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Dean Foods
Company Annual Meeting Voting Considerations
May 2012 |
Compensation-Related Matters
Dean Foods Company is soliciting your advisory vote on executive
compensation
ISS recommends voting FOR
our executive compensation program
our pay for performance is rated as a low
concern
ISS notes that we responded to stockholder concerns by eliminating excise
tax gross-ups in future change-in-control agreements
Glass Lewis recommends voting AGAINST
(i) our executive compensation
program
because,
among
other
reasons,
they
allege
we
have
failed
to
align
pay
for performance and (ii) election of J. Wayne Mailloux to the Board because he
serves on our Compensation Committee
We strongly disagree with Glass Lewis
analysis, which seems to utilize a
substantially different peer group that may not include CPG companies in its
pay for performance analysis and continues to penalize our compensation
structure for having excise tax gross-ups despite our adoption of the policy
prospectively eliminating gross-ups in change-in-control
agreements 1 |
Compensation-Related Matters
Our Board recommends you vote FOR
our executive compensation program
Our compensation policies and practices link pay to performance and strongly
align the interests of our executive officers with our stockholders
We eliminated excise tax gross-ups for future change-in-control
agreements in response to stockholder concerns and corporate governance best
practices We recently adopted stock ownership guidelines
Our CEO reduced his base salary with approval of the Compensation Committee
in view of 2010 performance
We
finished
2011
with
a
return
to
growth
in
the
third
and
fourth
quarters
of
2011
and
met or exceeded our guidance to investors in each quarter of 2011
Our Board recommends you vote FOR
the election of Mr. Mailloux to the Board
Mr.
Mailloux
should
not
be
punished
merely
for
being
part
of
our
Compensation
Committee. If stockholders disapprove of the companys executive
compensation they have
the
ability
to
express
such
disapproval
in
the
Say-on-Pay
vote
Mr. Maillouxs experience in the beverage industry, combined with his
global business experience, make him well qualified to advise our
company 2 |
Separation of
Chairman and CEO Role A
stockholder
proposal
seeks
to
urge
the
Board
to
adopt
a
policy
that
the
Boards
Chairman be an independent director
ISS and Glass Lewis each recommends voting FOR
this proposal
We strongly disagree with ISS
and Glass Lewis
recommendations, and the
Board recommends voting AGAINST
this proposal
Nine out of ten members of our Board are independent
Our Board has an independent lead director whose duties are closely aligned
with the role
of
an
independent
chairman,
including
(i)
calling
all
Board
meetings,
(ii)
approving
the schedule and agenda for all Board meetings, (iii) presiding at executive
sessions of the Board and (iv) acting as a liaison between the independent
directors and our CEO The
independent
members
of
the
Board
meet
regularly
in
executive
session
The
majority
of
S&P
500
companies
have
combined
the
Chairman
and
CEO
roles
Combining the Chairman and CEO roles facilitates information flow between
management and the Board
3 |
Accelerated Vesting
of Equity Awards A
stockholder
proposal
seeks
to
urge
the
Board
to
adopt
a
policy
prohibiting
the
acceleration of equity awards upon a change in control of the company
ISS and Glass Lewis recommends voting FOR
this proposal claiming that a
change
in
control
would
provide
an
economic
windfall
to
plan
participants
and
CEO
We strongly disagree with ISS
and Glass Lewis
recommendations and the
Board recommends voting AGAINST
this proposal
Flexible compensation policies are imperative to recruit and retain executive
talent Accelerated vesting of equity awards upon a change in control
(i) aligns executive and stockholder interests, (ii) enables the company to
retain its management team while a change in control transaction is pending,
and (iii) avoids potential conflicts of interest and distractions that may
arise when the company is going through a change in control A
majority
of
our
peers
do
not
have
such
a
policy
so
adoption
of
the
proposed
policy
would disadvantage us in recruiting and retaining executive talent
Such a policy would penalize management if we were taken private
4 |
Equity Retention
Guidelines A stockholder
proposal
seeks
to
urge
the
Board
to
adopt
a
policy
requiring
senior
executives retain until retirement at least 75% of shares received through
compensation programs.
Glass Lewis recommends voting AGAINST
this proposal because the proposed
policy may hinder the ability of the compensation committee to attract and
retain executive talent
and it does not believe that the proposal serves the best
interests of shareholders at this time.
We agree with this assessment of the
proposal.
ISS recommends voting FOR
this proposal [b]ased on the spirit of the
proposal
We strongly disagree with ISS
recommendation because it fails to (i) provide
a detailed analysis of the proposal, (ii) properly account for the stock
ownership guidelines already adopted by the Board, (iii) consider that such a
policy is unusual for our peer group, and (iv) recognize the significant
disadvantage that such a proposal would have on our ability to attract and
retain executive talent
5 |
Equity Retention
Guidelines Our Board recommends voting AGAINST
this proposal
We have adopted equity ownership guidelines of 5x annual salary for our
CEO and 2x annual salary for our other Executive Officers
Our CEO owns stock worth over 30 times his base salary
The proposed policy would place restrictions on executives until
retirement
even if such executive is no longer employed by us
Retention guidelines as proposed are uncommon in our peer group and
would significantly inhibit our ability to attract and retain executive
talent Our current compensation methodology already provides for
meaningful stock ownership by our executives and aligns stockholder and
executive interests
6 |