EXECUTIVE COMPENSATION
The following tables disclose compensation received by the individuals who are
the chief executive officer and the next four most highly compensated executive
officers of ACCO Brands based on compensation received from ACCO Brands, Fortune
Brands or GBC, as applicable, for the fiscal years indicated. References in this
section to ACCO Brands' 2003 and 2004 fiscal years refer to the fiscal years
which ended on December 27, 2003 and 2004, respectively, and references to ACCO
Brands' 2005 fiscal year refers to the fiscal year which ended on December 31,
2005.
Compensation described in the following tables for fiscal years 2004 and 2003
was earned by David D. Campbell, Dennis Chandler and Neal V. Fenwick as officers
of ACCO World Corporation. Compensation described in the following tables for
fiscal years 2004 and 2003 was earned by John Turner as an officer of GBC.
Compensation reported for Boris Elisman for fiscal year 2004 was earned as an
employee of ACCO World. Except as indicated below, compensation described in the
following tables for the fiscal year 2005 includes, in the case of David D.
Campbell, Dennis Chandler, Boris Elisman and Neal V. Fenwick, compensation
earned by them as officers of ACCO World through August 16, 2005 and, in the
case of Mr. Turner, compensation earned by him as an officer of GBC through
August 16, 2005. The compensation earned by each since August 17, 2005 has been
paid by ACCO Brands.
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Summary Compensation Table
Annual Compensation Long-Term Compensation
Other Awards Payouts
Annual Restricted Securities
Compen- Stock Underlying LTIP All Other
Bonus sation Award(s) Options/ Payout Compensa-
Name and Principal Position Year Salary ($) ($)(1) ($)(2) ($)(3) SARs(#) ($)(4) tion ($)(5)
David D. Campbell 2005 606,250 106,328 50,412 2,041,200 385,000 597,000 89,678
Chairman of the Board, 2004 525,000 1,247,275 46,780 - 299,084 3,885,480 103,854
President and Chief Executive 2003 500,000 1,183,100 41,841 - 199,389 581,429 92,473
Officer
Neal V. Fenwick 2005 318,500 192,865 65,497 476,280 90,000 179,100 3,476
Executive Vice President and 2004 286,886 434,568 46,926 - 71,780 1,500,000 3,446
Chief Financial Officer 2003 261,417 406,411 55,666 - 39,877 - 3,416
Dennis L. Chandler 2005 333,375 46,945 22,676 476,280 90,000 179,100 14,948
Chief Operating Officer 2004 293,700 437,586 20,470 - 71,780 1,500,000 14,334
2003 260,550 348,239 19,785 - 39,877 - 13,580
John M. Turner 2005 309,772 79,248 3,700 277,509 65,000 451,619 13,086
Group President, Industrial 2004 304,881 106,708 3,150 - 20,000 - 14,318
and Print Finishing Group 2003 293,155 20,521 2,900 - 20,000 - 16,820
Boris Elisman 2005 315,000 229,628 13,992 192,780 40,000 64,476 9,603
President, Kensington 2004 28,636 - 1,166 - 34,781 - 116
Technology Group
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(1) The annual bonus amounts are earned and accrued during the fiscal year
indicated, and paid subsequent to the end of such year.
The amount indicated for Mr. Fenwick in 2005 includes a special merger
completion bonus in the amount of $150,000 paid to him by Fortune Brands.
Messrs. Campbell, Fenwick and Chandler received payments under two incentive
plans during 2003 and 2004, a traditional annual incentive plan and two one-year
transitional incentive plans. The transitional plans were substituted for the
previous ACCO World long-term incentive plans that were typically measured on
three-year performance cycles, and were administered under the ACCO World LTIP.
Payments under the traditional annual incentive plan for 2004 and 2003
respectively were: $558,400 and $475,750 for Mr. Campbell; $228,018 and $194,236
for Mr. Fenwick; and $208,086 and $136,064 for Mr. Chandler. Payments under the
one-year transitional incentive plans for 2004 and 2003 respectively were:
$688,875 and $707,250 for Mr. Campbell; $206,550 and $212,175 for Mr. Fenwick;
and $229,500 and $212,175 for Mr. Chandler.
(2) Other Annual Compensation:
(a) For Mr. Campbell, represents dividends paid on performance awards from
participation in the Fortune Brands Performance Share Plan. The amounts for
2005, 2004 and 2003 were $34,412, $30,780 and $25,841, respectively.
Additionally, Mr. Campbell received an automobile allowance of $16,000 per
year.
(b) For Mr. Fenwick, during 2005, 2004, and 2003 respectively, represents
additional compensation in the form of child educational expense
reimbursements of $23,220, $23,812, and $31,765, an auto allowance of
$13,992 per year, personal financial planning expenses of $26,697, $5,000,
and $4,000, and the cost of airfare for family members returning to the
United Kingdom of $1,588, $4,122, and $5,909.
(c) For Mr. Chandler, during 2005, 2004, and 2003 represents additional
compensation in the form of an auto allowance of $13,992 per year and
personal financial planning expenses of $8,684, $6,478, and $5,793
respectively.
(d) For Mr. Elisman, the amount listed represents the amount paid in the form
of an auto allowance.
(e) For Mr. Turner, the amount listed represents additional compensation in the
form of personal financial planning expenses.
(3) For Messrs. Campbell, Fenwick, Chandler and Elisman, represents the value of
restricted stock units (RSUs) granted in 2005 under the ACCO Brands 2005 LTIP
at the grant date fair market value of $22.68. These units will generally
vest 100% on December 6, 2008 and be delivered in shares of Company stock,
conditioned on each individual Officer's remaining employed at that date. The
market value of these RSU's as of December 31, 2005 at a share price of
$24.50 each are as follows: Mr. Campbell: 90,000 units valued at $2,205,000;
Messrs. Fenwick and Chandler: 21,000 units valued at $514,500, each; and,
Mr. Elisman: 8,500 units valued at $208,250.
For Mr. Turner, this amount represents: (a) the grant date value of 5,689 RSUs,
which per the merger agreement with GBC were converted from performance-vested
RSUs to time-vested RSUs, on August 17, 2005, which will fully vest and be
delivered in shares of company stock on February 26, 2007 conditioned on
Mr. Turner remaining employed at that date and (b) 6,000 RSUs granted in 2005 at
12
the grant date fair market value of $22.68 under the ACCO Brands 2005 LTIP,
which will vest 100% on December 6, 2008 and be delivered in shares of Company
stock, conditioned on Mr. Turner remaining employed at that date. The aggregate
value of these units as of December 31, 2005 at a share price of $24.50 was
$286,381.
(4) The amounts listed in the "LTIP Payout" column for Messrs. Campbell, Fenwick
and Chandler are the value of performance awards for the performance period
that ended in the year reported and paid subsequent to the end of such year.
The payments listed for Messrs. Campbell, Fenwick, Chandler and Elisman for
2005 are from their participation in the ACCO World Long-term Incentive Plan,
a long-term performance unit cash plan, with three-year performance cycles,
based on achievement of pre-established operating income, return on net
tangible assets, expense reduction, and sales growth targets. The amount
shown in the 2005 column is for the performance period 2003 through 2005.
For the year 2004 the amounts include a one-time, non-recurring incentive
payment of $3,150,000 for Mr. Campbell, and $1,500,000 for each of Messrs.
Fenwick and Chandler related to a three-year incentive plan aligned to certain
business repositioning and restructuring goals established by Fortune Brands.
Additionally, Mr. Campbell received performance shares under the Fortune Brands
Performance Share Plan. Shares awarded under this plan, for 2004, had a value of
$735,480 at December 31, 2004, and $581,429 at December 31, 2003. Through a
separate agreement with Fortune Brands, Mr. Campbell retains the right to awards
that were granted but not vested at the merger close. The agreement provides
that the target number of these awards be pro-rated through August 16, 2005 (the
spin-off date), and will be awarded based on actual performance through the end
of the performance period. For the performance period ended December 31, 2005,
performance under the plan provides for a maximum award. On a pro-rated basis,
Mr. Campbell's award was 8,312 shares, with a value of $645,510 based on the
value of Fortune Brands common stock as of December 31, 2005 of $77.66.
Additional detail on this Plan is provided in the Long-term Incentive
Plans-Awards in Last Fiscal Year table following.
For Mr. Turner, this amount represents the value of restricted stock units
previously awarded to him by GBC that vested during 2005 and were converted upon
vesting into either shares of GBC common stock or the Company's common stock at
the time of the Merger. Of these restricted stock units, 6,371 had a value of
$13.46 per share and 15,321 had a value of $23.88 per share at the time they
vested.
(5) The amount listed in the "All Other Compensation" column includes:
(a) Company matching contributions to the named individuals accounts in the
Company's tax qualified 401(k) savings and retirement plan, and for Mr.
Campbell, Company contributions to the Fortune Brands Supplemental Plan in
which Mr. Campbell participated in 2003, 2004 and 2005, and (b) the value of
premiums paid by the Company under executive long term disability and life
insurance programs as described below:
(a) Defined Contribution Plan and Supplemental Plan Contributions. For Mr.
Campbell the amounts listed include contributions to his account in the
Company's 401(k) retirement savings plan of $15,980, $15,813 and $16,200
for the years 2003, 2004 and 2005 respectively. The amounts contributed by
the Company for Mr. Campbell to the Fortune Brands Supplemental Plan for
the years 2003, 2004 and 2005 were $60,715, $71,618 and $62,294
respectively. For Mr. Chandler the amounts listed are for the Company
contributions to his 401(k) plan account of $9,022, $9,225 and $9,450 for
the years 2003, 2004 and 2005 respectively. The amount indicated for Mr.
Elisman in 2005 included an $8,203 contribution to his 401(k) plan account.
For Mr. Turner, these amounts represent contributions by the company to GBC's
401(k) Savings and Retirement Plan on his behalf and to his respective accounts
established pursuant to GBC's non-tax qualified Supplemental Deferred
Compensation Plan.
(b) Additional Life Insurance and Long Term Disability Programs. Certain
executive officers receive life insurance and long term disability programs
in addition to those offered to the general employee population. The
amounts in the table include the dollar value of life insurance premiums
paid by the Company in 2005, 2004, and 2003. These amounts are
respectively: $11,184, $8,941, and $8,378 for Mr. Campbell; $2,076, $2,046,
and $2,016 for Mr. Fenwick; and $4,096, $3,709, and $3,158 for
Mr. Chandler. In addition, the following amounts relate to company payment
of supplemental long-term disability insurance premiums in 2005, 2004, and
2003: $1,358, $1,333, and $1,400 for Mr. Campbell and $1,400 each year for
each of Messrs. Fenwick and Chandler.
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The following table provides information on grants of stock options made in 2005
by ACCO Brands to the executive officers named in the Summary Compensation
Table:
Option Grants in Last Fiscal Year (ACCO Brands)
Individual
Grants
Percent of
Total
Options/
Number of SARs
Securities Granted to
Underlying Employees Exercise or Grant Date
Options/SARs in Fiscal Base Price Expiration Present
Name Granted (#)(1) Year ($/SH) Date(2) Value ($)(3)
David D. Campbell 385,000 20.9 22.68 12/6/2013 3,018,400
Neal V. Fenwick 90,000 4.9 22.68 12/6/2013 705,600
Dennis L. Chandler 90,000 4.9 22.68 12/6/2013 705,600
John M. Turner 25,000 1.4 22.68 12/6/2013 196,000
Boris Elisman 40,000 2.2 22.68 12/6/2013 313,600
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(1) All options are for shares of common stock of ACCO Brands and were granted
under the ACCO Brands 2005 LTIP. No stock appreciation rights ("SARs") were
granted during 2005. Options are generally not exercisable for one year after
the date of grant. The options granted during 2005 become exercisable in
three equal annual installments beginning one year after the date of grant.
(2) ACCO Brands' 2005 LTIP provides that each option shall have a limited right
("Limited Right") which generally is exercised automatically on the date of
change in control of ACCO Brands. The Limited Right generally entitles the
holder of the option to receive cash equal to the number of shares subject to
the option multiplied by the difference between the exercise price per share
and (a) the fair market value of such shares at the date of exercise of the
Limited Right if the option is an incentive stock option and (b) if the
option is a nonqualified stock option, the greater of (i) the highest price
per share paid for the shares of common stock of ACCO Brands acquired in the
change in control and (ii) the highest market value of shares of common stock
during a specified period prior to the time of exercise. The option is
canceled to the extent of the exercise of the Limited Right.
(3) Grant Date Present Value of $7.84 per share was determined using the
Black-Scholes option pricing model based on the following assumptions:
(a) an expected option term of 4 1/2 years;
(b) a risk-free weighted-average rate of return of 3.4%;
(c) stock price volatility of 35.0%; and
(d) no dividend payments.
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The following table provides information on grants of stock options made by GBC
in 2005 to former GBC officers who are currently ACCO Brands executive officers
named in the Summary Compensation Table. These options converted into ACCO
Brands stock options at the time of the Merger on the same terms and conditions
as originally awarded by GBC.
Option Grants in Last Fiscal Year (GBC)
Individual
Grants
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees in Fiscal Base Price Expiration Present
Name Granted (#) (1) Year ($/SH) Date Value ($)(2)
John M. Turner 40,000 8.5 12.77 2/22/15 392,400
(1) Options granted to Mr. Turner were granted under GBC's 2001 Stock Incentive
Plan for Employees. Twenty-five percent (25%) of each option first becomes
exercisable one (1) year after the respective grant date and an additional
25% vests on each successive anniversary of the grant date. All of these
options were granted at the fair market value of GBC's common stock on the
grant date in the NASDAQ stock market. No SARs were granted or are
outstanding.
(2) Grant date present value of $9.81 per share is based on the Black-Scholes
stock option pricing model. Option term is ten years and various assumptions
were made for volatility (59.2%) and risk-free interest rates (4.41%).
The Grant Date Present Values in the above tables are only theoretical values
and may not accurately determine present value. The actual value, if any, to be
realized by an optionee will depend on the excess of the market value of the
common stock over the exercise price on the date the option is exercised, so
there is no assurance that the value realized will be at or near the value
established by the Black-Scholes model.
The following table provides information about option exercises during 2005 by
the officers named in the Summary Compensation Table and the value of their
unexercised options as of the end of 2005.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values (1)
Number of
Shares Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at
Shares FY-End (#) FY-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#)(2) Realized ($) Unexercisable Unexercisable (3)
David D. Campbell 0 0 288,051/684,082 2,707,904/2,951,790
Neal V. Fenwick 0 0 64,267/157,790 599,007/663,850
Dennis L. Chandler 0 0 60,746/157,790 556,121/663,850
John M. Turner 49,000 763,542 70,250/83,125 818,888/829,888
Boris Elisman 0 0 13,293/66,584 65,269/203,327
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(1) Included in these amounts are options that were granted prior to the merger
with GBC. All GBC options converted to ACCO Brands options on a 1:1 basis at
the merger. Unvested Fortune Brands options converted to ACCO Brands options
on a 1:3.99 basis at the time of the Merger pursuant to the terms of the
merger agreement. The exercise price of the options was also proportionately
adjusted to account for the effect of the Merger. The vesting of all
converted options continues as provided for in each individual's original
award agreements.
(2) No SARs have been issued or are outstanding.
(3) Based on fair market value of $24.50 per share of ACCO Brands common stock on
December 31, 2005.
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The following table provides information concerning long-term compensation
awards made during 2005 to the executive officers named in the Summary
Compensation Table.
Long-term Incentive Plans-Awards in Last Fiscal Year (1)
Number of Performance
Shares, or Other Estimated Future Payouts Under Non-Stock
Units or Period Until Price-Based Plans
Other Maturation
Name Rights (#) or Payout Threshold (#) Target (#) Maximum (#)
David D. Campbell 105,000 3 yrs. 78,750 105,000 157,500
Neal V. Fenwick 24,000 3 yrs. 18,000 24,000 36,000
Dennis L. Chandler 24,000 3 yrs. 18,000 24,000 36,000
John M. Turner 7,000 3 yrs. 5,250 7,000 10,500
Boris Elisman 10,000 3 yrs. 7,500 10,000 15,000
(1) For awards under the ACCO Brands' 2005 LTIP, the number of shares of common
stock to be delivered for the performance period 2006-2008 is based on the
level of achievement of specified earnings before interest, taxes,
depreciation and amortization (EBITDA) of ACCO Brands and its consolidated
subsidiaries for 2008. The target number of shares will be earned if 100% of
the targeted EBITDA is achieved and an additional amount of shares will be
paid if the targeted EBITDA is exceeded, but the maximum number of shares
paid will not exceed 150% of the target amount. The threshold amount will be
earned at the achievement of approximately 95% of the 2008 EBITDA target
unless otherwise determined by the Compensation Committee of the Board of
Directors. Dividend equivalents in the form of additional performance stock
units may be issued that equal the cash dividends that would have been paid
on the shares had the recipient owned the shares during the performance
period.
Mr. Campbell has received performance share awards under the Fortune Brands
Long-term Incentive Plan. These awards will be paid based on actual performance
achieved during the applicable performance period, and have been prorated in the
case of each performance period based on the number of days in such performance
period prior to the effective date of the spin-off, and have been adjusted per
the conversion formula that affected all Fortune Brands shares at the spin-off.
The table below shows the original and adjusted targets for these awards. To
receive awards under these plans, Mr. Campbell must remained employed with ACCO
Brands through December 31 of the last year of each successive performance
period. Any payments made to Mr. Campbell under this plan in the future will be
made by Fortune Brands.
Performance Cycle (Target Awards in # Share Units)
2003-2005 2004-2006 2005-2007
Original Target
Award 6,000 6,000 4,600
Prorated Target, as
Adjusted 5,541 3,430 1,011
For the 2003-2005 cycle, awards were approved by the Fortune Brands Board of
Directors at maximum, which equates to 150% of target. For Mr. Campbell, this
resulted in an award of 8,312 shares which was paid in cash by Fortune Brands,
valued at $77.645 per share for a total of $645,385.
Retirement Plans
ACCO Brands Corporation Pension Plan. The ACCO Brands Corporation Pension Plan
for Salaried and Certain Hourly Paid Employees ("Pension Plan"), which became
effective as of June 1, 1956, is a noncontributory defined benefit retirement
plan covering salaried and certain hourly paid employees. Participants become
eligible for benefits under this plan when they achieve 65 years of age and a
minimum of 5 years of service. Alternatively, a participant may choose "Early
Retirement" between 55 and 65 years of age with a minimum of 5 years of service.
Benefits under this plan are equal to the sum of (A) and (B):
(A) For credited service accrued prior to January 1, 2002:
0.75% of Final Average Base Earnings up to Social Security Covered
Compensation, plus 1.25% of Final Average Base Earnings in excess of
Social Security Covered Compensation, multiplied
16
by the number of years of Credited Service accrued prior to January 1,
2002 (up to a maximum of 30 years).
"Final Average Base Earnings" is defined as average base compensation
(base rate of pay) during the five consecutive calendar years within
the 10 years of service prior to the date of termination that provide
the highest average.
"Covered Compensation" is defined as the 35 year average of the FICA
taxable wage bases ending with the earlier of the year the participant
reaches Social Security retirement age or the year of employment
termination or retirement.
(B) For credited service accrued after December 31, 2001:
1.25% of Final Average Total Earnings multiplied by the number of
years of Credited Service accrued after December 31, 2001.
"Final Average Total Earnings" is defined as average total earnings
(base rate of pay plus annual bonus) during the five consecutive
calendar years within the 10 years of service prior to the date of
employment termination or retirement that provide the highest average.
ACCO Brands Supplemental Plan. The ACCO Brands Corporation Supplemental Pension
Plan ("Supplemental Plan") is an unfunded excess benefit plan that pays the
difference between the benefits payable under our tax-qualified Pension Plan and
the amount that would have been paid, but for the Internal Revenue Code annual
benefit limits on tax-qualified pension plans. The current Internal Revenue Code
limit is the lesser of $170,000 or the employee's average annual compensation
during the three highest-paid consecutive years of employment. The Internal
Revenue Code also provides that benefits under tax-qualified plans cannot be
based on compensation in excess of a certain limit, currently $210,000. The
Supplemental Plan provides the difference between the amount paid under our
tax-qualified plans and the amount that would have been paid if the limit on
compensation were not included therein. In calculating benefits, no credit is
given for service in excess of 35 years.
Mr. Campbell is a participant in both the Pension and Supplemental Plans with
less than 1 year of credited service as of December 31, 2005. The estimated
annual benefit payable under the combined plans upon retirement at normal
retirement age for Mr. Campbell will be $250,332.
Mr. Chandler is a participant in both the Pension and Supplemental Plans with 11
years of credited service as of December 31, 2005. The estimated annual benefit
payable under the combined plans upon retirement at normal retirement age for
Mr. Chandler will be $108,444.
Mr. Elisman is a participant in both the Pension and Supplemental Plans with one
year of credited service as of December 31, 2005. The estimated annual benefit
payable under the combined plans upon retirement at normal retirement age for
Mr. Elisman will be $171,864.
Special Agreement with Mr. Fenwick: Per an existing agreement with Mr. Fenwick
he will receive a pension benefit upon his retirement as if he were to remain a
participant in the ACCO UK Pension Plan. As a participant in the ACCO UK Pension
Plan, 6% of Mr. Fenwick's base salary and 6% of his average annual bonus paid
over the preceding three years is withheld and contributed to the plan, as
required by the plan.
The annual pension benefit under this plan is payable as a single life annuity
payable at age 62, equal to two-thirds (2/3) of an executive's Final Pensionable
Earnings. "Pensionable Earnings" are defined as base salary for the preceding
full year together with the average annual bonus paid for the preceding three
years. "Final
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Pensionable Earnings" are Pensionable Earnings for the full year immediately
before retirement or if higher, the average of any 3 consecutive years of
Pensionable Earnings in the last 10 years. Mr. Fenwick is eligible for early
retirement at age 55, with the benefit reduced by 4% per year that the benefit
commencement date precedes Mr. Fenwick's 62nd birthday.
The following table sets forth the highest estimated annual retirement benefits
payable to Mr. Fenwick in the specified compensation and years of service
classifications upon retirement at normal retirement date, assuming an annuity
payment, rather than a discounted lump sum, under the ACCO UK Pension Plan:
Pension Plan Table
Estimated Annual Retirement Benefits
for Representative Years of Credited Service
Remuneration 10 15 20 25 30 35
$ 172,000 $ 32,453 $ 48,679 $ 58,026 $ 81,132 $ 97,359 $ 113,585
$ 258,000 $ 48,679 $ 73,019 $ 97,359 $ 121,699 $ 146,038 $ 170,378
$ 344,000 $ 64,906 $ 97,359 $ 129,812 $ 162,265 $ 194,718 $ 227,169
$ 430,000 $ 81,132 $ 121,699 $ 162,265 $ 202,831 $ 243,395 $ 283,962
$ 516,000 $ 97,359 $ 146,038 $ 194,718 $ 243,395 $ 292,075 $ 340,754
$ 602,000 $ 113,585 $ 170,378 $ 227,169 $ 283,962 $ 340,754 $ 397,547
$ 688,000 $ 129,812 $ 194,718 $ 259,622 $ 324,528 $ 389,434 $ 454,340
$ 774,000 $ 146,038 $ 219,056 $ 292,075 $ 365,094 $ 438,113 $ 511,132
$ 860,000 $ 162,265 $ 243,395 $ 324,528 $ 405,660 $ 486,793 $ 567,925
$ 946,000 $ 178,491 $ 267,735 $ 356,981 $ 446,226 $ 535,472 $ 624,718
$ 1,032,000 $ 194,718 $ 292,075 $ 389,434 $ 409,393 $ 584,152 $ 681,509
(1) The table above assumes an exchange rate of 1.00 = $1.72, which was in effect
on December 31, 2005.
As of December 31, 2005, Mr. Fenwick had completed 17 years of pensionable
service with ACCO.
Special Agreement with Mr. Turner. Per an agreement with John M. Turner entered
into by GBC prior to the Merger, he is a participant in the GBC (United Kingdom)
Limited Staff Pension Plan (the "GBC UK Plan"). The GBC UK Plan is a
contributory defined benefit retirement plan covering certain current and former
employees of GBC's United Kingdom subsidiary. Mr. Turner was formerly employed
by that subsidiary and continues to accrue benefits under this plan. Benefits
under the GBC UK Plan equal the sum of
a) for credited service accrued prior to January 1, 2002, 2.5% of Final
Pensionable Salary as of December 31, 2001 for each year of pensionable service
before January 1, 2002 and in proportion for each completed month of pensionable
service indexed to the U.K. Retail Price Index through Mr. Turner's normal
retirement date; and
b) for credited service accrued after December 31, 2001, 1.67% of Final
Pensionable Salary for each year of pensionable service thereafter and in
proportion for each month of pensionable service.
Under the GBC UK Plan, Mr. Turner would be eligible to receive benefits at the
normal retirement age of 65 or upon an earlier retirement at a reduced actuarial
determined amount. "Final Pensionable Salary" is defined as the average of the
last five consecutive year's salary plus the average of the past three year's
bonus, less 800 Pounds Sterling, except that bonus amounts are excluded from the
definition of Final Pensionable Salary for all years beginning January 1, 2002.
As of December 31, 2005, Mr. Turner had completed 27 years of pensionable
service under the GBC UK Plan. The estimated annual benefit payable to Mr.
Turner upon retirement at age 65 will be $204, 666 using exchange rates in
effect at December 31, 2005.
18
Severance/Change in Control Provisions and Agreements
Currently, Messrs. Campbell, Chandler, and Elisman are covered under the ACCO
Brands Corporation Executive Severance Policy, which provides for the following
upon involuntary termination or termination as triggered by a "change in
control":
Involuntary Termination: 24 months salary and two year's target bonus for
Mr. Campbell; 18 months of base salary plus one year's target bonus for
each of Messrs. Chandler and Elisman.
Change in Control Termination: 36 months salary and three year's target
bonus for Mr. Campbell; 24 months of base salary plus one year's target
bonus for each of Messrs. Chandler and Elisman.
Mr. Fenwick is currently covered by a letter agreement with the Company under
the provisions of the ACCO UK severance policy, under which he would receive the
following:
Involuntary Termination: 30 months of base salary, 30 months target bonus,
and pro-rata target bonus for the then current year.
Change in Control Termination: 36 months of base salary, 36 months target
bonus, and pro-rata target bonus for the then current year.
Repatriation Payment: a lump sum payment in the amount of $500,000 in lieu
of repatriation and relocation benefits in the event he is involuntarily
terminated from employment or should he voluntarily terminate his
employment following a change in control.
Mr. Turner is party to an Executive Severance/ Change in Control Agreement,
entered into with GBC. Under the terms of this agreement, Mr. Turner would be
entitled to severance payments and other benefits (as summarized below) if he is
terminated by ACCO Brands within twenty-four months following completion of the
merger without "cause" or by Mr. Turner for "good reason" (each as defined in
the agreement). In the event of an eligible termination, the Company must pay
Mr. Turner a single lump-sum cash payment equal to 2.25 times the sum of his
respective annual base salary plus the greater of either his target bonus or his
bonus based on actual performance for the then-current year.
If Mr. Turner's employment terminates in a "change in control termination," he
will be deemed to have satisfied the age and service requirements for retiree
medical benefits as in effect at GBC on February 10, 2005, and he and his
eligible dependents may commence coverage for such retiree benefits at any time
following the expiration of the active employee medical and dental continuation
coverage period as described in his change in control agreement to the same
extent and on the same cost-sharing basis as do other GBC retirees with the same
combined age and years of service as of his date of termination.
If Mr. Turner is terminated involuntarily or in a "change in control
termination" and as a result thereof he is entitled to receive severance
payments under these arrangements, he would also receive:
continued participation in our medical and dental plans on a cost-sharing
basis for the severance period up to a maximum of two years following
termination;
in the case of a change in control termination, to the extent not already
vested and exercisable, he would be entitled to exercise any or all stock
options that were outstanding immediately prior to the merger for the
earlier of one year following termination or the expiration date of the
stock option (other than stock options issued by GBC to Mr. Turner in 2005
which would be exercisable as they may vest over his equivalent severance
period);
19
reimbursement of reasonable and ordinary relocation expenses to move
himself and his immediate family to the United Kingdom, provided those
expenses are incurred within sixty days of the termination of his
employment;
outplacement services of an amount not to exceed ten percent of his base
salary in effect at the time of termination; and
a gross-up for any "golden parachute" excise tax that may be payable by him
under Section 4999 of the Internal Revenue Code, and any income and
employment withholding taxes on the gross-up payment, with respect to the
severance payments and other benefits due to him (whether under the change
in control plan or otherwise), unless the amount of any "excess parachute
payments" paid or payable to him does not exceed 330% of his base pay as
determined pursuant to Section 280G of the Internal Revenue Code, in which
case the gross-up payment shall not be paid and the severance payable to
him will be reduced so that no amounts paid or payable to the executive
will be deemed "excess parachute payments" for purposes of Section 4999 of
the Internal Revenue Code.
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