def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Section 240.14a-12
WATERS
CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
April 2,
2006
Dear Stockholder:
On behalf of the Board of Directors of Waters Corporation
(Waters or the Company), I cordially
invite you to attend the Annual Meeting of Stockholders (the
Meeting) of the Company to be held at Waters
Corporation, 34 Maple Street, Milford, Massachusetts 01757 on
May 11, 2006 at 11:00 a.m., local time.
The notice of Meeting, Proxy Statement and proxy card from
Waters are enclosed. You may also read the notice of Meeting and
the Proxy Statement on the Internet at
http://www.waters.com/stockholder.
We encourage you to conserve natural resources, as well as
reduce printing and mailing costs, by signing up for electronic
delivery of Waters stockholder communications. For more
information, see Electronic Delivery of Waters Stockholder
Communications under the table of contents.
The matters scheduled to be considered at the Meeting are
(i) to elect directors to serve for the ensuing year and
until their successors are elected, (ii) to ratify the
selection of PricewaterhouseCoopers LLP as the Companys
independent registered public accounting firm for the fiscal
year ending December 31, 2006 and (iii) to consider
and act upon any other matters which may properly come before
the Meeting or any adjournment thereof. These matters are more
fully explained in the Proxy Statement which you are encouraged
to read in its entirety.
The Companys Board of Directors values and encourages
stockholder participation at the Meeting. It is important that
your shares be represented, whether or not you plan to attend
the Meeting. Please take a moment to sign, date and return your
proxy card in the envelope provided even if you plan to attend
the Meeting.
We hope you will be able to attend the Meeting.
Sincerely,
Douglas A. Berthiaume
Chairman, President and
Chief Executive Officer
WATERS
CORPORATION
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders
(the Meeting) of Waters Corporation
(Waters or the Company) will be held at
Waters Corporation, 34 Maple Street, Milford, Massachusetts
01757 on May 11, 2006 at 11:00 a.m., local time, for
the following purposes:
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1.
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To elect directors to serve for the ensuing year and until their
successors are elected;
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2.
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To ratify the selection of PricewaterhouseCoopers LLP as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2006;
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To consider and act upon any other matters which may properly
come before the Meeting or any adjournment thereof.
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In accordance with the provisions of the Companys bylaws,
the Companys Board of Directors has fixed the close of
business on March 15, 2006 as the record date for the
determination of the holders of Common Stock entitled to notice
of and to vote at the Meeting.
By order of the Board of Directors
Mark T. Beaudouin
Vice President
General Counsel and Secretary
Milford, Massachusetts
April 2, 2006
TABLE OF
CONTENTS
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Exhibit A
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ELECTRONIC
DELIVERY OF WATERS STOCKHOLDER COMMUNICATIONS
We encourage you to conserve natural resources, as well as
reduce printing and mailing costs, by signing up for
electronic delivery of Waters stockholder communications.
With electronic delivery, you will receive documents such as the
Annual Report and the Proxy Statement as soon as they are
available, and you can easily submit your stockholder votes
online. Electronic delivery can also help reduce the number of
bulky documents in your personal files and eliminate duplicate
mailings. To sign up for electronic delivery:
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If you are a registered holder (you hold your Waters shares in
your own name through Waters transfer agent, The Bank of
New York, or you have stock certificates), visit
http://www.stockbny.com to enroll and vote your
shares online.
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If you are a beneficial holder (your shares are held by a
brokerage firm, a bank or a trustee), visit
http://www.icsdelivery.com to enroll for future
electronic delivery of shareholder information. Please have your
12-digit
control number, which you will find on your Voting
Instruction Form, and follow the instructions provided to
enroll.
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Your electronic delivery enrollment will be effective until
cancelled. If you have questions about electronic delivery
please email Waters Corporation at
waters_proxy@waters.com.
VOTING
To ensure that your vote is recorded promptly, please vote as
soon as possible, even if you plan to attend the Annual Meeting
in person. Stockholders have three options for submitting their
vote: (1) via the Internet, (2) by phone or
(3) by mail, using the enclosed paper proxy card. If you
have Internet access, we encourage you to record your vote on
the Internet. It is convenient for you, and it saves the
Company significant postage and processing costs. In addition,
when you vote via the Internet or by phone prior to the Meeting
date, your vote is recorded immediately and there is no risk
that postal delays will cause your vote to arrive late and
therefore not be counted. Refer to your proxy card, or the email
you received for electronic delivery of the Proxy Statement, for
further instruction on voting.
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WATERS
CORPORATION
34 Maple Street
Milford, Massachusetts 01757
PROXY
STATEMENT
Annual Meeting of Stockholders
May 11, 2006, 11:00 a.m.
This Proxy Statement is being furnished by the Board of
Directors (the Board) of Waters Corporation
(Waters or the Company), in connection
with the Boards solicitation of proxies (each a
Proxy and, collectively, Proxies), for
use at the 2006 Annual Meeting of Stockholders (the
Meeting) to be held on May 11, 2006 at
11:00 a.m. at the Companys headquarters located at 34
Maple Street, Milford, Massachusetts 01757. Solicitation of
Proxies may be made through officers and regular employees of
the Company by telephone or by oral communications with
stockholders following the original solicitation period. No
additional compensation will be paid to such officers and
regular employees for Proxy solicitation. The Altman Group, Inc.
has been hired by the Company to do a broker solicitation for a
fee of $5,000 plus reasonable
out-of-pocket
expenses. Expenses incurred in connection with the solicitation
of Proxies will be borne by the Company.
VOTING
MATTERS
The representation in person or by proxy of a majority of the
outstanding shares of common stock of the Company, par value
$.01 per share (the Common Stock), entitled to
vote at the Meeting is necessary to provide a quorum for the
transaction of business at the Meeting. Shares can only be voted
if a stockholder is present in person or is represented by a
properly signed Proxy. Each stockholders vote is very
important. Whether or not you plan to attend the Meeting in
person, please sign and promptly return the enclosed Proxy card,
which requires no postage if mailed in the United States. All
signed and returned Proxies will be counted towards establishing
a quorum for the Meeting, regardless of how the shares are voted.
Shares represented by Proxy will be voted in accordance with
your instructions. You may specify how you want your shares to
be voted by marking the appropriate box on the Proxy card. If
your Proxy card is signed and returned without specifying how
you want your shares to be voted, your shares will be voted in
favor of the proposals made by the Board, and as the individuals
named as Proxy holders on the Proxy deem advisable on all other
matters as may properly come before the Meeting.
Any stockholder returning the enclosed Proxy has the power to
revoke such Proxy prior to its exercise either by voting by
ballot at the Meeting, by executing a later dated Proxy or by
delivering a signed written notice of the revocation to the
office of the Secretary of the Company before the Meeting
begins. The Proxy will be voted at the Meeting if the signer of
the Proxy was a stockholder of record on March 15, 2006
(the Record Date).
Representatives of the Companys independent registered
public accounting firm, PricewaterhouseCoopers LLP, are expected
to be present at the Meeting. They will have the opportunity to
make statements if they desire to do so and will be available to
respond to appropriate questions.
As of the Record Date, there were 103,997,666 shares of
Common Stock outstanding and entitled to vote at the Meeting.
Each outstanding share of Common Stock is entitled to one vote.
This Proxy Statement is first being sent to the stockholders on
or about April 2, 2006. A list of the stockholders entitled
to vote at the Meeting will be available for inspection at the
Meeting for proper purposes relating to the Meeting.
MATTERS
TO BE ACTED UPON
PROPOSAL 1. ELECTION
OF DIRECTORS
The Board recommends that the stockholders vote FOR each
nominee for Director set forth below. Nine Directors are to be
elected at the Meeting, each to hold office until his or her
successor is elected and qualified or until his or her earlier
resignation, death or removal. Two new nominees, Christopher A.
Kuebler and JoAnn A. Reed
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were nominated by the Boards Nominating and Corporate
Governance Committee and approved by the full Board on
February 28, 2006, and are listed below and on the proxy
ballot for election as Directors. Each of the other nominees
listed below is currently a Director of the Company. It is
intended that the Proxies in the form enclosed with this Proxy
Statement will be voted for the nominees set forth below unless
stockholders specify to the contrary in their Proxies or
specifically abstain from voting on this matter.
The following information pertains to the nominees, their
principal occupations for the preceding five-year period,
certain directorships and their ages as of April 2, 2006.
Douglas A. Berthiaume, 57, has served as Chairman of the Board
since February 1996 and has served as President, Chief Executive
Officer and a Director of the Company since August 1994 (except
from January 2002 to March 2003, during which he did not serve
as President). From 1990 to 1994, Mr. Berthiaume served as
President of the Waters Chromatography Division of Millipore
Corporation, the predecessor business of the Company, which was
purchased in 1994. Mr. Berthiaume is the Chairman of the
Childrens Hospital Trust Board, and a Trustee of the
Childrens Hospital Medical Center, The University of
Massachusetts Amherst Foundation, and a Director of Genzyme
Corporation.
Joshua Bekenstein, 47, has served as a Director of the Company
since August 1994. He is a Managing Director of Bain Capital,
LLC, where he has worked since its inception in 1984.
Mr. Bekenstein is a Director of Bombardier Recreational
Products, Inc., Toys R Us, Bright Horizons Family Solutions,
Inc., and Dollarama.
Michael J. Berendt, Ph.D., 57, has served as a Director of
the Company since March 1998. Dr. Berendt is a Managing
Director of Research Corporation Technologies, a position he
assumed in August 2004. From November 2000 to August 2004,
Dr. Berendt served as Managing Director, Life Sciences
Group, of AEA Investors, Inc. Prior to joining AEA,
Dr. Berendt was Senior Vice President of Research for the
Pharmaceutical Division of Bayer Corporation from November 1996
to November 2000. From January 1996 to November 1996,
Dr. Berendt served as Vice President, Institute for
Bone & Joint Disorders and Cancer, Bayer Corporation,
Pharmaceutical Division. From October 1993 to January 1996,
Dr. Berendt served as Director, Institute for
Bone & Joint Disorders and Cancer, Bayer Corporation,
Pharmaceutical Division. Prior to joining Bayer, Dr. Berendt
served as Group Director of Drug Discovery at Pfizer, Inc., and
was responsible for immunology, pulmonary, inflammation and
antibiotic research. Dr. Berendt has served as a member of
the Board of Directors of Onyx Pharmaceuticals, Inc. and Myriad
Genetics, Inc.
Edward Conard, 49, has served as a Director of the Company since
August 1994. Mr. Conard has been a Managing Director of
Bain Capital, LLC since March 1993. Mr. Conard was
previously a Director of Wasserstein Perella and Company, an
investment banking firm that specializes in mergers and
acquisitions, and a Vice President of Bain & Company
heading up the firms operations practice area.
Mr. Conard is a Director of Innophos, Inc., Unisource
Worldwide, Inc. and Broder Brothers.
Laurie H. Glimcher, M.D., 54, has served as a Director of
the Company since January 1998. Dr. Glimcher has been Irene
Heinz Given Professor of Immunology at the Harvard School of
Public Health and Professor of Medicine at Harvard Medical
School since 1991. Dr. Glimcher is a Director of
Bristol-Myers Squibb Company. She is a Fellow of the American
Academy of Arts and Sciences and a Member of the National
Academy of Sciences and the Institutes of Medicine of the
National Academy of Sciences.
Christopher A. Kuebler, 52, was nominated to serve as a Director
of the Company on February 28, 2006. Mr. Kuebler
served as Chairman and CEO of Covance Inc., and its precursor
companies from November 1994 to December 2004. He served as
Chairman during 2005. Prior to joining Covance, Mr. Kuebler
spent nearly 20 years in the pharmaceutical industry, at
Abbott Laboratories, Squibb Inc. and Monsanto Health Care.
Mr. Kuebler is currently a Director of Nektar Therapeutics
and The Ocean Conservancy.
William J. Miller, 60, has served as a Director of the Company
since January 1998. Mr. Miller is an independent investor
and consultant. From April 1996 to November 1999,
Mr. Miller served as Chief Executive Officer and Chairman
of the Board of Directors of Avid Corporation, where from
September 1996 to January 1999 he served as President. From
March 1992 to September 1995, Mr. Miller served as Chief
Executive Officer of Quantum Corporation. From May 1992 to
September 1995, Mr. Miller served as a member of the Board
of Directors of Quantum Corporation and from September 1993 to
August 1995, he served as Chairman of the Board of
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Directors. From 1981 to March 1992, he served in various
positions at Control Data Corporation, most recently as
Executive Vice President and President, Information Services.
Mr. Miller is a Director of Nvidia Corporation, Viewsonic
Corporation and Digimarc Corporation.
JoAnn A. Reed, 50, was nominated to serve as a Director of the
Company on February 28, 2006. Ms. Reed is currently
Senior Vice President and Chief Financial Officer of Medco
Health Solutions, Inc. She joined Medco Containment Services,
Inc. in 1988. Her prior experience includes CBS, Inc.,
Aetna/American Re-insurance Co., Standard and Poors, and
Unisys/Timeplex. She is a nominee to the Board of Trustees of
St. Marys College of Notre Dame.
Thomas P. Salice, 46, has served as a Director of the Company
since July 1994. Mr. Salice is a Managing Member of SFW
Capital Partners, LLC, a position he assumed in January 2005.
From June 1989 to December 2004 Mr. Salice served in a
variety of capacities with AEA Investors, Inc. including
Managing Director, President and Chief Executive Officer and
most recently as Vice-Chairman from October 2002 through 2004.
Mr. Salice is a Director of Agere Systems, Inc., and
Mettler Toledo International, Inc. and is a
Trustee of Fordham University.
Required
Vote: Recommendation of the Board of Directors
With respect to the election of Directors of the Company, the
affirmative vote of a plurality of shares present at the Meeting
in person or represented by Proxy, and entitled to vote on the
matter, is necessary for the election of each of the nominees
for Director listed above (i.e. the nominees receiving the
greatest number of votes cast with respect to such shares will
be elected). Shares for which authority to vote for the election
of a nominee is withheld (so-called abstentions) will be counted
as present for the purpose of determining whether a quorum is
present but not be treated as shares voted for any nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH
NOMINEE FOR DIRECTOR SET FORTH ABOVE.
PROPOSAL 2. RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee of the Board has selected
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, to audit the books, records and accounts of the
Company for the fiscal year ending December 31, 2006. In
accordance with a vote of the Audit Committee and as approved by
the Board, this selection is being presented to the stockholders
for ratification at the Meeting.
The affirmative vote of the majority of the shares present at
the Meeting in person or represented by Proxy, and entitled to
vote on the matter is required to approve the proposal.
Abstentions will be counted as present for the purpose of
determining whether a quorum is present and will be treated as
shares present and entitled to vote but will not be treated as
an affirmative vote in favor of the proposal and therefore will
have the effect of a vote against the proposal. Ratification by
stockholders is not required. If the proposal is not approved by
the stockholders, the Board does not plan to change the
appointment for fiscal 2006, but will consider the stockholder
vote in selecting an independent registered public accounting
firm for fiscal 2007.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS
LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
PROPOSAL 3. OTHER
BUSINESS
The Board does not know of any other business to be presented at
the Meeting. If any other matters properly come before the
Meeting, however, it is intended that the persons named in the
enclosed form of Proxy will vote said Proxy in accordance with
their best judgment.
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DIRECTORS
MEETINGS AND COMPENSATION
Directors
Meetings
The Board held five meetings during the year ended
December 31, 2005. The Board has determined that each
Director other than Mr. Berthiaume, the Companys
Chairman, President and Chief Executive Officer, has no material
relationship with the Company and otherwise qualifies as
independent under applicable listing standards of
the New York Stock Exchange. As of the date hereof
Mr. Berthiaume has certified that he is not aware of any
violation by the Company of the New York Stock Exchanges
Corporate Governance Listing Standards.
The Nominating and Corporate Governance Committee currently
consists of Dr. Michael J. Berendt (Chairman),
Dr. Laurie H. Glimcher, and Mr. Thomas P. Salice. The
responsibilities of the Nominating and Corporate Governance
Committee include the recruitment and recommendation of
candidates for the Board. The Nominating and Corporate
Governance Committee may, as it deems appropriate, give
consideration to any candidates suggested by the stockholders of
the Company. The Nominating and Corporate Governance Committee
also develops and recommends to the Board the Corporate
Governance Guidelines for the Company. The charter of the
Nominating and Corporate Governance Committee, which sets forth
all of the committees functions, is available at the
Companys website at http://www.waters.com
under the caption About Waters > Corporate
Information > Corporate Governance.
The Audit Committee, which currently consists of Mr. Thomas
P. Salice (Chairman), Mr. Edward Conard and
Mr. William J. Miller, oversees the activities of the
Companys independent registered public accounting firm.
The Audit Committee recommends the engagement of the independent
registered public accounting firm, and performs certain other
functions pursuant to its charter, a copy of which is attached
to this Proxy Statement as Exhibit A.
The Compensation and Management Development Committee, which
currently consists of Mr. William J. Miller (Chairman),
Mr. Joshua Bekenstein and Mr. Thomas P. Salice approves the
compensation of executives of the Company, makes recommendations
to the Board with respect to standards for setting compensation
levels and administers the Companys incentive plans,
consistent with its charter, which is available at the
Companys website at http://www.waters.com
under the caption About Waters >Corporate
Information > Corporate Governance.
During fiscal year 2005, each of the Companys Directors
attended in excess of 75% of the aggregate of the meetings of
the Board and the meetings of committees of the Board of which
such Director was a member. During fiscal year 2005, the
Compensation and Management Development Committee met three
times, the Audit Committee met eight times and the Nominating
and Corporate Governance Committee met two times. The Company
does not have a formal policy, but encourages Director
attendance at annual stockholder meetings. All Directors
attended the 2005 annual meeting.
Compensation
of Directors
Directors who are full-time employees of the Company receive no
additional compensation for serving on the Board or its
committees. For services performed during the year 2005, outside
Directors each received a retainer of $30,000 for the year,
$1,000 for each Board meeting attended, $1,000 for each
Nominating and Corporate Governance and Compensation and
Management Development Committee meeting attended, $2,500 for
each Audit Committee attended, an annual grant of 4,000
non-qualified stock options and 1,000 shares of restricted
stock. In addition, a committee chairman received an annual
retainer of $4,000. There are no increases in compensation for
outside Directors for 2006. All Directors are also reimbursed
for expenses incurred in connection with their attendance at
meetings.
CORPORATE
GOVERNANCE
During 2005, the Nominating and Corporate Governance Committee
of the Board again implemented a comprehensive evaluation of the
Board and each of its Committees. The evaluation, in the form of
a questionnaire, was circulated to all members of the Board and
Committees in September 2005. The Companys General Counsel
received all of the questionnaires, compiled the results and
circulated them to the Board and each Committee for discussion
and analysis in December, 2005. It is the intention of the
Nominating and Corporate Governance Committee to engage in this
process annually.
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Increasingly, shareholders of public companies are focusing on
the amount of equity ownership by directors and officers of the
companies in which they invest. In order to more closely align
the interests of the Companys shareholders with those of
management, during 2004 the Nominating and Corporate Governance
Committee considered and recommended to the Board minimum stock
ownership guidelines for members of the Board and the
Companys executive officers. These guidelines, which were
approved by the Board in February, 2004, provide for the
accumulation by the Chief Executive Officer of common stock of
the Company equal to five (5) times his base salary over a
three year period, which requirement would also apply to any
successor to the Chief Executive Officer. Additionally, members
of the Companys Executive Committee, Messrs. Caputo,
Ornell and Beaudouin and Ms. Rae, are each required to
accumulate common stock of the Company equal to two
(2) times their base salary over a five year period.
Pursuant to the guidelines, members of the Board are required to
accumulate a minimum of 5,000 shares of common stock of the
Company over a five (5) year period. For purposes of
accumulation of minimum stock ownership, grants of restricted
stock by the Company to such executives or to members of the
Board shall apply towards satisfaction of the guidelines.
Also, in 2004, the Nominating and Corporate Governance Committee
voted to recommend that the Board adopt a lead
director to preside over executive sessions of the Board
and to provide a focal point for and to facilitate communication
among outside Directors, Company management and Company
shareholders. In May, 2004, the Board accepted the
recommendation of the Nominating and Corporate Governance
Committee and elected Thomas P. Salice as the Companys
lead director. Mr. Salice will serve in such capacity for a
two year term at which point another of the members of the Board
will be elected to serve as lead director.
During 2005, the Nominating and Corporate Governance Committee
continued to review the Companys corporate governance
practices, Board committee charters and overall governance
structure in light of the Sarbanes-Oxley Act of 2002 and rules
and regulations adopted by the Securities and Exchange
Commission (SEC) and the New York Stock Exchange.
Previously, in September 2003, the Board approved a number of
new or revised corporate governance documents in order to ensure
the Companys continued compliance with applicable law,
rules and regulations. In particular, the Board adopted a
revised Audit Committee charter, which is attached hereto as
Exhibit A, and revised charters for its Compensation and
Management Development Committee and its Nominating and
Corporate Governance Committee. The Board also adopted Corporate
Governance Guidelines, a Code of Business Conduct and Ethics for
employees, executive officers and Directors and a
whistleblower policy regarding the treatment of
complaints on accounting, internal accounting controls and
auditing matters. All of these documents are available on the
Companys website at http://www.waters.com
under the caption About Waters >Corporate
Information > Corporate Governance and a copy of any of them
may be obtained, without charge, upon written request to the
Company,
c/o Secretary,
34 Maple Street, Milford, MA 01757.
The Nominating and Corporate Governance Committee is currently
comprised of three members:
Dr. Michael J. Berendt, Chairman; Thomas P.
Salice; and Dr. Laurie H. Glimcher. Each of the members of the
Nominating and Corporate Governance Committee is independent, as
such term is defined in the listing standards of the New York
Stock Exchange.
With respect to potential candidates to serve on the Board, the
Nominating and Corporate Governance Committee considers
suggestions from a variety of sources, including stockholders.
Any nominations of candidates, together with appropriate
biographical information, should be submitted to the Company,
c/o Secretary,
34 Maple Street, Milford, MA 01757.
The Nominating and Corporate Governance Committee believes that
candidates for service as a Director of the Company should meet
certain minimum qualifications. In selecting Directors, the
Board seeks individuals who are highly accomplished in their
respective fields, with superior educational and professional
credentials. Candidates should satisfy the independence
requirements of the SEC and the New York Stock Exchange and
should have demonstrated experience in organizational leadership
and management. Candidates for Director should also be of the
highest moral and ethical character and integrity, consistent
with the standards established by the Company.
The Company has a process for identifying and selecting
candidates for Board membership. Initially, the Chairman/CEO,
the Nominating and Corporate Governance Committee or other Board
members identifies a need to either expand the Board with a new
member possessing certain specific characteristics or to fill a
vacancy on the Board. A search is then undertaken by the
committee, working with recommendations and input from Board
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members, members of senior management, professional contacts,
external advisors, nominations by stockholders
and/or the
retention of a professional search firm if necessary. An initial
slate of candidates is identified that will satisfy the criteria
for Board membership and is presented to the committee for
review. Upon review by the Committee, a series of interviews of
one or more candidates is conducted by the Chairman/CEO and at
least one member of the committee. During this process, the full
Board is informally apprised of the status of the search and its
input is solicited.
Upon identification of a final candidate, the entire Nominating
and Corporate Governance Committee will meet to consider the
credentials of the candidate and thereafter, if approved,
submits the candidate for approval by the full Board.
During 2005, the Nominating and Corporate Governance Committee
undertook a search to identify new candidates for Board
membership. The Committee retained the firm SpencerStuart to
assist in the process of identifying potential candidates who
would meet the criteria for Board membership at set forth above.
The Committee received and reviewed the profiles of many
candidates during the process and, based on the quality of the
individuals identified, determined to expand its search and seek
to nominate two members to the Board rather than the one
originally contemplated. At a Special Meeting of the Nominating
and Corporate Governance Committee held on January 6, 2006,
the Committee unanimously voted to recommend that each of
Christopher A. Kuebler and JoAnn A. Reed be nominated to serve
as members of the Companys Board of Directors. This
recommendation was approved by the Companys full Board of
Directors at a regular meeting of the Board held on
February 28, 2006 and each of Mr. Kueblers and
Ms. Reeds names have been placed in nomination and
appear in this Proxy Statement as candidates for election as
directors of the Company by the Companys stockholders at
the Meeting on May 11, 2006.
With respect to communications with the Board on general
matters, stockholders may contact the Board or any of its
individual Directors by writing to Waters Corporation,
c/o Secretary,
34 Maple Street, Milford, Massachusetts 01757. Any such
communication should include the name and return address of the
stockholder, the specific Director or Directors to whom the
contact is addressed and the nature or subject matter of the
contact.
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Company has a qualified Audit Committee of the Board. During
2005, the Audit Committee, in conjunction with management and
the independent registered public accounting firm, focused on
the following items:
|
|
|
|
1.
|
Compliance with Section 404 of the Sarbanes-Oxley Act of
2002 and the adequacy of Company internal controls,
|
|
|
2.
|
The appropriateness of Company financial reporting and
accounting processes,
|
|
|
3.
|
The independence and performance of the Companys
independent registered public accounting firm,
|
|
|
4.
|
Company compliance with laws and regulations, and
|
|
|
5.
|
Review of the Companys independent registered public
accounting firms quality control procedures.
|
During 2005, the Company continued its comprehensive efforts
with respect to on-going compliance with the internal controls
requirements of Section 404 of the Sarbanes-Oxley Act of
2002. The initial phases of the project commenced during 2003
and required the allocation of unprecedented resources, both
human and financial, to scope, implement and review the
Section 404 compliance plan. This resulted in a report by
the Companys independent registered public accounting
firm, PricewaterhouseCoopers LLP, to the Audit Committee in
March, 2005. The reports results were a finding of no
material weaknesses in the Companys internal controls over
financial reporting as of December 31, 2004. In 2005, in
addition to PricewaterhouseCoopers LLP, the Company retained
Ernst & Young LLP, to assist in elements of
continuing compliance with the Act. The project itself was
managed primarily by the Companys Director of Internal
Audit in conjunction with the Companys Chief Financial
Officer and its Corporate Controller. During 2005, the Audit
Committee received regular and detailed briefings from Company
management as well as from the Companys independent
registered public accounting firm,
8
PricewaterhouseCoopers LLP, on the progress of the
Companys efforts to comply with Section 404. On
February 28, 2006 PricewaterhouseCoopers LLP reported
to the Audit Committee that it had identified no material
weaknesses in the Companys internal controls over
financial reporting as of December 31, 2005.
The Board has adopted a written charter setting out more
specifically the functions that the Audit Committee is to
perform. A copy of the charter is attached to this Proxy as
Exhibit A. The Audit Committee held eight meetings during
the fiscal year ended December 31, 2005. The Audit
Committee reviewed on a quarterly basis, with members of the
Companys management team, the Companys quarterly
financial results prior to the release of earnings and the
filing of the Companys quarterly financial statements with
the SEC., The Board has determined that each of the three
current members of the Audit Committee Mr.
Salice (Chairman), Mr. Conard and
Mr. Miller is an audit committee
financial expert as defined under applicable rules and
regulations of the SEC and is independent as defined
under the listing standards of the New York Stock Exchange and
applicable rules and regulations of the SEC. Company management
has primary responsibility for the financial statements and
reporting processes. The Companys independent registered
public accounting firm, PricewaterhouseCoopers LLP, audits the
annual financial statements and is responsible for expressing an
opinion on their conformity with generally accepted accounting
principles.
The Audit Committee has adopted the following guidelines
regarding the engagement of PricewaterhouseCoopers LLP to
perform non-audit services for the Company:
Company management will submit to the Audit Committee for
approval the list and budgeted fees of non-audit services that
it recommends the Committee engage its independent registered
public accounting firm to provide for the fiscal year. Company
management and the Companys independent registered public
accounting firm will each confirm to the Audit Committee that
each non-audit service on the list is permissible under all
applicable legal requirements. The Audit Committee will, in its
discretion, either approve or disapprove both the list of
permissible non-audit services and the budgeted fees for such
services. The Audit Committee will be informed routinely as to
the non-audit services actually provided by the Companys
independent registered public accounting firm pursuant to this
pre-approval process as well as new non-audit services
requesting approval.
To ensure prompt handling of unexpected matters, the Audit
Committee delegates to its Chairman the authority to amend or
modify the list of approved permissible non-audit services and
fees. The Chairman will report action taken to the Audit
Committee at the next Audit Committee meeting.
PricewaterhouseCoopers LLP must ensure that all audit and
non-audit services provided to the Company have been
pre-approved by the Audit Committee.
The Committee hereby reports for the fiscal year ended
December 31, 2005 that:
|
|
|
|
1.
|
It has reviewed and discussed the Companys audited
financial statements for the fiscal year ended December 31,
2005 with Company management,
|
|
|
2.
|
It has discussed with PricewaterhouseCoopers LLP those matters
required to be discussed by Statement on Auditing Standards
No. 61, Codification of Statement on Auditing Standards, AU
§380,
|
|
|
3.
|
It has received from PricewaterhouseCoopers LLP its written
disclosures and a letter required by Independence Standards
Board Standard No. 1, Independence Discussions with the
Audit Committee, and has discussed with PricewaterhouseCoopers
LLP its independence,
|
|
|
4.
|
It has considered whether, and determined that, the provision of
non-audit services to the Company by PricewaterhouseCoopers LLP
as set forth below, was compatible with maintaining auditor
independence, and
|
|
|
5.
|
It has reviewed and discussed with PricewaterhouseCoopers LLP
its internal quality control procedures, and any material issues
raised by the most recent internal quality control review, or
peer review, or by any inquiry or investigation by governmental
or professional authorities within the preceding five years.
|
9
Based on the items reported above, on February 28, 2006 the
Audit Committee recommended to the Board that the Companys
audited financial statements be included in the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2005 for filing with
the SEC. The recommendation was accepted by the Board on the
same date.
Mr. Thomas P. Salice Mr. Edward
Conard Mr. William J.Miller
Audit
Fees
The aggregate fees for the fiscal years ended December 31,
2005 and December 31, 2004 by the Companys principal
accounting firm, PricewaterhouseCoopers LLP, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
|
2004
|
|
|
Audit Fees
|
|
|
|
|
|
$
|
3,279,468
|
|
|
|
|
|
|
$
|
4,139,701
|
|
Audit Related Fees
|
|
|
|
|
|
$
|
110,039
|
|
|
|
|
|
|
$
|
123,094
|
|
Tax Related Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Compliance
|
|
$
|
369,489
|
|
|
|
|
|
|
$
|
393,461
|
|
|
|
|
|
Tax Planning
|
|
$
|
170,205
|
|
|
|
|
|
|
$
|
229,496
|
|
|
|
|
|
Total Tax Related Fees
|
|
|
|
|
|
$
|
539,694
|
|
|
|
|
|
|
$
|
622,957
|
|
All Other Fees
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
3,929,201
|
|
|
|
|
|
|
$
|
4,885,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees consists of fees for the audit of
the Companys financial statements, review of the interim
condensed consolidated financial statements included in
quarterly reports, assistance with review of documents filed
with the SEC, and services that are normally provided by
PricewaterhouseCoopers LLP in connection with statutory and
regulatory filings or engagements, and attest services, except
those not required by statute or regulation. In addition, 2005
includes $1,471,124, and 2004 includes $2,544,943 of Audit Fees
related to the internal control auditing requirements of
Section 404 of Sarbanes Oxley Act of 2002.
Audit Related Fees consists of fees for
assurance and related services that are reasonably related to
the performance of the audit or review of the Companys
consolidated financial statements and are not reported under
Audit Fees. These services include employee benefit
plan audits, advisory work on compliance with the Sarbanes-Oxley
Act of 2002 prior to the attestation, acquisition-related
services, attest services not required by statute or regulation,
and accounting consultations and reviews for various matters.
Tax Related Fees consists of fees for tax
compliance and planning services. Tax compliance includes fees
for professional services related to international tax
compliance and preparation. Tax planning consists primarily of
fees related to the impact of acquisitions and restructuring on
international subsidiaries.
All Other Fees consists of fees for all other
permissible services other than those reported above.
The Audit Committee approved 100% of the services listed under
the preceding captions Audit-Related Fees, Tax
Related Fees and All Other Fees. The Audit
Committees pre-approval policies and procedures are
described in its report set forth herein.
10
MANAGEMENT
COMPENSATION
Summary
Compensation Table
The following Summary Compensation Table discloses, for the
fiscal years indicated, individual compensation information for
Mr. Berthiaume and the five other most highly compensated
executive officers (collectively, the named
executives) who were serving as executive officers at the
end of fiscal year 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term
|
|
|
|
|
|
|
Annual Compensation
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
All Other
|
|
|
|
Fiscal
|
|
|
Salary
|
|
|
Bonus
|
|
|
Underlying
|
|
|
Compensation
|
|
Name and Principal
Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
Options (#)
|
|
|
($)
|
|
|
|
|
Douglas A. Berthiaume
|
|
|
2005
|
|
|
|
650,000
|
|
|
|
336,586
|
(2)
|
|
|
|
|
|
|
37,630
|
(5)
|
Chairman, President
and
|
|
|
2004
|
|
|
|
650,000
|
|
|
|
1,950,000
|
(3)
|
|
|
150,000
|
|
|
|
85,482
|
(5)
|
Chief Executive
Officer
|
|
|
2003
|
|
|
|
617,500
|
(1)
|
|
|
566,041
|
(4)
|
|
|
150,000
|
|
|
|
40,493
|
(5)
|
Arthur G. Caputo
|
|
|
2005
|
|
|
|
375,000
|
|
|
|
180,793
|
(2)
|
|
|
100,000
|
|
|
|
9,749
|
(5)
|
Executive Vice President
and
|
|
|
2004
|
|
|
|
330,000
|
|
|
|
866,250
|
(3)
|
|
|
125,000
|
|
|
|
8,518
|
(5)
|
President, Waters
Division
|
|
|
2003
|
|
|
|
309,500
|
(1)
|
|
|
206,331
|
(4)
|
|
|
100,000
|
|
|
|
10,269
|
(5)
|
Mark T. Beaudouin
|
|
|
2005
|
|
|
|
300,000
|
|
|
|
112,496
|
(2)
|
|
|
40,000
|
|
|
|
15,135
|
(5)
|
Vice President,
General
|
|
|
2004
|
|
|
|
280,000
|
|
|
|
525,000
|
(3)
|
|
|
50,000
|
|
|
|
23,565
|
(5)
|
Counsel and Secretary
|
|
|
2003
|
|
|
|
203,500
|
(1)(8)
|
|
|
201,332
|
(6)
|
|
|
100,000
|
(7)
|
|
|
748
|
(5)
|
John Ornell
|
|
|
2005
|
|
|
|
300,000
|
|
|
|
112,496
|
(2)
|
|
|
40,000
|
|
|
|
14,393
|
(5)
|
Vice President Finance
and
|
|
|
2004
|
|
|
|
275,000
|
|
|
|
515,625
|
(3)
|
|
|
50,000
|
|
|
|
25,279
|
(5)
|
Administration and
Chief
|
|
|
2003
|
|
|
|
244,500
|
(1)
|
|
|
159,998
|
(4)
|
|
|
50,000
|
|
|
|
13,944
|
(5)
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian K. Mazar
|
|
|
2005
|
|
|
|
113,300
|
(9)
|
|
|
51,598
|
(2)
|
|
|
|
|
|
|
6,200
|
(5)
|
Senior Vice President
|
|
|
2004
|
|
|
|
135,000
|
|
|
|
347,200
|
(3)
|
|
|
15,000
|
|
|
|
15,123
|
(5)
|
Human Resources
|
|
|
2003
|
|
|
|
132,231
|
(1)
|
|
|
116,875
|
(4)
|
|
|
40,000
|
|
|
|
8,121
|
(5)
|
Elizabeth B. Rae
|
|
|
2005
|
|
|
|
141,259
|
(10)
|
|
|
12,553
|
(2)
|
|
|
30,000
|
|
|
|
5,208
|
(5)
|
Vice President
|
|
|
2004
|
|
|
|
112,645
|
|
|
|
50,728
|
(3)
|
|
|
15,000
|
|
|
|
5,409
|
(5)
|
Human Resources
|
|
|
2003
|
|
|
|
108,461
|
|
|
|
34,848
|
(4)
|
|
|
15,000
|
|
|
|
4,728
|
(5)
|
|
|
|
(1) |
|
A financial planning benefit was eliminated in 2003 and a
one-time adjustment of $7,500 was made to
Mr. Berthiaumes base salary in 2003 and a $4,500
one-time adjustment was made to the base salary of each of Mr.
Beaudouin, Mr. Caputo, Mr. Mazar, and Mr. Ornell
in 2003. |
|
(2) |
|
Reflects bonus earned under the Companys Management
Incentive Plan in 2005 which was paid in 2006. |
|
(3) |
|
Reflects bonus earned under the Companys Management
Incentive Plan in 2004 which was paid in 2005. |
|
(4) |
|
Reflects bonus earned under the Companys Management
Incentive Plan in 2003 which was paid in 2004. |
|
(5) |
|
Reflects amounts contributed for the benefit of the named
executive in 2005, 2004, and 2003 (if applicable), respectively,
under the Waters 401(k) Restoration Plan and the Waters Employee
Investment Plan and for Group Term Life Insurance coverage in
excess of $50,000. |
|
(6) |
|
Mr. Beaudouins 2003 bonus includes $176,332 earned
under the Companys Management Incentive Plan and a
one-time new hire bonus in the amount of $25,000. |
|
(7) |
|
Mr. Beaudouins 2003 option grant reflects a new hire
grant and an annual grant. |
|
(8) |
|
Mr. Beaudouin joined the Company in April 2003. |
|
(9) |
|
Mr. Mazar resigned his position as Senior Vice President,
Human Resources on October 1, 2005. |
|
(10) |
|
Ms. Rae was appointed Vice President, Human Resources on
October 1, 2005. |
11
Option
Grants In Fiscal Year
The following table shows information regarding stock option
grants to the named executives in fiscal year 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value at
|
|
|
|
|
|
|
Assumed Annual Rates of
|
|
|
|
|
|
|
Stock Price Appreciation For
|
|
|
|
Individual Grants
|
|
|
10-year
Option Term
|
|
|
|
|
|
|
|
Number of
|
|
|
Percent of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Total Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Granted to
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Employees
|
|
|
Price
|
|
|
Expiration
|
|
|
|
|
|
|
|
Name
|
|
Granted (#)
|
|
|
in Fiscal Year
|
|
|
($/SH)
|
|
|
Date
|
|
|
5% ($)
|
|
|
10% ($)
|
|
|
|
|
Douglas A. Berthiaume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur G. Caputo
|
|
|
100,000
|
(1)
|
|
|
18.15
|
%
|
|
$
|
38.99
|
|
|
|
12/02/2015
|
|
|
$
|
2,452,060
|
|
|
$
|
6,214,002
|
|
Mark T. Beaudouin
|
|
|
40,000
|
(1)
|
|
|
7.26
|
%
|
|
$
|
38.99
|
|
|
|
12/02/2015
|
|
|
$
|
980,824
|
|
|
$
|
2,485,601
|
|
Brian Mazar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Ornell
|
|
|
40,000
|
(1)
|
|
|
7.26
|
%
|
|
$
|
38.99
|
|
|
|
12/02/2015
|
|
|
$
|
980,824
|
|
|
$
|
2,485,601
|
|
Elizabeth Rae
|
|
|
30,000
|
(1)
|
|
|
5.44
|
%
|
|
$
|
38.99
|
|
|
|
12/02/2015
|
|
|
$
|
735,618
|
|
|
$
|
1,864,201
|
|
|
|
|
(1) |
|
Option becomes exercisable with respect to 20% of the shares
subject to the option on each of December 2, 2006,
December 2, 2007, December 2, 2008, December 2,
2009 and December 2, 2010. |
Aggregated
Option Exercises, Holdings and Year End Values for Fiscal Year
2005
The following table shows information regarding (i) the
number of shares of Common Stock acquired upon exercise by the
named executives of stock options in 2005 and the value realized
thereby and (ii) the number and value of any unexercised
stock options held by such executives as of December 31,
2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
Value of Unexercised
|
|
|
Shares
|
|
|
|
|
|
Underlying Unexercised
|
|
|
In-the Money Options at
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
Options at FY-End
|
|
|
FY-End closing price of
$37.80
|
Name
|
|
Exercise (#)
|
|
|
($)
|
|
|
Exercisable/Unexercisable
|
|
|
Exercisable/Unexercisable
|
|
|
Douglas A. Berthiaume
|
|
|
|
|
|
|
|
|
|
|
984,000/240,000
|
|
|
|
$15,596,915/$557,700
|
|
Arthur G. Caputo
|
|
|
|
|
|
|
|
|
|
|
528,824/299,000
|
|
|
|
$7,478,941/$757,892
|
|
Mark T. Beaudouin
|
|
|
|
|
|
|
|
|
|
|
50,000/140,000
|
|
|
|
$448,602/$672,903
|
|
Brian Mazar
|
|
|
66,000
|
|
|
$
|
2,716,923
|
|
|
|
337,000/45,000
|
|
|
|
$4,727,412/$347,191
|
|
John Ornell
|
|
|
22,500
|
|
|
$
|
965,750
|
|
|
|
255,600/138,000
|
|
|
|
$2,776,898/$451,562
|
|
Elizabeth Rae
|
|
|
5,000
|
|
|
$
|
137,557
|
|
|
|
38,200/57,300
|
|
|
|
$315,658/$132,213
|
|
Waters
Corporation Retirement Plans
Substantially all full-time United States employees of Waters
participate in the Waters Corporation Retirement Plan (the
Retirement Plan), a defined benefit pension plan
intended to qualify under Section 401(a) of the Internal
Revenue Code (the Code). The Retirement Plan is a
cash balance plan whereby each participants benefit is
determined based on annual pay credits and interest credits made
to each participants notional account. In general, a
participant becomes vested under the Retirement Plan upon
completion of five years of service. The normal retirement age
under the plan is age 65.
Pay credits range from 4.0% to 9.5% of compensation, depending
on the participants amount of compensation and length of
service with the Company. Compensation refers to pension
eligible earnings of the participant (limited to $210,000 for
2005), which includes base pay, overtime, certain incentive
bonuses, commissions and pre-tax deferrals, but excludes special
items such as stock awards, moving expense reimbursements and
employer contributions to retirement plans. Interest credits are
based on the one year constant maturity Treasury Bill rate on
the first business day in November of the preceding plan year
plus 0.5%, subject to a 5.0% minimum and a 10.0% maximum rate.
12
The Company also maintains a non-qualified, supplemental plan
which provides benefits that would be paid by the Retirement
Plan except for limitations on pensionable pay and benefit
amounts currently imposed by the Code.
The aggregate estimated annual benefit payable from the
Retirement Plan and the Companys non-qualified,
supplemental retirement plan combined to Mr. Beaudouin,
Mr. Berthiaume, Mr. Caputo, Mr. Mazar,
Mr. Ornell and Ms. Rae upon normal retirement is
$49,000, $254,000, $152,000, $59,000, $117,000, and $47,000,
respectively. As of December 31, 2005, Mr. Beaudouin,
Mr. Berthiaume, Mr. Caputo, Mr. Mazar,
Mr. Ornell and Ms. Rae had approximately 2,
25, 28, 14, 15 and 9 years of credited service,
respectively, under the Retirement Plan.
The aggregate estimated annual normal retirement benefits are
based on actual 2005 eligible compensation, including bonus paid
in 2005. Future eligible compensation is assumed to equal the
January 2006 rate of pay and future interest credits are assumed
to be 5.0%.
Equity
Compensation Plan Information
The following table sets forth information as of
December 31, 2005 about shares of Common Stock outstanding
and available for issuance under the Waters 2003 Equity
Incentive Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
remaining available For
|
|
|
|
|
|
|
|
|
|
future issuance under
|
|
|
|
|
|
|
|
|
|
the Waters 2003
|
|
|
|
Number of securities to
|
|
|
Weighted-average
|
|
|
Equity Incentive Plan
|
|
|
|
be issued upon exercise
|
|
|
exercise price of
|
|
|
(excluding securities
|
|
|
|
of outstanding options,
|
|
|
outstanding options,
|
|
|
reflected
|
|
Plan category
|
|
warrants and rights
|
|
|
warrants and rights
|
|
|
in column (a))
|
|
|
|
|
Equity compensation plans
approved by security holders
|
|
|
10,982,131
|
|
|
$
|
35.47
|
|
|
|
6,031,552
|
|
Equity compensation plans not
approved by security holders
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10,982,131
|
|
|
$
|
35.47
|
|
|
|
6,031,552
|
|
Compensation
and Management Development Committee Interlocks and Insider
Participation
The Compensation and Management Development Committee currently
consists of Mr. Joshua Bekenstein, Mr. William J.
Miller (Chairman), and Mr. Thomas P. Salice. Prior to the
Companys initial public offering in 1995, Mr. Salice
also served as an officer of the Company.
COMPENSATION
AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT
The Compensation and Management Development Committee of the
Board is responsible for administering the compensation of
senior executives of the Company and is comprised of three
non-employee Directors, William J. Miller, Chairman, Joshua
Bekenstein and Thomas P. Salice, each of whom the Board has
determined is independent under applicable listing standards of
the New York Stock Exchange. As a consequence of Mr. Philip
Caldwells retirement as a member of the Board, in January,
2005 the Nominating and Corporate Governance Committee voted to
recommend to the full Board changes to the composition of the
committee, which recommendations were accepted by the Board at
its February, 2005 meeting. Therefore, effective as of
May 4, 2005, the date of the Meeting, the Compensation and
Management Development Committee is comprised of the following
members: William J. Miller, Chairman, Joshua Bekenstein and
Thomas P. Salice. From January 1, 2005 to May 4, 2005
the Compensation and Management Development Committee of the
Board was comprised of Mr. Thomas P. Salice, Chairman, Mr.
William J. Miller and Mr. Edward Conard.
Overview
and Objectives
The Compensation and Management Development Committees
compensation philosophy and the objectives of the Companys
executive compensation plans is to focus senior management on
achieving financial and operating objectives which provide
long-term stockholder value. The Companys executive
compensation plans are designed to align the interest of senior
management with those of the Companys stockholders.
Therefore, the
13
Companys executive compensation plans allocate a
significant portion of cash compensation to variable
performance-based compensation. It is also the intent of these
plans to attract, motivate and retain senior executives. The
Compensation and Management Development Committee utilizes the
services of an outside executive compensation consultant to
assist it in determining the Companys executive
compensation structure.
Elements
of Executive Compensation
There are three key elements of executive compensation: base
salary, senior management incentive bonus (annual
incentive), and long-term performance-based awards. Each
element addresses specific objectives of the plan and together
they meet the overall objectives of the executive compensation
plan. In reviewing these elements for senior executives, The
Compensation and Management Development Committee utilizes a
consistent methodology and process each year and reviews
competitive market data from three sources including survey data
from a nationally recognized consulting firm, data from a group
of thirteen peer companies (peer companies), and
data from a group of high technology companies with similar
revenue size and market capitalization characteristics as Waters
Corporation (high technology companies) .
Base
Salary
The base salaries for senior executives are reviewed annually by
the Compensation and Management Development Committee.
Individual salaries are based upon a combination of factors
including past individual performance and experience,
competitive salary levels and an individuals potential for
making significant contributions to future Company performance.
Base salaries for senior executives are important to attracting
and retaining senior executives and are set at or below median
levels relative to the market for comparable positions. Base
salary increases for senior executives for fiscal year 2005 were
determined by the Compensation and Management Development
Committee based on achievement of 2004 Company financial goals,
consideration of the competitive market base salary data for
comparable positions, and individual performance and
responsibility.
Annual
Incentive
The Management Incentive Plan is the annual incentive plan for
officers and other senior executives of the Company. The purpose
of the Management Incentive Plan is to provide added motivation
and incentive to senior executives to achieve annual operating
results based on operating budgets established at the beginning
of the fiscal year. This element of compensation is important in
meeting the objective of allocating a significant portion of
compensation to variable performance-based compensation.
The Compensation and Management Development Committee evaluates
the audited results of the Companys performance against
previously established performance targets in order to determine
the individual bonuses under the Management Incentive Plan. This
plan is designed to provide total cash compensation that is
competitive to slightly less than competitive relative to the
market for target performance, below competitive market
compensation for poor performance against targets, and
substantially above competitive market compensation in times of
excellent performance versus targets. In 2005, pursuant to the
Management Incentive Plan, the Compensation and Management
Development Committee established criteria and targets for the
payment of incentive compensation to executive officers based
upon achievement of earnings growth.
Long Term
Performance-Based Awards
Long-term equity based compensation awards are an important
component of senior executive compensation and the 2003 Equity
Incentive Plan has been designed to motivate senior executives
and other key employees to contribute to the long-term growth of
stockholder value and to align executives compensation
with the growth in Waters stock price. The importance of
ownership in Waters stock by the executive officers is further
emphasized through the ownership guidelines discussed in the
Corporate Governance section of this Proxy Statement.
In preparation for the adoption of FAS 123(R), the
Committee reviewed and evaluated in detail various long-term
incentive instruments with the independent compensation
consultant. Based on this analysis, the Committee determined
that for 2005, non-qualified stock options were the long-term
performance-based compensation instrument that was most
effective in meeting Waters objectives. Therefore, during fiscal
year 2005 non-qualified
14
stock options were granted to the Companys senior
executives and other key individuals under the 2003 Equity
Incentive Plan. Consistent with prior practice, these
non-qualified stock options were granted at fair market value on
the date approved by the Committee, will vest at 20% per
year for five years, and have a ten year term. The five year
vesting schedule supports both the long-term focus of this
element of compensation and Waters objective to retain senior
executives.
In determining the long-term performance incentive grant, The
Compensation and Management Development Committee reviews the
competitive practices of the peer companies and the high
technology companies. The Compensation and Management
Development Committee evaluates and authorizes all awards under
the Plan for all recommendations from the Companys Chief
Executive Officer.
Other
Compensation
The Company does not offer any perquisites for the exclusive
benefit of executive officers. Senior executives are eligible to
participate in other compensation plans that are generally
offered to other employees, such as the Companys savings
and investment plan, retirement plan, the employee stock
purchase plan, health and insurance plans. They are also
eligible to participate in supplemental employee retirement
plans that are available to employees who meet certain minimum
earnings eligibility criteria.
President
and Chief Executive Officer Compensation
Mr. Berthiaumes 2005 annual base salary was based on
the Compensation and Management Development Committees
evaluation of the Companys overall performance in 2004,
the salaries and compensation practices of a group of peer
companies, data on companies of comparable size from a
nationally recognized salary survey and a group of high
technology companies. After considering these factors, the
Compensation and Management Development Committee recommended an
increase to Mr. Berthiaumes annual base salary for
fiscal year 2005. Mr. Berthiaume declined the base salary
increase for 2005. The Compensation and Management Development
Committee used the same process to review Mr. Berthiaumes
salary at the end of fiscal year 2005 and recommended a base
salary increase for 2006. Mr. Berthiaume also declined the
recommended base salary increase for 2006.
Under the Management Incentive Plan, the Compensation and
Management Development Committee awarded Mr. Berthiaume a
bonus of $336,586 for fiscal year 2005. The criteria and targets
for payout under the Management Incentive Plan were
pre-established at the beginning of the fiscal year and were
based on the achievement of the Companys earnings goals.
The Compensation and Management Development Committee reviews
the equity grant practices of a peer group of companies, as well
as a group of high technology companies in determining
Mr. Berthiaumes stock option grant. During fiscal
year 2005, the Compensation and Management Development Committee
recommended a stock option grant for Mr. Berthiaume.
However Mr. Berthiaume declined the stock option grant.
Limit on
Deductible Compensation
The Compensation and Management Development Committee has
considered the application of Section 162(m) of the
Internal Revenue Code of 1986 to the Companys compensation
practices. Section 162(m) generally limits the tax
deduction available to public companies for annual compensation
paid to senior executives in excess of $1 million unless
the compensation qualifies as performance based
compensation. The Compensation and Management Development
Committee believe that payments under the Management Incentive
Plan and the stock incentive plans of the Company qualify as
performance based compensation. From time to
time, the Compensation and Management Development Committee will
reexamine the Companys compensation practices and the
effect of Section 162(m) and reserves the right to award
future compensation which would not comply with the
Section 162(m) requirements for non-deductibility if the
Compensation and Management Development Committee concluded that
this was in the Companys best interests to do so.
Mr. Joshua Bekenstein Mr. William J.
Miller Mr. Thomas P. Salice
15
STOCK
PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100
invested as of December 31, 2000 (the last day of public
trading of the Common Stock in fiscal year 2000) through
December 30, 2005 (the last day of public trading of the
Common Stock in fiscal year 2005) in the Common Stock of
the Company, the NYSE Market Index and the SIC Code 3826 Index.
The return of the indices is calculated assuming reinvestment of
dividends during the period presented. The Company has not paid
any dividends since its initial public offering. The stock price
performance shown on the graph below is not necessarily
indicative of future price performance.
COMPARISON
OF CUMULATIVE TOTAL RETURN SINCE
DECEMBER 31, 2000 AMONG WATERS CORPORATION,
NYSE MARKET INDEX AND SIC CODE 3826 LABORATORY
ANALYTICAL INSTRUMENTS
16
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding
beneficial ownership of Common Stock as of March 15, 2006
by each person or entity known to the Company who owns
beneficially five percent or more of the Common Stock, by each
named executive officer and Director nominee and all executive
officers and Director nominees as a group (December 31,
2005 in the case of 5% shareholders).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
Amount and Nature of
|
|
|
Outstanding
|
|
Name of Beneficial
Owner
|
|
Beneficial
Ownership(1)
|
|
|
Common Stock(1)
|
|
|
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
Fidelity
Investments Boston, Massachusetts
|
|
|
13,755,068
|
|
|
|
13.22
|
%
|
Aim Capital Management,
Inc. Houston, Texas
|
|
|
7,652,770
|
|
|
|
7.35
|
%
|
Directors and Executive
Officers
|
|
|
|
|
|
|
|
|
Mark T. Beaudouin(2)(3)
|
|
|
61,132
|
|
|
|
|
*
|
Douglas A. Berthiaume(2)(4)
|
|
|
3,996,449
|
|
|
|
3.81
|
%
|
Arthur G. Caputo(2)(5)
|
|
|
1,099,004
|
|
|
|
1.05
|
%
|
Brian Mazar(2) (7)
|
|
|
625,658
|
|
|
|
|
*
|
John Ornell(2)(6)
|
|
|
268,372
|
|
|
|
|
*
|
Elizabeth Rae(2)(8)
|
|
|
40,784
|
|
|
|
|
*
|
Joshua Bekenstein(2)(9)(12)
|
|
|
35,000
|
|
|
|
|
*
|
Dr. Michael J. Berendt(2)(13)
|
|
|
23,000
|
|
|
|
|
*
|
Edward Conard(2)(9)(11)
|
|
|
31,000
|
|
|
|
|
*
|
Dr. Laurie H. Glimcher(2)(13)
|
|
|
15,000
|
|
|
|
|
*
|
William J. Miller(2)(9)(11)(12)
|
|
|
27,000
|
|
|
|
|
*
|
Thomas P.
Salice(2)(9)(10)(11)(12)(13)
|
|
|
64,300
|
|
|
|
|
*
|
All Directors and Executive
Officers as a group (12) persons)
|
|
|
6,286,699
|
|
|
|
5.92
|
%
|
|
|
|
* |
|
represents less than 1% of the total number of the issued and
outstanding shares of Common Stock. |
|
(1) |
|
Figures are based upon 103,997,666 shares of Common Stock
outstanding as of March 15, 2006. The figures assume
exercise by only the stockholder or group named in each row of
all options for the purchase of Common Stock held by such
stockholder or group which are exercisable within 60 days
of March 15, 2006. |
|
(2) |
|
Includes share amounts which the named individuals have the
right to acquire through the exercise of options which are
exercisable within 60 days of March 15, 2006 as
follows: Mr. Beaudouin 60,000, Mr. Berthiaume 984,000,
Mr. Caputo 519,000, Mr. Mazar 149,000, Mr. Ornell
255,600, Ms Rae 38,200, Mr. Bekenstein 28,000,
Dr. Berendt 20,000, Mr. Conard 28,000,
Dr. Glimcher 12,000, Mr. Miller 24,000 and
Mr. Salice 21,600. |
|
(3) |
|
Includes 1,132 shares held in Mr. Beaudouins
ESPP plan. |
|
(4) |
|
Includes 69,000 shares held by Mr. Berthiaumes
wife, 560,831.99 shares held by limited partnership
interests, 34,828 shares held in Mr. Berthiaumes 401K
Plan and 25,252 shares held in a family trust.
Mr. Berthiaume disclaims beneficial ownership for the
shares held by his wife, the shares held in a family trust and
the shares held by the limited partnership interests. |
|
(5) |
|
Includes 101,880 shares held in Mr. Caputos 401K
Plan account and 2,390 shares held by his daughters, for
which Mr. Caputo disclaims beneficial ownership. |
|
(6) |
|
Includes 9,768 shares held in Mr. Ornells 401K
and ESPP plans and 3,000 shares held by his daughters for
which Mr. Ornell disclaims beneficial ownership. |
17
|
|
|
(7) |
|
Includes 51,226 shares held in Mr. Mazars 401K
plan and ESPP and 182,948 shares held in a family trust for
which Mr. Mazar disclaims beneficial ownership. |
|
(8) |
|
Includes 1,684 shares held in Ms. Raes 401K plan. |
|
(9) |
|
Excludes deferred compensation in the form of phantom stock,
receipt of which may be, at the election of the Director, on a
specified date at least six (6) months in the future or
upon his or her cessation of service as a Director of the
Company. |
|
(10) |
|
Includes 3,000 shares held in Mr. Salices IRA
and 3,200 shares held by a charitable trust and over which
Mr. Salice shares voting and investment power with his
spouse as trustees. |
|
(11) |
|
Member of the Audit Committee. |
|
(12) |
|
Member of the Compensation and Management Development Committee. |
|
(13) |
|
Member of the Nominating and Corporate Governance Committee. |
18
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Change of
Control Agreements
The Company and Messrs. Berthiaume, Beaudouin, Caputo,
Ornell and Ms. Rae are parties to an Executive Change of
Control/Severance Agreement dated February 24, 2004. Under
the terms of the agreement, if any such officers
employment is terminated without cause during the period
beginning 9 months prior to, and ending 18 months
following, a change of control of the Company (as
defined in the agreement), or such officer terminates his or her
employment for good reason (as defined in the
agreement) during the 18 month period following a change of
control of the Company, such Officer would be entitled to
receive (i) a lump sum cash payment equal to 12 months
of his or her monthly salary plus the bonus that would have been
payable to him or her during the 12 month period following
termination, (ii) accelerated vesting of stock options,
restricted stock grants and capital accumulation benefits and
(iii) continued insurance benefit coverage substantially
similar to the coverage he or she had been receiving prior to
any such termination. The agreement further provides that the
benefits will be supplemented by an additional payment to
gross up such officer for any excise tax under the
parachute payment tax provisions of the Internal
Revenue Code.
Loans to
Executive Officers
At December 31, 2005 there were no loans outstanding due
from executive officers. In compliance with the Sarbanes-Oxley
Act of 2002, the Company no longer makes loans to its executive
officers.
Indemnification
of Directors and Officers
The Company provides indemnification for its Directors and
executive officers in addition to the indemnification provided
for in the Companys Second Amended and Restated
Certificate of Incorporation, as amended, and Amended and
Restated Bylaws.
SECTION 16(A)
BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
The Federal securities laws require the Companys Directors
and officers, and persons who own more than ten percent of the
Common Stock, to file with the Securities and Exchange
Commission, the New York Stock Exchange and the Secretary of the
Company initial reports of ownership and reports of changes in
ownership of the Common Stock.
With the exception of a late filing of a Form 5 by
Mr. Caputo for reporting certain gifts made between 1999
and 2004, to the Companys knowledge, based solely on
review of the copies of such reports and written representations
furnished to the Company that no other reports were required,
none of the Companys officers, Directors and
greater-than-ten-percent
beneficial owners failed to file on a timely basis during the
fiscal year ended December 31, 2005, or in prior fiscal
years reports required by Section 16 of the Securities
Exchange Act of 1934, as amended.
STOCKHOLDER
PROPOSALS
Proposals of stockholders to be presented at the 2007 Annual
Meeting of Stockholders, anticipated to be scheduled on or about
May 8, 2007, must be received by the Secretary of the
Company as follows. Proposals that are submitted pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended, and are
to be considered for inclusion in the Companys Proxy
Statement and form of Proxy relating to that meeting must be
received by December 3, 2006. All other proposals must be
received during the sixty to ninety day period preceding that
meeting.
19
EXHIBIT A
AUDIT
COMMITTEE CHARTER
OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Purpose
The purpose of the Audit Committee (the Committee)
is to assist the Board of Directors (the Board) of
Waters Corporation (the Company) in ensuring that
management is maintaining internal controls adequate to provide
reasonable assurance that assets are safe-guarded, transactions
are properly executed and recorded, generally accepted
accounting principles are consistently applied, and that there
is compliance with corporate policies for conducting business.
The Committee shall assist the Board in overseeing the integrity
of the Companys financial statements, the Companys
compliance with legal and regulatory requirements, the
independent registered public accounting firms
qualifications and independence, and the performance of the
Companys internal audit function and independent
registered public accounting firm. In doing so, it is the goal
of the Committee to maintain free and open communication among
the Committee, independent registered public accounting firm,
Director of Internal Audit and management of the Company.
The function of the Committee is oversight. The Committee relies
on the expertise and knowledge of the Companys management,
the internal auditor, and the independent registered public
accounting firm in carrying out its oversight responsibilities.
Management is responsible for the preparation, presentation, and
integrity of the Companys financial statements and the
maintenance of appropriate accounting and financial reporting
principles and policies and internal controls and procedures
designed to assure compliance with accounting standards and
applicable laws and regulations. The independent registered
public accounting firm is responsible for planning and carrying
out proper annual audits and quarterly reviews of the
Companys financial statements and reports directly to the
Committee. The Committee reports regularly to the Board.
The Committee shall perform such functions, exercise such
powers, and consult with such persons as may be required to
fulfill the responsibilities of the Committee or additional
responsibilities, which may be delegated to it from time to time
by the Board. In discharging its oversight role, the Committee
is empowered to investigate any matter brought to its attention
with full access to all books, records, facilities, and
personnel of the Company. The Committee shall have the
authority, without seeking Board approval, to engage outside
advisors or consultants, including legal, accounting, or other
advisors as it deems necessary to carry out its duties, and
shall be entitled to rely on advice, information, opinions,
reports, or statements, including financial statements and other
financial data, provided or prepared by officers or employees of
the Company or such outside advisors or consultants. The
Committee shall receive appropriate funding, as it determines,
from the Company for payment of compensation to such outside
advisors or consultants.
The Company shall make this Charter available on its website at
www.waters.com. The Company shall disclose such
availability in its Annual Report on
Form 10-K
and also shall disclose therein that it shall provide a printed
copy of this Charter without charge to any Company stockholder
who requests it. The Company also shall publish this Charter
periodically in the Companys annual Proxy Statement, to
the extent required by the rules and regulations of the
Securities and Exchange Commission (the SEC).
Composition
The Committee shall consist of no fewer than three members of
the Board independent of management and the Company and free
from any relationship that may interfere with the members
exercise of independent judgment from management and the
Company, as prescribed by the applicable laws, regulations, and
rules of the SEC and New York Stock Exchange (the
NYSE). All members of the Committee shall be able to
read and understand fundamental financial statements. The
Chairman and each of the members of the Committee shall be
appointed by the Board, upon the recommendation of the
Nominating and Corporate Governance Committee of the Board, and
shall serve an annual term. Any Committee member may be replaced
by the Board at any time.
A-1
At least one member of the Committee shall be an audit
committee financial expert as such term is defined in
Rule 407 under the Securities Exchange Act of 1934, as
amended from time to time (the Exchange Act).
No Committee member may serve simultaneously on the audit
committees of more than three public companies (including the
Company) unless the Board first has determined that such
simultaneous service would not impair the ability of such member
to serve on the Committee and the Company discloses such
determination in its annual Proxy Statement.
Audit
Committee Authority, Responsibilities and Processes
The Committee shall meet as often as it shall determine, but not
less frequently than is necessary to discharge the
Committees responsibilities as required by applicable laws
and the regulations and rules of the SEC and NYSE, together as a
committee and in separate sessions with representatives of
management, the internal auditor, and the independent registered
public accounting firm. The Committee may request any officer or
employee of the Company or the Companys outside counsel or
independent registered public accounting firm to attend a
meeting of the Committee or to meet with any members of, or any
advisor or consultant to, the Committee.
|
|
|
|
1.
|
The Committee shall have a clear understanding with management
and the independent registered public accounting firm that the
independent registered public accounting firm is ultimately
accountable to the Committee, as representative of the
Companys stockholders, and as such the independent
registered public accounting firm must report directly to the
Committee. The Committee shall have the sole authority to
appoint (subject, if applicable, to ratification by the
stockholders of the Company), retain, compensate, evaluate,
terminate, and replace the independent registered public
accounting firm. The Committee may receive input from the
management of the Company on these matters but shall not
delegate these responsibilities. The Committee shall be
responsible for the oversight of the independent registered
public accounting firm, including the resolution of any
disagreements between management and the independent registered
public accounting firm regarding financial reporting or other
matters.
|
|
|
2.
|
The Committee shall review and discuss the proposed scope and
plans for the annual audit and significant variations that arise
in the course of the examination. Also, the Committee shall
discuss with management and the independent registered public
accounting firm the adequacy and effectiveness of the accounting
and financial controls (including any audit steps taken in light
of any material control deficiencies), including the
Companys system to monitor and manage business risk, and
legal and ethical compliance programs.
|
|
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3.
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The Committee shall review the independent registered public
accounting firms internal control observations and
responses by the Companys management.
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4.
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The Committee shall approve all fees and terms related to the
annual independent audit and subsequent variations thereof, as
well as all permissible non-audit engagements of the independent
registered public accounting firm. The Committee shall
pre-approve all audit and permissible non-audit services to be
performed for the Company by the independent registered public
accounting firm, giving effect to the de minimis
exception for non-audit services set forth in
Section 10A(a)(i)(1)(B) of the Exchange Act. The Committee
may delegate this authority to the Chairman of the Committee or
another subcommittee. On an annual basis, the Committee shall
consider whether the provision of non-audit services by the
independent registered public accounting firm, on an overall
basis, is compatible with maintaining the independent registered
public accounting firms independence from management.
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5.
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The Committee shall, at least annually, obtain and review a
report by the independent registered public accounting firm
describing (A) the independent registered public accounting
firms internal quality-control procedures, (B) any
material issues raised by the most recent internal
quality-control review, or peer review, of the independent
registered public accounting firm, or by any inquiry or
investigation by governmental or professional authorities,
within the preceding five years, respecting one or more
independent audits carried out by the independent registered
public accounting firm, and any steps taken to deal with any
such issues, and (C) (to assess the independent registered
public accounting firms
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independence) all relationships between the independent
registered public accounting firm and the Company. The Committee
shall discuss with the independent registered public accounting
firm its independence from management and the Company and shall
review at least annually the matters included in the written
disclosures provided by the independent registered public
accounting firm as required by the applicable regulatory body.
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6.
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The Committee shall review and evaluate the lead partner of the
independent registered public accounting firm and shall ensure
the occurrence of any legally required rotation of lead and
concurring partners and any other partners required to be
rotated. The Committee may also consider whether, to assure
continuing auditor independence, it would be advisable to
regularly rotate the independent registered public accounting
firm itself. The Committee shall present its conclusions with
respect to the independent registered public accounting firm to
the full Board.
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7.
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The Committee shall recommend to the Board a policy concerning
the Companys hiring of employees or former employees of
the independent registered public accounting firm in accordance
with the applicable rules of the SEC to ensure that the
independent registered public accounting firm is independent.
Specifically, prior to the hiring of any member of the audit
engagement team assigned to the Company in any financial
reporting oversight role of the Company the Committee shall
ensure that one year has passed since completion of the next
audit performed by such team subsequent to the audit in which
such member participated.
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8.
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The Committee shall review the performance and qualifications of
the independent registered public accounting firm, and in so
doing, take into account the opinions of management and the
internal auditor. The Committee shall report to the Board its
conclusions with respect to the independent registered public
accounting firm.
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Financial
Reporting
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The Committee shall review major issues regarding accounting
principles and financial statement presentations, including any
significant change in the Companys selection or
application of accounting principles. The Committee also shall
review and discuss with the independent registered public
accounting firm and management the adequacy and effectiveness of
the accounting policies and practices and significant judgments
that may affect the financial statements of the Company, and the
selection made from among alternative accounting treatments.
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2.
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The Committee shall consider changes in accounting standards
that may significantly affect financial reporting practices.
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3.
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The Committee shall review and discuss, with financial
management and the independent registered public accounting
firm, the Companys annual and quarterly financial results
and the annual financial statements and quarterly financial
statements, including the Companys disclosures under the
Managements Discussion and Analysis of Financial
Condition and Results of Operations section of its
periodic reports, prior to the release of earnings
and/or the
filing or distribution of the Companys annual and
quarterly financial statements and discuss any significant
changes to the Companys accounting principles and any
items required to be communicated by the independent registered
public accounting firm. Also, the Committee shall discuss the
results of the annual audit and any other matters required to be
communicated to the Committee by the independent registered
public accounting firm under generally accepted auditing
standards. Based on the foregoing and on review of other
information made available to the Committee, the Committee shall
recommend to the Board whether the audited financial statements
should be included in the Companys Annual Report on
Form 10-K.
The Chairman of the Committee (or an alternate if necessary) may
represent the entire Committee for purposes of the quarterly
review of the Companys earnings release.
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4.
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The Committee shall meet separately with the independent
registered public accounting firm to discuss the results of its
audit work and the matters required to be discussed by Statement
on Auditing Standards No. 61 relating to the conduct of the
audit, including any problems or difficulties encountered in the
course
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of the audit work and managements response thereto, any
restrictions on the scope of activities or access to requested
information, and the nature and resolution of any significant
disagreements with management. The Committee shall also obtain
from the independent registered public accounting firm assurance
that Section 10A(b) of the Exchange Act (regarding the
independent registered public accounting firms
responsibilities upon detection or otherwise becoming aware of
information indicating that an illegal act (whether or not
perceived to have a material effect on the financial statements
of the Company) has or may have occurred) has not been
implicated.
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5.
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The Committee shall discuss with management the type and
presentation of information to be included in the Companys
earnings press releases, including the use therein of pro
forma or adjusted non-GAAP information, as
well as any financial information and earnings guidance provided
to analysts and rating agencies. Such discussion may be done
generally (i.e. , discussion of the types of information to be
disclosed and the type of presentation to be made). The
Committee need not discuss in advance each earnings release or
each instance in which the Company may provide earnings guidance.
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6.
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The Committee shall review any analyses prepared by management
and/or the
independent registered public accounting firm setting forth
significant financial reporting issues and judgments made in
connection with the preparation of the Companys financial
statements, including analyses of the effects of alternative
generally accepted accounting principles methods on the
financial statements. The Committee also shall review the effect
of regulatory and accounting initiatives and off-balance sheet
structures on the Companys financial statements.
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7.
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The Committee shall review with management guidelines and
policies with respect to the Companys approach to risk
assessment and risk management, and shall discuss the
Companys major financial risk exposures and steps taken by
management to monitor and control such exposures.
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8.
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The Committee shall review each report of the independent
registered public accounting firm delivered to the Committee
pursuant to Section 10A(k) under the Exchange Act,
concerning: (a) all critical accounting policies and
practices to be used; (b) all alternative treatments of
financial information within generally accepted accounting
principles that have been discussed with management,
ramifications of the use of such alternative disclosures and
treatments (including their effect on the Companys
financial statements), and the treatment preferred by the
independent registered public accounting firm; and
(c) other material written communications between the
independent registered public accounting firm and management,
such as any management letter or schedule of unadjusted
differences.
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9.
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The Committee shall review the disclosures made by officers of
the Company in the certifications required to be filed
(a) as part of the Companys Annual Reports on
Form 10-K
and Quarterly Reports on
Form 10-Q
regarding any significant deficiencies in the design or
operation of internal controls or material weaknesses therein
and any fraud involving management or other employees who have a
significant role in the Companys internal controls and
(b) pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, regarding the absence of misleading statements in the
Companys periodic reports and the fair presentation in
such reports of the Companys financial statements and
results of operations.
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10.
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The Committee shall discuss with management and the independent
registered public accounting firm any correspondence or other
communication from or with any governmental agency or regulatory
authority that raises any material issue concerning the
Companys financial statements, accounting policies, or
related matters.
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Controls
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1.
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The Committee shall review major issues as to the adequacy of
the Companys internal controls and any special audit steps
adopted in light of material control deficiencies. The Committee
shall assess the adequacy and effectiveness of the system of
internal controls, including the security of tangible and
intangible corporate assets and the security of computer systems
and facilities.
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2.
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The Company shall have an internal audit function. The Committee
shall oversee the appointment, removal, and replacement of the
Companys internal auditor (or, if such function is
performed by more
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A-4
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than one person or firm, the person or firm charged with heading
such function). The Committee shall review the responsibilities,
budget, and staffing of the Companys internal audit
function and the scope of the internal audit plan and function.
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At regularly scheduled meetings, and at any other times when
they believe it necessary, the independent registered public
accounting firm and senior financial management shall meet with
the Committee privately and confidentially to notify or advise
it concerning any circumstances which they believe require the
special attention of the Committee.
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Other
Committee Activities
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1.
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The Committee may, at its discretion, request management, the
independent registered public accounting firm, or other persons
with specific competence, including outside counsel and other
outside advisors, to undertake special projects or
investigations which it deems necessary to fulfill its
responsibilities, especially when potential conflicts of
interest with management may be apparent.
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2.
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The Committee shall be informed by senior financial management
of the rationale for securing audits or second opinions from
accounting firms other than the Companys independent
registered public accounting firm.
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3.
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The Committee shall annually assess and review the adequacy of
this Charter and shall annually review the Committees own
performance.
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4.
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The Committee shall provide its report required to be included
in the Companys annual Proxy Statement.
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5.
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The Committee shall establish, or determine that there have been
established, procedures for the receipt, retention, and
treatment of complaints from Company employees regarding
accounting, internal accounting controls, or auditing matters,
and the confidential, anonymous submission by Company employees
of concerns regarding questionable accounting or auditing
matters and shall monitor ongoing compliance with these
procedures.
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6.
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The Committee shall obtain reports from management, the internal
auditor, and the independent registered public accounting firm
that the Company is in conformity with applicable legal
requirements and the Companys Code of Business Conduct and
Ethics.
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7.
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The Committee shall review such other reports, adopt such other
policies, and implement such other procedures as shall be
necessary to comply with the rules and regulations that may,
from time to time, be established by the NYSE or the SEC.
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8.
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The members of the Committee shall not receive any compensation
from the Company other than director fees. Such director fees
may be greater than those paid to the other directors of the
Company.
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9.
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The Committee shall review with the Board any issues that arise
with respect to the quality or integrity of the Companys
financial statements, the Companys compliance with legal
or regulatory requirements, the performance and independence of
the independent registered public accounting firm, or the
performance of the internal audit function.
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A-5
YOUR VOTE IS IMPORTANT VOTE BY INTERNET / TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
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INTERNET
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TELEPHONE
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MAIL
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https://www.proxyvotenow.com/wat
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1-866-353-7845
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Go to the website address listed above. |
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OR
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Use any touch-tone telephone.
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OR
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Mark, sign and date your proxy card. |
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Have your proxy card ready.
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Detach your proxy card. |
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Have your proxy card ready.
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Follow the simple recorded instructions. |
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Return your proxy card in the postage-paid envelope provided. |
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Follow the simple instructions that
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appear on your computer screen. |
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1-866-353-7845
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CALL TOLL-FREE TO VOTE |
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Do not return your Proxy Card if you are voting by Telephone or Internet
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6 DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET 6
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Please sign, date and return
your proxy in the envelope
provided even if you plan to
attend the meeting.
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x
Votes must be indicated
(x) in Black or Blue ink. |
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1. |
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To elect directors for the ensuing year and until their successors are elected. |
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FOR ALL
NOMINEES
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WITHHELD FROM
ALL NOMINEES
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Nominees: |
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(01) Joshua Bekenstein, (02) Michael J. Berendt, Ph.D., (03) Douglas A. Berthiaume,
(04) Edward Conard, (05) Laurie H. Glimcher, M.D., (06) Christopher A. Kuebler,
(07) William J. Miller, (08) JoAnn A. Reed and (09) Thomas P. Salice |
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3.
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To consider and act upon any other matters which
may properly come before the meeting or any
adjournment thereof. |
Note: If you do not wish your shares
voted for any particular nominee, write each such nominees name on
the line above.
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FOR
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AGAINST
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ABSTAIN |
2.
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To ratify the selection of PricewaterhouseCoopers LLP
as the Companys Independent Registered Public
Accounting Firm for the fiscal year ending December
31, 2006;
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MARK HERE FOR ADDRESS CHANGE.
AND NOTE AT LEFT
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MARK HERE IF YOU PLAN TO ATTEND
THE MEETING
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(If signing as attorney, executor, trustee or
guardian, please give your full title as such. If shares
are held jointly, each holder should sign.)
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Date
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Share Owner sign here
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Co-Owner sign here |
WATERS
The Officers and Directors of Waters Corporation
cordially invite you to attend
the Annual Meeting of Stockholders
to be held at Waters Corporation, 34 Maple Street,
Milford, Massachusetts on Thursday, May 11, 2006 at 11:00 a.m.
Douglas A. Berthiaume
Chairman, President and Chief Executive Officer
(FOR RECORDED DIRECTIONS TO WATERS, CALL 508 482-3314)
WATERS CORPORATION
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 11, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Douglas A. Berthiaume and Mark T. Beaudouin, and each or
either of them, as the true and lawful attorneys of the undersigned, with full power of
substitution and revocation, and authorizes them, and each of them, to vote all the shares of
capital stock of the Corporation which the undersigned is entitled to vote at said meeting and any
adjournment thereof upon the matters specified below and upon such other matters as may be properly
brought before the meeting or any adjournment thereof, conferring authority upon such true and
lawful attorneys to vote in their discretion on such other matters as may properly come before the
meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN,
SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN ITEM 1 AND FOR THE PROPOSAL IN ITEM 2 AND
AUTHORITY WILL BE DEEMED GRANTED UNDER ITEM 3.
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WATERS CORPORATION |
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P.O. BOX 11103 |
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NEW YORK, N.Y. 10203-0103 |
CONTINUED AND TO BE SIGNED ON REVERSE SIDE