The Andersons, Inc. DEF 14A
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
The
Andersons, Inc.
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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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. |
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
March 17, 2006
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of shareholders that will be held on
Friday, May 12, 2006, at 8:00 a.m., local time, at The Andersons Headquarters Building, 480 West
Dussel Drive, Maumee, Ohio 43537.
This booklet includes the formal notice of the meeting and the proxy statement. The proxy
statement tells you more about the agenda, and how to vote your proxy and procedures for the
meeting. It also describes how the board operates and gives you information about our director
candidates. A form of proxy for voting at the meeting and our 2005 annual report to shareholders
included with this booklet.
It is important that your shares are represented and voted at the Annual Meeting, regardless
of the size of your holdings. I urge you to vote your proxy as soon as possible so that your
shares may be represented at the meeting. If you attend the Annual Meeting, you may revoke your
proxy in writing and vote your shares in person, if you wish.
I look forward to seeing you on May 12.
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Sincerely, |
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/s/Richard P. Anderson |
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Richard P. Anderson |
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Chairman, Board of Directors |
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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Date:
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May 12, 2006 |
Time:
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8:00 A.M. |
Place:
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The Andersons Headquarters Building |
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480 West Dussel Drive |
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Maumee, Ohio 43537 |
Matters to be voted upon:
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The election of eleven directors to hold office for a one-year term. |
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The ratification of the appointment of PricewaterhouseCoopers LLP as
independent registered public accounting firm for the year ending December 31, 2006. |
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Any other matters that may properly come before the Annual Meeting and any
adjournments or postponements thereof. |
Holders of record of The Andersons, Inc. Common Shares as of the close of business on February 28,
2006 will be entitled to vote at the Annual Meeting.
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By order of the Board of Directors |
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Maumee, Ohio |
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March 17, 2006
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/s/Naran U. Burchinow |
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Naran U. Burchinow |
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Secretary |
Whether or not you plan to attend the Annual Meeting in person and regardless of the number of
shares you own, please vote your shares by proxy, either by mailing the enclosed proxy card or, by
telephone or via the internet. If you attend the Annual Meeting, you may revoke your proxy in
writing and vote your shares in person, if you wish.
Contents
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THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
PROXY STATEMENT
Annual Meeting of Shareholders
May 12, 2006
Introduction
The Board of Directors is soliciting your proxy to encourage your participation in the voting
at the Annual Meeting and to obtain your support on each of the proposals. You are invited to
attend the Annual Meeting and vote your shares directly. However, even if you do not attend, you
may vote by proxy, which allows you to direct another person to vote your shares at the meeting on
your behalf. This proxy is being mailed to shareholders on or about March 17, 2006.
This Proxy Solicitation
Included in this package are the proxy card and this proxy statement. The proxy card and
the identification number on it are the means by which you authorize another person to vote your
shares in accordance with your instructions.
This proxy statement provides you with information about the proposals and about The
Andersons, Inc. (the Corporation) that you may find useful in deciding how to vote. After this
introduction, you will find the following seven sections:
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Voting |
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Proposals |
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Board of Directors |
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Appointment of Independent Registered Public Accounting Firm |
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Share Ownership |
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Executive Compensation |
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Other Information |
The Annual Meeting
As shown on the Notice of Annual Meeting, the Annual Meeting will be held on Friday, May
12, 2006, at The Andersons Headquarters Building in Maumee, Ohio. The Corporations Code of
Regulations requires that a majority of our Common Shares be represented at the Annual Meeting,
either in person or by proxy, in order to transact business.
Abstentions and broker non-votes (proxies held in street name by brokers that are not voted on
all proposals) will be treated as present for purposes of determining whether a majority is
represented.
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There were no shareholder proposals submitted for the Annual Meeting. We must receive any
shareholder proposals for the 2007 Annual Meeting at our principal offices in Maumee, Ohio by
December 31, 2006.
Common Shares Outstanding
On February 28, 2006, The Andersons, Inc. had issued and outstanding 7,571,859 shares of
common stock.
Voting
You are entitled to one vote at the Annual Meeting for each Common Share of The
Andersons, Inc. that you owned of record as of the close of business on February 28, 2006.
How to Vote Your Shares
You may vote your shares at the Annual Meeting by proxy or in person. Even if you plan
to attend the meeting, we urge you to vote in advance. If your shares are recorded in your name,
you may cast your vote in one of these four ways:
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Vote by telephone: You can vote by phone at any time by calling the
toll-free number (for residents of the U.S.) listed on your proxy card. To vote,
enter the control number listed on your proxy card and follow the simple recorded
instructions. If you vote by phone, you do not need to return your proxy card. |
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Vote by mail: If you choose to vote by mail, simply mark your proxy card,
and then date, sign and return it in the postage-paid envelope provided. |
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Vote via the internet: You can vote via the internet by accessing the
following website www.computershare.com/us/proxy. Follow the simple instructions
and be prepared to enter the code listed on your proxy card. If you vote via the
internet, you do not need to return your proxy card. |
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Vote in person at the Annual Meeting |
Shareholders who hold their shares beneficially in street name through a nominee (such as a
bank or a broker) may be able to vote by telephone or the Internet as well as by mail. You should
follow the instructions you receive from your nominee to vote these shares.
When you vote by proxy, the shares you hold will be voted in accordance with your
instructions. Your telephone or mail proxy vote will direct the designated persons (known as
proxies) to vote your shares at the Annual Meeting in accordance with your instructions. The
Board has designated Matthew C. Anderson, Naran U. Burchinow, Dale W. Fallat to serve as the
proxies for the Annual Meeting.
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How to Revoke Your Proxy
You may revoke your proxy at any time before it is exercised by any of the following
means:
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Notifying Naran U. Burchinow, our Corporate Secretary, in writing prior to the
Annual Meeting; |
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Submitting a later dated proxy card or telephone vote; |
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Attending the Annual Meeting and revoking your proxy in writing. Your attendance
at the Annual Meeting will not, by itself, revoke a proxy. |
Voting at the Annual Meeting
Your shares will be voted at the meeting as directed by the instructions on your proxy
card or voting instructions if: (1) you are entitled to vote, (2) your proxy was properly executed,
(3) we received your proxy prior to the Annual Meeting, and (4) you did not revoke your proxy prior
to the meeting.
The Boards Recommendations
If you send a properly executed proxy without specific voting instructions, the
designated proxies will vote your shares for the election of the nominated directors and the
ratification of the independent registered public accounting firm.
Votes Required to Approve Each Item
The Code of Regulations also states that the nominees for director receiving the greatest
number of votes shall be elected. Therefore, abstentions and broker non-votes will not count as a
vote for or against the election of directors. The ratification of independent registered public
accounting firm requires a majority of the common shares present and eligible to vote. A broker
non-vote or abstention will count as a vote against this proposal.
Where to Find Voting Results
We will announce the voting results at the Annual Meeting and will publish the voting
results in the Corporations Form 10-Q for the second quarter ended June 30, 2006. We will file
that Form 10-Q with the Securities and Exchange Commission in August 2006.
Proposals
The Governance / Nominating Committee and the Board, including all independent directors,
have nominated eleven directors each for a one-year term. The Audit Committee has hired
and the Board has approved PricewaterhouseCoopers LLP as the Corporations independent
registered public accounting firm for the year 2006 and recommends that you vote for their
ratification.
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Election of Directors
The Board of Directors is currently comprised of eleven directors. The Board of Directors has
nominated and recommends the election of each of the nominees listed below. Each Director that is
elected will serve until the next Annual Meeting or until their earlier removal or resignation.
Each of the nominees listed is currently a Director of the Corporation. The Board of Directors
expects all nominees named below to be available for election. In case any nominee is not
available, the proxy holders may vote for a substitute, unless the Board of Directors reduces the
number of directors.
Directors will be elected at the Annual Meeting by a plurality of the votes cast at the Annual
Meeting by the holders of shares represented in person or by proxy. There is no right to
cumulative voting as to any matter, including the election of directors.
The following is a brief biography of each nominee. Information as to their ownership of the
Common Shares can be found in the Share Ownership section at page 13. All information provided is
current as of the record date February 28, 2006.
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Principal Occupation, Business Experience |
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Director |
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and Other Directorships |
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Michael J. Anderson
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President and Chief Executive Officer
since January 1999, President and Chief
Operating Officer from 1996 through
1998, Vice President and General Manager
of the Retail Group from 1994 until 1996
and Vice President and General Manager
Grain Group from 1990 through 1994.
Director of Interstate Bakeries
Corporation and Fifth Third Bank,
Northwest Ohio.
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1988 |
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Richard P. Anderson
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Chairman of the Board since 1996, Chief
Executive Officer from 1987 to 1998,
Managing Partner from 1984 to 1987,
general partner and member of Managing
Committee from 1947 to 1987.
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1987 |
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Thomas H. Anderson
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Chairman Emeritus since 1996, Chairman
of the Board from 1987 until 1996,
Senior Partner in 1987, general partner
and member of Managing Committee from
1947 to 1987.
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1987 |
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John F. Barrett
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Chairman, President and Chief Executive
Officer of The Western and Southern
Financial Group, previously President
and Chief Operating Officer and
Executive Vice President and Chief
Financial Officer. Director of
Convergys Corp., Inc. and Fifth Third
Bancorp.
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1992 |
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Principal Occupation, Business Experience |
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Director |
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Robert J. King, Jr.
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50 |
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Managing Director, Western Reserve
Partners LLC since 2006. Formerly
Regional President of Fifth Third Bank
from 2002 through 2004 and Chairman,
President and Chief Executive Officer of
Fifth Third Bank (Northeastern Ohio)
from 1997 through 2002. Director of
Shiloh Industries, Inc. and MTD Holdings
Inc.
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2005 |
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Paul M. Kraus
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Of counsel to the Toledo, Ohio law firm
of Marshall & Melhorn, LLC, member since
1962.
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1988 |
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Donald L. Mennel
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President and Treasurer of The Mennel
Milling Company since 1984. Served as a
member of the Federal Grain Inspection
Service Advisory Board and a past
chairman of the Eastern Soft Wheat
Technical Board.
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1998 |
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David L. Nichols
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Past President and Chief Operating
Officer of the Richs Lazarus
Goldsmiths Macys Division of Federated
Department Stores, Inc. from 2000
through 2005, previously Chairman and
Chief Executive Officer of Mercantile
Stores, Inc. Director of R. G. Barry
Corporation. Past director of the
Federal Reserve Bank, Cleveland, Ohio.
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1995 |
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Dr. Sidney A. Ribeau
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President of Bowling Green State
University since 1995. Previously Vice
President for Academic Affairs at
California State Polytechnic University,
Pomona, California. Director of
Worthington Industries, Inc. and
Convergys Corp., Inc.
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1997 |
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Charles A. Sullivan
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Past Chairman of the Board and former
Chief Executive Officer of Interstate
Bakeries Corporation. Past director of
UMB Bank of Kansas City, Missouri.
Advisory director of Plaza Belmont, LLC.
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1996 |
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Jacqueline F. Woods
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Retired President of Ameritech Ohio
(subsequently renamed AT&T Ohio).
Director of The Timken Company.
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1999 |
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Certain Relationships and Related Transactions
Richard P. and Thomas H. Anderson are brothers; Paul M. Kraus is their brother-in-law.
Michael J. Anderson is a nephew of Richard P. and Thomas H. Anderson and Paul M. Kraus.
Charles A. Sullivan was formerly Chairman and Chief Executive Officer of Interstate Bakeries
Corporation, which filed for Chapter 11 reorganization under the federal
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bankruptcy code on September 22, 2004. Mr. Sullivans last date of service as an executive officer of that company
was September 30, 2002, which places the filing within the 2 year proxy disclosure requirement for
bankruptcy filings. Michael J. Anderson remains a director of Interstate Bakeries Corporation.
Directors Richard P. Anderson, Thomas H. Anderson and Paul M. Kraus each lease the land and
home in which they live from the Corporation pursuant to lifetime leases that were granted in 1978
by the predecessor entity to The Andersons, Inc. Their lease payments were based on the fair
market rental value of the properties over their projected lifetimes, and were fully paid by such
Directors in a single lump sum in 1978. Following discussion with such Directors, the Corporation
has recently offered to sell to each of them their respective land and homes, based on their
current fair market value. Such a sale would terminate the leases and give the Directors fee
simple ownership of their homes. At this time, the three Directors have indicated their intent to
purchase their properties.
Any of the three Directors who does not elect to purchase his property could continue to
occupy his home under his lifetime leasehold, and upon the death of that Director or surviving
spouse, his land parcel and home would revert to the Corporation.
Pursuant to Ohio law, the matter was referred to the independent Directors of the Corporation.
The independent Directors retained outside independent counsel, and a third party architect and
real estate professional to advise them. The independent Directors determined that it was not in
the best interests of the Corporation to continue to own these parcels of residential real estate,
or to serve as a landlord. The independent Directors commissioned appraisals of the three parcels
from an independent real estate appraiser, whose methodology was then reviewed and approved by a
second independent real estate appraiser. The independent Directors then concluded that Richard P.
Anderson, Thomas H. Anderson and Paul M. Kraus would be offered the opportunity to purchase their
homes at such fair market values, net of the value of their lifetime leaseholds, which, as
described above, such Directors already owned. The value of the lifetime leaseholds was determined
by independent counsel by reference to the Directors and surviving spouses life expectancies,
based upon Internal Revenue Code actuarial tables.
A limited number of adjacent land parcels for residential homesites may also be sold. The
independent Directors were advised that local zoning laws and prevailing land uses made sale of the
parcels as residential properties the most practical and easily disposable use of the properties.
Appraisals of the fair market value were also obtained for those parcels by the same process.
Relatives of the three Directors were advised that such parcels may soon be available for sale, at
the appraised fair market values. If offers to purchase the parcels at such fair market value are
received from such individuals, the Corporation may choose to accept them.
The Corporation believes that any sale on the above terms would be no less favorable to the
Corporation than a sale made to unaffiliated persons.
The Board of Directors recommends a vote FOR the election of the eleven directors as
presented.
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Approval of Independent Registered Public Accounting Firm
The Audit Committee has hired and the Board of Directors has approved PricewaterhouseCoopers
LLP as our independent registered public accounting firm to audit the financial statements of the
Corporation for fiscal year 2006.
If the shareholders do not ratify this appointment by a majority of the shares represented in
person or by proxy at the Annual Meeting, the Audit Committee will consider other independent
registered public accounting firms.
The Board of Directors recommends a vote FOR ratification of the appointment of
PricewaterhouseCoopers LLP as the independent registered public accounting firm.
Other Business
At the date of this Proxy Statement, we have no knowledge of any business other than the
proposals described above that will be presented at the Annual Meeting. If any other business
should properly come before the Annual Meeting, the proxies will be voted on at the discretion of
the proxy holders.
Board of Directors
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Governance / |
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Board |
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Audit |
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Compensation |
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Nominating |
Michael J. Anderson
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Richard P. Anderson
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Thomas H. Anderson
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John F. Barrett
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X |
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Robert J. King, Jr.
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X |
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Paul M. Kraus
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X |
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Donald L. Mennel
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X*
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David L. Nichols
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X
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Dr. Sidney A. Ribeau
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X
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X
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Charles A. Sullivan
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X* |
Jacqueline F. Woods
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X
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X* |
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Board Meetings and Committees
The Board of Directors (the Board) held five meetings in 2005. Each director attended 75%
or more of the 2005 meetings of the Board of Directors and its committees, except for Robert J.
King who attended all three meetings after his appointment to the Board in August 2005. Each of
the Board members, except Robert J. King, who was not then a member of the Board, attended the
Annual Shareholders Meeting held on May 6, 2005.
Audit Committee: The Audit Committee, among other duties, appoints the independent registered
public accounting firm, reviews the internal audit and external financial reporting of the
Corporation, reviews the scope of the independent audit and
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considers comments by the independent registered public accounting firm regarding internal controls and accounting procedures and
managements response to those comments. The Audit Committee held four regular meetings and five
special meetings in 2005.
The Board has determined that Donald L. Mennel, the Chairman of the Audit Committee, is an
audit committee financial expert as defined in the federal securities laws. All members of the
Audit Committee are independent as defined in the listing standards of the NASDAQ.
Compensation Committee: The Compensation Committee, comprised solely of four independent
directors, reviews the recommendations of the Corporations Chief Executive Officer as to the
appropriate compensation that includes base salaries, short-term and long-term compensation, and
benefits of the Corporations officers (other than the Chief Executive Officer) and determines the
compensation of such officers and the Corporations Chief Executive Officer for the ensuing year.
In addition, under the Corporations 2005 Long-Term Performance Compensation Plan, the Compensation
Committee reviews, approves and recommends to the Board of Directors grants of equity-based
compensation to all participants. The Compensation Committee met twice in 2005.
Governance / Nominating Committee: The Governance / Nominating Committee is comprised solely
of three independent directors. This Committee met twice in 2005. The Committee recommends to the
Board actions to be taken regarding its structure, organization and functioning, selects and
reviews candidates to be nominated to the Board, reports to the Board regarding the qualifications
of such candidates, and recommends a slate of directors to be submitted to the shareholders for
approval and conducts regular meetings of the independent directors without management being
present. The Governance / Nominating Committee recommended the election to the Board of each
nominee named in this Proxy Statement. The charter for the Governance / Nominating Committee was
included in the Proxy Statement for the May 13, 2004 Annual Meeting as Appendix C. All members of
the Governance / Nominating Committee are independent as defined in the listing standards of the
NASDAQ.
It is the policy of the Governance / Nominating Committee to consider for nomination as a
director any person whose name is submitted by a shareholder, provided that the submission is made
prior to December 31 of the year that precedes the next annual meeting of shareholders and provided
that the person is willing to be considered as a candidate.
Each candidate for director is evaluated on the basis of his / her ability to contribute
expertise to the businesses and services in which the Corporation engages, to conduct himself /
herself in accordance with the Statement of Principles, and to contribute to the mission and
greater good of the Corporation. The candidates particular expertise, as well as existing Board
expertise, is taken into consideration. A candidates independence, as defined by applicable
laws, and the Boards ratio of independent to non-independent directors is also taken into
consideration. Qualifications and specific qualities or skills considered necessary for one or
more of the directors to possess include, but are not limited to, the following:
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Able to serve for a reasonable period of time |
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Multi-business background preferred |
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Successful career in business preferred |
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Active vs. retired preferred |
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Audit Committee membership potential |
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Strategic thinker |
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Leader / manager |
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Agribusiness background, domestic and international |
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Transportation background |
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Retail background |
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Brand marketing exposure |
Submission of names by shareholders are to be made to the Secretary of the Corporation, at the
Corporations Maumee, Ohio address, who, in turn, submits the names to the Chair of the Governance
/ Nominating Committee.
Shareholder Communications to Board: Shareholders may send communications to the Board by
writing any of its officers at the Corporations Maumee, Ohio, address; or, by calling any officer
at 419-893-5050 or 800-537-3370. All shareholder communications intended for the Board will be
forwarded to the Board members. Shareholders may also obtain additional information about the
Corporation at the Corporations website (www.andersonsinc.com).
Code of Ethics
The Corporation has Standards of Business Conduct that apply to all employees, including the
principal executive officer, principal financial officer and the principal accounting officer.
These Standards of Business Conduct are available on the Corporations website
(www.andersonsinc.com). The Corporation intends to post amendments to or waivers from its
Standards of Business Conduct to the extent applicable to the Corporations chief executive
officer, principal financial officer or principal accounting officer on its website.
Director Compensation
Directors who are not employees of the Corporation receive an annual retainer of $22,500. The
chairpersons of the Audit, Compensation and Governance / Nominating Committees each receive an
additional retainer of $3,000. Directors may elect to take their annual retainer in cash, Common
Shares or as deferred compensation.
Directors who are not employees of the Corporation receive a fee of $1,000 for each Board
Meeting and Annual Meeting attended. Members of each committee, including the chairpersons, who
are not employees of the Corporation, receive $1,000 for each committee meeting attended.
Participation in Board and committee meetings by phone will be paid at a rate of one half of the
regular meeting amount. Beginning in 2002, directors participating in telephone conference
meetings with management that are not regularly scheduled Committee meetings, also receive a fee of
the greater of $500 or one half of the regular meeting amount.
Directors who are not employees of the Corporation also receive an option grant each year
based partially on the Corporations financial performance of the previous year. In 2005, the
grant date was moved to April 1 from January 1, which allows for completion of the annual audit of
the prior year. These Director grants vest after one year, and expire in five years and are
granted at the market price on the date of grant. Each non-employee director received a grant of
3,000 options on April 1, 2005 and is expected to receive a grant of 3,600 share-only share
appreciation rights on April 1, 2006.
Thomas H. Anderson, chairman emeritus, receives payments totaling $75,000
9
annually from the Corporation comprised of an annual retainer of $22,500 for Board of Director responsibilities and
of $52,500 annually from the Corporation for business consulting and advisory services. Richard P.
Anderson, Chairman of the Board, receives payments totaling $100,000 annually from the Corporation
comprised of an annual retainer of $22,500 for Board of Director responsibilities and $77,500 for
business consulting and advisory services.
Audit Committee Report
The Audit Committee of The Andersons, Inc. Board of Directors is comprised of three
independent directors and operates under a written charter (included in the Proxy Statement for the
May 13, 2004 Annual Meeting as Appendix A). The Audit Committee appoints, establishes fees to,
pre-approves non-audit services provided by, and evaluates the performance of the Corporations
independent registered public accounting firm. The Audit Committees appointment of the Companys
independent registered public accounting firm is presented to the shareholders in the annual proxy
statement for ratification.
Management is responsible for the Corporations internal controls, financial reporting process
and compliance with laws and regulations and ethical business standards. The Corporations
independent registered public accounting firm is responsible for performing an audit of the
consolidated financial statements of the Corporation in accordance with standards established by
the Public Company Accounting Oversight Board (PCAOB) and for issuing their reports. The Audit
Committee is responsible for monitoring and overseeing these processes.
In this context, the Audit Committee has met and held discussions with management, internal
audit and the independent registered public accounting firm. Management represented to the Audit
Committee that the consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated
financial statements with management, internal audit and the independent registered public
accounting firm. The Audit Committee also discussed with the independent registered public
accounting firm matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees) and reviewed all material written communications between the
independent registered public accounting firm and management.
The Corporations independent registered public accounting firm also provided to the Audit
Committee the written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee discussed with the
independent registered public accounting firm that firms independence.
The Audit Committee has also reviewed the services provided by the independent registered
public accounting firm (as disclosed below under the caption Audit Fees) when considering their
independence.
10
Based upon the Audit Committees discussion with management and the independent registered
public accounting firm and the Audit Committees review of the representations of management and
the report of the independent registered public accounting firm to the Audit Committee, the Audit
Committee recommended to the Board of Directors that the audited consolidated financial statements
be included in the Corporations Annual Report on Form 10-K for the year ended December 31, 2005
filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
Donald L. Mennel (chair), David L. Nichols, Charles A. Sullivan
Appointment of Independent Registered Public Accounting Firm
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP (PwC) served as the Corporations independent registered public
accounting firm for the year ended December 31, 2005. The Audit Committee has appointed PwC as the
independent registered public accounting firm of the Corporation for the year ended December 31,
2006.
Representatives from PricewaterhouseCoopers LLP are expected to attend the meeting. They will
have an opportunity to make a statement at the meeting if they desire to do so and are expected to
be available to respond to questions.
Audit Fees
During 2005, PwC not only acted as the Corporations independent registered public accounting
firm but also rendered other services to the Corporation. The following table sets forth the
aggregate fees billed by PwC for audit services related to 2005 and 2004 and for other services
billed in the most recent two years:
|
|
|
|
|
|
|
|
|
Fees |
|
2005 |
|
|
2004 |
|
Audit (1) |
|
$ |
1,256,500 |
|
|
$ |
1,376,000 |
|
Audit-related (2) |
|
|
|
|
|
|
24,000 |
|
Tax (3) |
|
|
77,243 |
|
|
|
11,880 |
|
Other (4) |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
|
Total |
|
$ |
1,335,243 |
|
|
$ |
1,413,380 |
|
|
|
|
|
|
|
(1) |
|
Fees for professional services rendered for the audit of the consolidated financial
statements, statutory and subsidiary audits, consents, income tax provision procedures, and
assistance with review of documents filed with the SEC. |
|
(2) |
|
Fees for assurance and related services other than those included in Audit Fees and related
to accounting consultations in connection with an acquisition. |
|
(3) |
|
Fees for services related to tax consultations and tax planning projects. |
|
(4) |
|
Annual license fee for technical accounting research software. |
11
Policy on Audit Committee Pre-Approval of Services Performed by the Independent Registered Public
Accounting Firm
In accordance with the Securities and Exchange Commissions rules issued pursuant to the
Sarbanes Oxley Act of 2002, which were effective as of May 6, 2003 and require, among other things,
that the Audit Committee pre-approve all audit and non-audit services provided by the Corporations
independent registered public accounting firm, the Audit Committee has adopted a formal policy on
auditor independence requiring the approval by the Audit Committee of all professional services
rendered by the Corporations independent registered public accounting firm. This policy
specifically pre-approves at the beginning of each fiscal year all audit and audit-related services
to be provided by the independent registered public accounting firm during that fiscal year within
a general budget. The Audit Committee is updated as to the actual billings for these items on a
quarterly basis.
Tax and all other services that are permitted to be performed by the independent registered
public accounting firm, but could also be performed by other service providers, require specific
pre-approval by the Audit Committee after considering other bids and the impact of these services
on auditor independence. If the Audit Committee pre-approves services in these categories by the
independent registered public accounting firm, the Audit Committee is updated on a quarterly basis
as to the actual fees billed under each project.
Since May 6, 2003, 100% of the tax and other fees were pre-approved by the Audit Committee.
All fees noted above were for full-time, permanent employees of PricewaterhouseCoopers LLP.
12
Share Ownership
Shares Owned by Directors and Executive Officers
This table indicates the number of Common Shares owned by the executive officers and directors
as of February 28, 2006. The table displays this information for the group as a whole, for each
director individually and for the five most highly compensated executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Shares Beneficially |
|
|
|
|
Owned as of February 28, 2006 |
|
|
|
|
|
|
|
|
Aggregate Number Of |
|
|
|
|
|
|
|
|
Shares Beneficially |
|
Percent of |
Name |
|
Options (a) |
|
Owned |
|
Class (b) |
Dennis J. Addis |
|
|
31,850 |
|
|
|
13,315 |
(g) |
|
|
* |
|
Michael J. Anderson |
|
|
126,332 |
|
|
|
151,414 |
(c) |
|
|
3.60 |
% |
Richard P. Anderson |
|
|
85,188 |
|
|
|
358,370 |
(d) |
|
|
5.55 |
% |
Thomas H. Anderson |
|
|
3,000 |
|
|
|
260,773 |
(e) |
|
|
3.37 |
% |
John F. Barrett |
|
|
8,580 |
|
|
|
14,635 |
|
|
|
* |
|
Naran U. Burchinow |
|
|
2,800 |
|
|
|
|
|
|
|
* |
|
Robert J. King Jr. |
|
|
|
|
|
|
500 |
|
|
|
* |
|
Paul M. Kraus |
|
|
8,580 |
|
|
|
99,550 |
(f) |
|
|
1.37 |
% |
Donald L. Mennel |
|
|
8,580 |
|
|
|
12,515 |
|
|
|
* |
|
David L. Nichols |
|
|
3,000 |
|
|
|
13,000 |
|
|
|
* |
|
Harold M. Reed |
|
|
37,850 |
|
|
|
22,187 |
|
|
|
* |
|
Dr. Sidney A. Ribeau |
|
|
9,007 |
|
|
|
8,120 |
|
|
|
* |
|
Rasesh H. Shah |
|
|
27,250 |
|
|
|
21,638 |
|
|
|
* |
|
Charles A. Sullivan |
|
|
8,580 |
|
|
|
21,747 |
(h) |
|
|
* |
|
Jacqueline F. Woods |
|
|
8,580 |
|
|
|
6,882 |
|
|
|
* |
|
All directors and
executive officers
as a group (22
persons) |
|
|
445,332 |
|
|
|
1,207,039 |
|
|
|
18.06 |
% |
|
|
|
(a) |
|
Includes options exercisable within 60 days of February 28, 2006. |
|
(b) |
|
An asterisk denotes percentages less than one percent. |
|
(c) |
|
Includes 51,546 Common Shares held by Mrs. Carol H. Anderson, Mr. Andersons spouse and 7,282
Common Shares held by Colin J. Anderson, Mr. Andersons son. Mr. Anderson disclaims
beneficial ownership of such Common Shares. |
|
(d) |
|
Includes 332,811 Common Shares are held by Richard P. Anderson, LLC. Richard P. Anderson
holds all options on Common Shares. Voting shares of the LLC are held 50% by Richard P.
Anderson and 50% by Mrs. Frances H. Anderson, Mr. Andersons spouse. Nonvoting shares are
held 24.53% each by Mr. Anderson and Mrs. Anderson. Mr. and Mrs. Andersons children hold the
remaining nonvoting shares. Mr. Anderson disclaims beneficial ownership of such Common
Shares. |
|
(e) |
|
Includes 117,745 Common Shares held by Thomas H. Anderson Trust and 143,028 Common Shares
held by Mary P. Anderson Trust. Mrs. Mary P. Anderson, is Mr. |
13
|
|
Andersons spouse. Mr. Anderson disclaims beneficial ownership of such Common Shares. |
|
(f) |
|
Includes 46,650 Common Shares held by Mrs. Carol A. Kraus, Mr. Krauss spouse. Mr. Kraus
disclaims beneficial ownership of such Common Shares. |
|
(g) |
|
Includes 400 Common Shares owned by Jeremy Addis, Mr. Addiss son. Mr. Addis disclaims
beneficial ownership of such Common Shares. |
|
(h) |
|
Includes 5,270 Common shares owned by Charles A. Sullivan Trust. |
Share Ownership of Certain Beneficial Owners
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature |
|
|
Title of |
|
|
|
of Beneficial |
|
Percent of |
Class |
|
Name and Address of Beneficial Owner |
|
Ownership |
|
Class |
|
Common Shares |
|
Advisory Research, Inc. |
|
485,495 |
|
6.41% |
|
|
180 North Stetson Street |
|
|
|
|
|
|
Suite 5500 |
|
|
|
|
|
|
Chicago, Illinois 60601 |
|
|
|
|
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires officers and
directors to file reports of securities ownership and changes in such ownership with the Securities
and Exchange Commission. In addition, persons that are not officers or directors but who
beneficially own more than ten percent of Common Shares, must also report under Section 16(a).
Copies of all Section 16(a) forms filed by officers, directors and greater-than-10% owners are
required to be provided to the Corporation.
We have reviewed the reports and written representations from the executive officers and
directors. Based on our review, we believe that all filing requirements were met during 2005,
except for the following:
|
|
Daniel T, Anderson filed a late Form 4 for shares gifted to him on November 14 |
|
|
|
Richard M. Anderson filed a late Form 4 for a sale of shares made March 7 |
|
|
|
Charles E. Gallagher filed a late Form 4 for a sale of shares made November 9. |
Executive Compensation
This section contains charts that show the amount of compensation (both cash and Common
Shares) earned by the Corporations five most highly paid executive officers and one former
executive officer. It also contains the performance graph comparing the Corporations performance
relative to our peer group of companies and the report of our Compensation Committee explaining the
compensation philosophy for the Corporations most highly paid executive officers.
14
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term |
|
|
|
Annual Compensation |
|
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual |
|
|
Option |
|
|
Compensation |
|
Name and Position |
|
Year |
|
|
Salary |
|
|
Bonus |
|
|
Compensation (b) |
|
|
Grants |
|
|
(a) |
|
|
Michael J. Anderson |
|
|
2005 |
|
|
$ |
386,667 |
|
|
$ |
350,000 |
|
|
$ |
156,240 |
|
|
|
30,000 |
|
|
$ |
6,300 |
|
President and Chief |
|
|
2004 |
|
|
|
366,667 |
|
|
|
300,000 |
|
|
|
|
|
|
|
33,500 |
|
|
|
6,665 |
|
Executive Officer |
|
|
2003 |
|
|
|
348,333 |
|
|
|
185,000 |
|
|
|
|
|
|
|
35,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Addis |
|
|
2005 |
|
|
|
207,500 |
|
|
|
200,000 |
|
|
|
53,010 |
|
|
|
10,500 |
|
|
|
5,684 |
|
President |
|
|
2004 |
|
|
|
198,750 |
|
|
|
155,000 |
|
|
|
|
|
|
|
12,500 |
|
|
|
5,352 |
|
Plant
Nutrient Division |
|
|
2003 |
|
|
|
179,583 |
|
|
|
132,500 |
|
|
|
|
|
|
|
12,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Naran U. Burchinow |
|
|
2005 |
|
|
|
169,749 |
|
|
|
100,000 |
|
|
|
20,770 |
|
|
|
4,000 |
|
|
|
45,363 |
|
Vice President, |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
Counsel and Secretary |
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harold M. Reed |
|
|
2005 |
|
|
|
210,583 |
|
|
|
175,000 |
|
|
|
53,010 |
|
|
|
10,500 |
|
|
|
6,670 |
|
President |
|
|
2004 |
|
|
|
205,167 |
|
|
|
180,000 |
|
|
|
|
|
|
|
11,500 |
|
|
|
6,150 |
|
Grain Division |
|
|
2003 |
|
|
|
200,000 |
|
|
|
95,000 |
|
|
|
|
|
|
|
12,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rasesh H. Shah |
|
|
2005 |
|
|
|
212,500 |
|
|
|
290,000 |
|
|
|
53,010 |
|
|
|
12,500 |
|
|
|
6,354 |
|
President |
|
|
2004 |
|
|
|
203,500 |
|
|
|
275,000 |
|
|
|
|
|
|
|
12,500 |
|
|
|
6,665 |
|
Rail Group |
|
|
2003 |
|
|
|
187,667 |
|
|
|
82,500 |
|
|
|
|
|
|
|
12,000 |
|
|
|
5,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard M. Anderson |
|
|
2005 |
|
|
|
135,554 |
|
|
|
|
|
|
|
53,010 |
|
|
|
7,500 |
|
|
|
327,624 |
|
Former President |
|
|
2004 |
|
|
|
197,000 |
|
|
|
45,000 |
|
|
|
|
|
|
|
10,500 |
|
|
|
6,150 |
|
Turf &
Specialty Group |
|
|
2003 |
|
|
|
190,833 |
|
|
|
50,000 |
|
|
|
|
|
|
|
12,000 |
|
|
|
6,000 |
|
(a) |
|
Corporations matching contributions to the 401(k) retirement plan and the deferred
compensation plan. Also includes service award value for Harold M. Reed, moving and
relocation costs for Naran U. Burchinow and severance payments, supplemental pension plan
payment and the payout of accrued vacation for Richard M. Anderson. |
|
(b) |
|
Represents the April 1, 2005 market value of Performance Share Units granted. Common shares
will be delivered in the first quarter of 2008 based on cumulative earnings per share growth
over a three year performance period beginning January 1, 2005. This amount represents a full
award equivalent to 14% annual growth. Partial awards (equal to 10% of the full award) begin
at 3% annual growth. Grantees who separate from the Corporation for reasons other than death,
disability, retirement or termination without cause as a result of the sale of a business unit
forfeit their award (Richard M. Andersons award was forfeited). Upon the end of the
performance period, |
15
|
|
additional shares representing dividends paid during the performance period will be delivered.
Holders of these units have no shareholder rights until the end of the performance period and
delivery of the Common Shares. |
Option Grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable |
|
|
|
2005 Individual Grants |
|
|
Value at Assumed |
|
|
|
|
|
|
|
% of Total |
|
|
|
|
|
|
|
|
|
|
Annual rates of Share |
|
|
|
Number of |
|
|
Options |
|
|
|
|
|
|
|
|
|
|
Price Appreciation for |
|
|
|
Securities |
|
|
Granted to |
|
|
|
|
|
|
|
|
|
|
Option Term (b) |
|
|
|
|
Underlying |
|
|
Employees |
|
|
Exercise |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
in Fiscal |
|
|
or Base |
|
|
|
|
|
|
|
|
|
|
|
|
Granted (a) |
|
|
Year |
|
|
Price |
|
|
Expiration Date |
|
|
5% |
|
|
10% |
|
|
|
|
Michael J. Anderson |
|
|
30,000 |
|
|
|
15.66 |
% |
|
$ |
31.00 |
|
|
|
4/1/10 |
|
|
$ |
1,186,800 |
|
|
$ |
1,497,900 |
|
Dennis J. Addis |
|
|
10,500 |
|
|
|
5.48 |
% |
|
|
31.00 |
|
|
|
4/1/10 |
|
|
|
415,380 |
|
|
|
524,265 |
|
Naran U. Burchinow |
|
|
4,000 |
|
|
|
1.30 |
% |
|
|
31.00 |
|
|
|
4/1/10 |
|
|
|
158,240 |
|
|
|
199,720 |
|
Harold M. Reed |
|
|
10,500 |
|
|
|
5.48 |
% |
|
|
31.00 |
|
|
|
4/1/10 |
|
|
|
415,380 |
|
|
|
524,265 |
|
Rasesh H. Shah |
|
|
12,500 |
|
|
|
6.52 |
% |
|
|
31.00 |
|
|
|
4/1/10 |
|
|
|
494,500 |
|
|
|
624,125 |
|
Richard M. Anderson (c) |
|
|
7,500 |
|
|
|
3.91 |
% |
|
|
31.00 |
|
|
|
4/1/10 |
|
|
|
296,700 |
|
|
|
374,475 |
|
(a) |
|
These options, granted on April 1, 2005, were 40% vested at the date of grant, 30% after one
year and 30% after two years. Annual growth of 5% results in a share price of $39.56 per
share and 10% results in a price of $49.93 per share for the five-year option term. See (b)
for a discussion of these annual growth factors used in calculating potential realizable
value. |
(b) |
|
Potential realizable value is based on the assumed annual growth of the Corporations Common
Shares for the option term. Actual gains, if any, on share option exercises are dependent on
the future performance of the shares. There can be no assurance that the amounts reflected in
this table will be achieved. |
(c) |
|
Subsequent to grant, 2,250 of these options were cancelled as they will not vest within one
year of Richard M. Andersons termination date. |
16
Aggregated Option Exercises in 2005 and Year-End Values
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Unexercised |
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|
Value of In-the- |
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Options at |
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Money Options at |
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Year End (#) |
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|
Year End ($) |
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Shares |
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|
Acquired on |
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|
Value |
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|
Exercisable / |
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|
Exercisable / |
|
Name (a) |
|
Exercise |
|
|
Realized |
|
|
Unexercisable |
|
|
Unexercisable (b) |
|
|
Michael J. Anderson |
|
|
30,000 |
|
|
$ |
788,725 |
|
|
|
122,332 |
|
|
$ |
3,513,659 |
|
|
|
|
|
|
|
|
|
|
|
|
18,000 |
|
|
|
217,440 |
|
Dennis J. Addis |
|
|
6,000 |
|
|
|
155,190 |
|
|
|
36,200 |
|
|
|
1,002,309 |
|
|
|
|
|
|
|
|
|
|
|
|
6,300 |
|
|
|
76,104 |
|
Naran U. Burchinow |
|
|
|
|
|
|
|
|
|
|
1,600 |
|
|
|
19,328 |
|
|
|
|
|
|
|
|
|
|
|
|
2,400 |
|
|
|
28,992 |
|
Harold M. Reed |
|
|
14,000 |
|
|
|
432,550 |
|
|
|
37,700 |
|
|
|
1,057,896 |
|
|
|
|
|
|
|
|
|
|
|
|
6,300 |
|
|
|
76,104 |
|
Rasesh H. Shah |
|
|
7,500 |
|
|
|
196,400 |
|
|
|
29,500 |
|
|
|
763,873 |
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
90,600 |
|
Richard M. Anderson |
|
|
24,000 |
|
|
|
760,910 |
|
|
|
19,500 |
|
|
|
503,206 |
|
|
|
|
|
|
|
|
|
|
|
|
2,250 |
|
|
|
27,180 |
|
(a) |
|
None of the individuals in this table has stock appreciation rights. |
|
(b) |
|
The value of in-the-money options is calculated as the difference between the closing market
price of the Corporations Common Shares underlying the Corporations stock options as of
December 31, 2005 ($43.08) and the exercise price of the option. |
Long-Term
Incentive Plans Awards in Last Fiscal Year
In 2005, the Compensation Committee granted performance share units (PSUs) to all officers of
the Corporation under the 2005 Long-Term Performance Compensation Plan. Each PSU will be converted
into one share of the Corporations common stock at the end of the performance period if the
applicable performance conditions are satisfied. These PSUs will be increased by common shares
equal to the value of equivalent dividends paid on the Corporations common shares during the
performance period. For a description of the performance conditions and period for these PSUs, see
page 15, footnote (b).
|
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|
Name |
|
|
|
Number of Units |
|
Performance Period |
|
Michael J. Anderson
|
|
|
|
|
5,040 |
|
|
2005 through 2007 |
Dennis J. Addis
|
|
|
|
|
1,710 |
|
|
2005 through 2007 |
Naran U. Burchinow
|
|
|
|
|
670 |
|
|
2005 through 2007 |
Harold M. Reed
|
|
|
|
|
1,710 |
|
|
2005 through 2007 |
Rasesh H. Shah
|
|
|
|
|
1,710 |
|
|
2005 through 2007 |
17
Estimated Retirement Benefits
The following table shows estimated annual regular pension benefits payable to officers and
other key employees upon retirement if occurring today at age 65 under the provisions of our
qualified and non-qualified pension plans. These benefits are based upon compensation and years of
service.
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|
Approximate Annual Retirement Benefit |
|
|
Average Five-Year |
|
|
|
|
|
Based Upon the Indicated Years of Service (b) |
|
|
Compensation (a) |
|
5 Years |
|
10 Years |
|
15 Years |
|
25 Years |
|
30 Years |
|
|
|
200,000
|
|
$ |
13,700 |
|
|
$ |
27,400 |
|
|
$ |
41,200 |
|
|
$ |
68,600 |
|
|
$ |
82,300 |
|
300,000
|
|
|
21,200 |
|
|
|
42,400 |
|
|
|
63,700 |
|
|
|
106,100 |
|
|
|
127,300 |
|
400,000
|
|
|
28,700 |
|
|
|
57,400 |
|
|
|
86,200 |
|
|
|
143,600 |
|
|
|
172,300 |
|
500,000
|
|
|
36,200 |
|
|
|
72,400 |
|
|
|
108,700 |
|
|
|
181,100 |
|
|
|
217,300 |
|
600,000
|
|
|
43,700 |
|
|
|
87,400 |
|
|
|
131,200 |
|
|
|
218,600 |
|
|
|
262,300 |
|
700,000
|
|
|
51,200 |
|
|
|
102,400 |
|
|
|
153,700 |
|
|
|
256,100 |
|
|
|
307,300 |
|
800,000
|
|
|
58,700 |
|
|
|
117,400 |
|
|
|
176,200 |
|
|
|
293,600 |
|
|
|
352,300 |
|
900,000
|
|
|
66,200 |
|
|
|
132,400 |
|
|
|
198,700 |
|
|
|
331,100 |
|
|
|
397,300 |
|
1,000,000
|
|
|
73,700 |
|
|
|
147,400 |
|
|
|
221,200 |
|
|
|
368,600 |
|
|
|
442,300 |
|
In February 2006, the Board of Directors approved a revision of the retirement program for the
employees of the Corporation. The above table will apply only to service prior to December 31,
2006 and based on the average five-year compensation at retirement but not taking compensation
after December 31, 2011 into account. Pension benefits for service after December 31, 2006 will be
1% of the compensation during the year of service for all non-retail employees.
(a) |
|
Compensation includes base pay plus bonus. |
|
(b) |
|
The benefits shown reflect the election of a single life annuity. Credited years of service
are as follows: |
|
|
|
Names |
|
Years of Credited Service |
|
Michael J. Anderson |
|
18 |
Dennis J. Addis |
|
18 |
Naran U. Burchinow |
|
1 |
Harold M. Reed |
|
21 |
Rasesh H. Shah |
|
18 |
Richard M. Anderson |
|
17.7 at termination |
18
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors is pleased to present its report on
executive compensation. The Committee exercises the Boards powers in reviewing all aspects of
cash and long-term compensation for executive officers and other key employees. All members of the
Compensation Committee are independent as defined by the Securities and Exchange Commission and the
National Association of Securities Dealers.
Compensation
Philosophy
The Corporations compensation philosophy is to pursue and create a direct linkage between
executive compensation and continuous improvements in corporate performance and increases in
shareholder value. The Corporation has adopted the following objectives as guidelines for
compensation decisions:
|
|
Implement a balance between short- and long-term compensation to
leverage the Corporations annual and long-term business
objectives and strategy by encouraging executive performance in
fulfilling those objectives in a manner consistent with the values
expressed in the Corporations Mission Statement and Statement of
Principles. |
|
|
Provide short-term cash compensation opportunities based on annual
Corporation, business unit, and individual performance. |
|
|
Provide long-term equity compensation opportunities to reward
achievement of the Corporations long-term performance goals and
to align interests of executives with shareholders. |
|
|
Require executives to build and maintain a continuing equity
investment in the Corporation which is appropriate to individual
roles and responsibilities. |
|
|
Display a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives. |
|
|
Be willing to compensate executive officers in recognition of
superior individual performance, new responsibilities or new
positions. |
|
|
Take into account historical levels of executive compensation and
the overall competitiveness of the market for high quality
executive talent. |
During 2004 the Corporation formed a task force and retained the services of an outside
consultant to facilitate and conduct a comprehensive review of the Amended and Restated Long-Term
Compensation Plan dated December 14, 2001 (the Prior Plan). The task force assessed the
effectiveness of the Prior Plan design, reviewed emerging trends with respect to the delivery of
equity and cash-based long-term incentive compensation, evaluated the impact of and considered
planning opportunities presented by the recent changes in accounting standards, and examined
alternative strategies for delivering equity-based long-term incentive compensation. Based on the
task force findings and recommendations, the Corporation is revising its long-term compensation
strategy to strengthen the alignment of executive officers and other key employees with shareholder
interests and to more closely align compensation with the achievement of long-term corporate
performance. The Corporation has also adopted a share ownership and retention policy for all
participants in the Plan effective April 1, 2005. This policy is intended to promote sound
corporate governance by appropriately aligning the interests of executives and other managers with
the interests of shareholders.
19
Compensation Program Components
We regularly review the Corporations compensation program to ensure that pay levels and
incentive opportunities are competitive with the market and reflect the Corporations performance.
Elements of the compensation program for executive officers are further explained below.
Base Salary and Bonus Base pay levels are largely determined by evaluating the
responsibilities of the position held and the experience of the individual and by comparing the
salary scale with that of companies of similar size and complexity. Actual base salaries are kept
within a competitive salary range for each position that is established through job evaluation and
market comparisons. The Corporations bonus program considers a portion of this base salary at
risk and determines how much of the at-risk dollars are awarded each year based on both
quantitative and qualitative factors.
Long-Term Compensation Plan The Corporation sponsors a long-term performance
compensation plan which enables the Board of Directors to deliver any combination of share-only
share appreciation rights (SOSARs), share options, share awards, and performance share units (PSUs)
to certain employees based both on Corporation and individual performance. The exercise price of
options and SOSARs is the market price of the Common Shares on the grant date. Share awards may
include restrictions that require continued employment prior to vesting. PSUs include restrictions
that require achievement of certain levels of predefined performance prior to vesting.
Stock Ownership and Retention Policy The Corporation adopted a stock ownership and
retention policy effective April 1, 2005. The policy applies to all participants in the long-term
performance compensation plan including executive officers, directors and other key employees. The
policy requires participants to build and maintain an ongoing ownership stake in the Corporation
and thereby link their interests to shareholder interests. The policy includes both stock
ownership and retention requirement features. The key features of the policy are:
|
|
|
Each participant is encouraged to build and maintain a continuing equity
investment in the Corporation which is appropriate to individual roles and
responsibilities. Ownership guidelines were determined as a multiple of
average base salary and converted to a number of fixed shares. |
|
|
|
|
The policy does not require any participant to purchase shares in the market
in order to meet the guidelines, rather the focus is on retaining shares
delivered through the Plan. Until the ownership guideline level is achieved,
participants are required to retain at least 75% of the net shares exercised or
delivered from grants made after the effective date of the policy. For
participants who are not officers of the Corporation, there is no retention
requirement on shares delivered after the ownership guideline has been achieved
unless the participant falls bellow the ownership guideline for any reason; in
this case the 75% retention requirement applies until the level is once again
achieved. If a participant is also an officer of the Corporation, the
retention requirement is reduced to 25% of the net shares exercised or
delivered once the ownership guideline is achieved. |
|
|
|
|
In addition, regardless of whether the ownership guideline level is met, all
participating officers must retain 100% of the net shares exercised or |
20
|
|
|
delivered for one year following the date of exercise or vesting as the case may
be. |
Employee Benefit Plans. The Corporation also sponsors an Employee Share Purchase Plan
that allows all employees to purchase Common Shares at the lower of the beginning or end of the
year market price. Funding of these purchases is made through payroll deductions.
Chief Executive Officer Compensation
The Committee set the 2005 fiscal year cash compensation for Mr. Michael J. Anderson based on
past compensation practices, policies and performance. Taking these factors into account, Mr.
Andersons annual base salary was set at $386,666 for 2005. He also received a 2005 performance
bonus of $350,000 and is expected to receive an April 1, 2006 grant of 22,000 share-only share
appreciation rights (SOSARs) and 3,710 performance share units. The performance share units grant
Mr. Anderson the right to receive Common Shares at the end of the three year performance period on
December 31, 2008, dependent on the achievement of specified financial performance objectives for
the period. In the future, we will continue to take responsibility for establishing the Chief
Executive Officers annual cash and equity-based compensation. In doing so, the Committee will
consider a number of factors, including prior compensation arrangements, corporate performance,
individual performance and competitive standards.
Summary
After our review of all existing programs, we continue to believe that the total compensation
program for executives is focused on increasing shareholder value and enhancing corporate
performance. We currently believe that the compensation of executive officers is properly tied
linked to share appreciation through the 2005 Long-Term Performance Compensation Plan. We also
believe that executive compensation levels are competitive with the compensation programs provided
by the Corporations competitors. All members of the Committee have approved this report.
|
|
|
|
|
COMPENSATION COMMITTEE
|
|
|
Jacqueline F. Woods (chair),
John F. Barrett, Robert J. King, Jr., Sidney A. Ribeau |
Performance Graph
The graph below compares the total shareholder return on the Corporations Common Shares to
the cumulative total return for the NASDAQ U.S. Index and a Peer Group Index. The indices reflect
the year-end market value of an investment in the stock of each company in the index, including
additional shares assumed to have been acquired with cash dividends, if any. The Peer Group Index,
weighted for market capitalization, includes the following companies:
|
|
|
Agrium, Inc.
|
|
Archer-Daniels-Midland Co.
|
|
Corn Products International, Inc.
|
|
GATX Corp. |
|
|
Greenbrier Companies, Inc. |
|
|
Lesco, Inc. |
|
|
Lowes Companies |
|
|
21
This Peer Group Index was adjusted in 2004 as two of the companies previously used were no
longer in existence as public companies and two companies (Scotts Company and Conagra, Inc.) have
changed their focus to brand / packaged foods from the previous focus on agribusiness / lawn / turf
products.
The graph assumes a $100 investment in The Andersons, Inc. Common Shares on December 31, 2000
and also assumes investments of $100 in each of the NASDAQ U.S. and Peer Group indices,
respectively, on December 31 of the first year of the graph. The value of these investments as of
the following calendar year ends is shown in the table below the graph.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Period |
|
Cumulative Returns |
|
|
December 31, 2000 |
|
2001 |
|
2002 |
|
2003 |
|
2004 |
|
2005 |
|
|
|
The Andersons, Inc. |
|
$ |
100.00 |
|
|
$ |
119.30 |
|
|
$ |
154.81 |
|
|
$ |
198.67 |
|
|
$ |
321.16 |
|
|
$ |
547.95 |
|
NASDAQ U.S. |
|
|
100.00 |
|
|
|
79.21 |
|
|
|
54.46 |
|
|
|
82.12 |
|
|
|
89.65 |
|
|
|
91.54 |
|
Peer Group Index |
|
|
100.00 |
|
|
|
155.59 |
|
|
|
129.17 |
|
|
|
183.77 |
|
|
|
208.33 |
|
|
|
239.47 |
|
Other Information
Shareholder Proposals for 2007 Annual Meeting
The Secretary of the Corporation must receive shareholder proposals for consideration at the
2007 annual meeting no later than December 31, 2006. This deadline is necessary in order for the
proposal to be considered for inclusion in the Corporations 2007 proxy materials.
22
Additional Information
This proxy information is being mailed with the Corporations December 31, 2005 Summary Annual
Report to Shareholders including the Annual Report on Form 10-K. You may obtain additional copies
of the Corporations Annual Report on Form 10-K free of charge upon oral or written request to the
Secretary of the Corporation at 480 West Dussel Drive, Maumee, Ohio 43537. You may also obtain a
copy of this document at the Securities and Exchange Commissions Internet site at
http://www.sec.gov. We expect that it will be filed on or about March 15, 2006.
The proxies being solicited are being solicited by the Board of Directors of the Corporation.
The cost of soliciting proxies in the enclosed form will be borne by the Corporation.
Please complete the enclosed proxy card and mail it in the enclosed postage-paid envelope or
register your vote by phone or internet as soon as possible.
|
|
|
|
|
By order of the Board of Directors |
|
|
|
|
|
/s/Naran U. Burchinow |
|
|
|
|
|
|
|
|
Naran U. Burchinow
|
|
|
Secretary |
23
PROXY THE ANDERSONS, INC.
Location: The Andersons Inc. General Office Building, 480 W. Dussel Dr., Maumee OH 43537;
8:00 a.m. Local Time
Proxy solicited by Board of Directors for Annual Meeting May 12, 2006
Matthew C. Anderson, Dale W. Fallat, and Naran U. Burchinow, or any of them, each with the
power of substitution, are hereby authorized to represent and vote the shares of the undersigned,
with all the powers which the undersigned would possess if personally present at the Annual Meeting
of Stockholders of The Andersons, Inc. to be held on May 12, 2006 or at any postponement or
adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such directions are
indicated, the Proxies will have authority to vote for the election of eleven Directors to hold
office for a one-year term, and for ratification of the appointment of PricewaterhouseCoopers LLP
as independent registered public accounting firm for the year ending December 31, 2006.
In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
Important This Proxy must be signed and dated on the reverse side. THANK YOU FOR VOTING.
IF YOU HOLD SHARES THROUGH A BROKERAGE FIRM, IN YOUR OWN NAME, OR THROUGH THE 401K, YOU MAY HAVE
MORE THAN ONE PROXY TO COMPLETE.
IF VOTING BY U.S. MAIL, PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE ON
OR BEFORE APRIL 28, 2006.
Telephone and Internet Voting Instructions
You can vote by telephone OR Internet! Available 24 Hours a day
7 days a week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote
your proxy.
To vote using the Telephone (within U.S. and Canada)
|
|
|
Call toll free 1-866-731-VOTE (8683) in the United States of Canada any time on a touch
tone telephone. There is NO CHARGE to you for the call. |
|
|
|
|
Follow the simple instructions provided by the recorded message. |
To vote using the Internet
|
|
|
Go to the following web site: WWW.COMPUTERSHARE.COM/US/PROXY |
|
|
|
|
Enter the information requested on your computer screen and follow the simple
instructions |
If you
vote by telephone or the Internet, please DO NOT mail back this proxy
card.
Proxies submitted by telephone or the Internet must be received by 1:00 a.m., Central Time, on May
12, 2006.
THANK YOU FOR VOTING.
The Andersons, Inc.
[Name and address of shareholder]
o Mark this box with an X if you have made changes to your name or address details above
Annual Meeting Proxy Card
A. Election of directors
1. The Board of directors recommends a vote FOR the listed nominees. The Election of eleven
Directors to hold office for a one-year term:
|
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|
|
|
|
|
|
|
|
|
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|
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|
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For
|
|
Withhold
|
|
|
|
For
|
|
Withhold
|
|
|
|
For
|
|
Withhold |
Michael J. Anderson
|
|
o
|
|
o
|
|
Robert J. King, Jr.
|
|
o
|
|
o
|
|
Dr. Sidney A. Ribeau
|
|
o
|
|
o |
Richard P. Anderson
|
|
o
|
|
o
|
|
Paul M. Kraus
|
|
o
|
|
o
|
|
Charles A. Sullivan
|
|
o
|
|
o |
Thomas H. Anderson
|
|
o
|
|
o
|
|
Donald L. Mennel
|
|
o
|
|
o
|
|
Jacqueline F. Woods
|
|
o
|
|
o |
John F. Barrett
|
|
o
|
|
o
|
|
David L. Nichols
|
|
o
|
|
o |
|
|
|
|
|
|
B. Issues
The Board of Directors recommends a vote FOR the following proposal.
|
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|
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|
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|
For
|
|
Against
|
|
Abstain |
|
|
|
|
|
|
|
|
|
2.
|
|
Ratification of the appointment of
PricewaterhouseCoopers LLP as independent registered public
accounting firm for the year ending December 31, 2006.
|
|
o
|
|
o
|
|
o |
Mark this box with an X if you plan to attend the Annual Meeting. o
C. Authorized Signatures Sign Here This section must be completed for your instructions to
be executed.
Note: Please sign your name(s) EXACTLY as your name(s) appear on this proxy. All joint holders
must sign. When signing as attorney, trustee, executor, administrator, guardian or corporate
officer, please provide your FULL title.
|
|
|
|
|
Signature 1 Please keep signature within the box
|
|
Signature 2 Please keep signature within the box
|
|
Date (mm/dd/yyyy) |
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|
/ / |