Time on Tuesday, May 4, 2010. Have your proxy card in hand when you call
and then follow the instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends that you vote FOR the following:
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¨
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¨
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1.
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Election of Directors
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Nominees
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01 Nolan D. Archibald
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02 Jeffrey L. Bleustein
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03 Graham H. Phillips
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04 Lawrence A. Zimmerman
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The Board of Directors recommends you vote FOR the following proposal(s):
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For
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Against
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Abstain
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2.
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Ratification of the Audit Committees selection of Ernst & Young LLP as the Companys independent registered public accounting firm for the fiscal year
ending December 31, 2010.
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¨
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NOTE: In their discretion, on such other business as may properly come before the meeting.
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Yes
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No
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Please indicate if you plan to attend this meeting.
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¨
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¨
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary,
please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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TWO ADDITIONAL WAYS TO VOTE
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Vote by Internet
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Vote by Telephone
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Its
fast, convenient, and your vote is
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immediately confirmed and registered.
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Its fast, convenient, and your vote is
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You may also give your consent to have all
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immediately confirmed and registered.
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future proxy statements and annual reports
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delivered to you electronically.
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Call toll-free on a touch-tone phone in the
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Go to Web site
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U.S. or Canada
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www.proxyvote.com
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1-800-690-6903
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Follow these three easy
steps:
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Follow these three easy
steps:
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Read the accompanying Proxy Statement and Proxy Card.
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Read the accompanying Proxy Statement and Proxy Card.
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Go to Web site
www.proxyvote.com.
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Call the toll-free phone number above.
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Follow the simple instructions.
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Follow the simple instructions.
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VOTE 24 HOURS A DAY
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DO NOT RETURN PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE
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Registered
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, Annual Report on Form 10-K is/are available at
www.proxyvote.com
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Solicited on behalf of the Board of Directors of
BRUNSWICK CORPORATION
The undersigned hereby appoints P.B. Hamilton, K.C.
Coleman and K.M. Kaiser, and each of them, as proxies with power of substitution, and hereby authorizes them to represent and to vote, in accordance with the instructions on the reverse side, all shares of Common Stock of Brunswick Corporation that
the undersigned may be entitled to vote at the Annual Meeting of Shareholders to be held on May 5, 2010, or any adjournment thereof.
This proxy also provides voting instructions for shares held by Vanguard Fiduciary Trust Company, the trustee for the Brunswick
Retirement Savings Plan and the Brunswick Rewards Plan, and directs such trustee to vote, as indicated on the reverse side of this card, any shares allocated to the account in these plans. The Trustee will vote these shares as you direct. The
Trustee will vote allocated shares of the Companys stock for which proxies are not received in direct proportion to voting by allocated shares for which proxies are received.
This proxy/voting instruction card is solicited pursuant to a
separate Notice of Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged. This card should be voted, by mail, Internet or telephone, in time to reach the Companys proxy tabulator, Broadridge, no later than 5:00 p.m.
Eastern time on Tuesday, May 4, 2010, for all registered shares to be voted and no later than 5:00 p.m. Eastern time on Friday, April 30, 2010, for the Trustee to vote the Plan shares. Individual proxy voting and voting instructions will
be kept confidential.
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Continued and to be signed on reverse side
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