Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to Section
14(a) of
the Securities Exchange Act of
1934
(Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the
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Check the appropriate box: |
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Preliminary Proxy Statement |
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the Commission Only |
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Definitive Proxy Statement |
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(as permitted by Rule
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Definitive Additional Materials |
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Soliciting Material under Rule
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Kimberly-Clark
Corporation
(Name of Registrant as Specified in Its Charter)
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forth the amount on which the filing fee is calculated and state how it
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Table of Contents
Proxy
Statement
For
2015
Annual Meeting of
Stockholders
Kimberly-Clark
Corporation
Table of Contents
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March 9, 2015
Thomas J. Falk
Chairman of the Board and
Chief Executive Officer
FELLOW STOCKHOLDERS:
It is my pleasure to invite you to the
Annual Meeting of Stockholders of Kimberly-Clark Corporation. The meeting will
be held on Thursday, April 30, 2015, at 9:00 a.m. at our World Headquarters,
which is located at 351 Phelps Drive, Irving, Texas.
At the Annual Meeting, stockholders will
be asked to elect eleven directors for a one-year term, ratify the selection of
Kimberly-Clarks independent auditors, approve the compensation for our named
executive officers, and vote on a stockholder proposal. These matters are fully
described in the accompanying Notice of Annual Meeting and proxy
statement.
Your vote is important. Regardless of whether you plan to attend the meeting, I urge
you to vote your shares as soon as possible. You may vote using the proxy form
by completing, signing, and dating it, then returning it by mail. Also, most of
our stockholders can submit their vote by telephone or through the Internet. If
telephone or Internet voting is available to you, instructions will be included
on your proxy form. Additional information about voting your shares is included
in the proxy statement.
Sincerely,
2015 Proxy
Statement
Table of Contents
Notice of
Annual Meeting
of
Stockholders
TO BE HELD
April 30, 2015
AT OUR WORLD
HEADQUARTERS
351 Phelps Drive
Irving,
Texas
The Annual Meeting of Stockholders of
Kimberly-Clark Corporation will be held at our World Headquarters, which is
located at 351 Phelps Drive, Irving, Texas, on Thursday, April 30, 2015, at 9:00
a.m. for the following purposes:
1.
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To elect as directors
the eleven nominees named in the accompanying proxy
statement; |
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2. |
To ratify the
selection of Deloitte & Touche LLP as our independent auditors for
2015; |
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To approve the
compensation for our named executive officers; |
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4. |
To vote on a
stockholder proposal that may be presented at the meeting;
and |
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5. |
To take action upon
any other business that may properly come before the meeting or any
adjournments of the meeting. |
Stockholders of record at the close of
business on March 2, 2015 are entitled to notice of and to vote at the meeting
or any adjournments.
It is important that your shares be
represented at the meeting. I urge you to vote promptly by using the Internet or
telephone or by signing, dating and returning your proxy form.
The accompanying proxy statement also is
being used to solicit voting instructions for shares of Kimberly-Clark common
stock that are held by the trustees of our employee benefit and stock purchase
plans for the benefit of the participants in the plans. It is important that
participants in the plans indicate their preferences by using the Internet or
telephone or by signing, dating and returning the voting instruction card, which
is enclosed with the proxy statement, in the business reply envelope
provided.
To attend in person, please register by
following the instructions on page 9.
March 9, 2015 |
By Order of the Board of Directors. |
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Jeffrey P. Melucci Vice
President Deputy General Counsel and Corporate
Secretary |
Important Notice Regarding the
Availability of Proxy Materials for the
Stockholder Meeting to be Held on
April 30, 2015
The Proxy Statement and proxy card,
as well as our Annual Report on
Form 10-K for the year ended December 31,
2014, are available at
http://www.kimberly-clark.com/investors.aspx.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Proxy Summary
This section contains only selected
information. Stockholders should
review the entire Proxy Statement before
casting their votes.
Matters for Stockholder
Voting
Proposal |
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Description |
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Board voting recommendation |
1 |
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Election of
Directors |
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Election of 11 directors to serve for a one-year
term |
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FOR
all nominees |
2 |
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Ratification of auditors for the coming year |
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Approval of the Audit Committees selection
of Deloitte & Touche LLP as Kimberly-Clarks independent auditor for
2015 |
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FOR |
3 |
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Say-on-pay |
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Advisory approval of our named executive
officers compensation |
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FOR |
4 |
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Stockholder
proposal on written consent |
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Proposal to permit stockholders to act by written
consent |
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AGAINST |
2014 Performance and Compensation
Highlights
The Management Development and
Compensation Committee of our Board concluded that Kimberly-Clarks management
delivered financial performance in 2014 that was above-target from an overall
perspective, as reflected in the financial metrics of our annual incentive
program. Note that the Committee adjusted the results below for our Halyard
Health spin-off as described beginning on page 48.
Performance Measures |
2014 Results |
2014 Target |
Adjusted Net sales |
$21.31 billion |
$21.45 billion |
Adjusted EPS |
$6.09 |
$6.10 |
Adjusted OPROS improvement |
+80 bps |
+50 bps |
For details on how these measures are
adjusted, see Compensation Discussion and Analysis Executive Compensation for
2014, 2014 Performance Goals, Performance Assessments and
Payouts.
Based on this performance, the Committee
approved annual cash incentives for 2014 slightly above the target amount,
including an annual incentive payout for our Chief Executive Officer of 105 percent.
The chart at left shows the Total
Shareholder Return for Kimberly-Clark, our Executive Compensation Peer Group
(taken as a whole) and the S&P 500 for the previous five years. We believe
this indicates that the execution of our global business plan and the oversight
by our management and Board have been effective for the growth of Kimberly-Clark
as well as for returning value to our stockholders.
Table of Contents
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Proxy Summary |
Our Board Nominees
Listed below are Kimberly-Clarks Board
nominees. We believe they collectively possess the necessary experience
attributes to effectively guide our company and reflect the diversity of our
global consumers.
Name
Main Occupation |
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Committee
Roles* |
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Independent |
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Experience
Highlights |
Thomas J. Falk Chairman of the Board and CEO Kimberly-Clark
Corporation |
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EC |
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Meets NYSE financial literacy requirements; background in
accounting |
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Leadership experience as a CEO |
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Industry knowledge |
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International experience |
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Marketing, compensation,
governance, and public company board experience |
John F. Bergstrom Chairman and CEO Bergstrom Corporation |
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AC |
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✓ |
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► |
Audit Committee Financial Expert |
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Leadership experience as a CEO |
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Provides diversity of background/viewpoint |
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Marketing, compensation,
governance and public company board experience |
Abelardo E. Bru Retired Vice Chairman Pepsico, Inc. |
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MDCC |
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✓ |
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Meets NYSE financial literacy requirements |
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(Chair) |
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Leadership experience as a CEO |
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EC |
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Industry knowledge |
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International experience |
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Provides diversity of background/viewpoint |
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Marketing, compensation,
governance and public company board experience |
Robert W. Decherd Vice Chairman A.H. Belo Corporation |
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AC |
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✓ |
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Audit Committee Financial Expert |
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► |
Leadership experience as a CEO |
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► |
Provides diversity of background/viewpoint |
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► |
Marketing, compensation,
governance and public company board experience |
Fabian T. Garcia COO Global Innovation and
Growth, Europe & Hills Pet Nutrition, Colgate-Palmolive
Corporation |
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MDCC |
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✓ |
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► |
Meets NYSE financial literacy requirements |
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NCGC |
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Leadership experience as a COO |
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► |
Industry knowledge |
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International experience |
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Provides diversity of background/viewpoint |
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► |
Marketing, compensation
and governance experience |
Mae C. Jemison, M.D. President The Jemison Group |
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MDCC |
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✓ |
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► |
Meets NYSE financial literacy requirements |
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NCGC |
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► |
Leadership experience with start-ups and
non-profits |
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International experience |
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Provides diversity of background/viewpoint |
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Compensation, governance
and public company board experience |
* AC |
Audit
Committee |
* EC |
Executive
Committee |
*
MDCC |
Management Development
and Compensation Committee |
* NCGC |
Nominating and
Corporate Governance Committee |
Table of Contents
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Proxy Summary |
Our Board Nominees
(continued)
Name
Main Occupation |
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Committee
Roles* |
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Independent |
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Experience
Highlights |
James M. Jenness Retired Chairman of the Board
and CEO Kellogg Company |
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EC |
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✓ |
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► |
Meets NYSE financial literacy requirements |
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(Chair) |
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Independent |
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Leadership experience as a CEO |
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Lead Director |
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Industry knowledge |
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International experience |
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Marketing, compensation,
governance and public company board experience |
Nancy J. Karch Retired Director McKinsey & Co. |
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AC |
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✓ |
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► |
Meets NYSE financial literacy requirements; background in
finance |
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Leadership experience as a Senior Executive |
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Industry knowledge |
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Provides diversity of background/viewpoint |
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Compensation, governance
and public company board experience |
Ian C. Read Chairman of the Board and CEO Pfizer, Inc. |
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NCGC |
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✓ |
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► |
Qualifies as Audit Committee Financial Expert |
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(Chair) |
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Leadership experience as a CEO |
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EC |
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► |
International experience |
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► |
Provides diversity of background/viewpoint |
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► |
Marketing, compensation,
governance and public company board experience |
Linda Johnson Rice Chairman Johnson Publishing Company, Inc. |
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AC |
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✓ |
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► |
Meets NYSE financial literacy requirements; |
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► |
Leadership experience as a CEO |
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► |
International experience |
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► |
Provides diversity of background/viewpoint |
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► |
Marketing, compensation,
governance and public company board experience |
Marc J. Shapiro Retired Vice Chairman, JPMorgan Chase &
Co. |
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MDCC |
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✓ |
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► |
Meets NYSE financial literacy requirements; background in
banking/finance |
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NCGC |
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► |
Leadership experience as a CEO |
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► |
Provides diversity of background/viewpoint |
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► |
Compensation, governance
and public company board experience |
* AC |
Audit
Committee |
* EC |
Executive
Committee |
* MDCC |
Management Development
and Compensation Committee |
*
NCGC |
Nominating and
Corporate Governance Committee |
John R. Alm has announced that he does not
intend to stand for re-election to the Board of Directors when his term expires
at this years Annual Meeting. Mr. Alm currently serves as Chair of the Audit
Committee and as a member of the Executive Committee.
Table of
Contents
Information About Our
Annual
Meeting
On behalf of the Board of Directors of
Kimberly-Clark Corporation, we are soliciting your proxy for use at the 2015
Annual Meeting of Stockholders, to be held on April 30, 2015, at 9:00 a.m. at
our World Headquarters in Irving, Texas.
How We Provide
Proxy Materials |
We began providing our proxy statement and
form of proxy to stockholders on March 12, 2015.
As Security and Exchange Commission
(SEC) rules permit, we are making our proxy statement and our annual report
available to many of our stockholders via the Internet rather than by mail. This
reduces printing and delivery costs and supports our sustainability efforts. You
may have received in the mail a Notice of Electronic Availability explaining
how to access this proxy statement and our annual report on the Internet and how
to vote online. If you received this Notice but would like to receive a paper
copy of the proxy materials, you should follow the instructions contained in the
notice for requesting these materials.
If you were a stockholder of record at the
close of business on the record date of March 2, 2015, you are eligible to vote
at the meeting. Each share that you own entitles you to one vote.
As of the record date, 365,200,459 shares
of our common stock were outstanding.
You may vote in person by attending the
meeting, by using the Internet or telephone, or (if you received printed proxy
materials) by completing and returning a proxy form by mail. If telephone or
Internet voting is available to you, see the instructions on the notice of
electronic availability or the proxy form and have the notice or proxy form
available when you access the Internet website or place your telephone call. To
vote your proxy by mail, mark your vote on the proxy form, then follow the
instructions on the card.
Please note that if you received a notice
of electronic availability as described above, you cannot vote your shares by
filling out and returning the notice. Instead, you should follow the
instructions contained in the notice on how to vote by using the Internet or
telephone.
Table of
Contents
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Information About Our Annual
Meeting How Abstentions will be
Counted |
The named proxies will vote your shares
according to your directions. The voting results will be certified by
independent Inspectors of Election.
If you sign and return your proxy form,
or if you vote using the Internet or by telephone, but you do not specify how
you want to vote your shares, the named proxies will vote your shares as
follows:
► |
FOR the election of directors named in this
proxy statement |
► |
FOR ratification of the selection of our
independent auditors |
► |
FOR approval of the compensation of our named
executive officers |
► |
AGAINST the stockholder proposal requesting
stockholders be permitted to act by written
consent |
How To Revoke
or Change Your Vote |
There are several ways to revoke or change
your vote:
► |
Mail a revised proxy form to the
Corporate Secretary of Kimberly-Clark (the form must be received before
the meeting starts). Use the following address: 351 Phelps Drive, Irving,
TX 75038 |
► |
Use the Internet voting website
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► |
Use the telephone voting
procedures |
► |
Attend the meeting and vote in
person |
There must be a quorum to conduct business
at the Annual Meeting, which is established by having a majority of the shares
of our common stock present in person or represented by proxy.
Election of
Directors. A director nominee will be elected if he or she receives a majority of
the votes cast at the meeting in person or by proxy. If any nominee does not
receive a majority of the votes cast, then that nominee will be subject to the
Boards existing policy regarding resignations by directors who do not receive a
majority of for votes.
Other Proposals or
Matters. Approval requires the affirmative
vote of a majority of shares that are present at the Annual Meeting in person or
by proxy and are entitled to vote on the proposal or matter.
How Abstentions will
be Counted |
Election of Directors. Abstentions will have no impact on the outcome of the vote.
They will not be counted for the purpose of determining the number of votes cast
or as votes for or against a nominee.
Other Proposals. Abstentions will be counted:
► |
as present in
determining whether we have a quorum |
► |
in determining the
total number of shares entitled to vote on a proposal |
► |
as votes against a
proposal |
Table of
Contents
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Information About Our Annual
Meeting Costs of
Solicitation |
Effect of
Not Instructing Your Broker |
Routine Matters. If your shares are held through a broker and you do not
instruct the broker on how to vote your shares, your broker may choose to leave
your shares unvoted or to vote your shares on routine matters. Proposal 2.
Ratification of Auditors is the only routine matter on the agenda at this
years Annual Meeting.
Non-Routine Matters. Without instructions, your broker cannot vote your shares on
non-routine matters, resulting in what are known as broker non-votes. Broker
non-votes will not be considered present or entitled to vote on non-routine
matters and will also not be counted for the purpose of determining the number
of votes cast on these proposals.
Direct
Stock Purchase
and Dividend Reinvestment Plan |
If you participate in our Direct Stock
Purchase and Dividend Reinvestment Plan, you will receive a proxy form that
represents the number of full shares in your plan account plus any other shares
registered in your name. There are no special instructions for voting shares
held in the plan; simply use the normal voting methods described in this proxy
statement.
We are also sending or otherwise making
this proxy statement and voting materials available to participants who hold
Kimberly-Clark stock through any of our employee benefit and stock purchase
plans. The trustee of each plan will vote whole shares of stock attributable to
each participants interest in the plans in accordance with the participants
directions. If a participant gives no directions, the plan committee will direct
the voting of his or her shares.
Attending the
Annual Meeting |
If you are eligible to vote, you or a duly
appointed representative may attend the Annual Meeting in person. If you do plan
to attend, we ask that you inform us electronically, by telephone, or by
checking the appropriate box on your proxy form. This will assist us with
meeting preparations and help to expedite your admittance.
If your shares are not registered in your
own name and you would like to attend the meeting, please ask the broker, trust,
bank or other nominee that holds your shares to provide you with written proof
of your share ownership as of the record date. This will enable you to gain
admission to the meeting.
If you need directions to the meeting,
please contact Stockholder Services by telephone at (972) 281-1522 or by e-mail
at stockholders@kcc.com.
Kimberly-Clark will bear all costs of this
proxy solicitation, including the cost of preparing, printing and delivering
materials, the cost of the proxy solicitation and the expenses of brokers,
fiduciaries and other nominees who forward proxy materials to stockholders. In
addition to mail and electronic means, our employees may solicit proxies by
telephone or otherwise. We have retained D. F. King & Co., Inc. to aid in
the solicitation at a cost of approximately $19,000 plus reimbursement of
out-of-pocket expenses.
Table of
Contents
Corporate Governance
Our governance structure and processes are
based on a number of important governance documents including our Code of
Conduct, Certificate of Incorporation, Corporate By-Laws, Corporate Governance
Policies and our Board Committee Charters. These documents, which are available
in the investors section of our website at www.kimberly-clark.com, guide the
Board and our management in the execution of their responsibilities.
Kimberly-Clark believes that there is a
direct connection between good corporate governance and long-term, sustained
business success, and we believe it is important to uphold sound governance
practices. As such, the Board reviews its governance practices and documents on
an ongoing basis, considering changing regulatory requirements, governance
trends, and issues raised by our stockholders. After careful evaluation, we may
periodically make governance changes in view of these matters to maintain
current governance practices and promote shareholder value.
We believe we are in compliance with all
corporate governance requirements of the NYSE, the SEC, the Sarbanes-Oxley Act
of 2002 and the provisions of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 that have become effective as of the filing of this proxy
statement.
The Board has established a leadership
structure that allocates responsibilities between our Chairman of the Board and
Chief Executive Officer (CEO) and our Lead Director. The Board believes
that this allocation provides for dynamic Board leadership while maintaining
strong independence and oversight.
Consistent with this leadership structure,
at least once a quarter our Lead Director, who is an independent director,
chairs executive sessions of our non-management directors. Members of the
companys senior management team do not attend these sessions.
Chairman and Chief Executive Officer
Positions
The Boards current view is that a
combined Chairman and CEO position, coupled with a predominantly independent
board and a proactive, independent Lead Director, promotes candid discourse and
responsible corporate governance. Mr. Falk serves as Chairman of the Board and
CEO. The Board believes Mr. Falks thirty years of operational and management
experience at Kimberly-Clark has demonstrated the leadership and vision
necessary to lead the Board and Kimberly-Clark. Accordingly, Mr. Falk continues
to serve in this combined role at the pleasure of the Board without an
employment contract.
Table of
Contents
|
Corporate Governance
Director
Independence |
Lead Director
Mr. Jenness served as independent Lead Director in 2014. Our Corporate
Governance Policies outline the significant role and responsibilities of the
Lead Director, which include:
► |
Chairing the Executive
Committee |
► |
Chairing executive sessions at which
non-management directors meet outside managements presence, and providing
feedback from such sessions to the Chief Executive Officer
|
► |
Coordinating the activities of the
Independent Directors |
► |
Providing input on agendas and
schedules for Board meetings |
► |
Leading (with the Chairman of the
Nominating and Corporate Governance Committee) the annual Board evaluation
|
► |
Leading (with the Chairman of the
Management Development and Compensation Committee) the Boards review and
discussion of the Chief Executive Officers performance |
► |
Providing feedback to individual
directors following their periodic evaluations |
► |
Speaking on behalf of the Board and
chairing Board meetings when the Chairman of the Board is unable to do so
|
► |
Acting as a direct conduit to the
Board for stockholders, employees and others according to the Boards
policies |
Since 1996, our By-Laws have provided that
a majority of our directors be independent (Independent Directors). We believe
our independent board helps ensure good corporate governance and strong internal
controls.
Our Corporate Governance Policies, as
adopted by the Board, provide independence standards consistent with the rules
and regulations of the SEC and the listing standards of the New York Stock
Exchange (NYSE). Our independence standards can be found in Section 17 of our
Corporate Governance Policies.
The Board has determined that all
directors and nominees, except for Thomas J. Falk, are Independent Directors and meet the
independence standards in our Corporate Governance Policies. In making these
determinations, the Board considered the following:
► |
We made charitable contributions of
$132,000 in each of 2012 and 2013, and $175,000 in 2014, and paid
approximately $85,000 in 2013 for venue rental to the Fox Cities
Performing Arts Center in Appleton, Wisconsin, where Mr. Bergstrom is a
director. We have significant operations and a significant number of
employees in the Fox Cities area of Wisconsin. |
► |
Companies majority-owned by
Mr. Bergstrom paid us approximately $50,000 in 2012, $55,000 in 2013 and
$57,000 in 2014 to lease excess hangar space at an airport near Appleton,
Wisconsin and approximately $185,000 in 2012, $195,000 in 2013 and
$199,800 in 2014 for pilot services pursuant to a pilot sharing contract.
In addition, these companies paid us approximately $194,000 in 2012,
$196,000 in 2013 and $196,600 in 2014 for scheduling and aircraft services
for their airplane. |
► |
We paid approximately $1,000 in
2012, $111,000 in 2013, and $78,600 in 2014 for automobiles and related
services to car dealerships in the Neenah, Wisconsin area that are
majority-owned by Mr. Bergstrom. |
► |
We made charitable contributions of
$1,000 in 2012 and $50,000 in 2013 to the Education is Freedom Foundation,
where Mr. Bru is a director. |
Table of
Contents
|
Corporate Governance
Board
Committees |
► |
We purchased advertising totaling
$42,500 in 2014 for advertising services from entities owned directly or
indirectly by A.H. Belo Corporation, where Mr. Decherd serves as Vice
Chairman of the Board. |
► |
We paid approximately $65,000 in
2012 for cooperative product advertising and customer development and
approximately $51,000 in 2013 and $15,547 in 2014 for the purchase of
products for cooperative marketing to Colgate-Palmolive Company, where Mr.
Garcia is Chief Operating Officer, Global Innovation and Growth, Europe
& Hills Pet Nutrition. |
► |
Colgate-Palmolive Company paid us
approximately $78,000 in 2013 for products. |
► |
Pfizer, Inc., for which Mr. Read
serves as Chairman and Chief Executive Officer, paid us approximately
$22,000 in 2012, $89,000 in 2013, and $42,300 in 2014 for
products. |
► |
We made charitable contributions of
$27,000 in 2012, and $25,000 in 2013 to the United Negro
College Fund, where Ms. Johnson Rice is a director. |
► |
We purchased advertising totaling
$211,000 in 2012, $90,000 in 2013, and $20,000 in 2014 from entities owned
directly or indirectly by Johnson Publishing Company, Inc., where Ms.
Johnson Rice is Chairman. These amounts constituted less than five percent
of the gross revenues of Johnson Publishing Company, Inc., for 2012, 2013,
and 2014, respectively. |
► |
We paid approximately $550,000 in
2012, $645,000 in 2013, and $664,600 in 2014 to JPMorgan Chase & Co.
(JPMC) for investment banking services. Mr. Shapiro serves as a
consultant to JPMC and as non-executive Chairman of its Texas operations.
We do not believe his relationship with JPMC gives him a direct or
indirect material interest in our transactions with
JPMC. |
The NYSE listing standards and our own
Corporate Governance Policies establish certain levels at which transactions are
considered to have the potential to affect a directors independence. The
transactions listed above all fall below these levels.
The Board of Directors met six times in
2014. All of the directors attended in excess of 75 percent of the total number
of meetings of the Board and the committees on which they served.
All of our directors are encouraged to
attend our annual meeting of stockholders. All of our directors except Ian C.
Read and Marc J. Shapiro attended the 2014 Annual Meeting.
The standing committees of the Board
include the Audit Committee, Management Development and Compensation Committee,
Nominating and Corporate Governance Committee, and Executive Committee. In
compliance with applicable NYSE corporate governance listing standards, the
Board has adopted charters for all Committees except the Executive
Committee.
Our Committee charters are available in
the Investors section of our website at www.kimberly-clark.com.
As set forth in our Corporate Governance
Policies, the Audit, Management Development and Compensation, and Nominating and
Corporate Governance Committees all have the authority to retain independent
advisors and consultants, with all costs paid by
Kimberly-Clark.
Table of
Contents
|
Corporate Governance
Board
Committees |
Audit Committee
Chairman: John R. Alm
Other members: John F. Bergstrom, Robert
W. Decherd, Nancy J. Karch and Linda Johnson Rice
The Board has determined that Messrs. Alm, Bergstrom and Decherd are audit committee financial experts under SEC rules and
regulations and that Mr. Read, who is not currently serving on the Audit
Committee, also qualifies as an audit committee financial expert. In addition,
all Audit Committee members satisfy the NYSEs financial literacy requirements
and qualify as Independent Directors under the rules of the SEC and the NYSE, as
well as under our Corporate Governance Policies. See Corporate Governance -
Director Independence for additional information on Independent
Directors.
No member of the Audit Committee serves on
the audit committees of more than three public companies. Under our Audit
Committee Charter and NYSE corporate governance listing standards, if a member
were to serve on more than three such committees, the Board would then determine
whether this situation impairs the members ability to serve effectively on our
Audit Committee, and we would post information about this determination on the
investors section of our website at www.kimberly-clark.com.
During 2014 the Committee met ten
times.
The Committees principal functions, as
specified in its charter, include:
|
➢ |
the quality and integrity of our
financial statements |
|
➢ |
our compliance
programs |
|
➢ |
our hedging strategies and
policies |
|
➢ |
the independence, qualification and
performance of our independent auditors |
|
➢ |
the performance of our internal
auditors |
► |
Selecting and engaging our
independent auditors, subject to stockholder ratification
|
► |
Pre-approving all audit and
non-audit services that our independent auditors provide |
► |
Reviewing the scope of audits and
audit findings, including any comments or recommendations of our
independent auditors |
► |
Establishing policies for our
internal audit programs |
► |
Overseeing the companys risk
management program and receiving periodic reports from management on risk
assessments, the risk management process, and issues related to the risks
of managing our business |
For additional information about the Audit
Committees oversight activities in 2014, see Proposal 2. Ratification of
Auditors - Audit Committee Report.
Table of
Contents
|
Corporate Governance
Board
Committees |
Management Development and
Compensation Committee
Chairman: Abelardo E.
Bru
Other members: Fabian T. Garcia, Mae C.
Jemison, M.D. and Marc J. Shapiro
Each member of this Committee is an
Independent Director under the rules of the SEC and the NYSE, as well as under
our Corporate Governance Policies. The Committee met six times in 2014.
The
Committees principal functions, as specified in its charter,
include:
► |
Establishing and administering the
policies governing annual compensation and long-term compensation,
including stock option awards, restricted stock awards and restricted
share unit awards, such that the policies are designed to align
compensation with our overall business strategy and performance
|
► |
Setting, after an evaluation of his
overall performance, the compensation level of the Chief Executive
Officer |
► |
Determining, in consultation with
the Chief Executive Officer, compensation levels and performance targets
for the senior executive team |
► |
Overseeing: |
|
➢ |
leadership development for senior
management and future senior management candidates |
|
➢ |
a periodic review of our long-term
and emergency succession planning for the Chief Executive Officer and
other key officer positions, in conjunction with our Board
|
|
➢ |
key organizational effectiveness and
engagement policies |
► |
Reviewing diversity and inclusion
programs and related metrics |
► |
Annually reviewing our compensation
policies and practices for the purpose of mitigating risks arising from
these policies and practices that could reasonably have a material adverse
effect |
Roles of the Committee and the CEO in
Compensation Decisions
Each year, the Committee reviews and sets
the compensation of the officers that are elected by the Board (our elected
officers), including our Chief Executive Officer and our other executive
officers. The Committees charter does not permit the Committee to delegate to
anyone the authority to establish any compensation policies or programs for
elected officers, including our executive officers. With respect to officers
that have been appointed to their position (our non-elected officers), our
Chief Executive Officer has the authority to establish compensation programs and
to approve equity grants. However, only the Committee may make grants to elected
officers, including our executive officers.
Our Chief Executive Officer makes a
recommendation to the Committee each year on the appropriate target annual
compensation for each of the other executive officers. The Committee makes the
final determination of the target annual compensation for each executive
officer, including our Chief Executive Officer. While our Chief Executive
Officer and Chief Human Resources Officer typically attend Committee meetings,
none of the other executive officers is present during the portion of the
Committees meetings when compensation for executive officers is set. In
addition, our Chief Executive Officer is not present during the portion of the
Committees meetings when his compensation is set.
For additional information on the
Committees processes and procedures for determining executive compensation, and
for a detailed discussion of our compensation policies, see Compensation
Discussion and Analysis.
Table of Contents
|
Corporate Governance Board Committees |
Use of Compensation
Consultants
The Committees charter authorizes
it to retain advisors, including compensation consultants, to assist it in its
work. The Committee believes that compensation consultants can provide important
market information and perspectives that can help it determine compensation
programs that best meet the objectives of our compensation policies. In
selecting a consultant, the Committee evaluates the independence of the firm as
a whole and of the individual advisors who will be working with the
Committee.
Independent Committee
Consultant. In 2014, the Committee retained
Semler Brossy Consulting Group as its independent executive compensation
consultant. According to the Committees written policy, the independent
Committee consultant provides services solely to the Committee and not to
Kimberly-Clark. Semler Brossy has no other business relationship with
Kimberly-Clark and receives no payments from us other than fees for services to
the Committee. Semler Brossy reports directly to the Committee, and the
Committee may replace it or hire additional consultants at any time. A
representative of Semler Brossy attends Committee meetings and communicates with
the Chairman of the Committee between meetings from time to time.
The scope of Semler Brossys engagement in
2014 included:
► |
Conducting a
review of the competitive market data (including base salary, annual
incentive targets and long-term incentive targets) for our executive
officers, including our Chief Executive Officer |
► |
Reviewing
and commenting, as requested by the Committee, on recommendations by
management and Mercer Human Resource Consulting (Mercer) concerning
executive compensation programs, including program changes and redesign,
special awards, change-of-control provisions, our executive compensation
peer group, any executive contract provisions, promotions, retirement and
related items |
► |
Reviewing
and commenting on the Committees report for the proxy
statement |
► |
Attending
Committee meetings |
► |
Periodically
consulting with the Chairman of the Committee |
During 2014, at the request of the
Committee, a representative of Semler Brossy attended all Committee
meetings.
Kimberly-Clark
Consultant. To assist management and the
Committee in assessing our compensation programs and determining appropriate,
competitive compensation for our executive officers, Kimberly-Clark annually
engages an outside compensation consultant. In 2014, it retained Mercer for this
purpose. Mercer has provided consulting services to Kimberly-Clark on a wide
variety of human resources and compensation matters, both at the officer and
non-officer levels. During 2014, Mercer provided advice and counsel on various
matters relating to executive and director remuneration, including the following
services:
► |
Assessing
our executive compensation peer group and recommending changes as
necessary |
► |
Assessing
compensation levels within our peer group for executive officer positions
and other selected positions |
► |
Reviewing
historic and projected performance for peer group companies under the
metrics we use in our annual and long-term incentive plans |
► |
Assisting in
incentive plan design and modifications, as requested |
► |
Providing
market research on various issues as requested by management |
► |
Preparing
for and participating in Committee meetings, as
requested |
Table of Contents
|
Corporate Governance Board Committees |
► |
Reviewing
the Compensation Discussion and Analysis section of the Proxy Statement
and other disclosures, as requested |
► |
Consulting
with management on compensation matters |
Committee Assessment of
Consultant Conflicts of Interest. The
Committee has reviewed whether the work provided by Semler Brossy and Mercer
represents any conflict of interest. Factors considered by the Committee
include: (1) other services provided to Kimberly-Clark by the consultant; (2)
what percentage of the consultants total revenue is made up of fees from
Kimberly-Clark; (3) policies or procedures of the consultant that are designed
to prevent a conflict of interest; (4) any business or personal relationships
between individual consultants involved in the engagement and Committee members;
(5) any shares of Kimberly-Clark stock owned by individual consultants involved
in the engagement; and (6) any business or personal relationships between our
executive officers and the consulting firm or the individual consultants
involved in the engagement. Based on its review, the Committee does not believe
that any of the compensation consultants that performed services in 2014 has a
conflict of interest with respect to the work performed for Kimberly-Clark or
the Committee.
Committee
Report
The Committee has reviewed the
Compensation Discussion and Analysis section of this proxy statement and has
recommended that it be included in this proxy statement. The Committees report
is located at Compensation Discussion and Analysis Management Development and
Compensation Committee Report.
Nominating and Corporate Governance
Committee
Chairman: Ian C. Read
Other Members: Fabian T. Garcia, Mae C. Jemison, M.D. and Marc
J. Shapiro
Each member of this Committee is an
Independent Director under the rules of the NYSE, as well as under our Corporate
Governance Policies. The Committee met five times in 2014.
The Committees principal functions, as
specified in its charter, include the following:
► |
Overseeing
the process for Board nominations |
► |
Overseeing
corporate governance matters, including developing and recommending to the
Board changes to our Corporate Governance Policies |
► |
Advising
the Board on: |
➢ |
Board
organization, membership, function, performance and
compensation |
➢ |
committee
structure and membership |
➢ |
policies and
positions regarding significant stockholder relations issues
|
► |
Reviewing
director independence standards and making recommendations to the Board
with respect to the determination of director independence |
► |
Monitoring
and recommending improvements to the Boards practices and
procedures |
► |
Reviewing
stockholder proposals and considering how to respond to them |
► |
Overseeing
matters relating to Kimberly-Clarks corporate social responsibility and
sustainability activities and providing input to management on these
programs and their effectiveness |
Table of Contents
|
Corporate Governance Other Corporate Governance Policies and Practices |
The Committee, in accordance with its
charter and our Certificate of Incorporation, has established criteria and
processes for director nominations, including those proposed by stockholders.
Those criteria and processes are described in Proposal 1. Election of Directors
- Process and Criteria for Nominating Directors and Other Information -
Stockholder Nominations for Board of Directors.
Executive Committee
Chairman: James M. Jenness (Lead Independent
Director)
Other Members: John R. Alm, Abelardo E. Bru, Thomas J. Falk
and Ian C. Read
The Committee met two times in 2014.
The Committees principal function is to
exercise, when necessary between board meetings, the Boards powers to direct
our business and affairs.
Compensation Committee Interlocks and Insider
Participation |
None of the members of the Management
Development and Compensation Committee is a current or former officer or
employee of Kimberly-Clark. No interlocking relationship exists between the
members of our Board of Directors or the Management Development and Compensation
Committee and the board of directors or compensation committee of any other
company.
Communicating
with Directors |
The Board has established a process by
which stockholders and other interested parties may communicate with the Board,
including the Lead Director. That process can be found in the Investors section
of our website at www.kimberly-clark.com.
Other
Corporate Governance Policies and
Practices |
Corporate Governance
Policies. The Board of Directors first adopted Corporate Governance
Policies in 1994, and has amended them from time to time as rules and
regulations change and governance practices develop. These policies guide
Kimberly-Clark and the Board on matters of corporate governance, including:
director responsibilities, Board committees and their charters, director
independence, director compensation, performance assessments of the Board and
individual directors, director orientation and education, director access to
management, Board access to outside financial, business and legal advisors, and
management development and succession planning. To see these policies, go to the
Investors section of our website at www.kimberly-clark.com.
Code of
Conduct. Kimberly-Clark has a Code of Conduct
that applies to all of our directors, executive officers and employees,
including our Chief Executive Officer, Chief Financial Officer and Vice
President and Controller. It is available in the Investors section of our
website at www.kimberly-clark.com. Any amendments to or waivers of our Code of
Conduct applicable to our Chief Executive Officer, Chief Financial Officer or
Vice President and Controller will also be posted at that location.
Board and Management
Roles in Risk Oversight. The Board is
responsible for providing risk oversight with respect to our operations. In
connection with this oversight, the Board particularly focuses on our strategic
and operational risks, as well as related risk mitigation. In addition, the
Board reviews and oversees managements response to key risks facing
Kimberly-Clark.
Table of Contents
|
Corporate Governance Other Corporate Governance Policies and Practices |
The Boards committees review particular
risk areas to assist the Board in its overall risk oversight of
Kimberly-Clark:
► |
The Audit
Committee oversees our risk management program, with a particular focus on
our internal controls, compliance programs, financial statement integrity
and fraud risks, and related risk mitigation. In connection with this
oversight, the Audit Committee receives regular reports from management on
risk assessments, the risk management process, and issues related to the
risks of managing our business. The Audit Committee also receives an
annual enterprise risk management update, which describes our key
financial, strategic, operational and compliance risks. |
► |
The
Management Development and Compensation Committee reviews the risk profile
of our compensation policies and practices. This process includes a review
of an assessment of our compensation programs, as described in
Compensation Discussion and Analysis Analysis of Compensation-Related
Risks. |
► |
The
Nominating and Corporate Governance Committee monitors risks relating to
governance matters and recommends appropriate actions in response to those
risks. In addition, it provides oversight of our Corporate Social
Responsibility programs and sustainability activities and receives regular
updates on the effectiveness of these programs.
|
Complementing the Boards overall risk
oversight, our senior executive team identifies and monitors key enterprise-wide
and business unit risks, providing the basis for the Boards risk review and
oversight process. We have a Global Risk Oversight Committee, consisting of
management members from core business units and from our finance, treasury,
global risk management, compliance and legal functions. This committee
identifies significant risks for review and updates our policies for risk
management in areas such as hedging, foreign currency and country risks, product
liability, property and casualty risks, and supplier and customer risks. The
Board believes the allocation of risk management responsibilities described
above supplements the Boards leadership structure by allocating risk areas to
an appropriate committee for oversight, allows for an orderly escalation of
issues as necessary, and helps the Board satisfy its risk oversight
responsibilities.
Whistleblower
Procedures. The Audit Committee has
established procedures for receiving, recording and addressing any complaints we
receive regarding accounting, internal accounting controls or auditing matters,
and for the confidential and anonymous submission, by our employees or others,
of any concerns about our accounting or auditing practices. We also maintain a
toll-free Code of Conduct telephone line and a website, each allowing our
employees and others to voice their concerns anonymously.
Chief Compliance Officer.
Stephen Naughton is our Vice President and
Chief Compliance Officer and oversees our compliance programs. His duties
include: regularly updating the Audit Committee on the effectiveness of our
compliance programs, providing periodic reports to the Board, and working
closely with our various compliance functions to promote coordination and
sharing of best practices across these functions. Mr. Naughton is also a member
of our Global Risk Oversight Committee.
Management Succession
Planning. In conjunction with the Board, the
Management Development and Compensation Committee is responsible for
periodically reviewing the long-term management development plans and succession
plans for the Chief Executive Officer and other key officers, as well as the
emergency succession plan for the Chief Executive Officer and other key officers
if any of these officers unexpectedly becomes unable to perform his or her
duties.
Disclosure
Committee. We have established a Disclosure
Committee to assist in fulfilling our obligations to maintain disclosure
controls and procedures and to coordinate and oversee the process of preparing
our periodic securities filings with the SEC. This committee is composed of
members of management and is chaired by our Vice President and
Controller.
Table of Contents
|
Corporate Governance Other Corporate Governance Policies and Practices |
No Executive Loans.
We do not extend loans to our executive
officers or directors and therefore do not have any such loans
outstanding.
Board Policy on
Stockholder Rights Plans. We do not have a
poison pill or stockholder rights plan. If we were to adopt a stockholder
rights plan, the Board would seek prior stockholder approval of the plan unless,
due to timing constraints or other reasons, a majority of Independent Directors
of the Board determines that it would be in the best interests of stockholders
to adopt a plan before obtaining stockholder approval. If a stockholder rights
plan is adopted without prior stockholder approval, the plan must either be
ratified by stockholders or must expire, without being renewed or replaced,
within one year. The Nominating and Corporate Governance Committee reviews this
policy statement periodically and reports to the Board on any recommendations it
may have concerning the policy.
Simple Majority Voting
Provisions. Our Certificate of Incorporation
does not include supermajority voting provisions.
Special Stockholder
Meetings. Our Certificate of Incorporation
allows the holders of 25 percent or more of our issued and outstanding shares of
capital stock to request that a special meeting of stockholders be called,
subject to procedures and other requirements set forth in our
By-Laws.
Charitable
Contributions. The Nominating and Corporate
Governance Committee has adopted guidelines for the review and approval of
charitable contributions by Kimberly-Clark (or any foundation under the common
control of Kimberly-Clark) to organizations or entities with which a Director or
an executive officer may be affiliated. We will disclose in the Investors
section of our website at www.kimberly-clark.com any contributions made by us to
a tax-exempt organization under the following circumstances:
► |
An
Independent Director serves as an executive officer of the tax-exempt
organization; and |
► |
If within
the preceding three years, contributions in any single year from
Kimberly-Clark to the organization exceeded the greater of $1 million or 2
percent of the tax-exempt organizations consolidated gross revenues.
|
Table of Contents
Proposal 1.
Election of Directors
As of the date of this proxy statement,
the Board of Directors consists of twelve members. Each directors term will
expire at this years Annual Meeting. All the nominees standing for election at
the Annual Meeting are being nominated to serve until the 2016 Annual Meeting of
Stockholders and until their successors have been duly elected and qualified.
All nominees have advised us that they will serve if elected; however, should
any nominee become unable to serve, proxies may be voted for another person
designated by the Board.
John R. Alm has announced that he does not
intend to stand for re-election to the Board of Directors when his current term
expires at the Annual Meeting. Mr. Alm will continue to serve as a director
until the Annual Meeting. We would like to thank Mr. Alm for his eight years of
service and many contributions to the Board, Kimberly-Clark and our
stockholders. The size of the Board will be reduced from twelve members to
eleven, effective upon Mr. Alms retirement from the Board.
Given the independent status of the
nominees, if all nominees are elected at the Annual Meeting, ten of the eleven
directors on our Board will be Independent Directors.
Process
for Director
Elections |
Our Certificate of Incorporation provides
that all of our directors must be elected annually. Our By-Laws provide that, in
uncontested elections, directors must be elected by a majority of votes cast
rather than by a plurality. If any incumbent director does not receive a
majority of votes, he or she is required to tender his or her resignation for
consideration by the Board.
Process and
Criteria for Nominating
Directors |
The Board of Directors is responsible for
approving candidates for Board membership. The Board has delegated the screening
and recruitment process to the Nominating and Corporate Governance Committee, in
consultation with the Chairman of the Board and Chief Executive Officer and the
Lead Director. The Committee therefore recommends to the Board any new
appointments and nominees for election as directors at our annual meeting of
stockholders. It also recommends nominees to fill any vacancies. As provided in
our Certificate of Incorporation, the Board of Directors has the authority to
determine the size of the Board and to fill any vacancies that occur between
annual meetings of stockholders.
The Committee may receive recommendations
for Board candidates from various sources, including our directors, management
and stockholders. In addition, the Nominating and Corporate Governance Committee
periodically retains a search firm to assist it in identifying and recruiting
director candidates meeting the criteria specified by the Committee. The
Committee also has a process for considering nominations submitted by
stockholders. For details on this process, see Other Information - Stockholder
Nominations for Board of Directors.
The Committee believes that the criteria
for director nominees should foster effective corporate governance, support our
strategies and businesses, take diversity into account and ensure that our
directors, as a group, have an overall mix of the attributes needed for an
effective Board. The criteria should also support the successful recruitment of
qualified candidates.
Table of Contents
|
Proposal 1. Election of Directors
Process and Criteria for Nominating
Directors |
Qualified candidates for director are
those who, in the judgment of the Committee, possess all of the personal
attributes and a sufficient mix of the experience attributes listed below to
ensure effective service on the Board.
PERSONAL ATTRIBUTES
Leadership |
|
Collaborative |
|
Ability to communicate |
► |
Lead in personal and professional
lives. |
|
► |
Actively participate in Board and
committee matters. |
|
► |
Possess good interpersonal
skills. |
|
|
|
|
|
|
|
|
Ethical
Character |
|
|
|
Effectiveness |
► |
Possess high standards for ethical
behavior. |
|
Independence |
|
► |
Bring a proactive and
solution-oriented approach. |
|
|
► |
Independent of management and
Kimberly-Clark (for non-management directors only). |
|
|
EXPERIENCE ATTRIBUTES
ATTRIBUTE |
|
FACTORS THAT MAY BE
CONSIDERED |
Financial
acumen Has good knowledge of
business finance and financial statements |
|
► |
Satisfies the financial literacy
requirements of the NYSE |
|
► |
Qualifies as an audit committee
financial expert under the rules and regulations of the
SEC |
|
► |
Has an accounting, finance or
banking background |
General business
experience Possesses experience that
will aid in judgments concerning business issues |
|
► |
Has leadership experience as a chief
or senior executive officer |
|
► |
Has experience setting
compensation |
Industry
knowledge Possesses knowledge about
our industries |
|
► |
Has marketing expertise, with
digital marketing and e-commerce experience |
|
► |
Has governance/public company board
experience |
Diversity of background and
viewpoint Brings to the Board an
appropriate level of diversity |
|
► |
Brings a diverse viewpoint that is
representative of our customer, consumer, employee and stockholder
base |
|
► |
Provides a different perspective
(stemming, for example, from an academic background or experience from
outside the consumer packaged goods industry) |
Special business
experience Possesses global
management experience and experience with branded consumer packaged
goods |
|
► |
Has international
experience |
|
► |
Has branded consumer packaged goods
experience |
Table of Contents
|
Proposal 1. Election of Directors
The Nominees |
Committee Review of Attributes of
Current Directors |
The Nominating and Corporate Governance
Committee has reviewed the background of each of our current directors and their
service on the Board in light of the personal and experience attributes
described above. The Committee has determined that each director possesses all
of the personal attributes as well as a sufficient mix of the experience
attributes.
For details about each nominees specific
experience attributes, see The Nominees below.
As noted above, the Nominating and
Corporate Governance Committee believes that diversity of backgrounds and
viewpoints is a key attribute for directors. As a result, the Committee seeks to
have a diverse Board that is representative of our customer, consumer, employee
and stockholder base. While the Committee carefully considers this diversity
when considering nominees for director, the Committee has not established a
formal policy regarding diversity in identifying director nominees. Our Board
currently includes individuals of differing ages, races and
genders.
|
|
Director since 1987 Age 68 |
John F.
Bergstrom
Chairman and Chief Executive
Officer, Bergstrom Corporation
Mr. Bergstrom has served as Chairman
and Chief Executive Officer of Bergstrom Corporation, Neenah, Wisconsin,
for more than the past five years. Bergstrom Corporation owns and operates
automobile sales and leasing businesses and a credit life insurance
company based in Wisconsin.
Public company boards served on since 2010:
Advance Auto Parts, Inc., Associated Banc-Corp (since December 2010),
Wisconsin Energy Corporation and Wisconsin Electric Power
Company.
Experience
attributes: Mr. Bergstrom has been determined by our Board to be an “audit
committee financial expert” under the SEC’s rules and regulations, has leadership experience
as a chief executive officer, provides diversity of background and viewpoint, and has marketing,
compensation, governance and public company board experience. |
|
|
Table of Contents
|
Proposal 1. Election of
Directors The
Nominees |
Director since 2005 Age 66 |
Abelardo E.
Bru
Retired Vice Chairman, PepsiCo,
Inc.
Mr. Bru retired as Vice Chairman of
PepsiCo, a food and beverage company, in 2005. He joined PepsiCo in 1976.
Mr. Bru served from 1999 to 2003 as President and Chief Executive Officer
and in 2003 to 2004 as Chief Executive Officer and Chairman of Frito-Lay
Inc., a division of PepsiCo. Prior to leading Frito-Lay, Mr. Bru led
PepsiCos largest international business, Sabritas Mexico, as President
and General Manager from 1992 to 1999. Mr. Bru is a member of the board of
directors of the Education is Freedom Foundation.
Public company boards served on
since 2010: DirecTV (since May 2013), Kraft Foods Group, Inc. (since
October 2012).
Experience
attributes: Mr. Bru satisfies the
financial literacy requirements of the NYSE, has leadership experience as
a chief executive officer, has knowledge about our industries, provides
diversity of background and viewpoint, has international experience and
experience with branded consumer packaged goods, and has marketing,
compensation, governance and public company board
experience. |
|
|
Director since 1996 Age
64 |
Robert W.
Decherd
Vice Chairman, A. H. Belo
Corporation
Mr. Decherd has served as Vice
Chairman of the Board of A. H. Belo Corporation, a newspaper publishing
and Internet company, since September 2013. Prior to that, he served as
Chairman of the Board, President and Chief Executive Officer of A. H. Belo
Corporation since it was spun off from Belo Corp. in February 2008. Prior
to February 2008, Mr. Decherd was Chief Executive Officer of Belo Corp., a
broadcasting and newspaper publishing company, for 21 years. Mr. Decherd
has served as a member of the Advisory Council for the Harvard University
Center for Ethics and the Board of Visitors of the Columbia Graduate
School of Journalism. He continues to be actively involved in a variety of
civic initiatives in Dallas, Texas.
Public company boards served on
since 2010: A. H. Belo Corporation and Belo Corp. (through December
2013).
Experience
attributes: Mr. Decherd has been
determined by our Board to be an audit committee financial expert under
the SECs rules and regulations, has leadership experience as a chief
executive officer, provides diversity of background and viewpoint, and has
marketing, compensation, governance and public company board
experience. |
Table of Contents
|
Proposal 1. Election of
Directors The
Nominees |
Director since 1999 Age 56 |
Thomas J.
Falk
Chairman of the Board and Chief
Executive Officer
Mr. Falk was elected Chairman of the
Board and Chief Executive Officer in 2003 and President and Chief
Executive Officer in 2002. Prior to that, he served as President and Chief
Operating Officer since 1999. Mr. Falk previously had been elected Group
President Global Tissue, Pulp and Paper in 1998, where he was
responsible for Kimberly-Clarks global tissue businesses. Earlier in his
career, Mr. Falk had responsibility for Kimberly-Clarks North American
Infant Care, Child Care and Wet Wipes businesses. Mr. Falk joined
Kimberly-Clark in 1983 and has held other senior management positions. He
has been a director of Kimberly-Clark since 1999. He also serves on the
board of directors of Catalyst Inc., the University of Wisconsin
Foundation, and the Consumer Goods Forum, and serves as a governor of the
Boys & Girls Clubs of America.
Public company boards served on since 2010: Lockheed Martin Corporation (since
June 2010).
Experience attributes: Mr. Falk satisfies
the financial literacy requirements of the NYSE and has a background in accounting, has leadership experience as a
chief executive officer, has knowledge about our industries, has international experience and experience with
branded consumer packaged goods, and has marketing, compensation, governance and public company board
experience. |
|
|
Director since 2011 Age 55 |
Fabian T.
Garcia
Chief Operating Officer, Global
Innovation and Growth, Europe & Hills Pet Nutrition,
Colgate-Palmolive Company
Mr. Garcia has served as Chief
Operating Officer, Global Innovation and Growth, Europe and Hills Pet
Nutrition (added responsibility in 2012), of Colgate-Palmolive Company, a
household, health care and personal products company, since 2010. From
2007 to 2010, he served as Executive Vice President and President, Colgate
Latin America and Global Sustainability. He joined Colgate-Palmolive in
2003 as President, Colgate Greater Asia Pacific.
Experience
attributes: Mr. Garcia satisfies the
financial literacy requirements of the NYSE, has leadership experience as
a chief operating officer, provides diversity of background and viewpoint,
has knowledge about our industries, has international experience and
experience with branded consumer packaged goods, and has marketing,
compensation and governance experience. |
Table of Contents
|
Proposal 1. Election of
Directors The
Nominees |
Director since 2002 Age 58 |
Mae C. Jemison,
M.D.
President, The Jemison
Group
Dr. Jemison is founder and President
of The Jemison Group, Inc., a technology consulting company, and is also
the Principal for the 100 Year Starship Project, a new initiative started
by DARPA that focuses on human space travel to another star within the
next 100 years. She was President and founder of BioSentient Corporation,
a medical devices company from 2000 to 2012. Dr. Jemison founded the
Dorothy Jemison Foundation for Excellence and developed The Earth We Share
international science camp. Dr. Jemison served as a professor of
Environmental Studies at Dartmouth College from 1995 to 2002. From 1987 to
1993, she served as a National Aeronautics and Space Administration (NASA)
astronaut. Dr. Jemison is a member of the National Academy of Sciences
Institute of Medicine and the Greater Houston Partnership. She chaired the
State of Texas Product Development and Small Business Incubator Board, and
was a member of the National Advisory Council for Biomedical Imaging and
Bioengineering.
Public company boards served on
since 2010: Scholastic Corporation and Valspar Corporation.
Experience
attributes: Dr. Jemison satisfies the
financial literacy requirements of the NYSE, has international experience
and leadership experience of entrepreneurial start-up enterprises and
non-profit organizations, provides diversity of background and viewpoint,
and has compensation, governance and public company board
experience. |
|
|
Director since 2007 Age
68 |
James M.
Jenness
Retired Chairman of the Board and CEO, Kellogg Company
Mr. Jenness has served as a Director
of Kellogg Company, a producer of cereal and convenience foods, since
2000. From 2005 to 2014 he was Chairman of the Board of Kellogg and he
served as Chief Executive Officer of Kellogg from 2004 through 2006.
Mr. Jenness was Chief Executive Officer of Integrated Merchandising
Systems LLC, a market leader in outsource management for retail promotion
and branded merchandising, from 1997 to 2004. He served in various
positions of increasing responsibility at Leo Burnett Company, Kelloggs
major advertising agency partner, from 1974 to 1997, including as Vice
Chairman, Chief Operating Officer and Director. He is a senior director of
Ann & Robert H. Lurie Childrens Hospital of Chicago (formerly
Childrens Memorial Hospital) and a director of Mercy Home for Boys and
Girls. He also serves on the DePaul University College of Commerce
Advisory Council, is a member of DePauls Board of Trustees and is a
co-trustee of the W. K. Kellogg Foundation Trust.
Public company boards served on
since 2010: Kellogg Company.
Experience
attributes: Mr. Jenness satisfies the
financial literacy requirements of the NYSE, has leadership experience as
a chief executive officer, has knowledge about our industries, has
international experience and experience with branded consumer packaged
goods, and has marketing, compensation, governance and public company
board experience. |
Table of Contents
|
Proposal 1. Election of
Directors The
Nominees |
Director since 2010 Age 67 |
Nancy J.
Karch
Retired Director, McKinsey &
Co.
Ms. Karch served as a Director
(senior partner) of McKinsey & Co., an independent consulting firm,
from 1988 until her retirement in 2000. She had served in various
executive capacities at McKinsey since 1974. Ms. Karch is Director
Emeritus of McKinseys Stamford, Connecticut office, and serves on the
boards of Northern Westchester Hospital and North Shore - LIJ Health
System, both of which are not-for-profit entities.
Public company boards served on
since 2010: CEB (The Corporate Executive Board Company) (through January
2015), Genworth Financial, Inc., Kate Spade & Company and Mastercard
Incorporated.
Experience
attributes: Ms. Karch satisfies the
financial literacy requirements of the NYSE and has a background in
finance, has leadership experience as a senior executive officer, provides
diversity of background and viewpoint, has knowledge about our industries,
has experience with branded consumer packaged goods, and has compensation,
governance and public company board experience. |
|
|
Director since 2007 Age
61 |
Ian C. Read
Chairman of the Board and Chief
Executive Officer, Pfizer, Inc.
Mr. Read was elected Chairman of the
Board and Chief Executive Officer in December 2011 and President and Chief
Executive Officer in December 2010, of Pfizer, Inc., a drug manufacturer.
Mr. Read joined Pfizer in 1978 in its financial organization. He worked in
Latin America through 1995, holding positions of increasing
responsibility, and was appointed President of the Pfizer International
Pharmaceuticals Group, Latin America/Canada in 1996. In 2000, Mr. Read was
named Executive Vice President of Europe/Canada and was named a corporate
Vice President in 2001. In 2006, he was named Senior Vice President of
Pfizer, as well as Group President of its Worldwide Biopharmaceutical
Businesses.
Public company boards served on
since 2010: Pfizer, Inc. (since December 2010).
Experience
attributes: Mr. Read has been determined by our Board to qualify as an “audit
committee financial expert” under the SEC’s rules and regulations and has a background in finance,
has leadership experience as a chief executive officer, provides diversity of background and
viewpoint, has international experience, and has marketing, compensation, governance and public
company board experience. |
Table of Contents
|
Proposal 1. Election of
Directors The
Nominees |
Director since 1995 Age
57 |
Linda Johnson
Rice
Chairman, Johnson Publishing
Company, Inc.
Ms. Johnson Rice has served as
Chairman of Johnson Publishing Company, Inc., a multi-media company, since
2010. She served as Chief Executive Officer from 2004 to 2010, and also
served as President and Chief Operating Officer from 1987 to 2005. She
joined Johnson Publishing Company in 1980, and became Vice President in
1985.
Public company boards served on
since 2010: Omnicom Group, Inc.
Experience
attributes: Ms. Johnson Rice satisfies
the financial literacy requirements of the NYSE, has leadership experience
as a chief executive officer, provides diversity of background and
viewpoint, has international experience, and has marketing, compensation,
governance and public company board experience. |
|
|
Director since 2001 Age 67 |
Marc J.
Shapiro
Retired Vice Chairman, JPMorgan
Chase & Co.
Mr. Shapiro retired in 2003 as Vice
Chairman of JPMorgan Chase & Co., a financial services company. Before
becoming Vice Chairman of JPMorgan Chase & Co. in 1997, Mr. Shapiro
was Chairman and Chief Executive Officer of Chase Bank of Texas, a
wholly-owned subsidiary of JPMorgan Chase & Co., from 1989 until 1997.
He now serves as a consultant to JPMorgan Chase & Co. and as
non-executive Chairman of its Texas operations. Mr. Shapiro serves on the
boards of the Baylor College of Medicine, the Baylor St. Lukes Medical
Center Hospital, the Menninger Clinic, the M.D. Anderson Cancer Center,
and the Baker Institute at Rice University.
Public company boards served on
since 2010: Burlington Northern Santa Fe Corporation (through February
2010), The Mexico Fund and Weingarten Realty Investors.
Experience
attributes: Mr. Shapiro satisfies the
financial literacy requirements of the NYSE and has a banking and finance
background, has leadership experience as a chief executive officer,
provides diversity of background and viewpoint, and has compensation,
governance and public company board
experience. |
The Board of Directors
unanimously recommends a vote FOR the election of each of the
eleven nominees for director. |
Table of Contents
|
Proposal 1. Election of
Directors Director
Compensation |
Directors who are not officers or
employees of Kimberly-Clark or any of our subsidiaries, affiliates or equity
companies are Outside Directors for compensation purposes and are compensated
for their services under our 2011 Outside Directors Compensation Plan. All
Independent Directors currently on our Board are Outside Directors and are
compensated under this Plan.
Our objectives for Outside Director
Compensation are:
►to remain competitive with the median compensation paid to outside
directors of comparable companies
►to keep pace with changes in practices in director
compensation
►to attract qualified candidates for Board
service
►to reinforce our practice of encouraging stock ownership by our
directors
In 2012, the Nominating and Corporate
Governance Committee assessed our Outside Director compensation against the
median non-management director compensation for our peers. Based on this review,
the Committee recommended an increase in Outside Director compensation for 2013
and 2014, and the Board agreed with the Committees recommendation. Prior to
this adjustment, Outside Director compensation had not increased since
2009.
The table below shows how we structured
Outside Director compensation in 2014:
Board Members |
Cash retainer: $90,000 annually, paid in four quarterly
payments at the beginning of each quarter. |
|
|
|
Restricted share units: Annual grant with a value of
$155,000, awarded and valued on the first business day of the
year |
Committee
Chairs |
Additional annual grant of restricted share units with a
value of $20,000, awarded and valued on the first business day of the
year |
Lead Director |
Additional grant of restricted share units with a value
of $30,000, awarded and valued on the first business day of the
year |
New Outside Directors receive the full
quarterly amount of the annual retainer for the quarter in which they join the
Board. Their annual grant of restricted share units is pro-rated based on the
date when they joined.
We also reimburse Outside Directors for
expenses incurred in attending Board or committee meetings.
Restricted share units are not shares of
our common stock. Rather, restricted share units represent the right to receive
a pre-determined number of shares of our common stock within 90 days following a
restricted period that begins on the date of grant and expires on the date the
Outside Director retires from or otherwise terminates service on the Board. In
this way, they align the directors interests with the interests of our
stockholders. Outside Directors may not dispose of the units or use them in a
pledge or similar transaction. Outside Directors also receive additional
restricted share units equivalent in value to the dividends that would have been
paid to them if the restricted share units granted to them were shares of our
common stock.
Table of Contents
|
Proposal 1. Election of
Directors 2014 Outside Director
Compensation |
2014 Outside
Director Compensation |
The following table shows the compensation
paid to each Outside Director for his or her service in 2014.
Name |
|
Fees Earned or Paid in
Cash($) |
|
Stock Awards($)(1)(2)(3) |
|
All
Other Compensation($)(4) |
|
Total($)(5) |
John R. Alm |
|
90,000 |
|
175,000 |
|
10,000 |
|
|
275,000 |
John F. Bergstrom |
|
90,000 |
|
155,000 |
|
10,000 |
|
|
255,000 |
Abelardo E. Bru |
|
90,000 |
|
175,000 |
|
7,500 |
|
|
272,500 |
Robert W. Decherd |
|
90,000 |
|
155,000 |
|
10,000 |
|
|
255,000 |
Fabian T. Garcia |
|
90,000 |
|
155,000 |
|
|
|
|
245,000 |
Mae C. Jemison, M.D. |
|
90,000 |
|
155,000 |
|
|
|
|
245,000 |
James M. Jenness |
|
90,000 |
|
185,000 |
|
|
|
|
275,000 |
Nancy J. Karch |
|
90,000 |
|
155,000 |
|
10,000 |
|
|
255,000 |
Ian C. Read |
|
90,000 |
|
175,000 |
|
720 |
|
|
265,720 |
Linda Johnson Rice |
|
90,000 |
|
155,000 |
|
|
|
|
245,000 |
Marc J. Shapiro |
|
90,000 |
|
155,000 |
|
|
|
|
245,000 |
(1) |
Amounts shown reflect the grant date fair value of those
grants, determined in accordance with Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC) Topic 718 Stock
Compensation (ASC Topic 718) for restricted share unit awards granted
pursuant to our 2013 Outside Directors Compensation Plan. See Note 10 to
our audited consolidated financial statements included in our Annual
Report on Form 10-K for 2014 for the assumptions used in valuing these
restricted share units. |
(2) |
Restricted share unit awards were granted on January 2,
2014. The number of restricted share units granted is set forth
below: |
|
Name |
Restricted Share Units Grants in 2014(#) |
|
John R.
Alm |
1,685 |
|
John F.
Bergstrom |
1,493 |
|
Abelardo E.
Bru |
1,685 |
|
Robert W.
Decherd |
1,493 |
|
Fabian T.
Garcia |
1,493 |
|
Mae C.
Jemison, M.D. |
1,493 |
|
James M.
Jenness |
1,782 |
|
Nancy J.
Karch |
1,493 |
|
Ian C.
Read |
1,685 |
|
Linda Johnson
Rice |
1,493 |
|
Marc J. Shapiro |
1,493 |
Table of Contents
|
Proposal 1. Election of
Directors 2014 Outside Director
Compensation |
(3) |
As of December 31, 2014, Outside Directors had the
following stock awards outstanding: |
|
Name |
Restricted
Stock(#) |
Restricted Share Units(#) |
|
John R.
Alm |
|
23,090 |
|
John F.
Bergstrom |
3,000 |
30,116 |
|
Abelardo E.
Bru |
|
23,986 |
|
Robert W.
Decherd |
3,000 |
33,228 |
|
Fabian T.
Garcia |
|
6,547 |
|
Mae C.
Jemison, M.D. |
|
30,116 |
|
James M.
Jenness |
|
21,673 |
|
Nancy J.
Karch |
|
9,994 |
|
Ian C.
Read |
|
18,471 |
|
Linda Johnson
Rice |
3,000 |
31,828 |
|
Marc J. Shapiro |
|
34,129 |
|
In connection with
the Halyard Health spin-off on October 31, 2014, the Outside Directors
restricted share units (and the dividend equivalents credited to these
restricted units equal to cash dividends on our Common Stock as described
in footnote 5 below) were credited with reinvested dividend equivalents
equal to the value of the Halyard Health stock dividend distributed on our
common stock (approximately $4.69 per share) to maintain the value of the
awards before and after the spin-off. |
(4) |
Reflects charitable matching gifts paid in 2014 under
the Kimberly-Clark Foundations Matching Gifts Program to a charity
designated by the director. This program is available to all our employees
and directors. Under this program, the Kimberly-Clark Foundation matches
employees and directors financial contributions to qualified educational
and charitable organizations in the United States on a dollar-for-dollar
basis, up to $10,000 per person per calendar year. Amounts paid in 2014 in
connection with matching gifts for John F. Bergstrom, Abelardo E. Bru and
Nancy J. Karch reflect donations made in 2013. |
(5) |
During 2014, Outside Directors received credit for cash
dividends on restricted stock held by them. These dividends are credited
to interest bearing accounts maintained by us on behalf of those Outside
Directors with restricted stock. Earnings on those accounts are not
included in the Outside Director Compensation Table because the earnings
were not above market or preferential. Also in 2014, Outside Directors
received additional restricted share units with a value equal to the cash
dividends paid during the year on our common stock on the restricted share
units held by them. Because we factor the value of the right to receive
dividends into the grant date fair value of the restricted stock and
restricted share units awards, the dividends and dividend equivalents
received by Outside Directors are not included in the Outside Director
Compensation table. The dividends and other amounts credited on restricted
stock and additional restricted share units credited in 2014 were as
follows: |
|
Name |
Dividends Credited on Restricted
Stock($) |
Number of Restricted Share Units Credited in
2014(#) |
Grant Date Fair
Value of Restricted Share Units Credited($) |
|
John R. Alm |
|
656.79 |
70,980 |
|
John F. Bergstrom |
9,990 |
862.08 |
93,147 |
|
Abelardo E. Bru |
|
682.78 |
73,787 |
|
Robert W. Decherd |
9,990 |
952.35 |
102,897 |
|
Fabian T. Garcia |
|
178.42 |
19,312 |
|
Mae C. Jemison,
M.D. |
|
862.08 |
93,147 |
|
James M. Jenness |
|
614.95 |
66,466 |
|
Nancy J. Karch |
|
278.41 |
30,110 |
|
Ian C. Read |
|
522.81 |
56,511 |
|
Linda Johnson Rice |
9,990 |
911.74 |
98,511 |
|
Marc J. Shapiro |
|
978.48 |
105,719 |
Other than the cash retainer, grants of
restricted share units and the other compensation previously described, no
Outside Director received any compensation or perquisites from Kimberly-Clark
for services as a director in 2014.
Table of
Contents
|
Proposal 1. Election of
Directors 2014 Outside Director
Compensation |
A director who is not an Outside Director
does not receive any compensation for services as a member of the Board or any
committee, but is reimbursed for expenses incurred as a result of the
services.
In 2014, the Nominating and Corporate
Governance Committee, with the assistance of Mercer, revisited the Corporations
Outside Director compensation to assess whether it still met our objectives for
Outside Director compensation as described above. In its assessment, the
Committee compared aggregate Outside Director cash and equity compensation to
the median compensation of the outside directors of our peer group, as well as
the structure of our compensation programs of our peer group. For information
regarding our peer group, see Compensation Discussion and Analysis below.
Based on this review, the Committee determined that the aggregate compensation
for our Outside Directors would be below the median of our peer group in 2015.
The Committee then recommended to the Board, and the Board approved, changes to
our Outside Directors aggregate compensation to more closely align with the
median aggregate compensation of our peer group.
Accordingly, beginning in 2015:
► |
The annual cash retainer is increased from $90,000 to
$100,000, and |
► |
The value of the annual
grant of restricted share units is increased from $155,000 to
$165,000. |
There was no change to the amount of the
additional annual grant of restricted share units paid to committee chairs or to
the Lead Director.
Table of
Contents
Proposal 2.
Ratification of Auditors
The Audit Committee of the Board of
Directors is directly responsible for the appointment, compensation, retention
and oversight of our independent auditors. The Audit Committee is also
responsible for overseeing the negotiation of the audit fees associated with
retaining our independent auditors. To assure continuing auditor independence,
the Audit Committee periodically considers whether a different audit firm should
perform our independent audit work. Also, in connection with the mandated
rotation of the independent auditors lead engagement partner, the Audit
Committee and its chairman are directly involved in the selection of the new
lead engagement partner.
For 2015, the Audit Committee has selected
Deloitte & Touche LLP (along with its member firms and affiliates,
Deloitte) as the independent registered public accounting firm to audit our
financial statements. In engaging Deloitte for 2015, the Audit Committee
utilized a review and selection process that included the following:
► |
a review of managements assessment of the services Deloitte
provided in 2014 and a comparison of this assessment to prior years
reviews |
► |
discussions, in executive session, with the Chief Financial
Officer and the Vice President and Controller regarding their viewpoints
on the selection of the 2015 independent auditors and on Deloittes
performance |
► |
discussions, in executive session, with representatives of
Deloitte about their possible engagement |
► |
Audit Committee discussions, in executive session, about the
selection of the 2015 independent auditors |
► |
a review and approval of Deloittes proposed estimated fees
for 2015 |
► |
a review and assessment of Deloittes
independence |
► |
the Audit Committees consideration
of the fact that Deloitte has served as our independent auditors since
1928, and its conclusion that this service does not impact Deloittes
independence |
The Audit Committee and the Board believe
that the continued retention of Deloitte to serve as our independent auditor is
in the best interests of Kimberly-Clark and its stockholders, and they recommend
that stockholders ratify this selection. If the stockholders do not ratify the
selection of Deloitte, the Audit Committee will consider the selection of other
independent auditors.
Representatives of Deloitte are expected
to be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate
questions.
The Board of Directors
unanimously recommends a vote FOR ratification of
Deloittes selection as Kimberly-Clarks auditor for
2015. |
Table of
Contents
|
Proposal 2. Ratification of Auditors Audit
Committee Approval of Audit and Non-Audit
Services |
Principal
Accounting Firm Fees |
Our aggregate fees to Deloitte (excluding
value added taxes) with respect to the fiscal years ended December 31, 2014 and
2013, were as follows:
|
|
2014($) |
|
2013($) |
Audit Fees(1) |
|
13,701,800 |
|
10,398,000 |
Audit-Related Fees(2) |
|
4,730,000 |
|
721,000 |
Tax
Fees(3) |
|
2,926,500 |
|
3,425,000 |
All
Other Fees |
|
|
|
|
(1) |
These amounts represent fees billed or expected to be
billed for professional services rendered by Deloitte for the audit of
Kimberly-Clarks annual financial statements for the fiscal years ended
December 31, 2014 and December 31, 2013, reviews of the financial
statements included in Kimberly-Clarks Forms 10-Q, and other services
that are normally provided by the independent registered public accounting
firm in connection with statutory or regulatory filings or engagements for
each of those fiscal years, including: fees for consolidated financial
audits, statutory audits, comfort letters, attest services, consents,
assistance with and review of SEC filings and other related matters. These
amounts also include fees for an audit of internal control over financial
reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Fees
in 2014 include $1,074,000 for audits related to the recasted financial
statements to reflect discontinued operations as required due to the
spin-off of our health care business. |
(2) |
These amounts represent aggregate fees billed or
expected to be billed by Deloitte for assurance and related services
reasonably related to the performance of the audit or review of our
financial statements for the fiscal years ended December 31, 2014 and
2013, that are not included in the audit fees listed above. These services
include engagements related to employee benefit plans, due diligence
assistance and other matters. Fees in 2014 include $3,875,000 for audits
of the combined financial statements of the health care business as
required for the Form 10 registration statement and other audit-related
services associated with the spin-off of our health care
business. |
(3) |
These amounts represent Deloittes aggregate fees for
tax compliance, tax advice and tax planning for 2014 and 2013. For 2014,
approximately $446,000 was for tax compliance/preparation
fees. |
Audit Committee
Approval of Audit and Non-Audit
Services |
Using the following procedures, the Audit
Committee pre-approves all audit and non-audit services provided by Deloitte to
Kimberly-Clark:
► |
At the first face-to-face Audit Committee meeting each
year, our Chief Financial Officer presents a proposal, including fees, to
engage Deloitte for audit services; |
► |
Before the first face-to-face Audit Committee meeting of
the year, our Vice President and Controller prepares a detailed memorandum
regarding non-audit services to be provided by Deloitte during the year.
This memorandum includes the services to be provided, the estimated cost
of these services, reasons why it is appropriate to have Deloitte provide
these services, and reasons why the requested service is not inconsistent
with applicable auditor independence rules; and |
► |
Before each subsequent meeting of the
Audit Committee, our Vice President and Controller prepares an additional
memorandum that includes updated information regarding the approved
services and highlights any new audit and non-audit services to be
provided by Deloitte. All new non-audit services to be provided are
described in individual requests for
services. |
The Audit Committee reviews the requests
presented in these proposals and memoranda and approves all services it finds
acceptable.
To ensure prompt handling of unexpected
matters, the Audit Committee has delegated to the Chairman of the Audit
Committee the authority to amend or modify the list of audit and non-audit
services and fees between meetings, as long as the additional or amended
services do not affect Deloittes independence under applicable rules. Any
actions taken under this authority are reported to the Audit Committee at its
next face-to-face Committee meeting.
All Deloitte services and fees in 2014 and
2013 were pre-approved by the Audit Committee or the Audit Committee
Chairman.
Table of
Contents
|
Proposal 2. Ratification of Auditors Audit
Committee Report |
Audit Committee
Report
In accordance with its charter adopted by
the Board, the Audit Committee assists the Board in overseeing the quality and
integrity of Kimberly-Clarks accounting, auditing and financial reporting
practices.
In discharging its oversight
responsibility for the audit process, the Audit Committee obtained from the
independent registered public accounting firm (the auditors) a formal written
statement describing all relationships between the auditors and Kimberly-Clark
that might bear on the auditors independence, as required by Public Company
Accounting Oversight Board (PCAOB) Rule 3526, Communication with Audit Committees Concerning
Independence, discussed with the auditors any
relationships that may impact their objectivity and independence and satisfied
itself as to the auditors independence. The Audit Committee also discussed with
management, the internal auditors, and the auditors, the quality and adequacy of
Kimberly-Clarks internal controls and the internal audit functions
organization, responsibilities, budget and staffing. The Audit Committee
reviewed with both the auditors and the internal auditors their audit plans,
audit scope and identification of audit risks.
The Audit Committee discussed and reviewed
with the auditors all communications required by the PCAOBs auditing standards,
including those required by PCAOB AS 16, Communication with Audit Committees.
Also, with and without management present, it discussed and reviewed the results
of the auditors examination of our financial statements and our internal
control over financial reporting. The Committee also discussed the results of
internal audit examinations.
Management is responsible for preparing
Kimberly-Clarks financial statements in accordance with accounting principles
generally accepted in the United States of America (GAAP) and for establishing
and maintaining Kimberly-Clarks internal control over financial reporting. The
auditors have the responsibility for performing an independent audit of
Kimberly-Clarks financial statements and internal control over financial
reporting, and expressing opinions on the conformity of Kimberly-Clarks
financial statements with GAAP and the effectiveness of internal control over
financial reporting. The Audit Committee discussed and reviewed Kimberly-Clarks
audited financial statements as of and for the fiscal year ending December 31,
2014, with management and the auditors. The Audit Committee also reviewed
managements assessment of the effectiveness of internal controls as of December
31, 2014, and discussed the auditors examination of the effectiveness of
Kimberly-Clarks internal control over financial reporting.
Based on the
above-mentioned review and discussions with management and the auditors, the
Audit Committee recommended to the Board that Kimberly-Clarks audited financial
statements be included in Kimberly-Clarks Annual Report on Form 10-K for the
fiscal year ended December 31, 2014, for filing with the SEC. The Audit
Committee also has selected and recommended to stockholders for ratification the
reappointment of Deloitte as the independent registered public accounting firm
for 2015.
AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS |
|
John R. Alm, Chairman |
John F. Bergstrom |
Robert W. Decherd |
Nancy J. Karch |
Linda Johnson
Rice |
Table of
Contents
Proposal 3. Advisory Vote
to Approve
Named Executive
Officer Compensation
In the Compensation Discussion and
Analysis that follows, we describe in detail our executive compensation program,
including its objectives, policies and components. As discussed in that section,
our executive compensation program seeks to align the compensation of our
executives with the objectives of our Global Business Plan. To this end, the
Management Development and Compensation Committee (the Committee) has adopted
executive compensation policies that are designed to achieve the following
objectives:
► |
Pay-for-Performance.
Support a
performance-oriented environment that rewards achievement of our financial
and non-financial goals. |
► |
Focus on Long-Term
Success. Reward executives for long-term strategic management and
stockholder value enhancement. |
► |
Stockholder
Alignment. Align the financial interest of our executives with those of
our stockholders. |
► |
Quality of
Talent. Attract and retain executives whose
abilities are considered essential to our long-term
success. |
For a more detailed discussion of how our
executive compensation program reflects these objectives and policies, including
information about the fiscal year 2014 compensation of our named executive
officers, see Compensation Discussion and Analysis, below.
We are asking our stockholders to support
our executive compensation as described in this proxy statement. This proposal,
commonly known as a say-on-pay proposal, gives our stockholders the
opportunity to express their views on our executive compensation. This vote is
not intended to address any specific item of compensation, but rather the
overall compensation of our executives and the objectives, policies and
practices described in this proxy statement. Accordingly, we will ask our
stockholders to vote on the following resolution at the Annual
Meeting:
RESOLVED, that the compensation paid to
the Corporations named executive officers, as disclosed pursuant to Item 402 of
Regulation S-K, including the Compensation Discussion and Analysis, compensation
tables and narrative discussion, is hereby approved by the Corporations
stockholders on an advisory basis.
The say-on-pay vote is advisory and is
therefore not binding on Kimberly-Clark, the Committee or our Board.
Nonetheless, the Committee and our Board value the opinions of our stockholders.
Therefore, to the extent there is any significant vote against the executive
compensation as disclosed in this proxy statement, the Committee and our Board
will consider our stockholders concerns and will evaluate whether any actions
are necessary to address those concerns.
Table of
Contents
|
Proposal 3. Advisory Vote
to Approve Named Executive Officer
Compensation |
At our 2011 Annual Meeting, stockholders
voted to adopt the recommendation of our Board to vote on the say-on-pay
proposal every year at our annual meeting. As a result, we will continue to
submit our say-on-pay proposal to our stockholders at each annual meeting, until
stockholders next vote on the frequency for the proposal in 2017.
The Board of Directors
unanimously recommends a vote FOR the approval of named
executive officer compensation, as disclosed in this proxy statement
pursuant to the SECs compensation disclosure
rules. |
Table of
Contents
Compensation Discussion
and
Analysis
This Compensation Discussion and Analysis
is intended to provide investors with an understanding of our compensation
policies and decisions regarding 2014 compensation for our named executive
officers.
For 2014, our named executive officers
are:
Named Executive Officer |
|
Title |
Thomas J. Falk |
|
Chairman of the Board and Chief Executive
Officer |
Mark A. Buthman |
|
Senior Vice President and Chief Financial
Officer* |
Michael D. Hsu |
|
Group President K-C North
America |
Anthony J. Palmer |
|
President Global Brands and
Innovation |
Elane B. Stock |
|
Group President K-C
International** |
* |
On February 18, 2015, Mr. Buthman announced his intention to retire at the end of 2015. On April 27, 2015,
Maria Henry will join Kimberly-Clark and succeed Mr. Buthman as Senior Vice President and Chief Financial Officer.
On that date, Mr. Buthman will assume the title of Executive Vice President to serve during a management transition
period until he begins retirement. |
** |
Ms. Stock served as our Group President – K-C Professional until April 1, 2014. She was appointed Group President –
K-C International on that date. |
In addition, we provide compensation
information regarding Robert E. Abernathy, our former President, Global Health
Care, who left Kimberly-Clark effective October 31, 2014 to accept a position
with Halyard Health, Inc., our former subsidiary that we spun-off on that date.
References in the following discussion to our named executive officers do not
include Mr. Abernathy unless we specify otherwise. We discuss Mr. Abernathys
compensation separately under Executive Compensation for 2014 - Compensation of
Former President, Global Health Care below.
2014 Compensation Highlights |
As measured under our annual incentive
program, we delivered the results below in adjusted net sales, adjusted earnings
per share (EPS) and adjusted operating profit return on sales (OPROS). Note that
these amounts differ from our reported results and reflect adjustments by the
Committee to neutralize the impact of the Halyard Health spin-off on these
performance metrics. See pages 48-49 for details on the adjustments.
Performance Measure* |
|
2014 Results |
|
2014 Target |
Adjusted Net Sales |
|
$21.31 billion |
|
$21.45 billion |
Adjusted EPS |
|
$6.09 |
|
$6.10 |
Adjusted OPROS Improvement |
|
+80 bps |
|
+50 bps |
* |
See 2014 Performance Goals, Performance Assessments and Payouts
for additional information on how we use these measures to promote our
pay-for-performance culture. |
Table of
Contents
|
Compensation Discussion and Analysis 2014 Compensation
Highlights |
Based on our 2014 performance, the
Management Development and Compensation Committee of our Board (the Committee)
concluded that:
► |
management delivered a strong overall
financial performance in 2014 with significantly above target adjusted
OPROS growth, as well as solid organic net sales growth, and |
► |
management continues to make good progress
executing strategies for our long-term success, including: |
|
► |
focusing on targeted growth initiatives and product
innovations, |
|
► |
supporting our growth opportunities with advertising and
research spending, |
|
► |
generating cost savings to help fund brand investments
and improve margins, and |
|
► |
focusing on cash generation and
allocating capital in shareholder-friendly
ways. |
Based on this performance, the Committee
approved annual cash incentives for 2014 at slightly above the target amount,
including an annual incentive payout for the Chief Executive Officer of 105 percent of
his target payment amount.
Performance-Based
Compensation
Pay-for-performance is a key objective of
our compensation programs. Consistent with that objective, performance-based
compensation constituted a significant portion of our named executive officers
direct annual compensation targets for 2014. Also, to further align the
financial interests of our executives with those of our stockholders, a majority
of our executives target direct annual compensation for 2014 was
equity-based.
COMPOSITION OF
TARGET DIRECT COMPENSATION
|
|
|
|
Chairman and CEO |
|
|
|
Named Executive
Officers |
|
|
|
|
|
Table of Contents
|
Compensation Discussion and Analysis 2014 Compensation Highlights |
Committee Consideration of 2014
Stockholder Advisory Vote
At our 2014 Annual Meeting, our executive
compensation program received the support of approximately 95 percent of shares
represented at the meeting. The Committee has considered the results of this
vote and views this outcome as evidence of stockholder support of its executive
compensation decisions and policies. Accordingly, the Committee has not made any
substantial changes to its executive compensation policies for 2015. The
Committee will continue to review the annual stockholder votes on our executive
compensation program and determine whether to make any changes in light of the
results.
CEO Target Direct Compensation and
Realizable Direct Compensation
The following chart compares the Chief
Executive Officer’s target direct annual compensation and realizable direct
compensation over the last three years. Realizable direct compensation reflects
the actual compensation received for base salary and annual cash incentive plus
the intrinsic value of the long-term equity incentives granted in that year,
determined as follows:
► |
For stock options, intrinsic value
is the amount by which our 2014 year-end stock price ($115.54) exceeds the
exercise price, multiplied by the number of options granted, and
|
► |
For performance-based restricted
share units, intrinsic value is the number of units that were paid out
based on actual performance (for the grant made in 2012) or are expected
to be paid out based on projected performance (for the grants made in 2013
and 2014), multiplied by our 2014 year-end stock
price. |
(The stock option exercise prices and
numbers of stock options throughout this Proxy Statement have been adjusted for
our Halyard Health spin-off on October 31, 2014. Also, all outstanding
performance-based restricted stock units received a dividend equivalent for the
Halyard Health spinoff, as described on page 72 (footnote 4).)
Key factors
causing realizable direct compensation to differ from target direct annual
compensation over these three years are:
► |
Improved performance that resulted
in annual cash incentives to be paid out at 129 percent of target (2012),
132 percent of target (2013) and 105 percent of target (2014),
|
► |
A rising stock price over the last three years that significantly impacted the intrinsic value of stock
options and the dollar value of performance-based restricted share units granted in each year. Our
stock prices on the dates stock options were granted to our Chief Executive Officer were $75.22
(2012), $98.92 (2013) and $107.51 (2014) (as adjusted for our Halyard Health spin-off). |
The Committee believes that this chart
demonstrates that our Chief Executive Officer’s realizable direct compensation
varies from his target direct annual compensation based on our performance and
stock price consistent with our pay-for-performance philosophy.
Table of Contents
|
Compensation Discussion and Analysis Executive Compensation Objectives and Policies |
CEO TARGET DIRECT COMPENSATION AND
REALIZABLE DIRECT COMPENSATION
|
Target Direct
Compensation
Realizable Direct
Compensation*
* Realizable direct compensation does not include changes in pension
value, all other compensation or the value of dividends and dividend equivalents
for performance-based restricted share units.
|
Executive
Compensation Objectives and
Policies |
The Committee is responsible for
establishing and administering our policies governing the compensation of our
elected officers, including our named executive officers. The Committee reviews
its compensation philosophy annually, including determining whether this
philosophy supports our business objectives and is consistent with the
Committee’s charter.
The Committee has adopted executive
compensation policies that are designed to achieve the following
objectives:
Objective |
|
Description |
|
Related
Policies |
Pay for
Performance |
|
Support a
performance-oriented environment that rewards achievement of our financial
and non-financial goals. |
|
The majority of our named executive
officers’ pay varies with the levels at which annual and long-term
performance goals are achieved. The Committee chooses performance goals
that align with our strategies for sustained growth and
profitability. |
Focus on Long- Term
Success |
|
Reward
executives for long-term strategic management and stockholder value
enhancement. |
|
The largest single component of our
named executive officers’ annual target compensation is in the form of
performance-based restricted share units. The number of shares actually
received on payout of these units depends on our performance over a
three-year period. |
Table of Contents
|
Compensation Discussion and Analysis Executive Compensation Objectives and Policies |
Objective |
|
Description |
|
Related
Policies |
Stockholder
Alignment |
|
Align the financial interest of our
executives with those of our stockholders. |
|
Equity-based awards make up the
largest part of our named executive officers’ annual target compensation.
Our named executive officers also receive stock options, which vest over
time and have value only if our stock value rises after the option grants
are made. We also have other policies that link our executives’ interests
with those of our stockholders, including target stock ownership
guidelines. |
Quality of
Talent |
|
Attract and
retain highly skilled executives whose abilities are considered essential
to our long-term success as a global company operating our personal care,
consumer tissue and K-C professional brands and
businesses. |
|
The Committee reviews peer group
data to ensure our executive compensation program remains competitive so
we can continue to attract and retain this
talent. |
These compensation objectives and policies
seek to align the compensation of our elected officers, including our named
executive officers, with the objectives of our Global Business Plan. Our Global
Business Plan, established by our senior management and the Board, is designed
to make Kimberly-Clark a stronger and more competitive company and to increase
our total return to stockholders by:
► |
managing our business portfolio to
balance growth, margin and cash flow |
► |
investing in brands, innovation and
growth initiatives |
► |
delivering sustainable cost
reduction |
► |
providing disciplined capital
management to improve return on invested capital and return cash to
shareholders |
Table of Contents
|
Compensation Discussion and Analysis Components of Our Executive Compensation Program |
Components
of Our Executive Compensation
Program |
The table below gives an overview of the
compensation components used in our program and matches each with one or more of
the objectives described above.
Component |
|
Objectives |
|
Purpose |
|
Target Competitive
Position |
Base
salary |
|
Quality of
talent
Pay-for- performance |
|
Provide annual cash income based
on:
► level of responsibility,
experience and performance
► comparison to market pay
information |
|
► Compared to median of peer
group
► Actual base salary will vary based on the individual’s level of
responsibility, experience in the position and
performance |
Annual
cash incentive |
|
Pay-for- performance |
|
Motivate and reward achievement of
the following annual performance goals:
► corporate key financial goals
► other corporate financial and strategic performance
goals
► performance of the business unit or staff function of the
individual |
|
► Target compared to median of peer group
► Actual payout will vary based on actual corporate and business unit
or staff function performance |
Long-term equity
incentive |
|
Stockholder
alignment
Focus on
long- term success
Pay-for- performance
Quality of
talent |
|
Provide an incentive to deliver
stockholder value and to achieve our long-term objectives, through
awards of:
► performance-based restricted share units
► stock options
Time-vested restricted share units may be granted from time to
time for recruiting, retention or other purposes |
|
► Target compared to median of peer group
► Actual payout of performance-based restricted share units will vary
based on actual corporate performance
► Actual payout will also vary based on actual stock price
performance |
Retirement benefits |
|
Quality of
talent |
|
Provide competitive retirement plan
benefits through 401(k) plan and other defined contribution
plans |
|
► Benefits comparable to those of peer group |
Perquisites |
|
Quality of
talent |
|
Provide minimal market-based
additional benefits |
|
► Subject to review and approval by the Committee |
Post- termination compensation (severance and
change of control) |
|
Quality of
talent |
|
Encourage attraction and retention
of executives critical to our long-term success and
competitiveness:
► Severance Pay Plan, which provides eligible employees, including
executives, with payments and benefits in the event of certain involuntary
terminations
► Executive Severance Plan, which provides eligible employees,
including executives, payments in the event of a qualified separation of
service following a change of control |
|
► Subject to review and approval by the
Committee |
Table of Contents
|
Compensation Discussion and Analysis Setting Annual Compensation |
Setting Annual
Compensation |
This section describes how the Committee
thinks about annual compensation and the processes that it followed in setting
2014 target annual compensation for our named executive officers.
Focus on Direct Annual
Compensation
In setting 2014 compensation for our
executive officers, including our Chief Executive Officer, the Committee focused
on direct annual compensation, which consists of annual cash compensation (base
salary and annual cash incentive) and long-term equity incentive compensation
(performance-based restricted share units and stock options). The Committee
considered annual cash and long-term equity incentive compensation both
separately and as a package to help ensure that our executive compensation
objectives are met.
Executive Compensation Peer
Group
To ensure that our executive compensation
programs are reasonable and competitive in the marketplace, the Committee
compares our programs to those at other companies. In setting compensation in
February 2014 for our named executive officers, the Committee used a peer group
consisting of the following consumer goods and health care companies:
2014
Executive Compensation Peer Group |
► Avon Products, Inc.
► Campbell Soup Company
► The Clorox Company
► The Coca-Cola Company
► Colgate- Palmolive Company
► ConAgra Foods, Inc. |
|
► General Mills, Inc.
► The Hershey Company
► Johnson & Johnson
► Kellogg Company
► Kraft Foods Group
► Merck & Co., Inc. |
|
► Mondelez International
► Newell Rubbermaid Inc.
► Novartis AG
► PepsiCo, Inc.
► Pfizer Inc.
► The Procter & Gamble
Company |
The Committee generally seeks to select
companies with whom Kimberly-Clark competes for talent. We believe that we
generally compete for talent with consumer goods companies with annual revenues
ranging from approximately one-half to two times our annual revenues. However,
the Committee concluded that it was appropriate also to include certain
companies outside of this annual revenue range because we directly compete with
them for talent.
In developing the peer group, the
Committee does not consider individual company compensation practices, and no
company has been included or excluded because it is known to pay above-average
or below-average compensation. The Committee (working with compensation
consultants retained separately by the Committee and the company), reviews the
peer group annually to ensure that it continues to serve as an appropriate
comparison for our compensation program.
Table of Contents
|
Compensation Discussion and Analysis Setting Annual Compensation |
For purposes of setting executive
compensation for 2015, the Committee removed health care companies Merck &
Co., Inc., Novartis AG and Pfizer Inc. due to the 2014 spin-off of our health
care business, and added consumer goods company Nike, Inc., and three companies
focused on business-to-business commerce, 3M Company, E.I. du Pont de Nemours
and Company (DuPont) and Honeywell International Inc., to reflect our
significant business-to-business product sales.
Process for Setting Direct Annual
Compensation Targets
In setting the direct annual compensation
of our executive officers, the Committee evaluates both market data provided by
the compensation consultants and information on the performance of each
executive officer for prior years. To remain competitive in the marketplace for
executive talent, the target levels for the executive officers’ compensation
components, including our Chief Executive Officer, are compared to the median of
the peer group.
To reinforce a pay-for-performance
culture, targets for individual executive officers may be set above or below
this median depending on the individual’s performance in prior years and
experience in the position, as well as any applicable retention concerns. The
Committee believes that comparing target levels to the median, setting targets
as described above, and providing incentive compensation opportunities that will
enable executives to earn above-target compensation if they deliver above-target
performance on their performance goals, are consistent with the objectives of
our compensation policies. In particular, the Committee believes that this
approach enables us to attract and retain skilled and talented executives to
guide and lead our businesses and supports a pay-for-performance
culture.
When setting annual compensation for our
executive officers, the Committee considers each compensation component (base
salary, annual cash incentive and long-term equity incentive), but its decision
regarding a particular component does not necessarily impact its decision about
other components.
In setting compensation for executive
officers that join us from other companies, the Committee evaluates both market
data for the position to be filled and the candidate’s compensation history. The
Committee recognizes that in order to successfully recruit a candidate to leave
his or her current position and to join Kimberly-Clark, the candidate’s
compensation package may have to exceed his or her current compensation,
resulting in a package above the median of our peer group.
CEO Direct Annual
Compensation
The Committee determines Mr. Falk’s direct
annual compensation in the same manner as the direct annual compensation of the
other named executive officers. Mr. Falk’s direct annual target compensation is
at or near the median of direct annual compensation of chief executive officers
of companies included in the peer group.
The difference between Mr. Falk’s
compensation and that of the other named executive officers reflects the
significant difference in their relative responsibilities. Mr. Falk’s
responsibilities for management and oversight of a global enterprise are
significantly greater than those of the other executive officers. As a result,
the market pay level for Mr. Falk is appropriately higher than the market pay
for our other executive officer positions.
Table of Contents
|
Compensation Discussion and Analysis Executive Compensation for 2014 |
Direct Annual Compensation Targets for
2014
Consistent with its focus on direct annual
compensation, the Committee approved 2014 direct annual compensation targets for
each of our named executive officers. The Committee believes that these target
amounts, which formed the basis for the Committee’s compensation decisions for
2014, were appropriate and consistent with our executive compensation
objectives:
Name |
2014 Direct Annual Compensation
Target($) |
Thomas J. Falk |
12,510,000 |
Mark A. Buthman |
3,720,000 |
Michael D. Hsu |
3,472,500 |
Anthony J. Palmer |
2,587,500 |
Elane B. Stock |
3,472,500 |
These 2014 direct annual compensation
target amounts differ from the amounts set forth in the Summary Compensation
Table in the following ways:
► |
Base salaries are adjusted on April 1 of each
year, while the Summary Compensation Table includes salaries for the calendar year. See “Executive
Compensation for 2014 Base Salary.” |
► |
Annual cash incentive compensation is included
at the target level, while the Summary Compensation Table reflects the actual amount earned for
2014. |
► |
As described below under “Long-Term Equity
Incentive Compensation 2014 Stock Option Awards,” for compensation purposes the Committee values stock
options differently than the way they are
required to be reflected in the Summary Compensation
Table. |
► |
In setting direct annual compensation targets,
the Committee does not include increases in pension or deferred compensation earnings or other compensation,
while those amounts are required to be
included in the Summary Compensation Table. |
Executive
Compensation for 2014 |
To help achieve the objectives discussed
above, our executive compensation program for 2014 consists of fixed and
performance-based components, as well as short-term and long-term
components.
Base Salary
To attract and retain high caliber
executives, we pay our executives an annual fixed salary that the Committee
considers competitive in the marketplace.
Salary ranges and individual salaries for
executive officers are reviewed annually, and salary adjustments generally are
effective on April 1 of each year. In determining individual salaries, the
Committee considers the salary levels for similar positions at our peer group
companies, as well as the executive’s performance and experience in his or her
position. This performance evaluation is based on how the executive performs
during the year against results-based objectives established at the beginning of
the year. In general, an experienced executive who is performing at a
satisfactory level will receive a base salary at or around the median of our
peer group companies. However, executives may be paid above or below the median
depending on their experience and performance. From time to time, if warranted,
executives and other employees may receive additional salary increases because
of promotions, changes in duties and responsibilities, retention concerns or
market conditions.
Table of Contents
|
Compensation Discussion and Analysis Executive Compensation for 2014 |
For purposes of setting 2014 base
salaries, each executive’s leadership performance was measured against the
following set of behaviors viewed as characteristic of executives who are adept
at leading the strategic, operational and organizational aspects of our global
business:
|
|
|
|
|
Building
Trust
► Sharing
the vision
► Optimizing
diversity
► Modeling openness
and change
Making Decisions
►
Establishing strategic direction
►
Empowering/delegating |
Winning
Consistently
► Driving
execution and accountability
Thinking Customer
► Customer
focus
► Creating
innovative growth |
Continuously
Improving
►
Cultivating networks
► Leading
change and improvement
Building Talent
►
Continuously learning
► Building
organizational talent
|
|
|
|
|
The Committee approved the following base
salaries for our named executive officers, effective April 1, 2014:
Name |
2014 Base Salary($) |
Thomas J. Falk |
1,300,000 |
Mark A. Buthman |
800,000 |
Michael D. Hsu |
775,000 |
Anthony J. Palmer |
625,000 |
Elane B. Stock |
775,000 |
Annual Cash Incentive
Program
Consistent with our pay-for-performance
compensation objective, our executive compensation program includes an annual
cash incentive program to motivate and reward executives in achieving annual
performance objectives.
2014 Targets
The target payment amount for annual cash incentives is a
percentage of the executive’s base salary. The Committee determines this target
payment amount as described above under “Setting Annual Compensation Process
for Setting Direct Annual Compensation Targets.” The range of possible payouts
is expressed as a percentage of the target payment amount. The Committee sets
this range based on competitive factors.
Table of
Contents
|
Compensation Discussion and Analysis Executive
Compensation for 2014 |
TARGET PAYMENT AMOUNTS
AND RANGE OF POSSIBLE PAYOUTS
FOR 2014 ANNUAL CASH INCENTIVE
PROGRAM
|
|
Target Payment
Amount |
|
Potential Payout |
Chief Executive Officer |
|
170% of base salary |
|
0% - 200% of target payment |
|
|
|
|
amount |
Group President K-C
International |
|
85% of base salary* |
|
0% - 200% of target payment |
|
|
|
|
amount |
Other Named Executive Officers |
|
90% of base salary |
|
0% - 200% of target payment |
|
|
|
|
amount |
* |
Upon her promotion to Group
President K-C International on April 1, 2014, Ms. Stocks target payment
amount was increased from 70% to 90% of base salary and her 2014 payout
amount was prorated between the two target amounts such that the
annualized target payout amount was 85% of base
salary. |
2014 Performance Goals, Performance
Assessments and Payouts
Payment amounts
under the annual cash incentive program are dependent on performance measured
against corporate goals and business unit or staff function goals established by
the Committee at the beginning of each year. These performance goals, which are
communicated to our executives at the beginning of each year, are derived from
our financial and strategic goals.
As shown in the table below, the Committee
established goals for three different performance elements for 2014. It then
weighted the three elements for each executive (note that the business unit or
staff function performance goals did not apply to our CEO because his
responsibilities are company-wide). As it does each year, the Committee chose
weightings that are intended to strike an appropriate balance between aligning
each executives individual objectives with our overall corporate objectives and
holding the executive accountable for performance in the executives particular
area of responsibility.
Table of
Contents
|
Compensation Discussion and Analysis Executive
Compensation for 2014 |
ANNUAL CASH
INCENTIVE PROGRAM 2014 PERFORMANCE GOALS AND WEIGHTS
Below we describe the three elements of
performance, explain how performance was assessed for each element, and show the
payouts that were determined in each case.
■ ELEMENT 1: CORPORATE KEY FINANCIAL
GOALS
For 2014, the Committee chose the
following as corporate key financial goals for the annual cash incentive
program:
2014 Goal |
|
Explanation |
|
Reason for Use as a
Performance Measure |
Adjusted Net Sales |
|
Net sales for
2014(1) |
|
A key indicator of our overall
growth |
Adjusted EPS |
|
Consists of diluted net income per
share that is then adjusted to eliminate the effect of items or events
that the Committee determines in its discretion should be excluded for
compensation purposes(1)(2) |
|
A key indicator of our overall
performance |
Adjusted OPROS |
|
After adjusted net sales and adjusted
EPS are determined as described above, a multiplier based on adjusted
OPROS is applied to the calculation result to determine the final payout
percentage(1)(3) |
|
A measure of margin efficiency and a
helpful method of tracking our cost structure
performance |
(1) |
For purposes of the annual incentive program, the Committee added the amounts below to the calculation of net
sales, earnings per share and OPROS to neutralize the impact of the Halyard Health spin-off on October 31, 2014 on
these full-year performance metrics. |
|
Adjusted Net
Sales |
|
$1.59
billion |
|
Adjusted
EPS |
|
$0.08 |
|
Adjusted
OPROS |
|
40 bps |
Table of
Contents
|
Compensation Discussion and Analysis Executive
Compensation for 2014 |
|
The adjustments represent the estimated net sales, earnings per share and OPROS that our health care business
would have contributed in November and December had the spin-off not occurred. Each adjustment represents,
(a) for January through October, the actual results for our health care business (which are reported as discontinued
operations in our 2014 Annual Report on Form 10-K) and (b) for November and December, the difference between
our actual results and pro-forma results determined by multiplying our actual year-to-date performance for January
through October, expressed as a percentage of target, by the target performance level attributable to November
and December. |
|
|
(2) |
In addition to the adjustments for lost business due to
the Halyard Health spin-off, in 2014 the following adjustments were made
to diluted net income per share to determine adjusted
EPS: |
|
Diluted Net
Income Per Share |
|
$4.04 |
|
Adjustment for: |
|
|
|
Add
Charges related to exchange rate change in Venezuela |
|
$1.22 |
|
Add
Charges related to costs of Halyard Health spin-off |
|
$0.37 |
|
Add
Charges related to 2014 organization restructuring |
|
$0.25 |
|
Add
Charges related to regulatory dispute in Middle East |
|
$0.05 |
|
Add
Charges related to European strategic changes |
|
$0.08 |
|
Adjusted
EPS |
|
$6.01 |
|
As described above in footnote 1, an additional $0.08
was added to the 2014 EPS for the Halyard Health spin-off, resulting in
2014 EPS of $6.09. |
|
See page 46 of our 2014 proxy statement for a discussion
of adjustments to 2013 EPS and page 37 of our 2013 proxy statement for a
discussion of adjustments to 2012 EPS. |
(3) |
For purposes of determining annual cash incentive
amounts, we calculate adjusted OPROS using our reported financial results,
adjusted for the same items described above in determining adjusted
EPS |
Because Element 1 represents key
company-wide goals, it produces the same payout percentage for each named
executive officer. To determine this percentage, the Committee follows the
following process.
First, it determines an initial payout
percentage based on how Kimberly-Clark performed against the adjusted net sales
and adjusted EPS goals established in February of each year. For 2014, the
Committee set these goals and the corresponding initial payout percentages at
the following levels:
Measure
(each weighted
50%) |
|
Range of Performance
Levels |
|
|
Threshold |
|
Target |
|
Maximum |
Adjusted Net Sales (billions) |
|
$19.95 |
|
$21.45 |
|
$22.95 |
Adjusted EPS |
|
$5.65 |
|
$6.10 |
|
$6.55 |
Initial Payout Percentage |
|
0% |
|
100% |
|
200% |
Second, it applies a multiplier to this
initial payout percentage. The multiplier is based on how Kimberly-Clark
performed against the adjusted OPROS goals also established in February.
Depending on the level of basis point improvement, the multiplier may either
decrease or increase the initial payout percentage (but the amount of the final
payout percentage cannot exceed a 200 percent cap).
For 2014, the Committee set the following
ranges for this adjusted OPROS multiplier:
|
|
Range of Performance
Levels |
|
|
Threshold |
|
Target |
|
Maximum |
Adjusted OPROS (bps improvement) |
|
0
bps |
|
+50 bps |
|
+100 bps |
Adjusted OPROS
Multiplier Applied |
|
0.8 x |
|
1.0 x |
|
1.2 x |
to Initial Payout Percentage |
|
|
|
|
|
|
Table of
Contents
|
Compensation Discussion and Analysis Executive
Compensation for 2014 |
Actual
results. For 2014, our adjusted net sales
result was $21.31 billion and our adjusted EPS result was $6.09. Based on these
results, the initial payout percentage was determined to be 94 percent. To this
percentage, we then applied an adjusted OPROS multiplier of 1.12, which was
based on the actual 2014 improvement of 80 bps.
The resulting 2014 payout percentage for
achieving the corporate key financial goals was 105 percent of each named
executive officers target payment amount.
■ ELEMENT 2: ADDITIONAL CORPORATE FINANCIAL AND STRATEGIC
PERFORMANCE GOALS
At the beginning of 2014,
the Committee also established additional corporate financial and non-financial
strategic performance goals that are intended to challenge our executives to
exceed our long-term objectives. At the end of the year, it determined a payout
percentage based on its assessment of the degree to which these goals are
achieved.
The Committee does not use a formula to
assess the performance of these goals but instead takes a holistic approach and
considers performance of all the goals collectively. Although it does review
each goal separately, the key consideration for the Committee is how it views
Kimberly-Clarks performance for the year in all of these categories, taken as a
whole.
The chart below shows the 2014 goals and
how the Committee assessed Kimberly-Clarks performance against each
one:
Additional
Corporate Financial and Strategic Performance Goals for
2014 |
|
Final Result |
|
|
|
|
|
Below
Goal |
|
At
Goal |
|
Above
Goal |
Quality of earnings: |
|
► |
Gross profit growth percentage exceeding the |
|
|
|
|
|
|
|
|
|
adjusted net sales growth rate. |
|
|
|
X |
|
|
|
|
► |
Brand building spending growth percentage |
|
|
|
|
|
|
|
|
|
exceeding the adjusted net sales growth rate. |
|
X |
|
|
|
|
|
|
► |
Attaining cost savings goals. |
|
|
|
X |
|
|
|
|
► |
Operating profit growth percentage exceeding |
|
|
|
|
|
|
|
|
|
the adjusted net sales
growth rate. |
|
|
|
X |
|
|
Brand equity and market |
|
► |
Increasing market share in certain markets. |
|
|
|
X |
|
|
performance: |
|
► |
Improving brand
equity attribute in key |
|
|
|
|
|
|
|
|
|
categories and markets. |
|
|
|
X |
|
|
Innovation: |
|
► |
Attaining adjusted net sales from innovation |
|
|
|
|
|
|
|
|
|
goals (based on a rolling three-year review) in |
|
|
|
|
|
|
|
|
|
new products and line extensions in 2014. |
|
|
|
|
|
X |
|
|
► |
Attaining adjusted net sales from innovation |
|
|
|
|
|
|
|
|
|
goals (based on launches
in 2014). |
|
X |
|
|
|
|
Diversity and
inclusion |
|
|
|
|
|
|
|
|
X |
Actual payout
percentage. After taking into account
performance on all of these goals, the Committee determined that the payout
percentage for achieving these other financial and strategic goals should be
105 percent of target.
Table of
Contents
|
Compensation Discussion and Analysis Executive Compensation for
2014 |
■ ELEMENT 3: BUSINESS UNIT OR STAFF FUNCTION PERFORMANCE
GOALS
In addition to the performance goals
established by the Committee, our CEO establishes individual business unit or
staff function performance goals that are intended to challenge the executives
to exceed the objectives for that unit or function. These objectives include
strategic performance goals for the business units and staff functions, as well
as financial goals for the business units.
Following the end of the year, the
executives performance is analyzed to determine whether performance for the
goals was above target, on target or below target. Our CEO then provides the
Committee with an assessment of each individual business units or staff
functions performance against the objectives for that unit or
function.
Actual payout
percentages. Based on the assessed
performance of the relevant business unit or staff function against its
pre-established performance goals, and taking into account the CEOs
recommendations, the Committee determined the following payout percentages for
business unit or staff function performance for our named executive
officers:
Name |
|
2014 Business Unit/Staff
Function Payout Percentage |
Thomas J. Falk |
|
|
N/A |
|
Mark A. Buthman |
|
|
111% |
|
Michael D. Hsu |
|
|
87% |
|
Anthony J. Palmer |
|
|
100% |
|
Elane B. Stock |
|
|
120% |
|
Annual Cash Incentive Payouts for
2014
The following table shows the payout
opportunities and the actual payouts of annual cash incentives for 2014 for each
of our named executive officers. Payouts were based on the payout percentages
for each element, weighted for each executive as shown on page 48.
|
|
Annual
Incentive
Target |
|
Annual
Incentive
Maximum |
|
2014 Annual
Incentive
Payout |
Name |
|
% of Base
Salary |
|
Amount($) |
|
% of
Target |
|
Amount($) |
|
% of
Target |
|
Amount($) |
Thomas J. Falk |
|
170% |
|
2,210,000 |
|
200% |
|
4,420,000 |
|
105% |
|
2,328,677 |
Mark A. Buthman |
|
90% |
|
720,000 |
|
200% |
|
1,440,000 |
|
107% |
|
767,650 |
Michael D. Hsu |
|
90% |
|
697,500 |
|
200% |
|
1,395,000 |
|
96% |
|
671,545 |
Anthony J. Palmer |
|
90% |
|
562,500 |
|
200% |
|
1,125,000 |
|
104% |
|
587,070 |
Elane B. Stock |
|
85% |
|
658,750 |
|
200% |
|
1,317,500 |
|
114% |
|
752,650 |
Summary of Annual Cash Incentive
Payouts: 2010 through 2014
Generally, the
Committee seeks to set the minimum, target and maximum levels such that the
relative difficulty of achieving the target level is consistent from year to
year. From 2010 through 2014, total payout percentages (including business unit
or staff function performance) for the current named executive officers ranged
from 67 percent to 133 percent of each executives target award opportunity. The
Committee believes that these payouts are consistent with how Kimberly-Clark
performed during these years and reflect the pay-for-performance objectives of
our executive compensation.
Table of
Contents
|
Compensation Discussion and Analysis Executive Compensation for
2014 |
PAYOUTS FOR
CORPORATE GOALS AND AVERAGE TOTAL
PAYOUT PERCENTAGES FOR CURRENT NAMED
EXECUTIVE OFFICERS
|
2014 |
2013 |
2012 |
2011 |
2010 |
Average |
Payout for Corporate Goals |
105% |
132% |
129% |
75% |
67% |
102% |
Combination of corporate key
financial |
|
|
|
|
|
|
goals and additional corporate
financial |
|
|
|
|
|
|
and strategic performance goals |
|
|
|
|
|
|
|
Average Total Payout Percentages |
105% |
129% |
123% |
81% |
74% |
102% |
(including business unit or staff |
|
|
|
|
|
|
function performance) for current |
|
|
|
|
|
|
named executive officers |
|
|
|
|
|
|
Long-Term Equity Incentive
Compensation
The Committee awards long-term equity
incentive grants to executive officers as part of their overall compensation
package. These awards are consistent with the Committees objectives of aligning
our senior leaders interests with the financial interests of our stockholders,
focusing on our long-term success, supporting our performance-oriented
environment and offering competitive compensation packages.
Information regarding long-term equity
incentive awards granted to our named executive officers can be found under
Summary Compensation, Grants of Plan-Based Awards, and Discussion of
Summary Compensation and Plan-Based Awards Tables.
2014 Grants
In determining the 2014 long-term equity incentive award
amounts for our named executive officers, the Committee considered the following
factors, among others: the specific responsibilities and performance of the
executive, our business performance, retention needs, our stock price
performance and other market factors. Because these awards are part of our
annual compensation program that compares direct annual compensation to the
median of our peer group comparison, grants from prior years were not considered
when setting 2014 targets or granting awards.
To determine target values, it first
compared each executives direct annual compensation to the median of our peer
group, and then considered individual performance and the other factors listed
above, as applicable. Target grant values were approved in February 2014 and
were divided into two types:
► |
Performance-based restricted share units (75 percent of
the target grant value). For valuation purposes, each unit is assigned the
same value as one share of our common stock on the date of
grant. |
► |
Stock options (25
percent of the target grant value). For valuation purposes, one option has
the same value as 10 percent of the price of one share of our common stock
on the date of grant of the stock option. |
The Committee believes this allocation
between performance-based restricted share units and stock options supports the
pay-for-performance and stockholder alignment objectives of its executive
compensation program.
Table of
Contents
|
Compensation Discussion and Analysis Executive
Compensation for 2014 |
Performance Goals and Potential Payouts
for
2014 - 2016 Performance-Based
Restricted Share Units
For the
performance-based restricted share unit awards granted in 2014, the actual
number of shares to be received by our named executive officers can range from
zero to 200 percent of the target levels established by the Committee for each
executive, depending on the degree to which the performance objectives for these
awards are met over a three-year period.
The performance objectives for the 2014 awards are based on average annual adjusted net sales
growth and the average adjusted return on invested capital (ROIC) for the period January 1, 2014
through December 31, 2016. Adjusted ROIC is a measure of the return we earn on the capital
invested in our businesses. It is calculated using our reported financial results, adjusted for the same
items that we use in determining adjusted EPS. The formula we use to calculate adjusted ROIC
can be found under the Investors section of our website at www.kimberly-clark.com. For purposes
of determining award payouts, the Committee anticipates making further adjustments to average
adjusted net sales growth and average adjusted ROIC to neutralize the impact of the Halyard Health
spin-off on these metrics.
2014 - 2016 PERFORMANCE-BASED RESTRICTED SHARE UNITS:
POTENTIAL PAYOUTS AT VARYING PERFORMANCE LEVELS
Goals (Each weighted 50%) |
|
Performance
Levels |
Annual adjusted net sales growth |
|
0.30% |
|
1.55% |
|
2.80% |
|
4.05% |
|
5.30% |
Adjusted ROIC |
|
17.00% |
|
17.50% |
|
18.00% |
|
18.50% |
|
19.00% |
Potential Payout |
|
0% |
|
50% |
|
100% |
|
150% |
|
200% |
(as a percentage of target) |
|
|
|
|
|
|
|
|
|
|
Payout of 2011 - 2013 Performance-Based
Restricted Share Units
In February 2014,
the Committee evaluated the results of the three-year performance period for the
performance-based restricted share units that were granted in 2011. The
performance objectives for these 2011 awards were based on average annual
adjusted net sales growth and average adjusted ROIC for the period January 1,
2011 through December 31, 2013, each weighted equally.
Goals (Each weighted 50%) |
|
Performance
Levels |
Annual adjusted net |
|
1.00% |
|
2.25% |
|
3.50% |
|
4.75% |
|
6.00% |
|
2.9% |
sales growth |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted ROIC* |
|
14.80% |
|
15.30% |
|
15.80% |
|
16.30% |
|
16.80% |
|
16.0% |
Potential Payout |
|
0% |
|
50% |
|
100% |
|
150% |
|
200% |
|
Actual |
(as a percentage of target) |
|
|
|
|
|
|
|
|
|
|
|
|
*For purposes of calculating average
adjusted ROIC, the impacts of a charge related to the adoption of highly
inflationary accounting in Venezuela and charges related to the European and the
pulp and tissue restructurings were excluded from the ROIC
calculation.
Table of
Contents
|
Compensation Discussion and Analysis Executive
Compensation for 2014 |
Based on this review, the Committee
determined that we achieved our performance goal for adjusted ROIC but did not
achieve our performance goal for adjusted net sales. As a result, the payout
percentage for the share units was 97 percent of target. The following table
includes information about the opportunities and payouts (including reinvested
dividends) regarding these grants to our named executive officers:
|
|
Share
Amount |
|
2011 - 2013 Performance-Based
Restricted
Share Unit Award (Paid in
February 2014) |
Name |
|
Target |
|
Maximum |
|
% of
Target |
|
Amount of
Shares(#) |
|
Value of
Shares on Date
Received($) |
Thomas J. Falk |
|
95,952 |
|
191,904 |
|
97% |
|
93,073 |
|
10,260,368 |
Mark A. Buthman |
|
24,308 |
|
48,616 |
|
97% |
|
23,578 |
|
2,599,239 |
Michael D. Hsu |
|
|
|
|
|
|
|
|
|
|
Anthony J. Palmer |
|
10,874 |
|
21,748 |
|
97% |
|
10,548 |
|
1,162,812 |
Elane B. Stock |
|
6,716 |
|
13,432 |
|
97% |
|
6,515 |
|
718,214 |
The Committee believes that these payouts
further highlight the link between pay and performance established by our
compensation program, which seeks to align actual compensation paid to our named
executive officers with our long-term performance.
The shares underlying these
performance-based restricted share unit awards were distributed to our named
executive officers in February 2014 and are included in the Option Exercises and
Stock Vested in 2014 table.
Vesting Levels of Outstanding
Performance-Based Restricted Share Unit Awards
As of February 17, 2015, the performance-based restricted share units
granted in 2014 and 2013 were on pace to vest at the following levels: 92
percent for the 2014 award and 100 percent for the 2013 award.
The Committee has determined that the 2012
award vested at 111 percent. Payouts under these awards will be reflected in
2015 compensation.
2014 Stock Option
Awards
As noted above, 25 percent of the
long-term equity incentive grants to executive officers in 2014 consisted of
stock options. Stock option grants vest in three annual installments of 30
percent, 30 percent and 40 percent, beginning on the first anniversary of the
grant date. The Committee believes that stock options help further align our
executives interest with those of our stockholders and encourage executives to
remain with the company through the multi-year vesting schedule.
For purposes of determining the number of
options to be granted, stock options are valued on the basis that one option has
the same value as 10 percent of the price of one share of our common stock on
the date of grant. The value we use for this purpose differs from, and in April
2014 was higher than, the value of approximately 7.1 percent that we use for
financial statement purposes (resulting in fewer options being granted than if
the financial statement value had been used). The Committee believes that this
value is an appropriate way to determine the number of options to be granted
because it provides more consistent application and is not subject to the
volatility inherent in the valuation method (Black-Scholes-Merton) used for
financial statement purposes. Information regarding stock options granted to our
named executive officers can be found under Summary Compensation, Grants of
Plan-Based Awards, and Discussion of Summary Compensation and Plan-Based
Awards Tables.
Table of Contents
|
Compensation Discussion and Analysis Benefits and Other Compensation |
Compensation of Former President,
Global Health Care
Mr. Abernathy left Kimberly-Clark effective October 31, 2014 to accept a position with Halyard
Health in connection with our spin-off. Prior to his departure, Mr. Abernathy received a base salary
of $780,000. He received a prorated payout for 2014 under our annual cash incentive program
based upon (1) a target payment amount of 85 percent of base salary and (2) a payout percentage
of 103 percent for performance on key corporate financial goals, other financial and strategic
goals and business unit and staff function goals. In June 2014, Mr. Abernathy received a grant of
43,848 stock options (as adjusted for the Halyard Health spin-off) and 12,598 performance-based
restricted share units; however, the performance-based restricted share units were forfeited upon his
departure. Because Mr. Abernathy is over age 55, under the terms of our 2011 Equity Participation
Plan (the “2011 Plan”), his unvested stock options vested on the date of his departure and will be
exercisable until the earlier of five years or the remaining term of the options, and his unvested
performance-based restricted share units (other than those granted in 2014, which were forfeited)
will be payable in full based on attainment of the performance goal at the end of the restricted period.
Benefits and
Other Compensation |
Retirement
Benefits
Our named executive officers receive
contributions from us under the Kimberly-Clark Corporation 401(k) and Profit
Sharing Plan (the 401(k) Profit Sharing Plan) and the Kimberly-Clark
Supplemental Retirement 401(k) and Profit Sharing Plan (the Supplemental 401(k)
Plan) and participate in our frozen defined benefit pension plans. These plans
are consistent with those maintained by our peer group companies and are
therefore necessary to remain competitive with them for recruiting and retaining
executive talent. The Committee believes that these retirement benefits are
important parts of our compensation program. For more information, see
Nonqualified Deferred Compensation Overview of 401(k) Profit Sharing Plan and
Supplemental 401(k) Plan and Pension Benefits.
Other
Compensation
A review conducted in 2012 indicated that
perquisites provided to our executive officers are below the median of those
provided by our peer group. In addition, the Committee has adopted a policy
providing that executive officers will no longer receive tax reimbursement and a
related gross-up for perquisites (including personal use of corporate aircraft),
except for certain relocation benefits.
Perquisites include personal financial
planning services under our Executive Financial Counseling Program, an executive
health screening program where executives may receive comprehensive physical
examinations from an independent health care provider, and permitted personal
use of corporate aircraft consistent with our policy. The personal financial
planning program is designed to provide executives with access to knowledgeable
financial advisors that understand our compensation and benefit plans and can
assist our executives in efficiently and effectively managing their financial
and tax planning issues. Our Chief Executive Officer does not receive personal
financial planning services pursuant to this program. The executive health
screening program provides executives with additional services that help
maintain their overall health.
The Committee has adopted a policy that
limits the personal use of corporate aircraft by the Chief Executive Officer to
an aggregate annual incremental cost to Kimberly-Clark of $100,000, and
generally prohibits the personal use of corporate aircraft by other executive
officers unless there is no incremental cost to Kimberly-Clark for the use.
Under an executive security program for our Chief Executive Officer, approved by
the Board of Directors, our Chief Executive Officer is expected to use our
corporate aircraft for all business and personal travel, consistent with our
policy, and security services are provided for him at all times, including at
his office, other company locations and his residences. Periodically, an
independent security consultant conducts a security assessment, and the Board
reviews the program, to ensure that security measures provided by us are
appropriate.
Table of Contents
|
Compensation Discussion and Analysis Executive Compensation for
2015 |
The Board considers these security
arrangements to be appropriate and reasonable in light of the security risks
identified in the independent security assessment. In addition, if a corporate
aircraft is already scheduled for business purposes and can accommodate
additional passengers, executive officers and their guests may, under certain
circumstances, join flights for personal travel. The incremental cost to us of
providing security services at Mr. Falks residences and personal travel for Mr.
Falk and his guests on our corporate aircraft is included in All Other
Compensation in the Summary Compensation Table.
Post-Termination
Benefits
We maintain two severance plans that cover
our executive officers: the Severance Pay Plan and the Executive Severance Plan.
An executive officer may not receive severance payments under more than one
severance plan. Benefits under these plans are payable only if the executives
employment terminates under the conditions specified in the applicable plan. We
believe that our severance plans are consistent with those maintained by our
peer group companies and that they are therefore important for attracting and
retaining executives who are critical to our long-term success and
competitiveness. For more information about these severance plans and their
terms, see Potential Payments on Termination or Change of Control Severance
Benefits.
Severance Pay Plan
Our Severance Pay Plan provides severance benefits to most of
our U.S. hourly and salaried employees, including our named executive officers,
who are involuntarily terminated under the circumstances described in the plan.
The objective of this plan is to facilitate the employees transition to his or
her next position, and it is not intended to serve as a reward for the
employees past service.
Executive Severance
Plan
Our Executive Severance Plan provides
severance benefits to eligible employees, including our named executive
officers, in the event of a qualified termination of employment (as defined in
the plan) in connection with a change of control. For an eligible employee to
receive a payment under this plan, two things must occur: there must be a change
of control of Kimberly-Clark, and the employee must have been involuntarily
terminated without cause or have resigned for good reason (as defined in the
plan) within two years of the change of control (often referred to as a double
trigger). Each of our named executive officers has entered into an agreement
under the plan that expires on December 31, 2017.
Executive Compensation for
2015 |
2015 Base
Salary
In February 2015, the Committee approved
the following base salaries for our named executive officers, effective April 1,
2015:
Name |
|
2015 Base
Salary($) |
Thomas J. Falk |
|
1,300,000 |
Mark A. Buthman |
|
800,000 |
Michael D. Hsu |
|
815,000 |
Anthony J. Palmer |
|
640,000 |
Elane B. Stock |
|
815,000 |
Table of Contents
|
Compensation Discussion and Analysis Executive Compensation for
2015 |
2015 Annual Cash
Incentive Targets
In February 2015, the Committee also
established objectives for 2015 annual cash incentives, which will be payable in
2016. The target payment amounts and range of possible payouts for 2015 were as
follows:
|
Target Payment Amount |
Possible Payout |
Thomas J. Falk |
170% of base salary |
0% - 200% of target payment |
|
|
amount |
Mark A. Buthman |
90% of base salary |
0% - 200% of target payment |
|
|
amount |
Michael D. Hsu |
90% of base salary |
0% - 200% of target payment |
|
|
amount |
Anthony J. Palmer |
90% of base salary |
0% - 200% of target payment |
|
|
amount |
Elane B. Stock |
90% of base salary |
0% - 200% of target payment |
|
|
amount |
As discussed in 2014 Performance Goals,
Performance Assessments and Payouts above, the Committee sets the appropriate
split among the different elements of performance that make up our performance
goals. The following are the 2015 performance goals and relative weights for our
named executive officers:
ANNUAL CASH
INCENTIVE PROGRAM 2015 PERFORMANCE GOALS AND WEIGHTS
The corporate key financial goals for 2015
are designed to encourage a continued focus on executing our long-term Global
Business Plan objectives and include achieving net sales, adjusted EPS and
adjusted OPROS goals.
Table of Contents
|
Compensation Discussion and Analysis Executive Compensation for
2015 |
The Committee also established other
corporate financial and non-financial goals for 2015. These goals, intended to
further align compensation with achieving our Global Business Plan,
include:
► |
Focusing on gross profit growth,
advertising spending growth, cost savings and operating profit
growth |
► |
Focusing on market share improvement in key markets |
► |
Driving innovation |
► |
Diversity
and inclusion |
In
addition, goals have been established for each named executive officer, other
than our Chief Executive Officer, relating to his or her business unit or
specific staff function.
2015 Long-Term
Equity Compensation Incentive Awards
In February 2015, the Committee approved
long-term incentive compensation awards for the named executive officers
consisting of awards of performance-based restricted share units with a value
equal to 75 percent of the target grant value for long-term equity incentive
compensation, with the balance of the value to be granted in stock options. The
performance objectives for the performance-based restricted share unit awards
granted in 2015 are based on average annual net sales growth and average
adjusted ROIC improvement for the period January 1, 2015 through December 31,
2017. The actual number of shares to be received by our named executive officers
will range from zero to 200 percent of the target levels established by the
Committee for each executive, depending on the degree to which the performance
objectives are met.
PERFORMANCE-BASED
RESTRICTED SHARE UNITS GRANTED IN 2015
Name |
|
Target Amount of
Shares(#) |
|
Maximum Amount of
Shares(#) |
Thomas J.
Falk |
|
60,663 |
|
121,326 |
Mark A.
Buthman |
|
16,177 |
|
32,354 |
Michael D.
Hsu |
|
16,177 |
|
32,354 |
Anthony J.
Palmer |
|
9,437 |
|
18,874 |
Elane B. Stock |
|
16,177 |
|
32,354 |
In February 2015, the Committee also
approved the dollar amount of stock options to be granted to our named executive
officers in April 2015, along with our annual stock option grants to other
employees. The number of options they will receive will be based on the fair
market value of our stock on the date of grant.
Name |
Value of Stock Options to be
Granted($) |
Thomas J. Falk |
2,250,000 |
Mark A. Buthman |
600,000 |
Michael D. Hsu |
600,000 |
Anthony J. Palmer |
350,000 |
Elane B. Stock |
600,000 |
Table of Contents
|
Compensation Discussion and Analysis Additional Information about Our Compensation Practices |
Additional Information about
Our Compensation Practices |
As a matter of sound governance, we follow
certain practices with respect to our compensation program. We regularly review
and evaluate our compensation practices in light of regulatory developments,
market standards and other considerations.
Use of Independent Compensation Consultant
As previously discussed, the Committee engaged
Semler Brossy Consulting Group as its independent consultant to assist it in
determining the appropriate executive officer compensation in 2014 under our
compensation policies described above. Consistent with the Committees policy in
which its independent consultant may provide services only to the Committee,
Semler Brossy had no other business relationship with Kimberly-Clark and
received no payments from us other than fees and expenses for services to the
Committee. See Corporate Governance - Management Development and Compensation
Committee for information about the use of compensation consultants.
Adjustment of Financial Measures for Annual and Long-Term
Equity Incentives
Financial measures for the annual and
long-term equity incentive programs are developed based on expectations about
our planned activities and reasonable assumptions about the performance of our
key business drivers for the applicable period. From time to time, however,
discrete items or events may arise that were not contemplated by these plans or
assumptions. These could include accounting and tax law changes, tax credits
from items not within the ordinary course of our business operations, charges
relating to currency exchange rate changes, restructuring and write-off charges,
significant acquisitions or dispositions, and significant gains or losses from
litigation settlements.
Under the Committees exception guidelines
regarding our annual and long-term equity incentive program measures, the
Committee has adjusted in the past, and may adjust in the future, the
calculation of financial measures for these incentive programs to eliminate the
effect of the types of items or events described above. In making these
adjustments, the Committees policy is to seek to neutralize the impact of the
unexpected or unplanned items or events, whether positive or negative, in order
to provide consistent and equitable incentive payments that the Committee
believes are reflective of our performance. In considering whether to make a
particular adjustment under its guidelines, the Committee will review whether
the item or event was one for which management was responsible and accountable,
treatment of similar items in prior periods, the extent of the items or events
impact on the financial measure, and the items or events characteristics
relative to normal and customary business practices. Generally, the Committee
will apply an adjustment to all compensation that is subject to that financial
measure.
Pricing and Timing of Stock Option Grants and
Timing of
Performance-Based Equity Grants
Our policies and the 2011 Plan require stock
options to be granted at no less than the closing price of our common stock on
the date of grant. Stock option grants to our elected officers, including our
executive officers, are generally made annually at a meeting of the Committee
that is scheduled at least one year in advance, and the grants are effective on
the date of this meeting. However, if the meeting occurs during the period
beginning on the first day of the final month of a calendar quarter and ending
on the date of our earnings release, the stock option grants will not be
effective until the first business day following the earnings release. Our
executives are not permitted to choose the grant date for their individual stock
option grants.
The Chairman of the Board and Chief Executive
Officer has been delegated the authority to approve equity grants, including
stock options, to employees who are not elected officers of Kimberly-Clark.
These grants include scheduled annual grants, which are subject to an annual
limit set by the
Table of Contents
|
Compensation Discussion and Analysis Additional Information about Our Compensation Practices |
Committee, and recruiting and special
employee recognition and retention grants, which may not exceed 200,000 shares
in any calendar year. The Chairman of the Board and Chief Executive Officer is
not permitted to make any grants to any of our elected officers, including our
executive officers.
Annual stock option grants to non-elected officers are
effective on the same date as the annual stock option grants to our elected
officers. Recruiting, special recognition and retention stock-based awards are
made on a pre-determined date following our quarterly earnings release. In April
2014, our Chief Executive Officer authorized an aggregate of 1.68 million
options, performance-based restricted share units and time-vested restricted
share units to employees who are not elected officers (which number reflects an
adjustment to the number of options for the Halyard Health spin-off). In 2014,
our Chief Executive Officer also authorized an aggregate of 44,161 shares (as
adjusted for the spin-off with respect to the number of options) underlying
recruiting and retention grants, consisting of options, performance-based
restricted share units and time-vested restricted share units.
Since 2009, the Committee has awarded
performance-based restricted share units to executive officers at its February
meeting, and it intends to continue this practice. We believe this practice is
consistent with award practices at other large public companies. Our executives
are not permitted to choose the grant date for their individual restricted stock
or restricted share unit awards.
Policy on Incentive
Compensation Clawback
As described in detail above, a
significant percentage of our executive officer compensation is incentive-based.
The determination of the extent to which the incentive objectives are achieved
is based in part on the Committees discretion and in part on our published
financial results. The Committee has the right to reassess its determination of
the performance awards if the financial statements on which it relied are
restated. The Committee has the right to direct Kimberly-Clark to seek to
recover from any executive officer any amounts determined to have been
inappropriately received by the individual executive officer. In addition, under
the 2011 Plan, the Committee may require awards with performance goals under the
2011 Plan to be subject to any policy we may adopt relating to the recovery of
that award to the extent it is determined that performance goals relating to the
awards were not actually achieved. Further, the Sarbanes-Oxley Act of 2002
mandates that the chief executive officer and the chief financial officer
reimburse us for any bonus or other incentive-based or equity-based compensation
paid to them in a year following the issuance of financial statements that are
later required to be restated as a result of misconduct. The Committee intends
to review and revise the incentive compensation clawback policy once the SEC
issues final regulations on clawbacks under the Dodd-Frank legislation enacted
in 2010.
Stock Ownership
Guidelines
We strongly believe that the financial
interests of our executives should be aligned with those of our stockholders.
Accordingly, the Committee has established stock ownership guidelines for our
elected officers, including our named executive officers.
TARGET STOCK
OWNERSHIP AMOUNTS
Position |
Ownership Level |
Chief Executive Officer |
Six times annual base salary |
Other named executive officers |
Three times annual base salary |
Table of Contents
|
Compensation Discussion and Analysis Additional Information about Our Compensation Practices |
Failure to attain these targeted stock
ownership levels within five years from date of hire for, or appointment to, an
eligible position can result in the reduction of part or all of the executives
annual cash incentive (with a corresponding grant of time-vested restricted
share units or restricted stock in that amount), or a reduction in future
long-term equity incentive awards, either of which may continue until the
ownership guideline is achieved. In determining whether our stock ownership
guidelines have been met, any restricted stock and time-vested restricted share
units held are counted as owned, but performance-based restricted share units
are excluded until they vest. Executive officer stock ownership levels were
reviewed in 2014 for compliance with these guidelines. Based on our stock price
as of the compliance date for this review, the stock ownership levels specified
by the guidelines have been met or exceeded by each of our named executive
officers.
Other Polices
Relating to Transactions in Kimberly-Clark Securities
We require all executive officers to
pre-clear transactions involving our common stock (and other securities related
to our common stock) with our Legal Department.
Although we do not have a formal policy
prohibiting transactions that hedge an executive officers economic risk of
owning shares of our common stock, an executive officer must obtain clearance
from our Legal Department prior to engaging in any hedging transaction to ensure
compliance with applicable laws. Any shares an employee owns subject to a market
put or call option are excluded for purposes of determining compliance with our
stock ownership guidelines. None of our named executive officers engaged in any
hedging transactions in 2014.
Committee Exercise
of Discretion to Reduce Annual Cash Incentive Payment
In establishing performance goals and
target levels under the annual cash incentive program, the Committee is
exercising its discretion to limit the amount of the incentive payments,
consistent with our pay-for-performance objective. In the absence of this
exercise of discretion, each of the executive officers would be entitled to an
award equal to 0.3 percent of our earnings before unusual items; however, the
Committee has exercised its discretion to limit the amount of the incentive
payments each year of the program, and this potential maximum award has never
been paid to any of the executive officers.
Corporate Tax
Deduction for Executive Compensation
The United States income tax laws
generally limit the deductibility of compensation paid to the chief executive
officer and each of the three highest-paid executive officers (not including the
chief financial officer) to $1,000,000 per annum. However, an exception exists
for performance-based compensation that meets certain regulatory requirements.
Several classes of our executive compensation, including option awards and
portions of our long-term equity grants to executive officers, are designed to
meet the requirements for deductibility. Other classes of our executive
compensation, including portions of the long-term equity grants described above,
may be subject to the $1,000,000 deductibility limit.
Although deductibility of compensation is
preferred, tax deductibility is not a primary objective of our compensation
programs. In the Committees view, meeting the compensation objectives set forth
above is more important than the benefit of being able to deduct the
compensation for tax purposes.
Table of Contents
|
Compensation Discussion and Analysis Management Development and Compensation Committee Report |
Management Development and Compensation
Committee Report
In accordance with its written charter
adopted by the Board, the Management Development and Compensation Committee has
oversight of compensation policies designed to align elected officers
compensation with our overall business strategy, values and management
initiatives. In discharging its oversight responsibility, the Committee has
retained an independent compensation consultant to advise the Committee
regarding market and general compensation trends.
The Committee has reviewed and discussed
the Compensation Discussion and Analysis with our management, which has the
responsibility for preparing the Compensation Discussion and Analysis. Based
upon this review and discussion, the Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy statement and
incorporated by reference in our Annual Report on Form 10-K filed with the SEC
for the fiscal year ended December 31, 2014.
|
MANAGEMENT DEVELOPMENT AND
COMPENSATION |
|
COMMITTEE OF THE BOARD OF
DIRECTORS |
|
|
|
Abelardo E. Bru, Chairman |
|
Fabian T. Garcia |
|
Mae C. Jemison, M.D. |
|
Marc J.
Shapiro |
Table of Contents
|
Compensation Discussion and Analysis Analysis of Compensation-Related Risks |
Analysis of
Compensation- Related
Risks |
The Committee, with the assistance of its
independent consultant and Kimberly-Clarks compensation consultant, has
reviewed an assessment of our compensation programs for our employees, including
our executive officers, to analyze the risks arising from our compensation
systems.
Based on this assessment, the Committee
believes that the design of our compensation programs, including our executive
compensation program, does not encourage our executives or employees to take
excessive risks and that the risks arising from these programs are not
reasonably likely to have a material adverse effect on
Kimberly-Clark.
Several factors contributed to the
Committees conclusion, including:
► |
The Committee believes
Kimberly-Clark maintains a values-driven, ethics-based culture supported
by a strong tone at the top. |
► |
The performance targets for annual
cash incentive programs are selected to ensure that they are reasonably
attainable in a manner consistent with our Global Business Plan without
encouraging executives or employees to take inappropriate
risks. |
► |
An analysis by Kimberly-Clarks
consultant indicated that our compensation programs are consistent with
those of our peer group. In addition, the analysis noted that target
levels for direct annual compensation are compared to the median of our
peer group. |
► |
The Committee believes the
allocation among the components of direct annual compensation provides an
appropriate balance between annual and long-term incentives and between
fixed and performance-based compensation. |
► |
Annual cash incentives and long-term
performance-based restricted share unit awards under our executive
compensation program are capped at 200 percent of the target award, and
all other material non-executive cash incentive programs are capped at
reasonable levels, which the Committee believes protects against
disproportionately large incentives. |
► |
The Committee believes the
performance measures and the multi-year vesting features of the long-term
equity incentive compensation component encourage participants to seek
sustainable growth and value creation. |
► |
The Committee believes inclusion of
share-based compensation through the long-term equity incentive
compensation component encourages appropriate decision-making that is
aligned with the long-term interests of stockholders. |
► |
Our stock ownership guidelines further align the interests of
management and stockholders. |
Table of Contents
Compensation Tables
Summary Compensation
The following table contains information
concerning compensation awarded to, earned by, or paid to our named executive
officers in the last three years. Additional information regarding the items
reflected in each column appears below the table and on page 69.
SUMMARY COMPENSATION
TABLE
Name and Principal Position |
Year |
Salary($) |
Stock Awards($) |
Option Awards($) |
Non-Equity Incentive Plan Compen- sation($) |
Change in Pension Value
and Nonqualified Deferred Compen- sation Earnings($)(1) |
All
Other Compen- sation($) |
Total($) |
Thomas J. Falk |
2014 |
1,300,000 |
6,749,976 |
1,601,556 |
2,328,677 |
3,057,191 |
357,781 |
15,395,181 |
Chairman of the |
2013 |
1,300,000 |
5,999,979 |
1,384,455 |
2,908,360 |
|
321,210 |
11,914,004 |
Board and Chief |
|
|
|
|
|
|
|
|
Executive Officer |
2012 |
1,300,000 |
5,624,993 |
620,701 |
2,844,270 |
3,104,678 |
220,215 |
13,714,857 |
Mark A. Buthman |
2014 |
796,250 |
1,649,960 |
391,494 |
767,650 |
618,724 |
127,439 |
4,351,517 |
Senior Vice |
2013 |
781,250 |
1,350,046 |
311,504 |
873,097 |
|
116,719 |
3,432,616 |
President and Chief |
|
|
|
|
|
|
|
|
Financial Officer |
2012 |
765,000 |
1,349,990 |
148,970 |
813,845 |
631,565 |
101,426 |
3,810,796 |
Michael D.
Hsu(2) |
2014 |
746,250 |
1,500,044 |
355,899 |
671,545 |
|
113,808 |
3,387,546 |
Group President |
2013 |
657,500 |
1,237,481 |
285,542 |
692,031 |
|
66,395 |
2,938,949 |
K-C
North America |
|
|
|
|
|
|
|
|
Anthony J. Palmer |
2014 |
622,500 |
1,049,965 |
249,128 |
587,070 |
|
99,397 |
2,608,060 |
President Global |
2013 |
611,250 |
899,969 |
207,665 |
693,167 |
|
97,798 |
2,509,849 |
Brands and |
|
|
|
|
|
|
|
|
Innovation |
2012 |
580,000 |
1,387,503 |
70,346 |
635,950 |
|
77,849 |
2,751,648 |
Elane B.
Stock(2) |
2014 |
718,750 |
1,500,044 |
355,899 |
752,650 |
|
89,434 |
3,416,777 |
Group President |
|
|
|
|
|
|
|
|
K-C
International |
|
|
|
|
|
|
|
|
Robert E. |
2014 |
650,000 |
1,424,960 |
291,025 |
571,016 |
767,609 |
150,339 |
3,854,949 |
Abernathy(3) |
2013 |
780,000 |
1,424,997 |
328,807 |
850,533 |
|
120,106 |
3,504,443 |
Former President, |
|
|
|
|
|
|
|
|
Global Health Care |
2012 |
777,501 |
1,425,001 |
157,245 |
777,029 |
1,177,038 |
94,016 |
4,407,830 |
(1) |
For 2013, the aggregate value of pension benefits for
Messrs. Falk, Buthman and Abernathy decreased by $1,735,962, $378,044 and
$519,759, respectively. Because these amounts decreased, they have been
excluded from the table above under the SECs regulations. Messrs. Hsu and
Palmer and Ms. Stock are not participants in our pension
plans. |
|
Table of Contents
|
Compensation Tables |
(2) |
Mr. Hsu became one of our three
other most highly compensated executive officers in 2013; therefore, his
2012 compensation is not included in this table. Ms. Stock became one of
our three other most highly compensated executive officers in 2014;
therefore, her 2012 and 2013 compensation is not included in this
table. |
(3) |
Mr. Abernathy resigned as
President, Global Health Care effective October 31, 2014 to accept a
position with Halyard Health in connection with our spin-off of that
company. |
Salary. The amounts in this column represent base salary earned during the
year.
Stock Awards and Option
Awards. The amounts in these columns reflect the dollar value of
restricted share unit awards and stock options, respectively, granted under our stockholderapproved
2011 Equity Participation Plan (the “2011 Plan”).
The restricted share unit awards either
vest over time or are based on the achievement of performance-based
standards.
The amounts for each year represent the
grant date fair value of the awards, computed in accordance with ASC Topic 718.
See Notes 10, 9 and 9 to our audited consolidated financial statements included
in our Annual Reports on Form 10-K for 2014, 2013 and 2012, respectively, for
the assumptions we used in valuing and expensing these restricted share units
and stock option awards in accordance with ASC Topic 718.
For awards that are subject to performance
conditions, the value is based on the probable outcome of the conditions at
grant date. This value, as well as the value of the awards at the grant date
assuming the highest level of performance conditions will be achieved and using
the grant date stock price, is set forth below:
Name |
Year |
Stock
Awards at Grant Date Value($) |
Stock Awards at
Highest Level of Performance Conditions($) |
Thomas J.
Falk |
2014 |
6,749,976 |
13,499,952 |
|
2013 |
5,999,979 |
11,999,958 |
|
2012 |
5,624,993 |
11,249,986 |
Mark A.
Buthman |
2014 |
1,649,960 |
3,299,920 |
|
2013 |
1,350,046 |
2,700,092 |
|
2012 |
1,349,990 |
2,699,980 |
Michael D.
Hsu |
2014 |
1,500,044 |
3,000,088 |
|
2013 |
1,237,481 |
2,474,962 |
Anthony J.
Palmer |
2014 |
1,049,965 |
2,099,930 |
|
2013 |
899,969 |
1,799,938 |
|
2012 |
1,387,503 |
2,775,006 |
Elane B.
Stock |
2014 |
1,500,044 |
3,000,088 |
Robert E.
Abernathy |
2014 |
1,424,960 |
2,849,920 |
|
2013 |
1,424,997 |
2,849,994 |
|
2012 |
1,425,001 |
2,850,002 |
Non-Equity Incentive Plan
Compensation. The amounts in this column are
the annual cash incentive payments described in Compensation Discussion and
Analysis. These amounts were earned during the years indicated and were paid to
our named executive officers in February of the following year.
Table of Contents
|
Compensation Tables |
Change In Pension Value and
Nonqualified Deferred Compensation Earnings.
The amounts in this column reflect the aggregate change during the year in
actuarial present value of accumulated benefits under all defined benefit and
actuarial plans (including supplemental pension plans). With respect to the
supplemental pension plans, amounts have been calculated to reflect an
approximate 30-year Treasury bond rate to determine the amount of the earlier
retirement age lump sum benefit in a manner consistent with our financial
statements. We describe the assumptions we used in determining the amounts and
provide additional information about these plans in Pension Benefits.
Messrs. Falk and Abernathy have
compensation from before 2005 that they elected to defer pursuant to a Deferred
Compensation Plan then in effect. Beginning in 2010, each of our named executive
officers participates in the Supplemental 401(k) Plan, a non-qualified defined
contribution plan, and prior to 2010, Messrs. Buthman and Palmer participated in
its predecessor plan, the supplemental Retirement Contribution Program. Earnings
on each of these plans are not included in the Summary Compensation Table
because the earnings were not above-market or preferential. See Nonqualified
Deferred Compensation for a discussion of these plans and each named executive
officers earnings under these plans in 2014.
All Other Compensation. All other compensation consists of the following:
Name |
Year |
Perquisites ($)(1) |
Defined Contribution Plan Amounts($)(2) |
Tax
Gross-Ups($)(3) |
Total ($)(4) |
Thomas J. Falk |
2014 |
63,196 |
294,585 |
— |
357,781 |
|
2013 |
22,823 |
298,387 |
— |
321,210 |
|
2012 |
7,020 |
213,195 |
— |
220,215 |
Mark A. Buthman |
2014 |
10,585 |
116,854 |
— |
127,439 |
|
2013 |
1,872 |
114,847 |
— |
116,719 |
|
2012 |
7,050 |
94,376 |
— |
101,426 |
Michael D. Hsu |
2014 |
13,128 |
100,680 |
— |
113,808 |
|
2013 |
10,522 |
55,873 |
— |
66,395 |
Anthony J. Palmer |
2014 |
7,300 |
92,097 |
— |
99,397 |
|
2013 |
8,000 |
89,798 |
— |
97,798 |
|
2012 |
7,300 |
70,549 |
— |
77,849 |
Elane B. Stock |
2014 |
8,000 |
81,434 |
— |
89,434 |
Robert E. Abernathy |
2014 |
34,242 |
102,437 |
13,660 |
150,339 |
|
2013 |
8,000 |
112,106 |
— |
120,106 |
|
2012 |
10,492 |
83,524 |
— |
94,016 |
Table of Contents
|
Compensation Tables |
(1) |
Perquisites. For
a description of the perquisites we provide executive officers, and the
reasons why, see Compensation Discussion and Analysis Benefits and
Other Compensation Other Compensation. Perquisites for our named
executive officers in 2014 included the
following: |
|
Name |
Executive Financial Counseling Program($)(a) |
Personal Use of Corporate Aircraft($) |
Security Services($) |
Executive Health Screening Program($) |
Relocation Expenses($)(b) |
Total($) |
|
Thomas J.
Falk |
|
56,336 |
4,175 |
2,685 |
|
63,196 |
|
Mark A.
Buthman |
8,000 |
|
|
2,585 |
|
10,585 |
|
Michael D.
Hsu |
8,000 |
1,001 |
|
4,127 |
|
13,128 |
|
Anthony J.
Palmer |
7,300 |
|
|
|
|
7,300 |
|
Elane B.
Stock |
8,000 |
|
|
|
|
8,000 |
|
Robert E. Abernathy |
4,930 |
|
|
|
29,312 |
34,242 |
|
(a) |
Our Chief Executive Officer does
not receive personal financial counseling under this
program. |
|
(b) |
Amounts shown as Mr. Abernathy’s relocation expenses are related to his change in duties in 2014 from Executive
Vice President to President, Global Health Care in preparation for the Halyard Health spin-off. At Kimberly-Clark’s
request, Mr. Abernathy relocated from the Neenah, Wisconsin area to the Atlanta, Georgia area. Mr. Abernathy
participated in our relocation program, a broad-based program in which all salaried employees are eligible to
participate, on the same conditions as other participants. |
|
|
|
(2) |
Defined Contribution Plan Amounts. Matching
contributions were made under the 401(k) Profit Sharing Plan and accrued
under the Supplemental 401(k) Plan in 2014, 2013 and 2012 for all named
executive officers. A profit-sharing contribution was also made under the
401(k) Profit Sharing Plan and the Supplemental 401(k) Plan in February
2015, 2014 and 2013 with respect to our performance in 2014, 2013 and
2012, respectively, for the named executive officers as
follows: |
|
Name |
Performance Year |
Profit Sharing Contribution($) |
|
Thomas J.
Falk |
2014 |
126,251 |
|
|
2013 |
132,617 |
|
|
2012 |
94,753 |
|
Mark A.
Buthman |
2014 |
50,080 |
|
|
2013 |
51,043 |
|
|
2012 |
41,945 |
|
Michael D.
Hsu |
2014 |
43,148 |
|
|
2013 |
24,832 |
|
Anthony J.
Palmer |
2014 |
39,470 |
|
|
2013 |
39,910 |
|
|
2012 |
31,355 |
|
Elane B. Stock |
2014 |
34,900 |
|
Robert E.
Abernathy |
2014 |
45,016 |
|
|
2013 |
49,825 |
|
|
2012 |
37,122 |
|
See
Nonqualified Deferred Compensation for a discussion of these plans. The
profit sharing contribution varies depending on our performance for the
applicable year, contributing to fluctuations from year to year in the
amounts in the All Other Compensation column. |
(3) |
Tax Gross Ups. The amount shown for Mr. Abernathy reflects tax reimbursement for moving and related expenses incurred for a relocation in connection with his change in duties. |
(4) |
Certain Dividends. Our named
executive officers also received cash dividend equivalents in 2012 on
certain of the restricted share units held by them at the same rate and on
the same dates as dividends are paid to our stockholders. Because we
factored the value of the right to receive dividend equivalents into the
grant date fair value of the restricted share unit awards, the cash
dividend equivalents received by our named executive officers were not
included in the Summary Compensation Table. Dividend equivalents are no
longer paid on unvested performance-based and time-vested restricted share
units granted to our named executive officers beginning February 2009;
instead, dividend equivalents on these units are accumulated and will be
paid in additional shares after the restricted share units vest, based on
the actual number of shares |
Table of Contents
|
Compensation Tables |
that vest. See Outstanding Equity
Awards for information on these reinvested dividend equivalents. In connection
with the Halyard Health spin-off on October 31, 2014, performance-based
restricted share units and time-vested restricted share units (and the dividend
equivalents credited to these restricted share units equal to cash dividends on
our Common Stock as described above) were credited with reinvested dividend
equivalents equal to the value of the Halyard Health stock dividend distributed
on our common stock to maintain the value of the awards before and after the
spin-off.
Grants of Plan-Based
Awards
The following table sets forth plan-based
awards granted to our named executive officers during 2014 on a grant-by-grant
basis. The numbers of shares subject to option awards and option exercise prices
in this table and throughout this Proxy Statement reflect adjustments for the
Halyard Health spin-off on October 31, 2014.
GRANTS OF PLAN-BASED AWARDS IN 2014
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts
Under Equity Incentive Plan Awards(2) |
|
|
|
Name |
Grant
Type |
Grant Date(3) |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)(4) |
Exercise or
Base Price
of Option
Awards ($/Sh) |
Grant
Date Fair
Value of
Stock and
Option
Awards ($)(5) |
Thomas J. |
Annual cash |
|
|
2,210,000 |
4,420,000 |
|
|
|
|
|
|
Falk |
incentive award |
|
|
|
|
|
|
|
|
|
|
|
Performance- |
2/25/2014 |
|
|
|
|
61,369 |
122,738 |
|
|
6,749,976 |
|
based RSU |
|
|
|
|
|
|
|
|
|
|
|
Time-vested |
4/30/2014 |
|
|
|
|
|
|
209,291 |
107.51 |
1,601,556 |
|
stock option |
|
|
|
|
|
|
|
|
|
|
Mark A. |
Annual cash |
|
|
720,000 |
1,440,000 |
|
|
|
|
|
|
Buthman |
incentive award |
|
|
|
|
|
|
|
|
|
|
|
Performance- |
2/25/2014 |
|
|
|
|
15,001 |
30,002 |
|
|
1,649,960 |
|
based RSU |
|
|
|
|
|
|
|
|
|
|
|
Time-vested |
4/30/2014 |
|
|
|
|
|
|
51,160 |
107.51 |
391,494 |
|
stock option |
|
|
|
|
|
|
|
|
|
|
Michael D. |
Annual cash |
|
|
697,500 |
1,395,000 |
|
|
|
|
|
|
Hsu |
incentive award |
|
|
|
|
|
|
|
|
|
|
|
Performance- |
2/25/2014 |
|
|
|
|
13,638 |
27,276 |
|
|
1,500,044 |
|
based RSU |
|
|
|
|
|
|
|
|
|
|
|
Time-vested |
4/30/2014 |
|
|
|
|
|
|
46,508 |
107.51 |
355,899 |
|
stock option |
|
|
|
|
|
|
|
|
|
|
Anthony J. |
Annual cash |
|
|
562,500 |
1,125,000 |
|
|
|
|
|
|
Palmer |
incentive award |
|
|
|
|
|
|
|
|
|
|
|
Performance- |
2/25/2014 |
|
|
|
|
9,546 |
19,092 |
|
|
1,049,965 |
|
based RSU |
|
|
|
|
|
|
|
|
|
|
|
Time-vested |
4/30/2014 |
|
|
|
|
|
|
32,556 |
107.51 |
249,128 |
|
stock option |
|
|
|
|
|
|
|
|
|
|
Elane B. |
Annual cash |
|
|
658,750 |
1,317,500 |
|
|
|
|
|
|
Stock |
incentive award |
|
|
|
|
|
|
|
|
|
|
|
Performance- |
2/25/2014 |
|
|
|
|
13,638 |
27,276 |
|
|
1,500,044 |
|
based RSU |
|
|
|
|
|
|
|
|
|
|
|
Time-vested |
4/30/2014 |
|
|
|
|
|
|
46,508 |
107.51 |
355,899 |
|
stock option |
|
|
|
|
|
|
|
|
|
|
Robert E. |
Annual cash |
|
|
552,500 |
1,105,000 |
|
|
|
|
|
|
Abernathy |
incentive award |
|
|
|
|
|
|
|
|
|
|
|
Performance- |
6/19/2014 |
|
|
|
|
12,598 |
25,196 |
|
|
1,424,960 |
|
based RSU |
|
|
|
|
|
|
|
|
|
|
|
Time-vested |
6/19/2014 |
|
|
|
|
|
|
43,848 |
108.33 |
291,025 |
|
stock option |
|
|
|
|
|
|
|
|
|
|
Table of Contents
|
Compensation Tables |
(1) |
Represents the potential annual performance-based
incentive cash payments each named executive officer could earn in 2014.
These awards were granted under our Executive Officer Achievement Award
Program, which is our annual cash incentive program for executive
officers, which was approved by stockholders in 2002. Actual amounts
earned in 2014 were based on the 2014 objectives established by the
Management Development and Compensation Committee at its February 24, 2014
meeting. See Compensation Discussion and Analysis Executive
Compensation for 2014 Annual Cash Incentive Program. At the time of the
grant, the incentive payment could range from the threshold amount to the
maximum amount depending on the extent to which the 2014 objectives were
met. The actual amounts paid in 2015 based on the 2014 objectives are set
forth in the Summary Compensation Table under the column entitled
Non-Equity Incentive Plan Compensation. |
(2) |
Performance-based restricted share units granted under
the 2011 Plan to our named executive officers on February 25, 2014, except
for the grant to Mr. Abernathy, which occurred on June 19, 2014. The
number of performance-based restricted share units granted in 2014 that
will ultimately vest on the third anniversary of the grant date could
range from the threshold number to the maximum number depending on the
extent to which the average annual net sales growth and average adjusted
ROIC performance objectives for those awards are met. See Compensation
Discussion and Analysis Long-Term Equity Incentive Compensation 2014
Grants. Mr. Abernathy forfeited his 2014 performance-based restricted
share units upon his departure in October 2014. |
(3) |
The grant date for each award is the same date that the
Committee took action to grant the awards. |
(4) |
Time-vested stock options granted under the 2011 Plan to
our named executive officers on April 30, 2014, except for the grant to
Mr. Abernathy, which occurred on June 19, 2014. |
(5) |
Grant date fair value is determined in accordance with
ASC Topic 718 and, for performance-based restricted share units, is the
value at grant date based on the probable outcome of the performance
condition and is consistent with the estimate of aggregate compensation
cost to be recognized over the service period determined as of the grant
date, excluding the effect of estimated forfeitures. See Notes 10, 9 and 9
to our audited consolidated financial statements included in our Annual
Reports on Form 10-K for 2014, 2013 and 2012, respectively, for the
assumptions used in valuing and expensing these restricted share units and
stock option awards in accordance with ASC Topic
718. |
Discussion of Summary Compensation and
Plan-Based Awards Tables
Our executive compensation policies and
practices, pursuant to which the compensation set forth in the Summary
Compensation Table and the Grants of Plan-Based Awards in 2014 table was paid or
awarded, are described under Compensation Discussion and Analysis.
Other than the executive severance plans
described below, none of our named executive officers has an employment
agreement with us. See Potential Payments on Termination or Change of Control.
Executive officers may receive long-term
equity incentive awards of stock options, restricted stock or restricted share
units, or a combination of stock options, restricted stock and restricted share
units under the 2011 Plan, which was approved by stockholders in 2011. The 2011
Plan provides the Committee with discretion to require performance-based
standards to be met before awards vest. In 2014, the Committee did not award
time-vested restricted share units to our named executive officers. The
Committee awarded time-vested restricted share units to Mr. Palmer in 2012 and
Ms. Stock in 2012 and 2013 for retention purposes, and to Mr. Hsu in 2012 in
connection with his hire, which vest on the third anniversary of the date of
grant. In 2014, each named executive officer received grants of stock options
and performance-based restricted share units under the 2011 Plan.
For grants of stock options, the 2011 Plan
provides that the option price per share shall be no less than the closing price
per share of our common stock at the grant date. The term of any option is no
more than ten years from the grant date. Options granted in 2014 become
exercisable in three annual installments of 30 percent, 30 percent and 40
percent, beginning on the first anniversary of the grant date; however, all of
the options become exercisable for three years upon death or total and permanent
disability, and for the earlier of five years or the remaining term of the
options, upon retirement of the officer. In addition, options generally become
exercisable upon a termination of employment following a change of control, and
certain options granted to our named executive officers are subject to our
Executive Severance Plan. See Potential Payments on Termination or Change of
Control. The officers may transfer the options to family members or certain
entities in which family members have interests. Because Mr. Abernathy is over
age 55, his unvested stock options granted in 2014 vested on the date of his
departure and will be exercisable for five years.
Table of Contents
|
Compensation Tables |
Performance-based restricted share unit
awards granted in 2014 vest three years following the grant date in a range from
zero to 200 percent of the target levels based on our average annual net sales
growth and average adjusted ROIC performance during the three years. As of
February 17, 2015, the performance-based restricted share units granted in 2014
and 2013 were on pace to vest at the following levels: 92 percent for the 2014
award and 100 percent for the 2013 award. The Committee has determined that the
2012 award vested at 111 percent.
Dividend equivalents on unvested
performance-based restricted share units equal to cash dividends on our common
stock are accumulated and will be paid in additional shares after the
performance-based restricted share units vest, based on the actual number of
shares that vest. Dividend equivalents on the time-vested restricted share units
granted to Messrs. Hsu and Palmer in 2012, and to Ms. Stock in 2012 and 2013,
will be accumulated and paid in additional shares when the time-vested
restricted share units vest.
Outstanding Equity
Awards
The following table sets forth information concerning outstanding equity awards for our named executive officers as of
December 31, 2014. Option awards were granted for ten-year terms, ending on the option expiration date set forth in the
table. (Note that Mr. Abernathy’s options will expire on the fifth anniversary of his departure.) Stock awards were granted
as indicated in the footnotes to the table. The numbers of shares subject to option awards and option exercise prices in
this table and throughout this Proxy Statement reflect adjustments for the Halyard Health spin-off on October 31, 2014.
OUTSTANDING EQUITY AWARDS AS OF
DECEMBER 31, 2014(1)
|
|
Option
Awards(2) |
Stock
Awards |
Name |
Grant
Date |
Number of
Securities
Underlying
Unexercised
Options(#) Exercisable |
Number of
Securities
Underlying
Unexercised
Options(#) Unexercisable |
Option
Exercise Price($)(3) |
Option
Expiration Date |
Number
of Shares
or Units of
Stock That
Have Not Vested(#)(4)(5) |
Market
Value of
Shares or
Units of
Stock That
Have Not Vested($)(6) |
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not Vested(#)(4)(7) |
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not Vested($)(6) |
Thomas J. Falk |
|
|
|
|
|
|
|
|
|
|
4/30/2014 |
|
209,291 |
107.51 |
4/30/2024 |
|
|
|
|
|
2/25/2014 |
|
|
|
|
|
|
65,487 |
7,566,368 |
|
5/1/2013 |
60,652 |
141,523 |
98.92 |
5/1/2023 |
|
|
|
|
|
2/20/2013 |
|
|
|
|
|
|
144,219 |
16,663,063 |
|
5/2/2012 |
59,824 |
79,766 |
75.22 |
5/2/2022 |
|
|
|
|
|
2/27/2012 |
|
|
|
|
|
|
178,919 |
20,672,301 |
|
4/26/2011 |
96,664 |
|
62.07 |
4/26/2021 |
|
|
|
|
Mark A. |
|
|
|
|
|
|
|
|
|
Buthman |
|
|
|
|
|
|
|
|
|
|
4/30/2014 |
|
51,160 |
107.51 |
4/30/2024 |
|
|
|
|
|
2/25/2014 |
|
|
|
|
|
|
16,008 |
1,849,564 |
|
5/1/2013 |
13,646 |
31,843 |
98.92 |
5/1/2023 |
|
|
|
|
|
2/20/2013 |
|
|
|
|
|
|
32,450 |
3,749,273 |
|
5/2/2012 |
14,357 |
19,145 |
75.22 |
5/2/2022 |
|
|
|
|
|
2/27/2012 |
|
|
|
|
|
|
42,940 |
4,961,288 |
|
4/26/2011 |
24,489 |
|
62.07 |
4/26/2021 |
|
|
|
|
Table of Contents
|
Compensation
Tables |
|
|
Option Awards(2) |
Stock Awards |
Name |
Grant
Date |
Number
of Securities Underlying Unexercised Options(#) Exercisable |
Number
of Securities Underlying Unexercised Options(#) Unexercisable |
Option Exercise Price($)(3) |
Option Expiration Date |
Number of Shares or Units of Stock That Have
Not Vested(#)(4)(5) |
Market Value of Shares or Units of Stock That Have
Not Vested($)(6) |
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights
That Have Not Vested(#)(4)(7) |
Equity Incentive Plan
Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have
Not Vested($)(6) |
Michael D.
Hsu |
|
|
|
|
|
|
|
|
|
|
4/30/2014 |
|
46,508 |
107.51 |
4/30/2024 |
|
|
|
|
|
2/25/2014 |
|
|
|
|
|
|
14,553 |
1,681,454 |
|
5/1/2013 |
12,508 |
29,190 |
98.92 |
5/1/2023 |
|
|
|
|
|
2/20/2013 |
|
|
|
|
|
|
29,745 |
3,436,737 |
|
11/15/2012 |
|
|
|
|
6,632 |
766,261 |
|
|
Anthony
J. |
|
|
|
|
|
|
|
|
|
Palmer |
|
|
|
|
|
|
|
|
|
|
4/30/2014 |
|
32,556 |
107.51 |
4/30/2024 |
|
|
|
|
|
2/25/2014 |
|
|
|
|
|
|
10,187 |
1,177,006 |
|
5/1/2013 |
9,097 |
21,228 |
98.92 |
5/1/2023 |
|
|
|
|
|
2/20/2013 |
|
|
|
|
|
|
21,632 |
2,499,361 |
|
5/2/2012 |
13,559 |
9,041 |
75.22 |
5/2/2022 |
|
|
|
|
|
5/2/2012 |
|
|
|
|
10,804 |
1,248,294 |
|
|
|
2/27/2012 |
|
|
|
|
|
|
20,278 |
2,342,920 |
Elane B.
Stock |
|
|
|
|
|
|
|
|
|
|
4/30/2014 |
|
46,508 |
107.51 |
4/30/2024 |
|
|
|
|
|
2/25/2014 |
|
|
|
|
|
|
14,553 |
1,681,454 |
|
5/1/2013 |
7,581 |
17,691 |
98.92 |
5/1/2023 |
|
|
|
|
|
2/20/2013 |
|
|
|
|
3,004 |
347,082 |
|
|
|
2/20/2013 |
|
|
|
|
|
|
18,027 |
2,082,840 |
|
5/2/2012 |
4,786 |
6,382 |
75.22 |
5/2/2022 |
|
|
|
|
|
5/2/2012 |
|
|
|
|
4,322 |
499,364 |
|
|
|
2/27/2012 |
|
|
|
|
|
|
14,313 |
1,653,724 |
|
4/26/2011 |
6,767 |
|
62.07 |
4/26/2021 |
|
|
|
|
Robert
E. |
|
|
|
|
|
|
|
|
|
Abernathy |
|
|
|
|
|
|
|
|
|
|
6/19/2014 |
43,848 |
|
108.33 |
10/31/2019 |
|
|
|
|
|
5/1/2013 |
48,016 |
|
98.92 |
10/31/2019 |
|
|
|
|
|
2/20/2013 |
|
|
|
|
|
|
34,252 |
3,957,476 |
|
5/2/2012 |
50,518 |
|
75.22 |
10/31/2019 |
|
|
|
|
|
2/27/2012 |
|
|
|
|
|
|
45,326 |
5,236,966 |
|
4/26/2011 |
40,599 |
|
62.07 |
10/31/2019 |
|
|
|
|
|
4/28/2010 |
27,378 |
|
58.44 |
10/31/2019 |
|
|
|
|
(1) |
The amounts shown reflect outstanding equity awards granted under the 2011 Plan and its predecessor, the stockholder-approved 2001 Equity
Participation Plan the (“2001 Plan”) (the “Equity Plans”). Under the Equity Plans, an executive officer may receive awards of stock options,
restricted stock or restricted share units, or a combination of stock options, restricted stock and restricted share units. Awards listed above
granted on or after April 26, 2011 were granted under the 2011 Plan; all other awards were granted under the 2001 Plan. |
(2) |
Stock options granted under the Equity Plans become
exercisable in three annual installments of 30 percent, 30 percent and 40
percent, beginning on the first anniversary of the grant date; however,
all of the options become exercisable for three years upon death or total
and permanent disability and for the earlier of five years or the
remaining term of the options, upon retirement of the officer. In
addition, options generally become exercisable upon a termination of
employment following a change of control, and certain options granted to
our named executive officers are subject to our Executive Severance Plan.
See Potential Payments on Termination or Change of Control. The officers
may transfer the options to family members or certain entities in which
family members have interests. |
Table of Contents
|
Compensation
Tables |
|
In connection with the Halyard Health spin-off on
October 31, 2014 the numbers of stock options were increased and the
exercise prices were decreased to maintain the fair value of outstanding
options immediately before and after the spin-off. Specifically, for each
stock option held by a Kimberly-Clark employee, officer, or director, the
exercise price was divided by 1.044134 (the Adjustment Ratio) and the
number of shares subject to the outstanding stock option was multiplied by
the Adjustment Ratio, with fractional shares rounded down to the nearest
whole share. No incremental fair value was generated as a result of the
adjustments. |
(3) |
The Equity Plans provide that the option price per share
shall be no less than the closing price per share of our common stock at
grant date. |
(4) |
In connection with the Halyard Health spin-off on
October 31, 2014, performance-based restricted share units and time-vested
restricted share units (and the dividend equivalents credited to these
restricted share units equal to cash dividends on our Common Stock as
described in footnotes 5 and 6 below) were credited with reinvested
dividend equivalents equal to the value of the Halyard Health stock
dividend distributed on our common stock (approximately $4.69 per share)
to maintain the value of the awards before and after the
spin-off. |
(5) |
The amounts shown represent awards of time-vested
restricted share units. Subject to accelerated vesting as described in
Potential Payments on Termination or Change of Control, time-vested
restricted share unit awards vest on the third anniversary of the grant
date. Dividend equivalents on these time-vested restricted share units
equal to cash dividends on our Common Stock will be accumulated and paid
in additional shares when the time-vested restricted share units vest. The
units listed include the following amount of dividend equivalents on
time-vested restricted share units granted to our named executive officers
on the dates indicated: |
|
Name |
Grant Date |
Dividend Equivalents |
|
Michael D. Hsu |
11/15/2012 |
396 |
|
Anthony J. Palmer |
5/2/2012 |
811 |
|
Elane B.
Stock |
2/20/2013 |
156 |
|
|
5/2/2012 |
325 |
(6) |
The values shown in this column are based on the closing
price of our common stock on December 31, 2014 of $115.54 per
share. |
(7) |
The amounts shown represent awards of performance-based
restricted share units granted to our named executive officers in February
2012, 2013 and 2014. Subject to accelerated vesting as described in
Potential Payments on Termination or Change of Control,
performance-based restricted share unit awards granted in 2012, 2013 and
2014 vest on February 27, 2015, February 20, 2016, and February 25, 2017,
respectively, in a range from zero to 200 percent of the target levels
indicated based on the achievement of specific performance goals. Based on
the current vesting pace of these awards, the amounts shown represent the
maximum level for the 2012 and 2013 grants and the target level for the
2014 grant. See Discussion of Summary Compensation and Plan-Based Awards
Tables. The units listed include the following amounts of dividend
equivalents on performance-based restricted share units granted to our
named executive officers equal to cash dividends on our Common Stock,
based on the maximum level for the 2012 and 2013 grants and the target
level for the 2014 grant. |
|
Name |
Year |
Dividend Equivalents |
|
Thomas J.
Falk |
2014 |
1,427 |
|
|
2013 |
7,488 |
|
|
2012 |
14,991 |
|
Mark A.
Buthman |
2014 |
349 |
|
|
2013 |
1,685 |
|
|
2012 |
3,598 |
|
Michael D.
Hsu |
2014 |
317 |
|
|
2013 |
1,544 |
|
Anthony J.
Palmer |
2014 |
222 |
|
|
2013 |
1,123 |
|
|
2012 |
1,699 |
|
Elane B.
Stock |
2014 |
317 |
|
|
2013 |
936 |
|
|
2012 |
1,199 |
|
Robert E.
Abernathy |
2013 |
1,779 |
|
|
2012 |
3,798 |
|
Note that the 2014 grant to Mr.
Abernathy was forfeited upon his departure from Kimberly-Clark, along with
all dividend equivalents relating to the
grant. |
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|
Compensation
Tables |
Option Exercises
and Stock Vested
The following table sets forth information
concerning stock options exercised and stock awards vested during 2014 for our
named executive officers.
OPTION EXERCISES AND
STOCK VESTED IN 2014
|
Option Awards |
Stock Awards |
Name |
Number
of Shares Acquired on Exercise(#) |
Value
Realized on Exercise($)(1) |
Number
of Shares Acquired on Vesting(#) |
Value Realized
on Vesting($)(2) |
Thomas J.
Falk |
|
|
93,073 |
10,260,368 |
Mark A.
Buthman |
13,751 |
405,104 |
23,578 |
2,599,239 |
Michael D.
Hsu |
|
|
|
|
Anthony J.
Palmer |
41,032 |
1,693,417 |
10,548 |
1,162,812 |
Elane B.
Stock |
14,303 |
551,431 |
6,515 |
718,214 |
Robert E. Abernathy |
|
|
22,338 |
2,462,541 |
(1) |
The dollar amount reflects the total pre-tax value realized by our
named executive officers (number of shares exercised times the difference
between the fair market value on the exercise date and the exercise
price). It is not the grant date fair value disclosed in other locations
in this proxy statement. Value from these option exercises was only
realized to the extent our stock price increased relative to the stock
price at grant (the exercise price). |
(2) |
The dollar amount reflects the total pre-tax value received by our
named executive officers upon the vesting of time-vested restricted share
units or performance-based restricted share units (number of shares vested
times the closing price of our common stock on the vesting date),
including cash paid in lieu of fractional shares. It is not the grant date
fair value disclosed in other locations in this proxy
statement. |
Pension
Benefits
The following table sets forth information
as of December 31, 2014 concerning potential payments to our named executive
officers under our pension plan and supplemental pension plans. Information about these plans follows the
table.
2014 PENSION
BENEFITS
Name(1) |
Plan Name |
Number of Years Credited Service(#)(3) |
Present Value of Accumulated Benefit($) |
Payments During Last Fiscal
Year($)(4) |
Thomas J.
Falk(2) |
Pension Plan |
26.5 |
1,111,537 |
|
|
Supplemental |
26.5 |
18,336,832 |
|
|
Pension Plans |
|
|
|
Mark A. Buthman |
Pension Plan |
15.2 |
583,462 |
|
|
Supplemental |
15.2 |
2,969,998 |
|
|
Pension Plans |
|
|
|
Robert E.
Abernathy(2) |
Pension Plan |
28.0 |
1,359,611 |
13,394 |
|
Supplemental |
28.0 |
3,582,277 |
3,176,268 |
|
Pension Plans |
|
|
|
(1) |
Because Messrs. Hsu and Palmer and Ms. Stock joined Kimberly-Clark
after January 1, 1997, they are not eligible to participate in our defined
benefit pension plans. |
(2) |
Mr. Falk is currently eligible for early retirement under the plans and would be eligible to receive the early retirement benefit described in the table below. At the time of Mr. Abernathy’s departure in October 2014 relating to the Halyard Health spin-off, he was eligible for early retirement under the Pension Plan and he was eligible under the Supplemental Pension Plans to receive the portion of early retirement benefit accrued prior to 2005. Mr. Abernathy is eligible to receive the remaining early retirement benefit under the Supplemental Pension Plans upon his separation from Halyard Health. |
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|
Compensation
Tables |
(3) |
Mr. Falk has 31.4 years of actual service and Mr.
Abernathy had 32.7 years of actual service upon his departure in October
2014. Beginning in 2010, the number of years of credited service was
frozen at the amounts set forth in the table, as a result of our ceasing
to accrue compensation and benefit service under the plans. Mr. Buthman
has 32.5 years of actual service. In 1997, he elected to participate in
our defined contribution plans instead of accruing additional years of
service under our defined benefit pension plans. This election reduces his
benefits under our defined benefit pension plans, in accordance with the
terms of those plans. |
(4) |
In accordance with the terms of the plans, upon his
departure from Kimberly-Clark in October 2014, Mr. Abernathy (a) commenced
benefits under the Pension Plan which are payable monthly at a rate of $6,697 per month and (b) received
a lump sum distribution under the Supplemental Pension Plans relating to
accrued benefits prior to 2005. |
Employees who joined Kimberly-Clark prior
to January 1, 1997 are eligible to participate in our pension plans, which
provide benefits based on years of service as of December 31, 2009 and pay
(annual cash compensation), integrated with social security benefits. Our
pension plans are comprised of the Kimberly-Clark Pension Plan and the
Supplemental Benefit Plans. We stopped accruing compensation and benefit service
for participants under our pension plans for most of our U.S. employees,
including our named executive officers, for plan years after 2009. These changes
do not affect benefits earned by participants prior to January 1,
2010.
The following is an overview of these
plans.
|
Pension Plan |
Supplemental Pension Plans |
Reason for Plan |
Provide eligible participants with a competitive level of
retirement benefits based on pay and years of service. |
Provide eligible participants with benefits as are
necessary to fulfill the intent of the pension plan without regard to
limitations imposed by the Internal Revenue Code. |
Eligible Participants |
Salaried employees who joined
Kimberly-Clark prior to January 1, 1997. |
Salaried employees impacted by
limitations imposed by the Internal Revenue Code on payments under the
pension plan. |
Payment Form |
Normal benefit:
►Single-life annuity payable monthly
Other optional forms of benefit are available, including a joint and
survivor benefit.
|
Accrued benefits prior to
2005:
►Monthly payments or a lump sum after
age 55
Accrued benefits for 2005 and after:
►Lump sum six months after
termination of employment
|
Retirement Eligibility |
Full unreduced benefit:
►Normal retirement age of
65
►Age 62 with 10 years of
service
►Age 60 with 30 years of
service
►Disability retirement
Early retirement benefit:
►Age 55 with five years of service.
The amount of the benefit is reduced according to the number of years the
participant retires before the age the participant is eligible for a full,
unreduced benefit. The amount of the reduction is based on age and years
of vesting service.
|
Same |
Table of Contents
|
Compensation
Tables |
Continued from previous
page
|
Pension Plan |
Supplemental Pension Plans |
Benefits Payable |
Service and earnings frozen as of
December 31, 2009. Benefit depends on the participants years of service
under our plan and monthly average earnings over the last 60 months of
service or, if higher, the monthly average earnings for the five calendar
years in his or her last fifteen years of service for which earnings were
the highest. |
Same |
Benefit Formula for Salaried
Employees (As of December 31, 2009) (Payable in the form of a
single life annuity) |
Unreduced monthly benefit = 1/12 of
((1.125% x final average annual earnings (up to 2/3 of the Social Security
Taxable Wage Base)) + (1.425% x final average annual earnings (in excess
of 2/3 of the Social Security Taxable Wage Base up to Taxable Wage Base))
+ (1.5% x final average annual earnings (over the Social Security Taxable
Wage Base))) |
Same |
Pensionable Earnings |
Annual cash compensation. Long-term
equity compensation is not included. |
Same |
Change of control or reduction in
our long-term credit rating (below investment grade) |
Not applicable |
Participants have the option of
receiving the present value of their accrued benefits prior to 2005 in the
supplemental pension plans in a lump sum, reduced by 10 percent and 5
percent for active and former employees,
respectively. |
The estimated actuarial present value of
the retirement benefits accrued through December 31, 2014 appears in the 2014
Pension Benefits table. For purposes of determining the present value of
accumulated benefits, we have used the potential earlier retirement ages as
described above rather than the normal retirement age under the plans, which is
65. For a discussion of how we value these obligations and the assumptions we
use in that valuation, see Note 11 to our audited consolidated financial
statements included in our 2014 Annual Report on Form 10-K. The calculation of
actuarial present value generally is consistent with the methodology and
assumptions outlined in our audited consolidated financial statements, except
that benefits are reflected as payable as of the date the executive is first
entitled to full unreduced benefits (as opposed to the assumed retirement date)
and without consideration of pre-retirement mortality. Present values for the
qualified plan are based on RP2000 mortality projected with generational
improvements and for the supplemental plans were calculated using the 2014
417(e) mortality table. With respect to the supplemental pension plans, the
amount of the earlier retirement age lump sum benefit was determined using an
approximate 30-year Treasury Bond rate of 2.60%, consistent with the methodology
used for purposes of our consolidated financial statements; any actual lump sum
benefit would be calculated using the 30-year Treasury Bond rate in effect as of
the beginning of the month prior to termination. Present value amounts were
determined based on the financial accounting discount rate for United States
pension plans of 4.10% as of December 31, 2014.
The actuarial increase in 2014 of the
projected retirement benefits can be found in the Summary Compensation Table
under the heading Change in Pension Value and Nonqualified Deferred
Compensation Earnings (all amounts reported under that heading represent
actuarial increases in our pension plans). Other than the payments to Mr.
Abernathy described above, no payments were made to our named executive officers
under our pension plans during 2014.
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|
Compensation
Tables |
While the supplemental pension plans
remain unfunded, in 1994 the Board approved the establishment of a trust and
authorized us to make contributions to this trust in order to provide a source
of funds to assist us in meeting our liabilities under our supplemental defined
benefit plans. For additional information regarding these plans, see
Compensation Discussion and Analysis Benefits and Other Compensation
Retirement Benefits.
Nonqualified
Deferred Compensation
The following table sets forth information
concerning nonqualified defined contribution and deferred compensation plans for
our named executive officers during 2014.
2014 NONQUALIFIED
DEFERRED COMPENSATION
Name |
Plan |
Company Contributions in
2014($)(1) |
Aggregate Earnings in
2014($)(2) |
Aggregate Withdrawals/ Distributions($)(3) |
Aggregate Balance
at December 31, 2014($)(4) |
Thomas J.
Falk |
Supplemental |
276,385 |
66,121 |
|
1,474,189 |
|
401(k)
Plan |
|
|
|
|
|
Deferred |
|
101,963 |
|
2,365,711 |
|
Compensation Plan |
|
|
|
|
Mark A.
Buthman |
Supplemental |
98,654 |
52,356 |
|
1,015,135 |
|
401(k)
Plan |
|
|
|
|
|
Deferred |
|
|
|
|
|
Compensation Plan |
|
|
|
|
Michael D.
Hsu |
Supplemental |
82,480 |
3,489 |
|
124,510 |
|
401(k)
Plan |
|
|
|
|
|
Deferred |
|
|
|
|
|
Compensation Plan |
|
|
|
|
Anthony J.
Palmer |
Supplemental |
73,897 |
58,721 |
|
684,147 |
|
401(k)
Plan |
|
|
|
|
|
Deferred |
|
|
|
|
|
Compensation Plan |
|
|
|
|
Elane B.
Stock |
Supplemental |
63,234 |
7,221 |
|
184,264 |
|
401(k)
Plan |
|
|
|
|
|
Deferred |
|
|
|
|
|
Compensation Plan |
|
|
|
|
Robert E.
Abernathy |
Supplemental |
84,237 |
33,314 |
513,348 |
|
|
401(k)
Plan |
|
|
|
|
|
Deferred |
|
1,339 |
|
20,982 |
|
Compensation Plan |
|
|
|
|
(1) |
Contributions consist solely of amounts accrued by
Kimberly-Clark under the Supplemental 401(k) Plan, including the
profit-sharing contribution in February 2015 with respect to our
performance in 2014. These amounts are included in the Summary
Compensation Table and represent a portion of the Defined Contribution
Plan Payments included in All Other Compensation. |
(2) |
The amounts in this column show the changes in the
aggregate account balance for our named executive officers during 2014
that are not attributable to company contributions. Aggregate earnings are
not included in the Summary Compensation Table because the earnings are
not above-market or preferential. |
(3) |
Upon his departure in connection with our Halyard Health
spin-off, Mr. Abernathy transferred his aggregate balance in the
Supplemental 401(k) Plan to a comparable nonqualified defined contribution
plan provided by Halyard Health. |
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|
Compensation
Tables |
(4) |
Balance for the Supplemental 401(k) Plan includes the
profit-sharing contribution made in February 2015 with respect to our
performance in 2014, as well as the following contributions by
Kimberly-Clark under the Supplemental 401(k) Plan in 2013 and 2012 that
are reported in the Summary Compensation Table as a portion of All Other
Compensation for those years: |
Name |
Year |
Accrued Amount($) |
Thomas J.
Falk |
2013 |
280,027 |
|
2012 |
195,194 |
Mark A.
Buthman |
2013 |
96,487 |
|
2012 |
76,376 |
Michael D. Hsu |
2013 |
37,512 |
Anthony J.
Palmer |
2013 |
71,438 |
|
2012 |
52,549 |
Robert E.
Abernathy |
2013 |
93,746 |
|
2012 |
65,524 |
In addition to amounts shown in the table
that reflect participation in the Supplemental 401(k) Plan, amounts shown for
Messrs. Falk and Abernathy represent compensation deferred in prior years under
our Deferred Compensation Plan and accumulated earnings. Effective in 2005, no
further amounts may be deferred under this plan. Participants in the Deferred
Compensation Plan may elect to have deferrals credited with yields equal to
those earned on any of a subset of funds available in the 401(k) Profit Sharing
Plan. Generally, benefits are payable under the Deferred Compensation Plan in
accordance with the participants election in a lump sum or in quarterly
installments over a period between two and 20 years. If a participant ceases
employment (other than as a result of a total and permanent disability or death
or on or after age 55 with five or more years of service), the account balance
is paid in a lump sum. In the event of a change of control or a reduction in our
long-term credit rating (below investment grade), currently-employed
participants have the option to elect an immediate lump-sum payment of their
account balance, less a 10 percent penalty.
Table of Contents
|
Compensation
Tables |
Overview of 401(k)
Profit Sharing Plan and Supplemental 401(k) Plan.
|
401(k) Profit Sharing Plan |
Supplemental 401(k) Plan |
Purpose |
To assist employees in saving for retirement, as well as to
provide a discretionary profit sharing contribution in which contributions
will be based on our profit performance. |
To provide benefits to the extent necessary to fulfill the
intent of the 401(k) Profit Sharing Plan without regard to the limitations
imposed by the Internal Revenue Code on qualified defined contribution
plans. |
Eligible participants |
Most employees. |
Salaried employees impacted by
limitations imposed by the Internal Revenue Code on the 401(k) Profit
Sharing Plan. |
Is the plan qualified under the
Internal Revenue Code? |
Yes. |
No. |
Can employees
make contributions? |
Yes. |
No. |
Do we make contributions or
match employee contributions? |
We match 100% of employee contributions, to a yearly maximum
of 4% of eligible compensation. In addition, we may make a discretionary
profit sharing contribution of 0% to 6% of eligible compensation based on
our profit performance. |
We provide credit to the extent our
contributions to the 401(k) Profit Sharing Plan are limited by the
Internal Revenue Code. |
When do account balances
vest? |
Account balances under these plans generally vest once the
participant completes at least two years of service. |
Same. |
How are account balances
invested? |
Account balances are invested in certain designated
investment options selected by the participant. |
Account balances are credited with earnings and losses as if
these account balances were invested in certain designated investment
options selected by the participant. |
When are account balances
distributed? |
Distributions of the participants vested account balance
are only available after termination of employment. Loans, hardship and
certain other withdrawals are allowed prior to termination of employment
for certain vested amounts under the 401(k) Profit Sharing
Plan. |
Distributions of the participants vested account balance
are payable after termination of
employment. |
Table of
Contents
|
Compensation
Tables |
While the Supplemental 401(k) Plan remains
unfunded, in 1996 the Board amended a previously established trust and
authorized us to make contributions to this trust in order to provide a source
of funds to assist us in meeting our liabilities under our supplemental defined
contribution plans.
Potential Payments
on Termination or Change of Control
Our named executive officers are eligible
to receive certain benefits in the event of termination of employment, including
following a change of control. This section describes various termination
scenarios as well as the payments and benefits payable under those
scenarios.
Severance Benefits
We maintain two severance plans that cover our executive
officers, depending on the circumstances that result in their termination. Those
plans include the Executive Severance Plan, which is applicable when an
executive officer is terminated following a change of control, and the Severance
Pay Plan, which is applicable in the event of certain other involuntary
terminations. An executive officer may not receive severance payments under more
than one of the plans described below.
Executive Severance
Plan. We have agreements under our
Executive Severance Plan with each named executive officer. The agreements
provide that, in the event of a Qualified Termination of Employment (as
described below), the participant will receive a cash payment in an amount equal
to the sum of:
► |
Two times the sum of annual base
salary and the average annual incentive award for the three prior fiscal
years, |
► |
The value of any forfeited awards,
based on the closing price of our common stock at the date of the
participants separation from service, of restricted stock and time-vested
restricted share units, |
► |
The number of
performance-based restricted share units that are forfeited multiplied by
the average performance-based restricted share unit payment for the prior
three years, |
► |
The value of any
forfeited benefits under the 401(k) Profit Sharing Plan and Supplemental
401(k) Plan, |
► |
The value of the
employer match and assumed 3 percent profit sharing contribution the named
executive officer would have received if he had remained employed an
additional two years under the 401(k) Profit Sharing Plan and Supplemental
401(k) Plan, and |
► |
Two years of COBRA
premiums for medical and dental
coverage. |
In addition, nonqualified stock options
will vest and be exercisable within the earlier of five years from the
participants termination or the remaining term of the option.
A Qualified Termination of Employment is
a separation of service within two years following a change of control of
Kimberly-Clark (as defined in the plan) either involuntarily without cause or by
the participant with good reason. In addition, any involuntary separation of
service without cause within one year before a change of control will also be
determined to be a Qualified Termination of Employment if it is in connection
with, or in anticipation of, a change of control.
The current agreements with our named
executive officers expire on December 31, 2017, unless extended by the
Committee.
These agreements reflect that the named
executive officer is not entitled to a tax gross-up if the named executive
officer incurs an excise tax due to the application of Section 280G of the
Internal
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|
Compensation
Tables |
Revenue Code. Instead, payments and
benefits payable to the named executive officer will be reduced to the extent
doing so would result in the executive retaining a larger after-tax amount,
taking into account the income, excise and other taxes imposed on the payments
and benefits.
The Board has determined the eligibility criteria for
participation in the plan. Each named executive officers agreement under the
Executive Severance Plan provides that the executive will retain in confidence
any confidential information known to the executive concerning Kimberly-Clark
and Kimberly-Clarks business so long as such information is not publicly
disclosed.
Severance Pay
Plan. Our Severance Pay Plan generally
provides eligible employees (including our named executive officers) severance
payments and benefits in the event of certain involuntary terminations. Under
the Severance Pay Plan, a named executive officer (employed for at least one
year) whose employment is involuntarily terminated would receive:
► |
Two times the sum of annual base
salary and the average annual incentive award for the three prior fiscal
years, |
► |
If the termination occurs after
March 31, the pro-rated current year annual incentive award based on
actual performance, |
► |
Six months of COBRA
premiums for medical coverage, and |
► |
Six months of
outplacement services and three months of participation in our employee
assistance program. |
If the named executive officers
employment is involuntarily terminated within the first 12 months of employment,
the Severance Pay Plan provides that the named executive officer would receive
three months base salary.
Severance pay under the Severance Pay Plan
will not be paid to any participant who is terminated for cause (as defined
under the plan), is terminated during a period in which the participant is not
actively at work for more than 25 weeks (except to the extent otherwise required
by law), voluntarily quits or retires, dies or is offered a comparable position
(as defined under the plan).
A named executive officer must execute a
full and final release of claims against us within a specified period of time
following termination to receive severance benefits under our severance pay
plans. Under the Severance Pay Plan, if the release has been timely executed,
severance benefits are payable as a lump sum cash payment no later than 60 days
following the participants termination date. Any current year annual incentive
award that is payable under the Severance Pay Plan will be paid at the same time
as it was payable under the Executive Officer Achievement Award Program, but no
later than 60 days following the calendar year of the separation from
service.
2011
Plan. In the event of a Qualified
Termination of Employment (as described below) of a participant in the 2011
Plan in connection with a change of control, all of the participants awards not
subject to performance goals would become fully vested. Any awards subject to
performance goals will vest at the average performance-based restricted share
unit payout for awards for the three prior fiscal years. Unless otherwise
governed by another applicable plan or agreement, such as the terms of the
Executive Severance Plan, options in this event would be exercisable for the
lesser of three months or the remaining term of the option. If any amounts
payable under the 2011 Plan result in excise tax due to the application of
Section 280G of the Internal Revenue Code, the 2011 Plan provides that payments
and benefits payable to the named executive officer will be reduced to the
extent necessary so that no excise tax will be imposed if doing so would result
in the
Table
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|
Compensation
Tables |
executive retaining a larger after-tax
amount, taking into account the income, excise and other taxes imposed on the
payments and benefits. A Qualified Termination of Employment is a termination
of the participants employment within two years following a change of control
of Kimberly-Clark (as defined in the 2011 Plan), unless the termination is by
reason of death or disability or unless the termination is by Kimberly-Clark for
cause or by the participant without good reason.
The 2011 Plan provides that, if pending a
change of control, the Committee determines that Kimberly-Clark common stock
will cease to exist without an adequate replacement security that preserves the
economic rights and positions of the participants in the 2011 Plan (for example,
as a result of the failure of the acquiring company to assume outstanding
grants), then all options and stock appreciation rights will become exercisable,
in a manner deemed fair and equitable by the Committee, immediately prior to the
consummation of the change of control. In addition, the restrictions on all
restricted stock will lapse and all restricted share units, performance awards
and other stock-based awards will vest immediately prior to the consummation of
the change of control and will be settled upon the change of control in cash
equal to the fair market value of the restricted share units, performance awards
and other stock-based awards at the time of the change of control.
In the event of a termination of
employment of a participant in the 2011 Plan, other than a Qualified Termination
of Employment, death, total and permanent disability or retirement of the
participant, the participant will forfeit all unvested restricted stock and
restricted share units, and any vested stock options held by the participant
will be exercisable for the lesser of three months or the remaining term of the
option.
Retirement, Death and
Disability
Retirement. In the event
of retirement (separation from service on or after age 55), our named executive
officers are entitled to receive:
► |
Benefits payable under our pension plans for
eligible participants (if the participant has at least five years of
vesting service) (see Pension Benefits for additional
information), |
► |
Their account balance, if any, under the
Deferred Compensation Plan,
|
► |
Their account balance under the Supplemental
401(k) Plan (if the participant has at least two years of vesting
service), |
► |
Their account balance under the 401(k)
Profit Sharing Plan, including any unvested employer
contributions, |
► |
Accelerated vesting of unvested stock
options, and the options will be exercisable until the earlier of five
years or the remaining term of the options, |
► |
For units outstanding more than six months
after the date of grant, performance-based restricted share units will be
payable based on attainment of the performance goal at the end of the
restricted period, |
► |
Annual incentive award payment under the
Executive Officer Achievement Award Program as determined by the Committee
in its discretion, |
► |
For participants with at least fifteen years
of vesting service and who joined Kimberly-Clark before January 1, 2004,
retiree medical credits based on number of years of vesting service (up to
a maximum of $104,500 in credits), and |
► |
For participants with at least fifteen years
of vesting service, continuing coverage under Kimberly-Clarks group life
insurance plan. |
Table
of Contents
|
Compensation
Tables |
Death. In the event of
death while an active employee, the following benefits are payable:
► |
50 percent of the benefits under our
pension plans for eligible participants, not reduced for early payment (if
the participant has at least five years of vesting service) (see Pension
Benefits), payable under the terms of the plans to the participants
spouse or minor children, |
► |
Their account balance, if any, under
the Deferred Compensation Plan, |
► |
Their account
balance under the Supplemental 401(k) Plan, |
► |
Their account
balance under the 401(k) Profit Sharing Plan, including any unvested
employer contributions, |
► |
Accelerated vesting
of unvested stock options, and the options will be exercisable until the
earlier of three years or the remaining term of the
options, |
► |
Time-vested restricted share units
will be vested pro rata, based on the number of full months of employment
during the restricted period prior to the participants termination of
employment, payable within 90 days following the end of the restricted
period, |
► |
For units outstanding more than six
months after the date of grant, performance-based restricted share units
will be vested pro rata, based on attainment of the performance goal at
the end of the restricted period, payable within 70 days following the end
of the restricted period, |
► |
Annual incentive
award payment under the Executive Officer Achievement Award Program as
determined by the Committee in its discretion, |
► |
For participants
who were at least age 55, had at least fifteen years of vesting service
and joined Kimberly-Clark before January 1, 2004, medical credits payable
to their spouse or dependent based on number of years of vesting service
(up to a maximum of $104,500 in credits), and |
► |
Payment of benefits
under Kimberly-Clarks group life insurance plan (which is available to
all salaried employees in the U.S.) equal to two times the participants
annual pay, up to $2 million (plus any additional coverage of three, four,
five or six times the participants annual pay, in increments of up to $1
million each, purchased by the participant at group rates). Benefits
provided by Kimberly-Clark and employee-purchased benefits cannot exceed
$6 million. |
Disability. In the event
of a separation of service due to a total and permanent disability, as defined
in the applicable plan, our named executive officers are entitled to
receive:
► |
Benefits payable under our pension
plans for eligible participants, not reduced for early payment, if the
participant has at least five years of vesting service (see Pension
Benefits for additional information), |
► |
Their account balance, if any, under
the Deferred Compensation Plan, |
► |
Accelerated vesting
of unvested stock options, and the options will be exercisable until the
earlier of three years or the remaining term of the
options, |
► |
Time-vested
restricted share units will be vested pro rata, based on the number of
full months of employment during the restricted period prior to the
participants termination of employment, payable within 90 days following
the end of the restricted period, |
► |
For units
outstanding more than six months after the date of grant,
performance-based restricted share units will be vested pro rata, based on
attainment of the performance goal at the end of the restricted period,
payable within 70 days following the end of the restricted
period, |
► |
Annual incentive
award payment under the Executive Officer Achievement Award Program as
determined by the Committee in its
discretion, |
Table of
Contents
|
Compensation
Tables |
► |
For participants of at least age 55
with at least fifteen years of vesting service and who joined
Kimberly-Clark before January 1, 2004, medical credits based on number of
years of vesting service (up to a maximum of $104,500 in credits),
|
► |
Continuing coverage under
Kimberly-Clarks group life insurance plan (available to all U.S. salaried
employees), with no requirement to make monthly contributions toward
coverage during disability, and |
► |
Payment of benefits
under Kimberly-Clarks Long-Term Disability Plan (available to all U.S.
salaried employees). Long-term disability under the plan would provide
income protection of monthly base pay, ranging from a minimum monthly
benefit of $50 to a maximum monthly benefit of $20,000. Benefits are
reduced by the amount of any other Kimberly-Clark or government-provided
income benefits received (but will not be lower than the minimum monthly
benefit). |
Potential Payments on Termination or
Change of Control Table
The following
table presents the approximate value of (i) the severance benefits for our named
executive officers under the Executive Severance Plan had a Qualified
Termination of Employment under that plan occurred on December 31, 2014; (ii)
the severance benefits for our named executive officers under the Severance Pay
Plan if an involuntary termination had occurred on December 31, 2014; (iii) the
benefits that would have been payable on the death of our named executive
officers on December 31, 2014; (iv) the benefits that would have been payable on
the total and permanent disability of our named executive officers on December
31, 2014; and (v) the potential payments to Messrs. Falk and Palmer if they had
retired on December 31, 2014. If applicable, amounts in the table were
calculated using the closing price of our common stock on December 31, 2014 of
$115.54 per share.
The termination benefits provided to our
executive officers upon their voluntary termination of employment do not
discriminate in scope, terms or operation in favor of our executive officers
compared to the benefits offered to all salaried employees, so those benefits
are not included in the table below. Because none of our named executive
officers, other than Messrs. Falk and Palmer, was eligible to retire as of
December 31, 2014, potential payments assuming retirement on that date are not
included for the other named executive officers.
The amounts presented in the table are in
addition to amounts each named executive officer earned or accrued prior to
termination, such as the officers balances under our Deferred Compensation
Plan, accrued retirement benefits (including accrued pension plan benefits),
previously vested benefits under our qualified and non-qualified plans,
previously vested options, restricted stock and restricted share units and
accrued salary and vacation. For information about these previously earned and
accrued amounts, see Summary Compensation, Outstanding Equity Awards,
Option Exercises and Stock Vested, Pension Benefits, and Nonqualified
Deferred Compensation.
Because Mr. Abernathy resigned in October
2014, he is discussed separately below under Resignation of Mr.
Abernathy.
Table of
Contents
|
Compensation
Tables |
POTENTIAL PAYMENTS
ON TERMINATION OR CHANGE OF CONTROL TABLE
|
Name |
Cash Payment($) |
Equity
with Accelerated Vesting($) |
Additional Retirement Benefits($) |
Continued Benefits and
Other Amounts($) |
Total($) |
|
|
Thomas J.
Falk |
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of
Employment |
9,871,121 |
(1) |
41,708,621 |
(2) |
527,971 |
(3) |
29,880 |
(4) |
52,137,593 |
|
|
Involuntary
termination(5) |
9,871,121 |
|
|
|
|
|
13,002 |
(6) |
9,884,123 |
|
|
Death |
4,328,677 |
(7) |
39,057,834 |
(8) |
|
(9) |
104,500 |
|
43,491,011 |
|
|
Disability |
2,328,677 |
(7) |
39,057,834 |
(8) |
3,473,520 |
(10) |
104,500 |
(11) |
44,964,531 |
|
|
Retirement |
2,328,677 |
(1) |
52,150,975 |
|
689,435 |
|
104,500 |
(12) |
55,273,587 |
|
|
Mark A.
Buthman |
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of
Employment |
3,856,129 |
(1) |
9,851,063 |
(2) |
216,194 |
(3) |
29,880 |
(4) |
13,953,266 |
|
|
Involuntary
termination(5) |
3,856,129 |
|
|
|
|
|
13,002 |
(6) |
3,869,131 |
|
|
Death |
2,337,650 |
(7) |
9,202,722 |
(8) |
|
(9) |
|
|
11,540,372 |
|
|
Disability |
767,650 |
(7) |
9,202,722 |
(8) |
1,175,887 |
(10) |
|
(11) |
11,146,259 |
|
|
Michael D.
Hsu |
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of
Employment |
3,032,087 |
(1) |
5,536,908 |
(2) |
165,238 |
(3) |
29,880 |
(4) |
8,764,113 |
|
|
Involuntary
termination(5) |
3,032,087 |
|
|
|
|
|
13,002 |
(6) |
3,045,089 |
|
|
Death |
1,991,545 |
(7) |
6,000,725 |
(8) |
|
|
|
|
7,992,270 |
|
|
Disability |
671,545 |
(7) |
6,000,725 |
(8) |
|
|
|
(11) |
6,672,270 |
|
|
Anthony J.
Palmer |
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of
Employment |
2,989,711 |
(1) |
6,762,685 |
(2) |
168,185 |
(3) |
29,880 |
(4) |
9,950,461 |
|
|
Involuntary
termination(5) |
2,989,711 |
|
|
|
|
|
13,002 |
(6) |
3,002,713 |
|
|
Death |
1,817,070 |
(7) |
4,922,754 |
(8) |
|
|
|
|
6,739,824 |
|
|
Disability |
587,070 |
(7) |
4,922,754 |
(8) |
|
|
|
(11) |
5,509,824 |
|
|
Retirement |
587,070 |
(1) |
6,998,113 |
|
|
|
|
(12) |
7,585,183 |
|
|
Elane B.
Stock |
|
|
|
|
|
|
|
|
|
|
|
Qualified Termination of
Employment |
2,980,424 |
(1) |
6,940,875 |
(2) |
155,944 |
(3) |
29,880 |
(4) |
10,107,123 |
|
|
Involuntary
termination(5) |
2,980,424 |
|
|
|
|
|
13,002 |
(6) |
2,993,426 |
|
|
Death |
1,852,650 |
(7) |
4,024,388 |
(8) |
|
|
|
|
5,877,038 |
|
|
Disability |
752,650 |
(7) |
4,024,388 |
(8) |
|
|
|
(11) |
4,777,038 |
|
(1) |
Assumes the Committee would approve full payment under
the Executive Officer Achievement Award Program for 2014; actual amount
that would be paid is determined by the Committee in its
discretion. |
(2) |
Assumes vesting of unvested performance-based restricted
share units at the maximum level for the 2012 and 2013 grants and at the
target level for the 2014 grant. See Outstanding Equity Awards. In
addition, under the terms of the 2011 Plan, if the Committee were to
determine that, pending a change of control, our common stock would cease
to exist without an adequate replacement security, the payment of this
amount would not be contingent upon the Qualified Termination of
Employment of the named executive officer. This provision also applies to
grants under the 2011 Plan to employees other than our named executive
officers. |
(3) |
Includes the value of two additional years of employer
contributions under the 401(k) Profit Sharing Plan and the Supplemental
401(k) Plan, pursuant to the terms of the Executive Severance
Plan. |
(4) |
Includes an amount equal to 24 months of COBRA medical
and dental coverage. |
(5) |
Benefits payable under the Severance Pay Plan. For
Messrs. Falk and Palmer, does not include accelerated equity vesting that
occurred when they became retirement eligible at age 55. See the benefits
payable for Messrs. Falk and Palmer for retirement for the amount of this
accelerated equity vesting. |
(6) |
Equals six months of COBRA medical coverage and
outplacement services with an estimated value of $7,002 and $6,000,
respectively. |
(7) |
For death, includes the payment of benefits under
Kimberly-Clarks group life insurance plan (which is available to all U.S.
salaried employees). For death and disability, assumes the Committee would
approve full payment under the Executive Officer Achievement Award Program
for 2014; actual amount that would be paid is determined by the Committee
in its discretion. For disability, does not include benefits payable under
Kimberly-Clarks Long-Term Disability Plan (which is available to all U.S.
salaried employees), the value of which would be dependent on the life
span of the named executive officer and the value of any Kimberly-Clark or
government-provided income benefits received. |
(8) |
Assumes pro rata vesting of unvested performance-based
restricted share units at the maximum level for the 2012 and 2013 grants
and at the target level for the 2014 grant. See Outstanding Equity
Awards. |
Table of
Contents
|
Compensation
Tables |
(9) |
For Messrs. Falk and Buthman, the estimated actuarial present value
of the pension benefits payable on death is less than the present value of
the aggregate accumulated benefit set forth in the Pension Benefits table;
as a result, no incremental benefit as a result of their death is included
in the amount. |
(10) |
Includes the excess, if any, of the estimated actuarial present
value of the retirement benefits payable on disability for the named
executive officer through December 31, 2014 (assuming the named executive
officer elects to receive a continuing benefit for his surviving spouse)
over the present value of the aggregate accumulated benefit set forth in
the Pension Benefits table. |
(11) |
For Mr. Falk, includes the value of retiree medical credits
assuming total and permanent disability on December 31, 2014. Our named
executive officers would also be eligible for continuing coverage under
Kimberly-Clarks group life insurance plan assuming total and permanent
disability on December 31, 2014, which benefit does not discriminate in
scope, terms or operation in favor of our named executive officers
compared to the benefits offered to all U.S. salaried employees and is
therefore not included in the table. |
(12) |
Includes the value of retiree medical credits assuming Messrs.
Falks retirement on December 31, 2014. Messrs. Falk and Palmer would also
be eligible for continuing coverage under Kimberly-Clarks group life
insurance plan assuming retirement on December 31, 2014, which benefit
does not discriminate in scope, terms or operation in favor of our
executive officers compared to the benefits offered to all U.S. salaried
employees and is therefore not included in the
table. |
Resignation of Mr.
Abernathy
Mr. Abernathy left
Kimberly-Clark effective October 31, 2014 to accept a position with Halyard
Health in connection with our spin-off. He received a prorated payout for 2014
under our annual cash incentive program which is shown in the Summary
Compensation Table above. Because Mr. Abernathy is over age 55, under the terms
of the 2011 Plan, his unvested stock options vested on the date of his departure
and will be exercisable until the earlier of five years or the remaining term of
the options, and his unvested performance-based restricted share units (other
than those granted in 2014, which were forfeited) will be payable in full based on attainment of the performance goal at the end of the restricted period. The value of the unvested stock options and performance-based restricted share units was $9,813,518 at the time of Mr. Abernathys departure (assuming the 2012 and 2013 grants of performance-based restricted share units vest at the maximum level). Mr. Abernathy also commenced monthly benefits under the Pension Plan and received a lump sum distribution under the Supplemental Pension Plan relating to accrued benefits prior to 2005, which amounts are shown in the Pension Benefits Table above. Mr. Abernathy received retiree medical credits valued at $104,500. Mr. Abernathy did not receive any additional retirement benefits or other benefits upon his resignation.
Table of
Contents
Proposal 4. Stockholder
Proposal
Regarding Right to
Act by Written Consent
Ms. Myra K. Young, 9295 Yorkship Court,
Elk Grove, CA 95758, owning 50 shares of our common stock, has given notice that
she or her designee intends to present for action at the Annual Meeting the
resolution set forth below. The Board of Directors opposes this stockholder
proposal for the reasons set forth below the proposal.
Proxies solicited by management will be
voted against the stockholder proposal below unless stockholders specify a
contrary choice in their proxies.
Stockholder
Proposal
In accordance with applicable rules of the
SEC, we have set forth Ms. Youngs proposal below:
Proposal 4 Right to Act by Written
Consent
Resolved,
Shareholders request that our board of directors undertake such steps as may be
necessary to permit written consent by shareholders entitled to cast the minimum
number of votes that would be necessary to authorize the action at a meeting at
which all shareholders entitled to vote thereon were present and voting. This
written consent is to be consistent with applicable law and consistent with
giving shareholders the fullest power to act by written consent consistent with
applicable law. This includes shareholder ability to initiate any topic for
written consent consistent with applicable law.
A shareholder right to act by written
consent and to call a special meeting are 2 complimentary ways to bring an
important matter to the attention of both management and shareholders outside
the annual meeting cycle.
A shareholder right to act by written
consent is one method to equalize our limited provisions for shareholders to
call a special shareholder meeting. For instance it takes 25% of Kimberly Clark
shareholders to call a special shareholder meeting. On the other hand Delaware
law allows 10% of shareholders to call a special shareholder
meeting.
Shareholder right to act by written
consent won majority shareholder support at 13 major companies in a single year.
This included 67%-support at both Allstate and Sprint. Hundreds of major
companies enable shareholders to act by written consent. Wet Seal (WTSLA)
shareholders successfully used written consent to replace certain
underperforming directors in 2012.
Please vote to enhance shareholder
value:
Right to Act by Written Consent
Proposal 4
Table of Contents
|
Proposal 4. Stockholder Proposal Regarding Right to Act by Written
Consent |
Response of the
Corporation to Stockholder Proposal
The Board of Directors unanimously
recommends a vote AGAINST this proposal.
This proposal would permit stockholders to
take action by written consent rather than requiring the action to be discussed
and voted on at a stockholders meeting. The Board believes that bypassing
stockholder meetings limits the ability of stockholders to ask questions and
discuss the action proposed.
The Board believes our current governance
practices provide for Board accountability and effective engagement with
stockholders. The Board has been responsive to stockholders concerns and seeks
to understand, and where appropriate, implement industry best practices for
corporate governance. Significant changes that we have made in recent years
include:
► |
Terminating our shareholder rights plan |
► |
Adopting a majority voting standard for the election of
directors |
► |
Declassifying the Board |
► |
Eliminating supermajority voting provisions in the
Certificate of Incorporation |
► |
Providing stockholders with the right to
call special meetings, as described in the Certificate of Incorporation
and By-Laws |
These actions reflect our commitment to
responsible corporate governance and providing our stockholders with meaningful
input in the governance of the Corporation.
Consistent with these principles, the
Board believes that significant corporate matters should be discussed in
stockholder meetings, which allows all stockholders to participate and permits
multiple points of view to be raised prior to a vote. Because stockholder action
by written consent does not require advance notice nor communication to all
stockholders, it could deny some stockholders the chance to offer their views,
deliberate the issues and then vote on a pending matter. Accordingly, we believe
that the ability stockholders have to call special meetings under our existing
By-Laws provides a better opportunity to deal with matters of importance to
Kimberly-Clark. Such special meetings include notice and disclosure for all
shareholders, rather than enabling action by a limited group through the use of
written consents.
Kimberly-Clark strongly believes in sound
governance and values its relationship with all of its stockholders. To that
end, we support and seek to implement policies and practices that take into
account the interests of all stockholders. In light of the availability of more
effective alternatives to address stockholder concerns, the Board believes that
stockholder action by written consent is not in the best interests of
Kimberly-Clark or its stockholders.
The Board unanimously
recommends that the stockholders vote AGAINST the
adoption of this proposal. |
Table of Contents
Other Information
Security Ownership Information |
The following table shows the number of
shares of our common stock beneficially owned as of December 31, 2014, by each
director and nominee, by each named executive officer, and by all directors,
nominees and executive officers as a group.
|
Name |
|
Number of Shares
(1)(2)(3)(4) |
|
Percent of
Class |
|
|
Robert E. Abernathy |
|
|
329,849 |
(5) |
|
|
* |
|
|
John R. Alm |
|
|
23,090 |
|
|
|
* |
|
|
John F. Bergstrom |
|
|
41,116 |
|
|
|
* |
|
|
Abelardo E. Bru |
|
|
23,986 |
|
|
|
* |
|
|
Mark A. Buthman |
|
|
212,077 |
(5) |
|
|
* |
|
|
Robert W. Decherd |
|
|
73,172 |
(6) |
|
|
* |
|
|
Thomas J. Falk |
|
|
1,023,045 |
(5)(7) |
|
|
* |
|
|
Fabian T. Garcia |
|
|
6,547 |
|
|
|
* |
|
|
Michael D. Hsu |
|
|
48,648 |
(5) |
|
|
* |
|
|
Mae
C. Jemison, M.D. |
|
|
30,116 |
|
|
|
* |
|
|
James M. Jenness |
|
|
21,673 |
|
|
|
* |
|
|
Nancy J. Karch |
|
|
10,994 |
|
|
|
* |
|
|
Anthony J. Palmer |
|
|
70,798 |
(5) |
|
|
* |
|
|
Ian
C. Read |
|
|
19,171 |
|
|
|
* |
|
|
Linda Johnson Rice |
|
|
35,128 |
(8) |
|
|
* |
|
|
Marc J. Shapiro |
|
|
54,230 |
(9) |
|
|
* |
|
|
Elane B. Stock |
|
|
64,352 |
(5) |
|
|
* |
|
|
All directors, nominees and executive
officers as a group |
|
|
2,314,430 |
(5)(10) |
|
|
* |
|
|
(20
persons) |
|
|
|
|
|
|
|
|
* |
Each director, nominee, named
executive officer and the directors, nominees and executive officers as a
group, owns less than one percent of the outstanding shares of our common
stock. |
(1) |
Except as otherwise noted, the directors, nominees and named
executive officers, and the directors, nominees and executive officers as
a group, have sole voting and investment power with respect to the shares
listed. |
(2) |
A portion of the shares owned by certain executive officers and
directors may be held in margin accounts at brokerage firms. Under the
terms of the margin account agreements, stocks and other assets held in
these accounts may be pledged to secure margin obligations. As of the date
of this proxy statement, none of the executive officers or directors has
any outstanding margin obligations under any of these
accounts. |
(3) |
Share amounts include unvested restricted share units granted to the following named executive officers under the
2011 Plan as indicated below. Amounts representing performance-based restricted share units in the table below
represent target levels for these awards. See “Compensation Tables – Outstanding Equity Awards” for additional
information regarding these grants. |
Table of Contents
|
Other Information |
Name |
|
Time-Vested Restricted Share
Units(#) |
|
Performance-Based Restricted
Share Units(#) |
Robert E.
Abernathy |
|
|
|
39,789 |
Mark A.
Buthman |
|
|
|
53,703 |
Thomas J.
Falk |
|
|
|
227,056 |
Michael D.
Hsu |
|
6,632 |
|
29,425 |
Anthony J.
Palmer |
|
10,804 |
|
31,142 |
Elane B.
Stock |
|
7,326 |
|
30,723 |
(4) |
For each director who is not an officer or employee of
Kimberly-Clark, share amounts include restricted share units and shares of
restricted stock granted under our Outside Directors Compensation Plan.
These awards are restricted and may not be transferred or sold until the
Outside Director retires from or otherwise terminates service on the
Board. See footnote 3 to the 2014 Outside Director Compensation table for
the number of shares of restricted stock and restricted share units that
the Outside Directors had outstanding as of December 31,
2014. |
(5) |
Includes shares of common stock held by the trustee of
the 401(k) Profit Sharing Plan for the benefit of, and that are
attributable to, the accounts in the plans of, the named executive
officers. Also includes the following shares which could be acquired
within 60 days of December 31, 2014 by: |
Name |
|
Number of Shares That Could be Acquired
Within 60 Days of December 31, 2014 |
Robert E. Abernathy |
|
210,359 |
Mark A. Buthman |
|
52,492 |
Thomas J. Falk |
|
217,140 |
Michael D. Hsu |
|
12,508 |
Anthony J. Palmer |
|
22,656 |
Elane B. Stock |
|
19,134 |
All directors,
nominees and executive officers |
|
621,446 |
as a group (20 persons) |
|
|
(6) |
Voting and investment power with respect to 39,944 of
the shares is shared with Mr. Decherds spouse. |
(7) |
Includes 99,411 shares held by TKM, Ltd. and 465,733
shares held by TKM II, Ltd. TKM, Ltd. is a family limited partnership,
which is owned by (i) an entity owned by a trust, controlled by Mr. Falk
and his spouse as general partner and (ii) two family trusts previously
established for the benefit of Mr. Falks child as limited partners. TKM
II, Ltd. is a family limited partnership which is owned by (i) an entity
owned by a trust, controlled by Mr. Falk and his spouse as general
partner, and (ii) a trust controlled by Mr. Falk and his spouse as limited
partners. Mr. Falk shares voting control over the shares held by TKM, Ltd.
and TKM II, Ltd. |
(8) |
Includes 300 shares held by a trust for the benefit of
Ms. Johnson Rices daughter and for which Ms. Johnson Rice serves as a
co-trustee and shares voting and investment power. |
(9) |
Includes 8,000 shares held by a trust for the benefit of
Mr. Shapiros children and for which Mr. Shapiro shares voting and investment power. |
(10) |
Voting and investment power with respect to 632,575 of
the shares is shared. |
Our Corporate Governance Policies provide
that, within three years of joining the Board, all Outside Directors should own
an amount of our common stock or share units at least equal in value to three
times the annual Board cash compensation. For the purpose of these stock
ownership guidelines, a director is deemed to own beneficially-owned shares, as
well as restricted stock and restricted share units (whether or not any
applicable restrictions have lapsed), but not stock options (whether vested or
unvested). As of December 31, 2014, the stock ownership levels specified by
these guidelines had been met or exceeded by each of the Outside
Directors.
Table of Contents
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Other Information Transactions With Related
Persons |
The following table sets forth the
information, as of December 31, 2014, regarding persons or groups known to us to
be beneficial owners of more than five percent of our common stock.
Name and
Address of Beneficial Owner |
|
Number of
Shares of Common Stock Beneficially Owned |
|
Percentage
of Common Stock Outstanding |
BlackRock, Inc.(1) 55
East 52nd Street New York, NY 10022 |
|
24,139,614 |
|
6.5% |
The Vanguard Group
Inc.(2) 100 Vanguard Boulevard Malvern, PA
19355 |
|
20,772,094 |
|
5.6% |
State Street
Corporation(3) State Street Financial Center One Lincoln
Street Boston, MA 02111 |
|
19,265,662 |
|
5.2% |
(1) |
The address, number and percentage of shares of our common stock beneficially owned by BlackRock, Inc.
(“BlackRock”) are based on the Schedule 13G/A filed by BlackRock with the SEC on February 9, 2015. According to
the filing, BlackRock had sole voting power with respect to 20,746,517 shares, sole dispositive power with respect to
24,139,614 shares, and did not have shared voting or dispositive power as to any shares. |
(2) |
The
address, number and percentage of shares of our common stock beneficially owned by The Vanguard Group Inc.
(“Vanguard”) are based on the Schedule 13G/A filed by Vanguard with the SEC on February 10, 2015. According
to the filing, Vanguard had sole voting power with respect to 641,324 shares, sole dispositive power with respect
to 20,162,017 shares, shared dispositive power with respect to 610,077 shares and did not have shared voting power as to any
shares. |
(3) |
The address, number and percentage of shares of our common stock beneficially owned by State Street Corporation
(“State Street”) are based on the Schedule 13G filed by State Street with the SEC on February 12, 2015. According to
the filing, State Street had shared voting and dispositive power with respect to 19,265,662 shares and did not have
sole voting or dispositive power as to any shares. |
Section
16(a) Beneficial Ownership
Reporting Compliance |
Section 16(a) of the Exchange Act requires
our directors, executive officers and any person owning more than 10 percent of
a class of our common stock to file reports with the SEC regarding their
ownership of our stock and any changes in ownership. We maintain a compliance
program to assist our directors and executive officers in making these filings.
Other than the exceptions noted below, we believe that our executive officers
and directors timely complied with their filing requirements for 2014. On April
30, 2014, each of the following officers was granted stock options: Michael T.
Azbell (Vice President and Controller), Mark A. Buthman, Thomas J. Falk, Lizanne
C. Gottung (Senior Vice President and Chief Human Resources Officer), Michael D.
Hsu, Nancy S. Loewe (then Chief Strategy Officer), Thomas J. Mielke (Senior Vice
President - General Counsel), Anthony J. Palmer, Elane B. Stock and Kimberly K.
Underhill (President K-C Professional). The Form 4 reports reflecting these
grants were filed on May 5, 2014. Also, on May 27, 2014, Joanne B. Bauer (former
President, K-C Healthcare), sold shares of our common stock owned through the
401(k) and Profit Sharing Plan. The Form 4 report reflecting these transactions
was filed on June 9, 2014.
Transactions
With Related Persons |
Policies and
Procedures for Review, Approval or Ratification of Related Person
Transactions. The Board has adopted
procedures for reviewing any transactions between the company and certain
related persons that involve amounts above certain thresholds. The SEC
requires that our proxy statement disclose these related person transactions.
A related person is defined under the SECs rules and includes our directors,
executive officers and five percent stockholders.
Table of Contents
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Other Information 2016 Stockholder
Proposals |
The Boards procedures provide
that:
► |
The Nominating and Corporate Governance Committee is best
suited to review, approve and ratify related person transactions involving
any director, nominee for director, any five percent stockholder, or any
of their immediate family members or related firms, and |
► |
The Audit Committee is best suited to review, approve and
ratify related person transactions involving executive officers (or their
immediate family members or related firms), other than any executive
officer that is also a Board member. |
► |
Either Committee may, in its sole
discretion, refer its consideration of related person transactions to the
full Board. |
Each director, director nominee and
executive officer is required to promptly provide written notification of any
material interest that he or she (or an immediate family member) has or will
have in a transaction with Kimberly-Clark. Based on a review of the transaction,
a determination will be made as to whether the transaction constitutes a related
person transaction under the SECs rules. As appropriate, the Nominating and
Corporate Governance Committee or the Audit Committee will then review the terms
and substance of the transaction to determine whether to ratify or approve the
related person transaction.
In determining whether the transaction is
consistent with Kimberly-Clarks best interest, the Nominating and Corporate
Governance Committee or the Audit Committee may consider any factors deemed
relevant or appropriate, including:
► |
Whether the transaction is on terms comparable to those that
could be obtained in arms-length dealings with an unrelated third
party; |
► |
Whether the transaction constitutes a conflict of interest
under our Code of Conduct, the nature, size or degree of any conflict, and
whether mitigation of the conflict is feasible; |
► |
The
impact of the transaction on a directors independence; and |
► |
Whether steps have been taken to ensure fairness to
Kimberly-Clark. |
2014 Related Person
Transactions. We share aircraft hangar space,
pilots and related services with Bergstrom Corporation, an entity that is
majority-owned by Mr. Bergstrom. During 2014, Bergstrom Corporation paid us
$453,400 for its share of the costs associated with these services. We believe
this arrangement is fair and reasonable, advantageous to Kimberly-Clark, and
consistent with national benchmarking. Based on an analysis of the arrangement,
we also believe its terms to be comparable to those that could be obtained in
arms-length dealings with an unrelated third party.
Stockholders
Sharing the Same
Household |
Stockholders who have the same address and
last name as of the record date and have not previously requested electronic
delivery of proxy materials may receive their voting materials in one of two
ways. They may receive a single proxy package containing one annual report, one
proxy statement and multiple proxy cards for each stockholder. Or they may
receive one envelope containing a Notice of Internet Availability of Proxy
Materials for each stockholder. This householding procedure helps us reduce
printing and postage costs associated with providing our proxy materials and is
consistent with our sustainability efforts.
If you reside in the same household with
another stockholder with the same last name and would like us to mail
proxy-related materials to you separately in the future, or are receiving
multiple copies of materials and wish to receive only one set of proxy-related
materials, please contact Stockholder Services by mail at P.O. Box 619100,
Dallas, Texas 75261-9100, by telephone at (972) 281-1522 or by e-mail at
stockholders@kcc.com.
Beneficial stockholders can request
information about householding from their banks, brokers or other such holders
of record.
Table of Contents
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Other Information Annual Meeting Advance Notice
Requirements |
2016
Stockholder Proposals |
Proposals by stockholders for inclusion in
our proxy statement and form of proxy for the Annual Meeting of Stockholders to
be held in 2016 should be addressed to the Corporate Secretary, Kimberly-Clark
Corporation, P.O. Box 619100, Dallas, Texas 75261-9100, and must be received at
this address no later than November 13, 2015. Upon receipt of a proposal, we
will determine whether or not to include the proposal in the proxy statement and
form of proxy in accordance with applicable law. It is suggested that proposals
be forwarded by certified mail, return receipt requested.
Stockholder
Nominations for Board of
Directors |
The Nominating and Corporate Governance
Committee considers nominees recommended by stockholders as candidates for
election to the Board of Directors. Under our Certificate of Incorporation and
By-Laws, a stockholder who wishes to nominate a candidate for election to the
Board is required to give written notice to our Corporate Secretary. We must
receive this notice at least 75 days, but not more than 100 days, before the
Annual Meeting of stockholders (unless we give less than 75 days notice of the
annual meeting date, in which case the notice must be received within 10 days
after the meeting date is announced). Our Certificate of Incorporation and
By-Laws specify information that the notice must contain about both the nominee
and the nominating stockholder, including information sufficient to allow the
Nominating and Corporate Governance Committee to determine if the candidate
meets the director nominee criteria described in this proxy statement. The
notice must also contain information about certain stock holdings of the nominee
and the nominating stockholder, including derivative holdings, dividend rights
that are separated from or separable from the underlying shares, and certain
performance-related fees, as well as information that would be required to be
disclosed in connection with a proxy solicitation (and whether a proxy
solicitation will be conducted). It must also contain information about certain
related person transactions, contact and related information regarding the
nominee, understandings regarding the nomination of the nominee and the
nominees consent to be nominated. We may require that the proposed nominee
furnish other information as needed to determine that persons eligibility to
serve as a director. A nomination that does not comply with the requirements set
forth in our Certificate of Incorporation and By-Laws will not be considered for
presentation at the annual meeting, but will be considered by the Nominating and
Corporate Governance Committee for any vacancies arising on the Board between
annual meetings in accordance with the process described in Proposal 1.
Election of Directors - Process and Criteria for Nominating
Directors.
Annual Meeting
Advance Notice
Requirements |
Our By-Laws require advance notice for any
business to be brought before a meeting of stockholders. In general, for
business to be properly brought before an annual meeting by a stockholder (other
than in connection with the election of directors; see Other Information
Stockholder Nominations for Board of Directors), written notice of the
stockholder proposal must be received by the Corporate Secretary of
Kimberly-Clark not less than 75 days nor more than 100 days prior to the first
anniversary of the preceding years Annual Meeting. Certain other notice periods
are provided if the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from the anniversary date. Under our By-Laws,
the stockholders notice to the Corporate Secretary must contain certain
information regarding the stockholder and affiliates, including name and
address, shares held, derivative positions, dividend rights that are separate or
separable from the underlying shares and certain performance-related fees.
Stockholders must also provide information regarding whether the stockholder or
affiliates intend to deliver a proxy statement or form of proxy regarding the
proposal, as well as information regarding the proposal and information relating
to the stockholder or affiliates required to be disclosed in the proxy
statement. Additional information concerning the advance notice requirements and
a copy of our By-Laws may be obtained from the Corporate Secretary of
Kimberly-Clark at the address provided below.
Table of Contents
Other Matters
to Be Presented at the
Annual Meeting
Our management does not know of any other
matters to be presented at the Annual Meeting. Should any other matter requiring
a vote of the stockholders arise at the meeting, the persons named in the proxy
will vote the proxies in accordance with their best judgment.
Kimberly-Clark
Corporation P.O. Box 619100 Dallas, Texas 75261-9100 Telephone
(972) 281-1200 March 9, 2015 |
By Order of the
Board of Directors.
|
|
Jeffrey P. Melucci Vice PresidentDeputy General Counsel Corporate
Secretary |
Table of Contents
Kimberly-Clark
Corporation
Invitation to Stockholders
Notice of 2015 Annual
Meeting
Proxy Statement
Table of Contents
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Electronic
Voting Instructions Available
24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the
voting methods outlined below to vote your
proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE
BAR. Proxies submitted by
the Internet or telephone must be received by 1:00 a.m., Central Time, on
April 30, 2015. |
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Vote by
Internet
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Go to www.envisionreports.com/kmb
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Or scan the QR code with your
smartphone
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Follow the steps outlined on the secure
website
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Vote by
telephone
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Call toll free 1-800-652-VOTE (8683) within
the USA, US territories & Canada on a
touch tone telephone
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Follow the instructions provided by the
recorded message
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Using a black ink pen, mark your
votes with an X as shown in this example. Please do not write outside
the designated areas. |
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Annual Stockholder
Meeting Proxy Card |
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▼IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD
ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE.▼ |
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A |
Election of Directors
The Board of Directors recommends a
vote FOR the listed nominees (terms to expire at 2016 Annual
Stockholder Meeting). |
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1. |
Nominees: |
For |
Against |
Abstain |
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01 - John F. Bergstrom |
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02 - Abelardo
E. Bru |
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03 - Robert W. Decherd |
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04 - Thomas J. Falk |
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05 - Fabian T. Garcia |
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06 - Mae C. Jemison, M.D. |
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07 - James M.
Jenness |
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09 - Ian C. Read |
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10 -
Linda Johnson Rice |
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11 - Marc J.
Shapiro |
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B |
Proposals The Board of Directors recommends a vote
FOR Proposals 2 and 3. |
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2. |
Ratification of Auditors |
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3. |
Advisory Vote to Approve Named Executive Officer
Compensation |
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C |
Proposal The Board of Directors recommends a vote
AGAINST Proposal 4. |
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Against |
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4. |
Stockholder Proposal Regarding The Right to Act By
Written Consent |
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D |
Authorized Signatures This
section must be completed for your vote to be counted Date and Sign
Below |
Please sign exactly as name(s) appears
hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please
give full title. |
Date (mm/dd/yyyy) Please print date
below. |
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Signature 1 Please keep signature within the
box. |
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Signature 2 Please keep signature within the
box. |
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PLEASE SEE REVERSE FOR ADDRESS
CHANGES AND ATTENDANCE PREFERENCE.
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Table of Contents
Proxy Kimberly-Clark
Corporation
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL STOCKHOLDER MEETING TO BE HELD ON
APRIL 30, 2015: The Notice of the Annual Meeting, the Proxy Statement
and the 2014 Annual Report, including Form 10-K, are available at
http://www.kimberly-clark.com/investors.aspx.
▼ IF YOU HAVE NOT
VOTED VIA THE INTERNET OR
TELEPHONE, FOLD ALONG
THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE. ▼ |
Proxy/Voting Instructions for the Annual
Stockholder Meeting April 30, 2015 |
+ |
Solicited on Behalf of the Board of
Directors
Thomas J. Falk, Thomas J. Mielke and
Jeffrey P. Melucci, or any of them, with full power of substitution to each,
hereby are appointed proxies and are authorized to vote, as specified on the
reverse side of this card, all shares of common stock that the undersigned is
entitled to vote at the Annual Stockholder Meeting of Kimberly-Clark
Corporation, to be held at the Kimberly-Clark World Headquarters, 351 Phelps
Drive, Irving, Texas on April 30, 2015 at 9:00 a.m. Central Time and at any
adjournment thereof. In their discretion, the proxies are authorized to vote on
such other business as may properly come before the meeting.
IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 and 3 AND AGAINST PROPOSAL 4. IF YOU PREFER TO
VOTE SEPARATELY ON INDIVIDUAL PROPOSALS YOU MAY DO SO BY MARKING THE APPROPRIATE
BOXES, SIGN AND DATE ON THE REVERSE SIDE.
This card also constitutes voting
instructions to the trustees of the Corporations employee benefits and stock
purchase plans to vote whole shares attributable to accounts the undersigned may
hold under such plans. If no voting instructions are provided, the respective
plan committees, which are comprised of management personnel, will direct the
trustees to vote the shares. Please date, sign and return this proxy/voting
instruction card promptly. If you own shares directly and plan to attend the
Annual Stockholder Meeting, please so indicate in the space provided
below.
IF YOU HAVE NOT VOTED VIA THE
INTERNET OR TELEPHONE PLEASE RETURN THIS CARD IN THE SELF-ADDRESSED ENVELOPE
PROVIDED.
E |
Non-Voting Items |
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Change of Address Please print new address below. |
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Meeting Attendance
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Mark box to the right if you plan
to attend the Annual Meeting. |
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