SEC Company Response from CORNING (GLW) — Sep 21, 2007
CORNING INC /NY (GLW) (CIK 0000024741)
Date: Sept. 21, 2007 · CIK: 0000024741 · Accession: 0000024741-07-000394
AI Filing Summary & Sentiment
File numbers found in text: 001-03247
Referenced dates: March 13, 2007
Letter
VIA EDGAR Division of Corporation Finance Re: Corning Incorporated Definitive Proxy Statement filed March 13, 2007 File No. 001-03247
Dear Mr. Buchmiller:
This letter is submitted in response to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission with respect to the Definitive Proxy Statement dated March 13, 2007 of Corning Incorporated (“Corning” or the “Company”), as set forth in your letter (the “Comment Letter”) dated August 21, 2007 to Mr. Wendell P. Weeks of Corning.
For reference purposes, the text of the Comment Letter has been reproduced herein with the response below the numbered comment.
Definitive Proxy Statement dated March 13, 2007
Compensation Discussion and Analysis, page 18
1.
We note your disclosure under the “Executive Compensation Philosophy—General Objectives” subsection that you believe that executive compensation should be based in part on performance at the individual level. Please expand your Compensation Discussion and Analysis to include a more specific discussion and analysis of how the applicable elements of your compensation packages are structured and implemented to reflect your named executive officer’s individual performance. You should disclose the elements of individual performance, both quantitative and qualitative, and specific contributions the compensation
committee considered in its evaluation, and if applicable, how they were weighted and factored into specific compensation decisions. You should also expand your discussion and analysis of the factors the committee considered in establishing personal objectives for Mr. Weeks. Refer to Item 402(b)(2)(vii) of Regulation S-K.
On page 20 of our 2007 Proxy Statement we describe our executive compensation philosophy, which is generally applicable to our Executive Group. However, in determining compensation for our Named Executive Officers (“NEOs”), Corning and its Compensation Committee (the “Committee”) use a team approach to encourage a collaborative culture and mutual responsibility for decisions made by the senior management team.
Under our team approach, individual factors such as: an executive’s role in the Company; professional experience; sustained performance; ability to take on additional responsibility; unique skills; and ability to meet strategic and financial objectives are important characteristics that result in an executive being named an NEO. However, once an executive reaches the NEO level, corporate financial performance, not individual performance, is the key factor in determining the NEO’s actual compensation paid under the various performance-based plans. Once at the NEO level, the Committee – and, the CEO, with respect to the other NEOs – use their subjective judgment of the NEO’s individual performance to determine, among other things, whether the NEO should: remain in his current role; assume additional responsibility; or receive a base salary increase. But the Committee is not responsible for establishing personal objectives for the CEO or any of the other NEOs.
The application of our team philosophy to NEO compensation is described on page 29 of our Proxy Statement. Based on the Committee’s assessment of the CEO’s performance to date, we position the CEO’s targeted total compensation around the median of the market for CEO compensation (as determined by reference to the surveys and Comparison Companies identified in the Proxy Statement). We then position our non-CEO NEOs closer to the CEO’s compensation than do many other companies. The NEO’s base salary and variable compensation targets are established by: (1) looking at the broader external market for executive compensation for individuals in similar roles; and (2) the Committee’s determination of the internal ranking of the NEO’s position and his level of responsibilities. Once the Committee approves the NEO’s base salary and annual variable compensation target, no specific individual performance metrics factor into the NEOs’ compensation awards. Base salary is set and the number of performance shares awarded under the Corporate Performance Plan and amount of cash bonus paid under the Performance Incentive Plan are based solely on actual corporate financial performance (i.e., adjusted Earnings Per Share, Adjusted Net Profit After Tax and Operating Cashflow). Awards earned by the NEOs under the GoalSharing Plan are based on the weighted average percentage of all payouts earned by employees under the various plans across the Company.
In light of the Staff’s comment, in future filings we will revise or supplement our disclosure consistent with the above and, to the extent applicable, clarify the role of individual performance in determining our NEO compensation.
2.
Your disclosure indicates that the corporate financial performance metrics for performance-based variable compensation are approved by the Committee and communicated to plan participants in February of each year. Please disclose these items of company performance and how your 2007 incentive awards are specifically structured around the applicable performance goals. See Item 402(b)(2)(v) and Instruction 2 to Item 402(b). To the extent you believe that disclosure of the information would result in competitive harm such that the information could be excluded under Instruction 4 to Item 402(b), please provide us with a detailed explanation supporting your conclusion. To the extent that it is appropriate to omit specific targets or performance objectives, you are required to provide appropriate disclosure pursuant to Instruction 4 to Item 402(b) of Regulation S-K. Refer also to Question 3.04 of the Item 402 of Regulation S-K Interpretations available on our website at www.sec.gov. In discussing how difficult or likely it will be for the registrant to achieve the target levels or other factors, you should provide as much detail as necessary without disclosing information that poses a reasonable risk of competitive harm.
In our 2007 Proxy Statement, we have provided disclosure giving investors the material information necessary to understand the compensation policies and decisions regarding the compensation earned by, awarded and paid to our NEOs for the fiscal year ended 2006. Thus, we have provided the information required by Item 402(b)(2)(v) of Regulation S-K with respect to the 2006 corporate performance goals. In our view, the 2007 performance goals could not affect an investor’s fair understanding of 2006 compensation, and, as a result, we believe that disclosure of such performance goals is not required under Instruction 2 to Item 402(b) of Regulation S-K.
Executive Pay Should Be in Line with External Benchmarks, page 20
3.
Please discuss and analyze how and why each of your named executive officers has his or her compensation determined with relation to the manufacturing or services companies in your Comparison Companies. For example, if a particular named executive officer’s compensation is determined solely with reference to manufacturing companies in your list of Comparison Companies, you should discuss and analyze why the manufacturing companies are the appropriate benchmarks given the officer’s job duties and responsibilities.
As described on page 20 of our 2007 Proxy Statement, given our diversified businesses, the unique innovations behind our products, and the global nature of our operations, we lack any pure peer companies against which the Committee is able to benchmark compensation. As a result, we use general compensation surveys and proxy data obtained from service providers, such as Equilar, Inc., to review the compensation levels for the named executive officers in a variety of manufacturing and service industries that are similar in size or have similar financial characteristics (the “Comparison Companies”). The information gleaned from these surveys and proxy data is used only as a reference point in the Committee’s determination and not as a specific benchmark or target for establishing our non-CEO NEOs’ compensation.
We believe that the disclosure in our 2007 Proxy Statement provides the material information concerning how the Committee uses general compensation information from Comparison Companies in making compensation decisions for the non-CEO NEOs. However, we intend to modify the heading of this item in future disclosure. Additionally, in light of the Staff’s comment, in future filings we will revise or supplement our disclosure consistent with the above and, to the extent applicable, clarify that, other than our CEO’s compensation, which is targeted around the median of the market for CEO compensation, we do not benchmark the elements or total compensation of our other NEOs to any specific percentile or range of a benchmark group.
Role of Executive Management in the Executive Compensation Process page 22
4.
We note your disclosure regarding the involvement of the Senior Vice President, Global Compensation and Benefits in discussing with the Committee significant proposals or topics impacting executive compensation. Please expand your disclosure relating to the role of the Senior Vice President, Global Compensation and Benefits in your compensation processes and that officer’s input during the crafting of compensation packages, including a clarification as to whether the officer makes specific recommendations regarding any of the elements of compensation for the named executive officers. Please also discuss the extent to which the named executive officers have the ability to make recommendations with respect to the proposals and topics discussed by the Senior Vice President, Global Compensation and Benefits and the Committee, including any recommendations with respect to any aspect of the compensation elements awarded to the named executive officers.
Using the Company’s compensation strategy, and based on direction from the Committee (and the CEO, regarding compensation for the other NEOs), the SVP Global Compensation & Benefits formulates each element of the total compensation recommendations for all of the NEOs. The recommendation for the CEO’s compensation is not discussed or reviewed with the CEO prior to the Committee’s review. No NEOs are present when the SVP Global Compensation & Benefits and the Committee review the CEO compensation recommendation. The Committee may make adjustments to the recommendation before giving its approval.
The SVP Global Compensation & Benefits reviews the recommendation for each of the other NEOs with the CEO. The CEO may propose any adjustments he thinks appropriate prior to submission to the Committee. The Committee reviews and discusses all NEO compensation recommendations and may make further adjustments before giving its approval.
The CEO, CFO and Chief Administrative Officer may make suggestions to the SVP Global Compensation & Benefits regarding agenda topics for Committee meetings. However, the NEOs do not recommend or suggest individual compensation actions that benefit them personally.
As disclosed on page 22 of our Proxy Statement, the Committee also engages an independent compensation consultant (in 2006, Hewitt Associates) to review and assess the recommended compensation plans and total compensation for all of the NEOs. This consultant is present at the Committee’s December meeting and provides feedback to the Committee before the compensation proposals for the NEOs are reviewed and finally approved.
In future filings we will expand the related disclosure and, to the extent applicable, include the concepts above.
Performance Incentive Plan, page 23
5.
You disclose that the annual cash bonus targets for the named executive officers range from 75% to 100% of the base salary for each named executive officer. Please provide discussion and analysis as to the reasons why the targeted amounts of annual incentive compensation, as a percentage of base salary, vary among your named executive officers.
On page 24 of our 2007 Proxy Statement, we discuss the factors regarding the individual cash bonus target determinations for our NEOs. Specifically, the individual cash bonus targets are determined by looking at: (1) internal equity -- a subjective determination that takes into account the NEO’s role and scope of responsibility, experience, and skills; and (2) external equity -- referring to the total compensation opportunities reflected in various executive compensation surveys for individuals with similar responsibilities. In footnote 5 to the Summary Compensation Table, we identify each NEO’s cash incentive target under the Performance Incentive Plan, as well as the cash incentive compensation actually realized by the NEO, based on the Company’s 2006 performance.
We believe the disclosure in our 2007 Proxy Statement provides the material information required by Items 402(b)(1)(v) and 402(b)(2)(vii) of Regulation S-K. However, in light of the Staff’s comments, in future filings, we intend to clarify our disclosure in accordance with those Items and, to the extent applicable, consistent with the above.
6.
You disclose that employees are eligible for awards earned under the Performance Incentive Plan with 50% of the plan opportunity based on corporate financial performance. Please disclose the bases upon which you will allocate the remaining 50% of the award.
As described on pages 20 and 23 of our 2007 Proxy Statement, cash bonuses paid to NEOs under the Company’s 2006 Performance Incentive Plan are based 100% on the corporate financial performance metrics multiplied by the NEO’s bonus target.
However, in addition to our NEOs, over 3,000 other Company executives and employees are eligible for annual cash bonuses under the Performance Incentive Plan. For non-NEO executives and employees, these cash bonuses are based 50% on corporate performance metrics (adjusted Net Income) and 50% on the individual executive or employees’ related
business, unit and/or individual objectives. The criteria for the 50% of the bonus that is based on an executive or employee’s business, unit and/or individual objectives can vary across the Company, depending on the business, the location and individual. For example, the business objectives are commonly the business’s financial metrics, such as profitability or actual performance as compared to budget or revenues. Unit and individual objectives might also be critical project milestones that may change from year to year.
In light of the Staff’s comment, we will revise the disclosure in future filings to further clarify this distinction.
Performance Metrics, page 27
7.
Given that the elements of compensation under your Performance Incentive Plan and Corporate Performance Plan are based on the achievement of the targeted financial metrics described, please discuss your policies and decisions regarding the adjustment or recovery of awards or payments if the relevant performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment. Refer to Item 402(b)(2)(viii) of Regulation S-K.
Currently, Corning does not have a policy in place to recover performance awards or payments due to restatements or adjustments. However, we are evaluating the implementation of such a policy. In the event we do implement such a policy, we will provide in future filings the disclosure required by Item 402(b)(2)(viii) of Regulation S-K. If w
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CORRESP
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filename1.htm
CORNING INCORPORATED
One Riverfront Plaza
Corning, NY 14831
September 21, 2007
VIA EDGAR
Mr. Timothy L. Buchmiller
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Mail Stop: 6010
Re:
Corning Incorporated
Definitive Proxy Statement filed March 13, 2007
File No. 001-03247
Dear Mr. Buchmiller:
This letter is submitted in response to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission with respect to the Definitive Proxy Statement dated March 13, 2007 of Corning Incorporated (“Corning” or the “Company”), as set forth in your letter (the “Comment Letter”) dated August 21, 2007 to Mr. Wendell P. Weeks of Corning.
For reference purposes, the text of the Comment Letter has been reproduced herein with the response below the numbered comment.
Definitive Proxy Statement dated March 13, 2007
Compensation Discussion and Analysis, page 18
1.
We note your disclosure under the “Executive Compensation Philosophy—General Objectives” subsection that you believe that executive compensation should be based in part on performance at the individual level. Please expand your Compensation Discussion and Analysis to include a more specific discussion and analysis of how the applicable elements of your compensation packages are structured and implemented to reflect your named executive officer’s individual performance. You should disclose the elements of individual performance, both quantitative and qualitative, and specific contributions the compensation
1
committee considered in its evaluation, and if applicable, how they were weighted and factored into specific compensation decisions. You should also expand your discussion and analysis of the factors the committee considered in establishing personal objectives for Mr. Weeks. Refer to Item 402(b)(2)(vii) of Regulation S-K.
On page 20 of our 2007 Proxy Statement we describe our executive compensation philosophy, which is generally applicable to our Executive Group. However, in determining compensation for our Named Executive Officers (“NEOs”), Corning and its Compensation Committee (the “Committee”) use a team approach to encourage a collaborative culture and mutual responsibility for decisions made by the senior management team.
Under our team approach, individual factors such as: an executive’s role in the Company; professional experience; sustained performance; ability to take on additional responsibility; unique skills; and ability to meet strategic and financial objectives are important characteristics that result in an executive being named an NEO. However, once an executive reaches the NEO level, corporate financial performance, not individual performance, is the key factor in determining the NEO’s actual compensation paid under the various performance-based plans. Once at the NEO level, the Committee – and, the CEO, with respect to the other NEOs – use their subjective judgment of the NEO’s individual performance to determine, among other things, whether the NEO should: remain in his current role; assume additional responsibility; or receive a base salary increase. But the Committee is not
responsible for establishing personal objectives for the CEO or any of the other NEOs.
The application of our team philosophy to NEO compensation is described on page 29 of our Proxy Statement. Based on the Committee’s assessment of the CEO’s performance to date, we position the CEO’s targeted total compensation around the median of the market for CEO compensation (as determined by reference to the surveys and Comparison Companies identified in the Proxy Statement). We then position our non-CEO NEOs closer to the CEO’s compensation than do many other companies. The NEO’s base salary and variable compensation targets are established by: (1) looking at the broader external market for executive compensation for individuals in similar roles; and (2) the Committee’s determination of the internal ranking of the NEO’s position and his level of responsibilities. Once the Committee approves the NEO’s base salary and annual variable compensation target,
no specific individual performance metrics factor into the NEOs’ compensation awards. Base salary is set and the number of performance shares awarded under the Corporate Performance Plan and amount of cash bonus paid under the Performance Incentive Plan are based solely on actual corporate financial performance (i.e., adjusted Earnings Per Share, Adjusted Net Profit After Tax and Operating Cashflow). Awards earned by the NEOs under the GoalSharing Plan are based on the weighted average percentage of all payouts earned by employees under the various plans across the Company.
In light of the Staff’s comment, in future filings we will revise or supplement our disclosure consistent with the above and, to the extent applicable, clarify the role of individual performance in determining our NEO compensation.
2
2.
Your disclosure indicates that the corporate financial performance metrics for performance-based variable compensation are approved by the Committee and communicated to plan participants in February of each year. Please disclose these items of company performance and how your 2007 incentive awards are specifically structured around the applicable performance goals. See Item 402(b)(2)(v) and Instruction 2 to Item 402(b). To the extent you believe that disclosure of the information would result in competitive harm such that the information could be excluded under Instruction 4 to Item 402(b), please provide us with a detailed explanation supporting your conclusion. To the extent that it is appropriate to omit specific targets or performance objectives, you are required to provide appropriate disclosure pursuant to Instruction 4 to Item 402(b) of Regulation
S-K. Refer also to Question 3.04 of the Item 402 of Regulation S-K Interpretations available on our website at www.sec.gov. In discussing how difficult or likely it will be for the registrant to achieve the target levels or other factors, you should provide as much detail as necessary without disclosing information that poses a reasonable risk of competitive harm.
In our 2007 Proxy Statement, we have provided disclosure giving investors the material information necessary to understand the compensation policies and decisions regarding the compensation earned by, awarded and paid to our NEOs for the fiscal year ended 2006. Thus, we have provided the information required by Item 402(b)(2)(v) of Regulation S-K with respect to the 2006 corporate performance goals. In our view, the 2007 performance goals could not affect an investor’s fair understanding of 2006 compensation, and, as a result, we believe that disclosure of such performance goals is not required under Instruction 2 to Item 402(b) of Regulation S-K.
Executive Pay Should Be in Line with External Benchmarks, page 20
3.
Please discuss and analyze how and why each of your named executive officers has his or her compensation determined with relation to the manufacturing or services companies in your Comparison Companies. For example, if a particular named executive officer’s compensation is determined solely with reference to manufacturing companies in your list of Comparison Companies, you should discuss and analyze why the manufacturing companies are the appropriate benchmarks given the officer’s job duties and responsibilities.
As described on page 20 of our 2007 Proxy Statement, given our diversified businesses, the unique innovations behind our products, and the global nature of our operations, we lack any pure peer companies against which the Committee is able to benchmark compensation. As a result, we use general compensation surveys and proxy data obtained from service providers, such as Equilar, Inc., to review the compensation levels for the named executive officers in a variety of manufacturing and service industries that are similar in size or have similar financial characteristics (the “Comparison Companies”). The information gleaned from these surveys and proxy data is used only as a reference point in the Committee’s determination and not as a specific benchmark or target for establishing our non-CEO NEOs’ compensation.
3
We believe that the disclosure in our 2007 Proxy Statement provides the material information concerning how the Committee uses general compensation information from Comparison Companies in making compensation decisions for the non-CEO NEOs. However, we intend to modify the heading of this item in future disclosure. Additionally, in light of the Staff’s comment, in future filings we will revise or supplement our disclosure consistent with the above and, to the extent applicable, clarify that, other than our CEO’s compensation, which is targeted around the median of the market for CEO compensation, we do not benchmark the elements or total compensation of our other NEOs to any specific percentile or range of a benchmark group.
Role of Executive Management in the Executive Compensation Process page 22
4.
We note your disclosure regarding the involvement of the Senior Vice President, Global Compensation and Benefits in discussing with the Committee significant proposals or topics impacting executive compensation. Please expand your disclosure relating to the role of the Senior Vice President, Global Compensation and Benefits in your compensation processes and that officer’s input during the crafting of compensation packages, including a clarification as to whether the officer makes specific recommendations regarding any of the elements of compensation for the named executive officers. Please also discuss the extent to which the named executive officers have the ability to make recommendations with respect to the proposals and topics discussed by the Senior Vice President, Global Compensation and Benefits and the Committee, including any recommendations
with respect to any aspect of the compensation elements awarded to the named executive officers.
Using the Company’s compensation strategy, and based on direction from the Committee (and the CEO, regarding compensation for the other NEOs), the SVP Global Compensation & Benefits formulates each element of the total compensation recommendations for all of the NEOs. The recommendation for the CEO’s compensation is not discussed or reviewed with the CEO prior to the Committee’s review. No NEOs are present when the SVP Global Compensation & Benefits and the Committee review the CEO compensation recommendation. The Committee may make adjustments to the recommendation before giving its approval.
The SVP Global Compensation & Benefits reviews the recommendation for each of the other NEOs with the CEO. The CEO may propose any adjustments he thinks appropriate prior to submission to the Committee. The Committee reviews and discusses all NEO compensation recommendations and may make further adjustments before giving its approval.
The CEO, CFO and Chief Administrative Officer may make suggestions to the SVP Global Compensation & Benefits regarding agenda topics for Committee meetings. However, the NEOs do not recommend or suggest individual compensation actions that benefit them personally.
4
As disclosed on page 22 of our Proxy Statement, the Committee also engages an independent compensation consultant (in 2006, Hewitt Associates) to review and assess the recommended compensation plans and total compensation for all of the NEOs. This consultant is present at the Committee’s December meeting and provides feedback to the Committee before the compensation proposals for the NEOs are reviewed and finally approved.
In future filings we will expand the related disclosure and, to the extent applicable, include the concepts above.
Performance Incentive Plan, page 23
5.
You disclose that the annual cash bonus targets for the named executive officers range from 75% to 100% of the base salary for each named executive officer. Please provide discussion and analysis as to the reasons why the targeted amounts of annual incentive compensation, as a percentage of base salary, vary among your named executive officers.
On page 24 of our 2007 Proxy Statement, we discuss the factors regarding the individual cash bonus target determinations for our NEOs. Specifically, the individual cash bonus targets are determined by looking at: (1) internal equity -- a subjective determination that takes into account the NEO’s role and scope of responsibility, experience, and skills; and (2) external equity -- referring to the total compensation opportunities reflected in various executive compensation surveys for individuals with similar responsibilities. In footnote 5 to the Summary Compensation Table, we identify each NEO’s cash incentive target under the Performance Incentive Plan, as well as the cash incentive compensation actually realized by the NEO, based on the Company’s 2006 performance.
We believe the disclosure in our 2007 Proxy Statement provides the material information required by Items 402(b)(1)(v) and 402(b)(2)(vii) of Regulation S-K. However, in light of the Staff’s comments, in future filings, we intend to clarify our disclosure in accordance with those Items and, to the extent applicable, consistent with the above.
6.
You disclose that employees are eligible for awards earned under the Performance Incentive Plan with 50% of the plan opportunity based on corporate financial performance. Please disclose the bases upon which you will allocate the remaining 50% of the award.
As described on pages 20 and 23 of our 2007 Proxy Statement, cash bonuses paid to NEOs under the Company’s 2006 Performance Incentive Plan are based 100% on the corporate financial performance metrics multiplied by the NEO’s bonus target.
However, in addition to our NEOs, over 3,000 other Company executives and employees are eligible for annual cash bonuses under the Performance Incentive Plan. For non-NEO executives and employees, these cash bonuses are based 50% on corporate performance metrics (adjusted Net Income) and 50% on the individual executive or employees’ related
5
business, unit and/or individual objectives. The criteria for the 50% of the bonus that is based on an executive or employee’s business, unit and/or individual objectives can vary across the Company, depending on the business, the location and individual. For example, the business objectives are commonly the business’s financial metrics, such as profitability or actual performance as compared to budget or revenues. Unit and individual objectives might also be critical project milestones that may change from year to year.
In light of the Staff’s comment, we will revise the disclosure in future filings to further clarify this distinction.
Performance Metrics, page 27
7.
Given that the elements of compensation under your Performance Incentive Plan and Corporate Performance Plan are based on the achievement of the targeted financial metrics described, please discuss your policies and decisions regarding the adjustment or recovery of awards or payments if the relevant performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment. Refer to Item 402(b)(2)(viii) of Regulation S-K.
Currently, Corning does not have a policy in place to recover performance awards or payments due to restatements or adjustments. However, we are evaluating the implementation of such a policy. In the event we do implement such a policy, we will provide in future filings the disclosure required by Item 402(b)(2)(viii) of Regulation S-K. If w