SEC Company Response from IDEXX LABORATORIES (IDXX) — Sep 21, 2007
IDEXX LABORATORIES INC /DE (IDXX) (CIK 0000874716)
Date: Sept. 21, 2007 · CIK: 0000874716 · Accession: 0000874716-07-000116
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-19271
Referenced dates: August 21, 2007
Letter
Division of Corporation Finance United States Securities and Exchange Commission IDEXX Laboratories, Inc. Definitive Proxy Statement filed March 29, 2007 File No. 000-19271
Re:
Dear Mr. Buchmiller:
Please see our responses below to your letter dated August 21, 2007. Each of our responses is preceded by a reproduction of the corresponding numbered Staff comments.
In connection with responding to your comments, we acknowledge that:
•
We, the Company, are responsible for the adequacy and accuracy of the disclosure in the filing;
•
Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
•
We, the Company, may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Compensation Discussion and Analysis, page 22
Comment:
1.
In an appropriate location in your Compensation Discussion and Analysis, please disclose whether the Compensation Committee can exercise discretion either to award compensation absent attainment of the relevant corporate or personal goals or objectives, or to reduce or increase the size of any award or payout. Refer to Item 402(b)(2)(vi) of Regulation S-K.
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 2
Response:
The size of the annual bonuses paid by the Company to its executive officers is determined in the discretion of the Compensation Committee of the Board of Directors, as described in the Company’s 2007 proxy statement under “Compensation Discussion and Analysis – Elements of Compensation – Annual Cash Bonus.” While the Compensation Committee considers many factors in determining the size of the bonus to be paid to each executive officer, including the performance of the Company relative to its budget, the size of each bonus award is not tied directly to the achievement of any particular financial or other goal. Since no particular award or payout is associated with the achievement of any particular performance goal, the determination of the Compensation Committee regarding award size does not involve the exercise of the kind of discretion described in Item 402(b)(2)(vi), which contemplates disclosure of the Compensation Committee’s discretion to deviate from the award that would otherwise result from the attainment or non-attainment of particular performance goals.
In future proxy statements, as applicable, beginning with the proxy statement for the Company’s 2008 annual meeting of shareholders, the Company will make clear that, while each executive officer has a target bonus potential associated with his or her position, the actual bonus paid is determined in the sole discretion of the Committee based on any factors it deems relevant. In this disclosure the Company will also state that the award determined by the Committee may be greater than, equal to, or less than the target bonus for each executive officer, and may be awarded (in whole or in part) or not awarded without regard to whether the Company achieves any particular performance goal.
Benchmarking, page 23
Comment:
2.
Given that you benchmark the compensation of your named executive officers, please expand your disclosure to address how you target each element of compensation against the comparator companies. Please specify how each element of compensation relates to the data you have analyzed from the comparator companies and include a discussion of where you target each element of compensation against the peer companies and where actual payments fell within the targeted parameters. To the extent actual compensation was outside a targeted percentile range, please explain why.
Response:
In determining the total value of annual executive compensation (base salary, bonus potential, and equity award value) the Compensation Committee takes into consideration survey data related to general industry and to a defined group of peer companies, which are listed in “Compensation Discussion and Analysis - Compensation Philosophy – Benchmarking” on page 24 of the 2007 proxy statement. In evaluating these survey results, the Committee considers primarily the relationship of total compensation paid to the Company’s executive officers to the
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 3
total compensation paid to similarly situated executives as represented in the survey data. The Company generally does not target any particular percentage of total compensation reflected in the survey data, although as described in the response to comment 4 below, the Committee did target the median total compensation of chief executive officers in the peer group when valuing the extraordinary stock option grant to the chief executive officer in 2007. Similarly, the Committee does not target individual elements of compensation paid to its executive officers to the individual elements paid to executives in the survey data. The relative value of each element of compensation paid to the Company’s executive officers is a function of the Company’s compensation philosophy, as described under “Compensation Discussion and Analysis – Compensation Philosophy.”
In future proxy statements, as applicable, beginning with the proxy statement for the Company’s 2008 annual meeting of shareholders, the Company will clarify how the Compensation Committee uses the survey data as described above.
Annual cash bonus, page 24
Comment:
3.
We note that the amount of the bonus actually paid to each executive officer depends on achieving overall corporate performance goals and individual annual performance goals. You have not, however, provided a quantitative or qualitative discussion of the goals to be achieved in order for named executive officers to earn their respective incentive compensation. Please disclose the specific corporate and individual objectives each named executive officer was required to achieve in order to receive the annual bonus granted. 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.
Response:
As discussed in the response to the Staff’s comment 1 above, the annual cash bonuses paid to the Company’s executive officers are determined in the discretion of the Compensation Committee. The Committee considers all factors that it deems relevant to evaluating an executive’s performance over the year. Among the factors considered by the Committee are the executive’s performance against the individual goals established by the executive and his or her supervisor at the beginning of the year and the Company’s performance against the budget approved by the Board of Directors at the beginning of the year. Neither individual goals nor the Company’s budget are established as a framework for determining the executive’s year-end
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 4
bonus. Rather, individual goals are part of the Company’s annual performance management process, which is applicable to all management employees of the Company, and the budget is prepared and approved as a part of the normal management of the Company. There is no pre-defined link between the achievement of individual goals or budget targets and the percentage of target bonus that the executive ultimately receives. The Committee may also consider other factors related to the Company’s performance during the year that are not reflected in either the budget or any executive’s annual performance goals, and indeed may not be foreseeable at the beginning the year. The reasons for the Company’s determination not to utilize a formulaic approach to the payment of annual bonuses are described in the second paragraph on page 25 of the 2007 proxy statement.
Because (i) executive officer’s annual goals are established for performance management purposes and not to set criteria for the payment of the target bonus or any percentage of the target bonus, (ii) budgets are established as part of the prudent financial management of the Company and not to set such criteria, (iii) the Compensation Committee considers achievement of these goals together with such other factors as it deems relevant in determining annual bonuses, and (iv) the Committee does not give any particular weight to any particular factor but rather makes a subjective bonus determination based on all factors, the Company does not believe that each executive’s annual performance goals or the budget targets are the kind of targets that are required to be disclosed under Item 402(b)(2) of Regulation S-K.
In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, the Company will provide disclosure clarifying that the factors considered by the Compensation Committee include performance against goals established for performance management purposes and a budget established for financial management purposes, and that such goals are not linked to the payment of any particular percentage of annual bonus target. The disclosure will clarify that the annual bonus awarded by the Committee is a completely subjective determination based on all factors deemed relevant by the Committee.
Equity Awards, page 25
Comment:
4.
You disclose that the target value of the equity awards is intended to give effect to your philosophy that equity awards should have the potential to raise an officer’s total compensation above the median of the peer group if the company performs better than its comparable companies. Please indicate what metrics the Compensation Committee utilizes in assessing whether your company has performed better than the relevant peer companies. Also discuss and analyze how the relative performance of your company against the peer group resulted in the granting of equity awards that on average were 109% of the target amount.
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 5
Response:
The Company does not set target equity award levels, or grant equity awards, based upon the performance of the Company relative to peer group companies, and therefore does not track any metrics relating to comparative performance. The Company’s philosophy is that equity awards should be of a size such that if the Company’s share price appreciation is materially greater than that of the peer companies, then the value actually derived over time by the recipient of the award (as opposed to the Black-Scholes award value at the time of the award) should permit the recipient to realize total compensation over the longer term that is above the median for the peer group. However, the Company does not have any formula for targeting the size of equity awards to give effect to this philosophy, nor does the Company track any metrics that permit it to determine in hindsight whether the Company’s share price has in fact out-performed the peer group and whether executive officers have in fact realized total compensation above the median as a result of the value actually derived from equity awards.
In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, to the extent this philosophy continues to be a relevant factor in determining equity awards, the Company will clarify in its disclosure about this philosophy that equity award grants are not based on any metrics related to the Company’s performance relative to the performance of companies within the peer group.
Comment:
5.
You disclose that the “size of annual dollar award value is a subjective determination based on the anticipated contribution of the executive officer to the long-term value of the company.” Please clarify the factors the Compensation Committee took into consideration in making these awards and how the Compensation Committee used those factors in setting the actual amounts of the award values.
Response:
In setting actual equity award values, the Committee considers the executive officer’s job scope relative to other executive officers, the executive officer’s long-term leadership potential, the size of prior awards to the executive officer and the value already derived from those awards, and internal pay equity considerations. In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, the Company will provide additional disclosure discussing the specific factors, including where relevant those described in the preceding sentence, considered by the Compensation Committee in determining the size of the annual equity award grants made to executive officers.
Comment:
6.
Discuss how the determination is made as to when your equity awards are granted. See Item 402(b)(2)(iv) of Regulation S-K.
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 6
Response:
The Company discloses its practices regarding the timing of equity award grants in the second to last paragraph on page 23 of the 2007 proxy statement. The timing of equity award grants is determined by an equity award grant policy that was adopted by the Board of Directors. This policy provides for fixed award dates that are, to the extent possible, tied to Compensation Committee meetings and occur outside of the quarterly blackout periods under the Company’s trading policies during which officers, directors, and certain other employees are precluded from trading Company shares. Most equity awards, including all annual awards to executive officers, are made on February 14 of each year, which shortly follows both the February Compensation Committee meeting at which prior year bonuses and current year salary determinations are made, and the Company’s earnings announcement for the fourth quarter of the preceding year, which generally occurs in the last week of January.
In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, the Company will enhance this disclosure to provide further details regarding this policy.
Change in Control Agreements, page 26
Comment:
7.
We note from the last bullet point that your executives would be required to enter into new non-compete agreements as a condition of receiving compensation and benefits under the change in control agreements. As required by Item 402(j)(4) of Regulation S-K, please disclose the contemplated duration of such non-compete agreements and provisions regarding waiver of breach of such agreements.
Response:
The duration of the referenced non-compete obligation would be two years and there are no provisio
Show Raw Text
CORRESP
1
filename1.htm
September 21, 2007
Mr. Tim Buchmiller
Senior Attorney
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
IDEXX Laboratories, Inc.
Definitive Proxy Statement filed March 29, 2007
File No. 000-19271
Dear Mr. Buchmiller:
Please see our responses below to your letter dated August 21, 2007. Each of our responses is preceded by a reproduction of the corresponding numbered Staff comments.
In connection with responding to your comments, we acknowledge that:
•
We, the Company, are responsible for the adequacy and accuracy of the disclosure in the filing;
•
Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
•
We, the Company, may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Compensation Discussion and Analysis, page 22
Comment:
1.
In an appropriate location in your Compensation Discussion and Analysis, please disclose whether the Compensation Committee can exercise discretion either to award compensation absent attainment of the relevant corporate or personal goals or objectives, or to reduce or increase the size of any award or payout. Refer to Item 402(b)(2)(vi) of Regulation S-K.
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 2
Response:
The size of the annual bonuses paid by the Company to its executive officers is determined in the discretion of the Compensation Committee of the Board of Directors, as described in the Company’s 2007 proxy statement under “Compensation Discussion and Analysis – Elements of Compensation – Annual Cash Bonus.” While the Compensation Committee considers many factors in determining the size of the bonus to be paid to each executive officer, including the performance of the Company relative to its budget, the size of each bonus award is not tied directly to the achievement of any particular financial or other goal. Since no particular award or payout is associated with the achievement of any particular performance goal, the determination of the Compensation Committee regarding award size does not involve the exercise of the kind of discretion described in Item
402(b)(2)(vi), which contemplates disclosure of the Compensation Committee’s discretion to deviate from the award that would otherwise result from the attainment or non-attainment of particular performance goals.
In future proxy statements, as applicable, beginning with the proxy statement for the Company’s 2008 annual meeting of shareholders, the Company will make clear that, while each executive officer has a target bonus potential associated with his or her position, the actual bonus paid is determined in the sole discretion of the Committee based on any factors it deems relevant. In this disclosure the Company will also state that the award determined by the Committee may be greater than, equal to, or less than the target bonus for each executive officer, and may be awarded (in whole or in part) or not awarded without regard to whether the Company achieves any particular performance goal.
Benchmarking, page 23
Comment:
2.
Given that you benchmark the compensation of your named executive officers, please expand your disclosure to address how you target each element of compensation against the comparator companies. Please specify how each element of compensation relates to the data you have analyzed from the comparator companies and include a discussion of where you target each element of compensation against the peer companies and where actual payments fell within the targeted parameters. To the extent actual compensation was outside a targeted percentile range, please explain why.
Response:
In determining the total value of annual executive compensation (base salary, bonus potential, and equity award value) the Compensation Committee takes into consideration survey data related to general industry and to a defined group of peer companies, which are listed in “Compensation Discussion and Analysis - Compensation Philosophy – Benchmarking” on page 24 of the 2007 proxy statement. In evaluating these survey results, the Committee considers primarily the relationship of total compensation paid to the Company’s executive officers to the
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 3
total compensation paid to similarly situated executives as represented in the survey data. The Company generally does not target any particular percentage of total compensation reflected in the survey data, although as described in the response to comment 4 below, the Committee did target the median total compensation of chief executive officers in the peer group when valuing the extraordinary stock option grant to the chief executive officer in 2007. Similarly, the Committee does not target individual elements of compensation paid to its executive officers to the individual elements paid to executives in the survey data. The relative value of each element of compensation paid to the Company’s executive officers is a function of the Company’s compensation philosophy, as described under “Compensation Discussion and Analysis – Compensation Philosophy.”
In future proxy statements, as applicable, beginning with the proxy statement for the Company’s 2008 annual meeting of shareholders, the Company will clarify how the Compensation Committee uses the survey data as described above.
Annual cash bonus, page 24
Comment:
3.
We note that the amount of the bonus actually paid to each executive officer depends on achieving overall corporate performance goals and individual annual performance goals. You have not, however, provided a quantitative or qualitative discussion of the goals to be achieved in order for named executive officers to earn their respective incentive compensation. Please disclose the specific corporate and individual objectives each named executive officer was required to achieve in order to receive the annual bonus granted. 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.
Response:
As discussed in the response to the Staff’s comment 1 above, the annual cash bonuses paid to the Company’s executive officers are determined in the discretion of the Compensation Committee. The Committee considers all factors that it deems relevant to evaluating an executive’s performance over the year. Among the factors considered by the Committee are the executive’s performance against the individual goals established by the executive and his or her supervisor at the beginning of the year and the Company’s performance against the budget approved by the Board of Directors at the beginning of the year. Neither individual goals nor the Company’s budget are established as a framework for determining the executive’s year-end
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 4
bonus. Rather, individual goals are part of the Company’s annual performance management process, which is applicable to all management employees of the Company, and the budget is prepared and approved as a part of the normal management of the Company. There is no pre-defined link between the achievement of individual goals or budget targets and the percentage of target bonus that the executive ultimately receives. The Committee may also consider other factors related to the Company’s performance during the year that are not reflected in either the budget or any executive’s annual performance goals, and indeed may not be foreseeable at the beginning the year. The reasons for the Company’s determination not to utilize a formulaic approach to the payment of annual bonuses are described in the second paragraph on page 25 of the 2007 proxy statement.
Because (i) executive officer’s annual goals are established for performance management purposes and not to set criteria for the payment of the target bonus or any percentage of the target bonus, (ii) budgets are established as part of the prudent financial management of the Company and not to set such criteria, (iii) the Compensation Committee considers achievement of these goals together with such other factors as it deems relevant in determining annual bonuses, and (iv) the Committee does not give any particular weight to any particular factor but rather makes a subjective bonus determination based on all factors, the Company does not believe that each executive’s annual performance goals or the budget targets are the kind of targets that are required to be disclosed under Item 402(b)(2) of Regulation S-K.
In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, the Company will provide disclosure clarifying that the factors considered by the Compensation Committee include performance against goals established for performance management purposes and a budget established for financial management purposes, and that such goals are not linked to the payment of any particular percentage of annual bonus target. The disclosure will clarify that the annual bonus awarded by the Committee is a completely subjective determination based on all factors deemed relevant by the Committee.
Equity Awards, page 25
Comment:
4.
You disclose that the target value of the equity awards is intended to give effect to your philosophy that equity awards should have the potential to raise an officer’s total compensation above the median of the peer group if the company performs better than its comparable companies. Please indicate what metrics the Compensation Committee utilizes in assessing whether your company has performed better than the relevant peer companies. Also discuss and analyze how the relative performance of your company against the peer group resulted in the granting of equity awards that on average were 109% of the target amount.
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 5
Response:
The Company does not set target equity award levels, or grant equity awards, based upon the performance of the Company relative to peer group companies, and therefore does not track any metrics relating to comparative performance. The Company’s philosophy is that equity awards should be of a size such that if the Company’s share price appreciation is materially greater than that of the peer companies, then the value actually derived over time by the recipient of the award (as opposed to the Black-Scholes award value at the time of the award) should permit the recipient to realize total compensation over the longer term that is above the median for the peer group. However, the Company does not have any formula for targeting the size of equity awards to give effect to this philosophy, nor does the Company track any metrics that permit it to determine in hindsight whether the
Company’s share price has in fact out-performed the peer group and whether executive officers have in fact realized total compensation above the median as a result of the value actually derived from equity awards.
In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, to the extent this philosophy continues to be a relevant factor in determining equity awards, the Company will clarify in its disclosure about this philosophy that equity award grants are not based on any metrics related to the Company’s performance relative to the performance of companies within the peer group.
Comment:
5.
You disclose that the “size of annual dollar award value is a subjective determination based on the anticipated contribution of the executive officer to the long-term value of the company.” Please clarify the factors the Compensation Committee took into consideration in making these awards and how the Compensation Committee used those factors in setting the actual amounts of the award values.
Response:
In setting actual equity award values, the Committee considers the executive officer’s job scope relative to other executive officers, the executive officer’s long-term leadership potential, the size of prior awards to the executive officer and the value already derived from those awards, and internal pay equity considerations. In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, the Company will provide additional disclosure discussing the specific factors, including where relevant those described in the preceding sentence, considered by the Compensation Committee in determining the size of the annual equity award grants made to executive officers.
Comment:
6.
Discuss how the determination is made as to when your equity awards are granted. See Item 402(b)(2)(iv) of Regulation S-K.
Mr. Tim Buchmiller
United States Securities and Exchange Commission
September 21, 2007
Page 6
Response:
The Company discloses its practices regarding the timing of equity award grants in the second to last paragraph on page 23 of the 2007 proxy statement. The timing of equity award grants is determined by an equity award grant policy that was adopted by the Board of Directors. This policy provides for fixed award dates that are, to the extent possible, tied to Compensation Committee meetings and occur outside of the quarterly blackout periods under the Company’s trading policies during which officers, directors, and certain other employees are precluded from trading Company shares. Most equity awards, including all annual awards to executive officers, are made on February 14 of each year, which shortly follows both the February Compensation Committee meeting at which prior year bonuses and current year salary determinations are made, and the Company’s earnings announcement for the
fourth quarter of the preceding year, which generally occurs in the last week of January.
In future proxy statements, as applicable, beginning with the proxy statement for the 2008 annual meeting of shareholders, the Company will enhance this disclosure to provide further details regarding this policy.
Change in Control Agreements, page 26
Comment:
7.
We note from the last bullet point that your executives would be required to enter into new non-compete agreements as a condition of receiving compensation and benefits under the change in control agreements. As required by Item 402(j)(4) of Regulation S-K, please disclose the contemplated duration of such non-compete agreements and provisions regarding waiver of breach of such agreements.
Response:
The duration of the referenced non-compete obligation would be two years and there are no provisio