UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

INFORMATION REQUIRED IN
PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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o Soliciting Material Pursuant to sec. 240.14a-12

LIFE TECHNOLOGIES CORPORATION

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March 18, 2011

 

Dear Stockholder:

 

This year’s Annual Meeting of Stockholders will be held on April 28, 2011 at 8:00 a.m. local time, at the offices of the Company, 5781 Van Allen Way, Carlsbad, California 92008. You are cordially invited to attend.

 

We are pleased to furnish proxy materials to our stockholders over the Internet pursuant to rules of the U.S. Securities and Exchange Commission. On March 18, 2011, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (the Notice) containing instructions on how to access our 2011 Proxy Statement and 2010 Annual Report to Stockholders. The Notice also provides instructions on how to vote online or by telephone, and includes instructions on how to receive a paper copy of the proxy materials by mail. If you received your annual meeting materials by mail, the Notice of Annual Meeting of Stockholders, Proxy Statement, Annual Report to Stockholders and proxy card were enclosed.

 

The Notice of Annual Meeting of Stockholders and the Proxy Statement, which describe the formal business to be conducted at the meeting, follow this letter.

 

Whether or not you plan to attend the meeting, your vote is very important and we encourage you to vote promptly. After reading the Proxy Statement, please make sure to vote your shares by promptly voting electronically or telephonically as described in the enclosed Proxy Statement, or if you received a paper copy of the proxy card, by dating, signing and returning your proxy card, or attending the annual meeting in person. Instructions regarding all three methods of voting are provided on the proxy card. If you hold shares through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from them to vote your shares. Regardless of the number of shares you own, your careful consideration of, and vote on, the matters before our stockholders are important.

 

We appreciate your comments and encourage you to let us know what you think about our Proxy process. You can submit comments to us by going to www.proxydocs.com/life if you are submitting your votes electronically, or by writing comments on the back of your proxy card and mailing it to the address listed on the card.

 

A copy of our 2010 Annual Report is also enclosed, but we also encourage you to view our more in depth annual report online at www.lifetechnologies.com.

 

Your vote is very important to us. I urge you to vote “FOR” all proposals.

 

I look forward to seeing you at the annual meeting.

 

Very truly yours,

 

 

Gregory T. Lucier
Chairman and Chief Executive Officer

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

TO BE HELD APRIL 28, 2011

 

 

 

 

To our Stockholders:

 

The Annual Meeting of Stockholders of Life Technologies Corporation (the Company), will be held on April 28, 2011, at 8:00 a.m. local time, at the offices of the Company, 5781 Van Allen Way, Carlsbad, California 92008, for the following purposes:

 

 

Our Board of Directors recommends a vote “FOR” each of these proposals. Stockholders of record at the close of business on February 28, 2011, are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. For ten days prior to the Annual Meeting, a complete list of the stockholders of record on February 28, 2011, will be available at our principal offices, located at 5791 Van Allen Way, Carlsbad, California 92008, for examination during ordinary business hours by any stockholder for any purpose relating to the meeting.

 

By Order of the Board of Directors,

 

 

John A. Cottingham
Chief Legal Officer & Secretary

 

Carlsbad, California

March 18, 2011

 

 

IMPORTANT: Please vote telephonically or electronically, as described in the accompanying materials, or promptly fill in, date, sign and return the enclosed proxy card in the accompanying pre-paid envelope to ensure that your shares are represented at the meeting. You may revoke your proxy before it is voted. If you attend the meeting, you may choose to vote in person even if you have previously sent in your proxy card.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 28, 2011: A complete set of proxy materials relating to our annual meeting is available on the Internet. These materials may be viewed at www.proxydocs.com/life.

 

Life Technologies Corporation
5791 Van Allen Way
Carlsbad, California 92008

 

PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS

 

The accompanying proxy is being solicited by the Board of Directors (the Board) of Life Technologies Corporation (also referred to as Life Technologies, the Company or we) and contains information related to the Annual Meeting of Stockholders (the Annual Meeting) to be held April 28, 2011, at 8:00 a.m. local time, or any adjournment or postponement thereof, for the purposes described in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at the offices of the Company, 5781 Van Allen Way, Carlsbad, California 92008. This Proxy Statement was filed with the Securities and Exchange Commission (the SEC) on March 18, 2011, and the approximate date on which the Proxy Statement and the accompanying proxy were first sent or made available to stockholders was March 18, 2011.

 

Life Technologies will bear the cost of soliciting proxies. In addition to soliciting proxies by mail, telephone or electronic means, we may request banks and brokers, and other custodians, nominees and fiduciaries, to solicit their customers who have Life Technologies stock registered in their names and will reimburse them for their reasonable, out-of-pocket costs. We may use the services of our officers, directors, and others to solicit proxies, personally or by telephone, without additional compensation. In addition, Life Technologies has retained Alliance Advisors, LLC to solicit stockholder proxies at a cost of approximately $7,000, plus reimbursement of reasonable out-of-pocket expenses.

 

ABOUT THE MEETING

 

What is the purpose of the Annual Meeting?

 

At the Annual Meeting, stockholders will act upon the matters presented in this Proxy Statement. These matters include: the election of directors, the ratification of the reappointment of Ernst & Young LLP as our independent registered public accounting firm, the adoption of certain changes to the Restated Certificate of Incorporation of the Company (the Restated Certificate of Incorporation), an advisory resolution regarding the compensation of the Company’s named executive officers for the fiscal year ended December 31, 2010 (the Named Executive Officers) and an advisory vote regarding the frequency of stockholder voting on the compensation of the Named Executive Officers. In addition, management will report on Life Technologies’ performance during 2010 and will respond to questions from our stockholders. The Annual Report for the fiscal year ended December 31, 2010, is available online at www.lifetechnologies.com.

 

Who is entitled to vote at the meeting?

 

Stockholders of record as of the close of business on the record date, February 28, 2011, are entitled to vote the shares of Life Technologies stock they held on the record date at the Annual Meeting. As of the close of business on the record date, there were 180,059,951 shares of the Company’s common stock (the Common Stock) outstanding and entitled to vote.

 

Stockholders may vote in person or by proxy. Each holder of shares of Common Stock is entitled to one vote for each share of stock held on the proposals presented in this Proxy Statement.

 

What does it mean to be a “stockholder of record”?

 

If, on February 28, 2011, your shares were registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, then you are a “stockholder of record.” As a

stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted.

 

What does it mean to beneficially own shares in “street name”?

 

If, on February 28, 2011, your shares were held in an account at a broker, bank, trust, or other agent, (we will refer to those organizations collectively as “broker”) then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that broker. The broker holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your broker on how to vote the shares in your account. As a beneficial owner, you are invited to attend the Annual Meeting. However, since you are not a stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker.

 

How is a quorum established and what is the vote required for each proposal?

 

The Company’s Sixth Amended and Restated Bylaws (the Bylaws) provide that a majority of all the outstanding shares of stock entitled to vote, whether present in person or represented by proxy, constitutes a quorum for the transaction of business at the Annual Meeting. Votes for and against, abstentions and “broker non-votes” will be counted for purposes of determining the presence or absence of a quorum.

 

A “broker non-vote” occurs when your broker submits a proxy card for your shares of Common Stock held in street name, but does not vote on a particular proposal because the broker has not received voting instructions from you and does not have the authority to vote on that matter without instructions. Under the rules that govern brokers, brokers have the discretion to vote on routine matters, but not on non-routine matters. The ratification of the appointment of the Company’s independent registered public accounting firm is a matter considered routine under applicable rules. Non-routine matters include the election of directors, adoption of changes to the Restated Certificate of Incorporation, the advisory resolution regarding the compensation of the Named Executive Officers and the advisory vote regarding the frequency of stockholder voting on the compensation of the Named Executive Officers.

 

Under the Bylaws, at any meeting of stockholders for the election of directors at which a quorum is present, each director shall be elected by the vote of a majority of the votes cast with respect to the director. All other matters shall be determined by a majority of the votes cast, unless otherwise required by applicable law, rule or regulation or the Company’s charter documents. The specific vote required for the election of directors and for the approval of each of the other proposals is set forth under each proposal.

 

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?

 

Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the Notice) to our stockholders of record and beneficial owners. All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

 

How do I vote?

 

All shares represented by a proxy will be voted, and where a stockholder specifies a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the specification so made.

If you are a stockholder with shares registered in your name, you may vote by one of the following three methods:

 

 

The Internet and telephone voting procedures are designed to authenticate your identity and to allow you to vote your shares and confirm that your voting instructions have been properly recorded.

 

If your shares are held by a broker, bank or other stockholder of record, in nominee name or otherwise, exercising fiduciary powers (typically referred to as being held in “street name”), you may receive a separate voting instruction form with this Proxy Statement, or you may need to contact your broker, bank or other stockholder of record to determine whether you will be able to vote electronically via the Internet or by telephone. Your broker may vote your shares on the proposal to ratify our independent auditors, but will not be permitted to vote your shares with respect to the other proposals unless you provide instructions as to how to vote your shares.

 

Once you have given your proxy, you may revoke it at any time prior to the time it is voted, by delivering to the Secretary of the Company at the Company’s principal offices either a written document revoking the proxy or a duly executed proxy with a later date, or by attending the Annual Meeting and voting in person. Merely attending the Annual Meeting will not, by itself, revoke a proxy. Please note, however, that your shares are held of record by a broker, bank or other nominee and if you wish to vote at the Annual Meeting, you must obtain and bring to the Annual Meeting a proxy card issued in your name from the broker, bank or other nominee. Otherwise, you will not be permitted to vote at the Annual Meeting.

 

ELECTION OF DIRECTORS

 

We have a classified Board of Directors, such that directors in each class are elected for a term of three years. Our Board currently consists of five Class III directors (Balakrishnan S. Iyer, William H. Longfield, Ronald A. Matricaria, W. Ann Reynolds, Ph.D. and David C. U’Prichard, Ph.D.) who will serve until the 2011 Annual Meeting of Stockholders, three Class I directors (Donald W. Grimm, Gregory T. Lucier and Per A. Peterson, Ph.D.) who will serve until the 2012 Annual Meeting of Stockholders, and four Class II directors (George F. Adam, Jr., Raymond V. Dittamore, Arnold J. Levine, Ph.D. and Bradley G. Lorimier) who will serve until the 2013 Annual Meeting of Stockholders, in each case until their respective successors are duly elected and qualified.

 

At the Annual Meeting, the stockholders will be asked to elect four nominees as Class III directors and two nominees as Class I directors. The nominees for election at the 2011 Annual Meeting of Stockholders to fill the four Class III positions on the Board are Balakrishnan S. Iyer, Gregory T. Lucier, Ronald A. Matricaria and David C. U’Prichard, Ph.D. The nominees for election at the Annual Meeting to fill two Class I positions on the Board are William H. Longfield and Ora H. Pescovitz, M.D.

 

Dr. Reynolds will be retiring as a Class III director immediately following the Annual Meeting in accordance with our Corporate Governance Principles, which provide that the Board nominate only individuals who are 72 years of age or younger on the date of the election of such individual. To provide for an even distribution of directors across each class, our Board decided to reduce the number of directors allocated to Class III to four directors and increase the number of directors allocated to Class I to four directors, such that

immediately following the Annual Meeting each of Classes I, II and III will have four members. As a result, the Board has chosen not to fill the Class III vacancy created by Dr. Reynolds’ retirement and has instead re-allocated this vacancy to Class I. The Board has nominated Ora H. Pescovitz, M.D. for election as a new Class I director, to fill the vacancy on the Board created by Dr. Reynolds’ retirement.

 

In addition, the Board is nominating current Class III director William H. Longfield for election as a Class I director at the Annual Meeting. The Board decided to nominate Mr. Longfield for election as a Class I director, with a term expiring at the 2012 annual meeting of stockholders, because Mr. Longfield will be older than 72 years of age at the time of the 2012 annual meeting of stockholders and it is therefore anticipated that Mr. Longfield will retire from the Board upon the expiration of his term in 2012. Mr. Lucier, currently a Class I director, has agreed to shorten his current term by one year and stand for election as a Class III director, filling the Class III vacancy left by Mr. Longfield and bringing the total number of Class III nominees for director to four. The Board has recommended these modifications to its current structure in the interests of balancing class membership in light of the resignation of former director William S. Shanahan in June 2010, the retirement of Dr. Reynolds in April 2011 and the anticipated retirement of Mr. Longfield in April 2012.

 

If elected, the nominees for the Class III positions will serve as directors until the annual meeting of stockholders in 2014, and the nominees for the Class I positions will serve as directors until the annual meeting of stockholders in 2012, in each case until his or her successor is elected and qualified. If a quorum is present at the Annual Meeting, each of the four nominees for Class III director and each of the two nominees for Class I director receiving the majority of votes cast for such nominee will be elected. Abstentions and broker non-votes will not have any effect on the outcome of the vote. If any nominee declines to serve or becomes unavailable for any reason, or if a vacancy occurs before the election (although we know of no reason to anticipate that this will occur), your proxy may be voted for such substitute nominee as the proxy holders may designate.

 

The following information relates to the nominees listed above and to the Company’s other directors whose terms of office will extend beyond the Annual Meeting, and sets forth the specific experience, qualifications, attributes and skills that led our Board to the conclusion that he or she should serve as a director. In addition to this information, we also believe that each of our director nominees and serving directors posses the highest personal and professional ethics, integrity and values, and are committed to representing the long-term interests of our stockholders. They each have demonstrated an inquisitive and objective perspective, business acumen and an ability to exercise sound judgment, as well as a commitment of service to Life Technologies and our Board. Finally, we value their significant experience on other public, private and non-profit boards of directors and board committees.

 

Nominees for election at the 2011 Annual Meeting of Stockholders

 

Class III

 

(Term Ends 2011)

 

 

Class I

 

(Term Ends 2012)

 

 

The Board of Directors recommends a vote “FOR” the nominees named above.

 

Directors Continuing in Office

 

Class I

 

(Term Ends 2012)

 

 

Class II

 

(Term Ends 2013)

 

 

How often did the Board of Directors meet during 2010?

 

During the fiscal year ended December 31, 2010, the Board of Directors held eight meetings. Each current director serving on the Board in fiscal year 2010 attended at least 75% of the meetings of the Board and the committees on which he or she served. The Board meets in Executive Session, without any members of management present, at each regularly scheduled meeting. The independent directors elect a Presiding Director annually. W. Ann Reynolds, Ph.D. served as the Presiding Director in 2010 and presided at each Executive Session in 2010.

 

What are the Corporate Governance Principles adopted by the Board of Directors?

 

Our Corporate Governance Principles are designed to ensure effective corporate governance of our Company. Our Corporate Governance Principles cover topics including, but not limited to, director qualification criteria, director responsibilities (including those of the Presiding Director), director compensation, director orientation and continuing education, communications from stockholders to the Board, succession planning and the evaluations of the Board and its committees. Our Corporate Governance Principles are reviewed regularly by the Governance and Nominating Committee and revised when appropriate. The full text of our Corporate Governance Principles are available on our website at www.lifetechnologies.com.

 

Who are the independent directors on the Board of Directors?

 

The Board has determined that, other than Gregory T. Lucier, our CEO, each of the members of the Board is an independent director in accordance with Nasdaq listing standards and our Corporate Governance Principles.

 

What is the Company’s policy regarding attendance by the Board of Directors at the Annual Meeting of Stockholders?

 

Members of the Board are strongly encouraged to attend the 2011 Annual Meeting of Stockholders. At the 2010 Annual Meeting of Stockholders, twelve of the incumbent directors were present. William S. Shanahan was not present.

 

What is the leadership structure of our Board of Directors?

 

Our Bylaws and Corporate Governance Principles provide our Board with flexibility to combine or separate the positions of Chairman of the Board and Chief Executive Officer in accordance with its determination that utilizing one or the other structure is in the best interests of our company. Currently, Mr. Lucier serves as both Chairman of the Board of Directors and Chief Executive Officer. Our Board has determined that this structure is the most effective leadership structure for our company at this time. The Board believes that Mr. Lucier is the director best situated to identify strategic opportunities and focus the activities of the Board due to his full-time commitment to the business and his company-specific experience. The Board also believes that the combined role of Chairman/Chief Executive Officer promotes effective execution of strategic imperatives and facilitates information flow between management and the Board.

 

Our Board has determined that maintaining the independence of the Company’s directors other than Mr. Lucier, managing the composition and function of its committees, and appointing an independent Presiding Director having the duties described below help maintain the Board’s strong, independent oversight of management. In accordance with our Corporate Governance Principles, our Board of Directors consists of a supermajority of independent directors. These independent directors meet regularly in executive session without the presence of management or non-independent directors. In addition, our Audit, Compensation and

Organizational Development, and Governance and Nominating Committees, which oversee critical matters such as the integrity of our financial statements, the compensation of executive management, the selection and evaluation of directors, and the development and implementation of corporate governance policies, each consist entirely of independent directors. Furthermore, our Board annually appoints an independent director to serve as Presiding Director. The Presiding Director has the responsibility of providing input to the Chairman/Chief Executive Officer on agenda items for meetings of the Board and the Board committees and of serving as a point person for stockholder communications with the Board. The Presiding Director presides over all executive sessions and meetings of the independent directors, defines the agenda for the executive sessions, gives feedback to the Chief Executive Officer following such executive sessions, serves as a point of leadership during special situations, ensures that all directors have an equal voice, and assists the Chairman or members of management in managing corporate crises, to the extent they arise, making related communications to the other directors. In addition to the Presiding Director, our other directors are encouraged to make suggestions for Board agenda items or pre-meeting materials.

 

What committees has the Board of Directors established?

 

The Board of Directors has established an Audit Committee, a Compensation and Organizational Development Committee, a Governance and Nominating Committee, and a Science and Technology Committee. Each committee operates under a written charter approved by the Board. The charters of each committee are available on the Company’s website at www.lifetechnologies.com. The Audit Committee consists of Mr. Dittamore, Mr. Adam, Mr. Iyer and Mr. Lorimier, and Mr. Dittamore serves as the Chairman. The Compensation and Organizational Development Committee consists of Mr. Matricaria, Mr. Grimm, Mr. Longfield and Dr. U’Prichard, and Mr. Matricaria serves as the Chairman. The Governance and Nominating Committee consists of Mr. Iyer, Mr. Dittamore, Mr. Matricaria, Dr. Peterson and Dr. Reynolds, and Mr. Iyer serves as the Chairman. The Science and Technology Committee consists of Dr. Peterson, Mr. Grimm, Dr. Levine, Mr. Lorimier and Dr. U’Prichard, and Dr. Peterson serves as the Chairman.

 

Audit Committee.  The Audit Committee’s function is to review with our independent registered public accounting firm and management the annual financial statements and independent registered public accounting firm opinion, review and maintain direct oversight of the plan, scope and results of the audit by the independent registered public accounting firm, review and approve all professional services performed and related fees charged by the independent registered public accounting firm, be solely responsible for the retention or replacement of the independent registered public accounting firm, and monitor the adequacy of the Company’s accounting and financial policies, controls, and reporting systems. During 2010, the Audit Committee held seven meetings.

 

The Board and the Audit Committee believe that the Audit Committee’s current member composition satisfies the Nasdaq listing standards that govern audit committee composition and the Company’s Corporate Governance Principles, including the requirement that each audit committee member is “independent” under the Nasdaq listing standards and the applicable rules and regulations of the SEC. Additionally, the Company certifies that it has, and will continue to have, at least one member of the Audit Committee that is defined as an “audit committee financial expert” as such term is defined by the SEC with past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. Currently, the Board has determined that Raymond V. Dittamore and Balakrishnan S. Iyer are “audit committee financial experts.” Additional information regarding the Audit Committee is set forth in the Report of the Audit Committee below.

 

Compensation and Organizational Development Committee.  The functions of the Compensation and Organizational Development Committee in 2010 included providing guidance to management and assisting the Board in matters relating to the compensation of the Board, CEO and senior executives, the organizational structure of the Company, the Company’s compensation and benefits programs, the Company’s succession, retention and training programs, and such other matters that have a direct impact on the success of our human resources. During 2010, the Compensation and Organizational Development Committee held five meetings.

The Board and the Compensation and Organizational Development Committee believe that the Compensation and Organizational Development Committee’s current member composition satisfies the Nasdaq listing standards that govern committee composition and the Company’s Corporate Governance Principles, including the requirement that committee members are “independent” under the Nasdaq listing standards. In addition, the members of the Compensation and Organizational Development Committee qualify as “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act and as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.

 

The Governance and Nominating Committee.  The functions of the Governance and Nominating Committee include leading any searches for new Board candidates and making recommendations to the Board regarding director nominees to be put forth by the Board at each annual meeting of stockholders. In addition, the area of corporate governance has taken on increasing importance in the creation and preservation of stockholder value. Therefore, the Governance and Nominating Committee focuses on core processes that the Board and its committees utilize to carry out their responsibilities, including fundamental issues such as how decisions are made. During the year ended December 31, 2010, the Governance and Nominating Committee held five meetings.

 

The Board of Directors and the Governance and Nominating Committee believe that the Governance and Nominating Committee’s current member composition satisfies the Nasdaq listing standards that govern committee composition and the Company’s Corporate Governance Principles, including the requirement that committee members are “independent” as that term is defined under the Nasdaq listing standards.

 

The Science and Technology Committee.  The Science and Technology Committee examines management’s direction and investment in the Company’s research and development and technology initiatives. The Science and Technology Committee functions as a broadly knowledgeable and objective group of scientists and non-scientists to consider and report periodically to the Board on matters relating to the investment in the Company’s research and development and technology initiatives. The Science and Technology Committee’s actions are generally related to high-level policy and strategy. The administration of the research and development function remains the responsibility of management. During the year ended December 31, 2010, the Science and Technology Committee held four meetings.

 

What is the Board’s Role in Risk Oversight?

 

The Board’s role in the Company’s risk oversight process includes receiving regular reports from members of senior management on areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic and reputational risks. The full Board (or the appropriate Committee in the case of risks that are under the purview of a particular Committee) receives these reports from the appropriate “risk owner” within the organization to enable it to understand our risk identification, management and mitigation strategies. The Board has developed an agenda of risk topics that are presented to the Board or one of its Committees on an annual basis. When a Committee receives such a report, the Chairman of the Committee discusses the report with the full Board during the next Board meeting. This practice enables the Board and its Committees to coordinate risk oversight for the Company, particularly regarding the interrelationship among various risks. Consistent with its charter, the Audit Committee discusses our policies with respect to risk assessment and risk management. The Compensation and Organizational Development Committee and the Board each discuss the relationship between our compensation policies and corporate risk to assess whether these policies encourage excessive risk-taking by executives and other employees.

 

Who are the nominees for election at the 2011 Annual Meeting of Stockholders?

 

Any stockholder of the Company may nominate one or more persons for election as a director of the Company at an Annual Meeting of Stockholders if the stockholder complies with the notice, information and consent provisions contained in the Company’s Bylaws. The Company’s Bylaws are available publicly on the Company’s website at www.lifetechnologies.com. In addition, the Governance and Nominating Committee will consider for inclusion in its nominations of new directors those nominees recommended by stockholders who

have held at least 1% of the outstanding voting securities of the Company for at least one year and who satisfy the notice, information and consent provisions set forth in our Bylaws. Board candidates referred by such stockholders will be considered on the same basis as Board of Directors candidates referred from other sources. Any stockholder who wishes to recommend for the Governance and Nominating Committee’s consideration a prospective nominee to serve on the Board of Directors may do so by giving the candidate’s name and qualifications in writing to the Company’s Secretary at the following address: 5791 Van Allen Way, Carlsbad, CA 92008.

 

The Governance and Nominating Committee recommended Balakrishnan S. Iyer, Gregory T. Lucier, Ronald A. Matricaria and David C. U’Prichard, Ph.D. to be nominated by the Board for election to Class III of the Board at the Annual Meeting of Stockholders. In addition, the Governance and Nominating Committee recommended William H. Longfield and Ora H. Pescovitz, M.D. to be nominated by the Board for election to Class I of the Board at the Annual Meeting of Stockholders.

 

In selecting non-incumbent candidates and reviewing the qualifications of incumbent candidates for the Board, the Governance and Nominating Committee considers the Company’s Corporate Governance Principles, which include the following:

 

 

Our Corporate Governance Principles also specify that our Board should represent a diverse experience at policy-making levels in business and technology in areas that are relevant to our global activities. The Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.

 

A supermajority of at least two-thirds of the directors will be independent directors as defined in the Nasdaq listing standards and our Corporate Governance Principles. Directors who do not meet these independence standards also make valuable contributions to the Board and to the Company through their experience and wisdom.

 

In general, to be considered independent under the Nasdaq listing standards and our Corporate Governance Principles, the Board must determine, among other things, that a director does not have any relationships that, in the Board’s opinion, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board will make an affirmative finding with respect to the independence of directors not less frequently than annually. The Board has determined that other than Mr. Lucier, the Company’s CEO, each of the current members of the Board, including the nominees for Class III and Class I director, are independent directors.

 

In addition to the policy that a supermajority of the Board members satisfy the independence standards discussed in the section above, members of the Audit Committee must also satisfy additional independence and experience requirements under the rules and regulations promulgated by the SEC. Specifically, they may not directly or indirectly receive any compensation from the Company other than their directors’ compensation, must not have participated in preparing the financial statements of the Company or any of its subsidiaries during the past three years, and must not be affiliated with the Company except through their membership on the Board and its committees.

 

REPORT OF THE AUDIT COMMITTEE

 

The purpose of the Audit Committee is to assist the Board in its general oversight of Life Technologies’ financial reporting, internal controls and audit functions. As described in the Audit Committee Charter, which is available at our website at www.lifetechnologies.com, the Audit Committee has oversight responsibilities to stockholders, potential stockholders, the investment community, and other stakeholders related to the:

 

 

The Audit Committee is composed solely of independent directors as required by the SEC and defined by the Nasdaq listing standards.

 

The Audit Committee has reviewed and discussed the consolidated financial statements with management and Ernst & Young LLP, the Company’s independent registered public accounting firm. Management is responsible for the preparation, presentation and integrity of Life Technologies’ financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Ernst & Young LLP is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America, as well as expressing an opinion on the effectiveness of internal control over financial reporting.

 

During 2010, the Audit Committee provided oversight and advice to management relating to management’s assessment of the adequacy of Life Technologies’ internal control over financial reporting in accordance with the requirements of the Sarbanes-Oxley Act of 2002. The Committee received periodic updates from management and Ernst & Young LLP relating to such assessment. The Audit Committee held regular private sessions with Ernst & Young LLP to discuss their audit plan for the year, the results of their quarterly reviews, and the annual audit. At the conclusion of the process, the Audit Committee reviewed a report from management on the effectiveness of the Company’s internal control over financial reporting. The Committee also reviewed the report of management contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC, as well as Ernst & Young LLP’s Report of Independent Registered Public Accounting Firm included in the Company’s Annual Report on Form 10-K related to its audit of (i) the consolidated financial statements and financial statement schedule, and (ii) the effectiveness of internal control over financial reporting.

 

The Audit Committee provided oversight and guidance to members of management, including the Chief Legal Officer, Vice President of Internal Audit (who reports to the Audit Committee), and Director of Compliance on the Company’s policies and procedures relating to risk assessment and risk management and on the legal and regulatory compliance programs. The Committee received periodic reports on these matters throughout the year.

 

The Audit Committee met on seven occasions in 2010. The Audit Committee met privately with Ernst & Young LLP, the Vice President of Internal Audit, and the Chief Financial Officer (CFO) at each regular meeting.

Life Technologies has an internal audit department that reports directly to the Audit Committee. The Audit Committee reviews and approves the internal audit plan and receives regular updates on internal audit activity. Updates include discussion of results and findings by the internal audit team, follow up, staffing level and qualifications of the internal audit function, and assessment of internal controls and risk of fraud.

 

The Audit Committee has discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees” and PCAOB Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting That Is Integrated with an Audit of Financial Statements.” In addition, Ernst & Young LLP has provided the Audit Committee with the written disclosures and the letter required by the PCAOB Ethics and Independence Rule 3526, “Communication with Audit Committees Concerning Independence,” and the Audit Committee has discussed with Ernst & Young LLP their firm’s independence. In addressing the quality of management’s accounting judgments, the Audit Committee asked for management’s representations and reviewed certifications prepared by the CEO and CFO that the unaudited quarterly and audited consolidated financial statements of the Company fairly present, in all material respects, the financial condition and results of operations of the Company.

 

Based on the review of the consolidated financial statements and discussions with and representations from management and Ernst & Young LLP referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in Life Technologies’ Annual Report on Form 10-K for the year ended December 31, 2010, for filing with the SEC.

 

In accordance with Audit Committee policy and the requirements of law, the Audit Committee pre-approves all non-audit services to be provided by Life Technologies’ outside auditors, Ernst & Young LLP. In addition, the Audit Committee pre-approves all audit and audit related services provided by Ernst & Young LLP. The Audit Committee has delegated to the chairman of the Audit Committee the ability to pre-approve non-audit services. Such pre-approval is later reported to the Audit Committee. A further discussion of the fees paid to Ernst & Young LLP for audit and non-audit expenses is included below under the heading “PRINCIPAL ACCOUNTING FEES & SERVICES.” Although the Audit Committee has the sole authority to appoint independent auditors, the Audit Committee is continuing its long-standing practice of recommending that the Board ask the stockholders to ratify the appointment at the Annual Meeting.

 

AUDIT COMMITTEE

 

Raymond V. Dittamore, Chairman
George F. Adam
Balakrishnan S. Iyer
Bradley G. Lorimier

 

PRINCIPAL ACCOUNTING FEES AND SERVICES

 

In connection with the audit of the 2010 financial statements, the Company entered into an engagement agreement with Ernst & Young LLP which set forth the terms by which Ernst & Young LLP has performed audit services for the Company. That agreement is subject to alternative dispute resolution procedures.

 

The following table sets forth the aggregate fees agreed to by the Company for the annual and statutory audits for the fiscal years ended December 31, 2010 and 2009, and all other fees paid by the Company during 2010 and 2009 to its independent registered public accounting firm, Ernst & Young LLP:

 

 

The Audit Committee has determined that the rendering of all non-audit services by Ernst & Young LLP is compatible with maintaining the independence of the independent registered public accounting firm. The fees listed under “Audit Fees” above were incurred for service related to the annual audit of the Company’s consolidated financial statements, including the audit of internal control over financial reporting, reviews of the Company’s interim consolidated financial statements on Form 10-Q, SEC registration statements, accounting consultations and services that are normally provided in connection with statutory and regulatory filings and engagements. The fees listed under “Audit-Related Fees” above were incurred for services related to mergers and acquisitions, including accounting consultations, dispositions and benefit plan audits. The fees listed under “Tax Fees” above were incurred for service related to federal, state and international tax compliance, tax advice and tax planning. The Audit Committee approves non-audit services by Ernst & Young LLP on an ad hoc basis, and has vested authority with Raymond V. Dittamore, the chairman of the Audit Committee, to approve non-audit services as needed.

 

***************

 

EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS

 

Introduction

 

The Compensation and Organizational Development Committee of the Company’s Board of Directors (the Committee) is composed of the following four Board members: Ronald A. Matricaria, who serves as Chairperson, William H. Longfield, Donald W. Grimm, and David C. U’Prichard, Ph.D. The members of the Committee are non-employee directors as defined under and comply with the requirements of Rule 16b-3 of the Exchange Act, independent directors as defined under the Nasdaq rules and outside directors within the meaning of Section 162(m) of the Internal Revenue Code and applicable regulations.

 

The Committee’s primary responsibility is to develop high-level policies, strategy and guidance related to the Company’s executive compensation, benefits, and succession planning. As part of its duties and responsibilities, the Committee oversees and approves all aspects of the executive compensation program for the Company’s Section 16 officers (the executive officers). In this role, the Committee makes recommendations to the non-employee directors on the compensation of the Company’s Chief Executive Officer (the CEO) and reviews and approves all compensation decisions relating to other executive officers to ensure those decisions are aligned with the short, mid, and long-term goals of the Company and its stockholders. Additionally, the Committee is responsible for providing guidance on the organizational structure of senior management, as well as the succession, retention planning and leadership development of senior management.

 

For a more detailed description of the Committee’s duties and responsibilities, refer to the Compensation and Organizational Development Committee Charter which is located in the Investor Relations section of the Company’s website at www.lifetechologies.com.

 

Executive Compensation Philosophy and Objectives

 

The underlying premise of the Company’s executive compensation philosophy is to retain and reward leaders who create long-term value for stockholders. Consistent with that philosophy, the Committee has chosen compensation components designed to align executive interests with those of stockholders. The Committee views all components of pay together in making compensation decisions. The components include base salary, annual incentives, long-term incentives, fringe benefits and perquisites. The Committee utilizes various components of compensation to strike an appropriate balance between promoting sustainable and excellent performance and discouraging inappropriate short-sighted risk-taking behavior.

 

In July 2008, the Committee established an executive officer compensation philosophy for the primary components of pay (base salary, annual bonus target, and long-term incentives). The Committee targets each component above the 50th percentile of benchmark data (discussed below) in recognition of the company’s performance relative to its peer companies measured by total shareholder return, revenue growth, gross margin, and other financial / operational indicators. While the Committee reviews the Company’s performance relative to its peer companies across multiple metrics and time frames each year, it does not rely on any single metric to make compensation decisions. This philosophy also recognizes the need to attract the best talent in the industry to deliver on the long-term growth goals of the Company. The Committee reviews this philosophy regularly and may make adjustments in the future if the Company’s performance relative to peer companies or the business strategy dramatically changes. This philosophy was last reviewed in October 2010 and was not changed.

 

The Committee employs the following core principles to guide its decisions regarding executive compensation. These core principles are considered individually and as a group when making compensation decisions. Specific weights are not assigned to individual core principles.

 

Pay Competitively:  The Committee believes overall compensation should be set at a competitive level to attract and retain exceptional leadership talent that is capable of both effectively managing the Company today and through the course of its anticipated future growth. The Committee utilizes benchmark data, which is explained in more detail below, as a reference point to establish competitive compensation packages.

Stock Ownership:  The Committee believes executive officers will make better decisions and align their interests with those of the Company’s stockholders if they are required to maintain a certain level of stock ownership. As a result, the Committee has established stock ownership guidelines for executive officers and provides a meaningful portion of an executive officer’s total compensation in the form of equity-based long-term incentives.

 

Pay-for-Performance:  The Committee structures its executive compensation program to reward executive officers who consistently perform at a high level, which enables the Company to meet its ultimate business goal of increasing stockholder value. The alignment of executive compensation to existing business dynamics may, on a year-to-year basis, result in different components of overall compensation being utilized to ensure executive officers are focused on executing the Company’s business strategy. The Committee is responsible for aligning compensation-related performance goals to the Company’s short, mid, and long-term strategies. The Committee measures performance against these goals to determine compensatory rewards for past performance and to establish future performance goals with appropriate remuneration.

 

Design of Executive Compensation

 

The Committee is ultimately responsible for decisions relating to executive officers’ compensation; however, the Committee considers recommendations from and discusses decisions with external consultants and the management team.

 

Role of the Committee

 

The Committee has responsibility for overseeing all forms of compensation for executive officers, including the Named Executive Officers listed below in the 2010 Summary Compensation Table (collectively, the Company’s NEOs). For FY 2010, the NEOs and their respective titles were as follows:

 

 

All of the above listed NEOs currently serve as executive officers.

 

In establishing executive compensation, the Committee:

 

 

During 2010, the Committee held five meetings and frequently met in executive session. The Committee reviews the adequacy of its charter at least annually. The Committee charter was revised effective July 26, 2010, primarily assigning the Committee responsibility for compensation matters relating to the Board.

Role of Consultants

 

The Committee has retained its own independent compensation consultant, DolmatConnell & Partners, since September 2006 to advise it on matters related to executive compensation and CEO pay decisions. DolmatConnell provides the Committee with executive compensation benchmark data derived from surveys and public disclosures of peer companies.

 

DolmatConnell recommends to the Committee relevant industry peer groups for purposes of comparison and benchmarking executive compensation. DolmatConnell is also available to the Committee to attend meetings, provide an independent perspective, and provide an environmental overview of executive compensation matters. DolmatConnell also provides the Committee with competitive analysis and recommendations regarding the annual use of stock compensation, bonus plan design, and executive benefits and perquisites. DolmatConnell does not provide any other services to the Company.

 

The Committee also retained an external advisor, Robert Muschewske, Ph.D. to gather feedback from each Board member and CEO direct reports in January as to their perspectives regarding the CEOs performance during the prior year and goals for the future. See “Determining 2010 Compensation for the CEO” below for more detail. Dr. Muschewske has also provided consulting services to the Company relating to periodic Board self assessments.

 

Role of Management

 

The Committee has full access to the management team when assessing and taking action related to executive compensation matters. The Chief Human Resources Officer and the Vice President for Global Compensation and Benefits work closely with the CEO to develop management’s recommendations and perspective on the alignment of executive compensation with the business strategy, which are presented at Committee meetings. The Chief Financial Officer, Chief Legal Officer, and their respective teams periodically attend Committee meetings and are also involved in providing input into materials presented to the Committee.

 

The CEO presents recommendations to the Committee for specific executive officer compensation actions, other than for himself, which include:

 

(i) an assessment of individual performances relative to previously approved performance goals and objectives, and

 

(ii) recommendations for base salary adjustments, bonus awards, and long-term incentive grants aligned to the CEO’s assessment of an individual executive officer’s past performance, comparison of internal equity, necessity of retention, if applicable, and the Company’s short, mid, and long-term strategies.

 

Management provides other information to the Committee to assist in its analysis and decision making process, including:

 

(i) recommendations for the design of short and long-term incentive plans,

 

(ii) tally sheets,

 

(iii) stock ownership and cash / equity retention levels,

 

(iv) current events and trends in executive compensation, and

 

(v) impact of compensation and benefit programs on the Company’s financial statements.

 

Benchmarking Executive Compensation

 

The Committee periodically reviews competitive market data as a reference point when considering compensation actions. Several other data points are used in addition to market data, including:

 

(i) individual performance and relative contribution to the Company’s performance,

(ii) overall Company and business unit performance,

 

(iii) financial impact on the Company’s income statement and balance sheet,

 

(iv) an executive officer’s role, responsibilities, and demonstrated leadership,

 

(v) the Company’s need to retain the executive, and

 

(vi) internal equity among the entire senior management team.

 

The Committee annually reviews benchmark compensation data provided by DolmatConnell. This data is developed from publicly-filed proxy statements (referred to as Proxy Data) of the companies listed below for Messrs. Lucier, Stevenson, and Hoffmeister. The Committee also annually reviews the companies used to develop the Proxy Data to ensure it reflects an appropriate balance between corporate revenue, market capitalization and competitive labor markets. In July 2010, two additional companies (CareFusion Corp. and Stryker Corp.) were added to the Proxy Data comparator group and one company (DENTSPLY International Inc.) was removed to better balance these factors.

 

DolmatConnell uses published surveys for all other executive officers. Specifically, DolmatConnell utilizes custom peer groups from the Radford Global Life Sciences Executive Survey (56 companies with median annual revenue of $3.8B) and the Towers Perrin Executive Compensation Survey (46 companies with median annual revenue of $4.6B).

 

Proxy Data Comparator Companies

 

 

Determining 2010 Compensation for the NEOs

 

Effective upon the merger of Invitrogen and Applied Biosystems in November 2008 (into the combined company — Life Technologies) the Committee took several actions to retain and motivate the executive team to integrate successfully the two organizations and to realize quickly the synergies of the merger. Several of the actions taken in November 2008 remained pertinent to 2010 compensation decisions. Specifically, in 2008 the Committee: (i) approved a special one-time incentive to reward executive officers (excluding the CEO) for achieving specified financial and operational synergy goals during the 24-month period following the merger, or sooner, in addition to all other forms of compensation, and (ii) provided executive officers with a long-term incentive grant in November of 2008, which ordinarily would have been granted in the first quarter of 2009 to ensure executives balance short-term goals and objectives associated with the merger with the Company’s long-term goal of increasing stockholder value through sustainable and superior performance.

 

The above actions and the ultimate awards were made after the Committee considered the competitive benchmark data, internal equity among executive officers, individual performance results relative to goals and objectives, payout and other award obligations resulting from contractual change-in-control agreements, and the importance of establishing a consistent executive compensation framework for the Company to build upon after the merger integration. The Committee did not assign any particular weight to these factors but each was important in analyzing and determining appropriate compensation packages for the executive officers. Additionally, the Committee made these decisions and took action in November 2008 in exchange for each

NEO’s agreement (other than the CEO) to waive certain rights pursuant to the terms of their then existing change-in-control agreements. The Committee also considered the value of these change-in-control payouts assuming executive officers triggered their agreement for “good reason” and the retention value associated with taking these actions. In November 2010, certain restrictive covenants contained in these agreements expired.

 

Determining 2010 Compensation for the CEO

 

The CEO developed his goals and objectives for 2010 in collaboration with the Board in December 2009. These goals and objectives were established primarily as a result of the Company’s operating plan for 2010, but also included non-financial metrics and goals the Board believed were critical to the ongoing success of the Company. The CEO’s goals and objectives also became the basis for determining the goals and objectives of his direct reports and ultimately the entire organization, which ensured consistency across the business units and the support functions.

 

The CEO reviewed his actual performance with the Board periodically during the year and formally at the December 2010 meeting. Subsequently, Dr. Muschewske gathered feedback from each Board member and CEO direct reports in January 2011 and compiled a report based on the information gathered. The Committee met to review and modify the report, as appropriate, and then the final report was provided to the full Board. This report, the CEO’s self assessment of his performance, actual financial performance results, and the external market competitive compensation data provided by DolmatConnell were utilized by the Committee in making its recommendations to the full Board, and were the primary factors considered by the full Board in determining the CEO’s compensation.

 

In 2010 the CEO achieved several significant milestones through his leadership in growing and integrating the business. Specifically, his primary accomplishments during the year were:

 

(i) achieved world-class benchmark revenue, COGS, and operating expense synergies in two years against three-year plan,

 

(ii) drove substantial improvements in financial performance despite a challenging operating environment,

 

(iii) moved into molecular medicine through the acquisition of Ion Torrent’s revolutionary sequencing technology, and

 

(iv) continued to drive the company’s performance-oriented culture while balancing its role as a global citizen.

 

Elements of the Company’s Executive Compensation Program

 

In addition to the benefit plans generally available to all employees, executive officers’ compensation consists of the following components:

 

Base Salary

 

Base salary ranges are established for each executive officer. The salary range midpoint is set at the 65th percentile of the comparator group market data. The midpoints are set at this level to ensure the Company can attract the best talent to deliver on shareholder goals in a very competitive environment. However, to be paid at the midpoint or higher an executive officer must have consistently performed at an exceptional level and displayed behaviors that have significantly impacted the Company’s growth and success. The Committee also believes the full breadth of the salary range should be utilized to recognize the difference in individual performance and contribution. As a result, individual base salaries may be higher or lower than the 65th percentile of the applicable comparator group market data, depending on various factors, including job performance, skill level, prior experience in his or her field of expertise, the executive’s experience with the Company, consistency regarding pay levels for similar positions or skill levels within the Company, the need to attract and retain talent, and external market conditions.

The Committee reviewed executive base salaries in February 2010 and approved adjustments that occurred in April 2010 in conjunction with the annual salary planning process across the Company. Scheduling executive officer base salary adjustments to occur in April ensures the Committee has the opportunity to evaluate fully each executive’s performance before determining an appropriate base salary.

 

The Committee reviewed Proxy Data showing the CEO’s 2010 base salary approximates the 65th percentile while base salary for other NEOs collectively is slightly below the 65th percentile relative to executives in similar roles.

 

Annual Bonus — Incentive Compensation Plan (ICP)

 

Executive officers participate in an annual cash bonus plan called the Incentive Compensation Plan (ICP). The Committee establishes an individual ICP target bonus opportunity for each executive officer expressed as a percentage of their base salary paid during the fiscal year. Target bonuses are established at the beginning of the fiscal year based on a review of:

 

(i) benchmark data for both target bonus opportunity and target total cash opportunity,

 

(ii) the role of each executive officer, including their ability to impact the Company’s overall performance, and

 

(iii) the Committee’s assessment of internal equity among the executive officers.

 

The Committee’s philosophy is to provide an ICP target bonus opportunity for the Company’s executive officers that approximates the 75th percentile of the applicable comparator group market data. The ICP target bonus of some executive officers may be higher or lower than the 75th percentile of the appropriate benchmark data.

 

For 2010, the following were the ICP target bonus amounts for each NEO:

 

 

After establishing targets, the Committee selects ICP performance metric(s) that are closely aligned with both the Company’s short-term strategy and its long-term objective of creating sustainable stockholder value. For 2010, the Committee selected Net Income as its sole funding metric under the ICP. The Company’s definition of Net Income for ICP purposes is non-GAAP net income (pro-forma) recorded on the year-end financial statements, excluding the effect of currency fluctuations in revenue and costs and the financial impact of acquisitions / divestitures approved by the Committee.

 

The Committee selected Net Income as the short-term performance metric to focus the leadership team on a common goal the Committee believed was aligned closely with stockholder value creation, while at the same time aligning executive officer performance to measurable results.

 

The Committee then established a fiscal year 2010 (FY2010) ICP Net Income performance goal of $508 million for NEOs that would fund 200% of an executive officer’s ICP target bonus opportunity. ICP Net Income below the goal would result in no bonus funding / payout for NEOs. Additionally, ICP Net Income above the goal does not result in additional ICP bonus funding / payout. In the event the Company’s actual ICP Net Income funded the 200% opportunity, the Committee retained the discretion to adjust the ICP bonus payout amount downward based on its assessment of the NEO’s individual performance in FY2010. The CEO provides the Committee with his perspective on individual NEO performance and makes recommendations for actual ICP payouts.

For FY2010, the Company achieved actual ICP Net Income of $620.6 million, which resulted in an ICP bonus funding amount equal to 200% of each NEO’s target bonus opportunity. However, pursuant to its retained discretion, the Committee adjusted downward each NEO’s funded bonus amount (excluding the CEO), resulting in an aggregate payout relative to target ICP bonus opportunity of 108.6% (excluding the CEO) and 166.7% for the CEO. The specific ICP bonus paid to each NEO for FY2010 is included in the Summary Compensation Table.

 

Long-Term Incentives

 

Overview.  The Company’s long-term incentive plan is designed to align the financial interests of stockholders directly with executive officers by focusing them on the sustainable appreciation of stockholder value. The Committee has a policy of granting equity awards on an annual basis, generally in the first few months of the fiscal year. However, as a result of the Invitrogen and Applied Biosystems merger in 2008, the Committee granted long-term incentive (LTI) awards to most executive officers in November 2008 to provide an immediate post-close incentive to effectively integrate the two organizations. In 2010, annual LTI awards to executive officers and other eligible employees occurred on March 1. Beginning in 2011, the Committee selected April 1 as the annual LTI award date to align more closely with merit increases, which are effective in April.

 

The Committee approved grants of non-qualified stock options and time-based vesting restricted stock units for most executive officers in February 2010. The FY2010 LTI design targeted an economic value of the total award to be evenly split between stock options and restricted stock units for employees at and above the Vice President level. For the 2011 LTI awards, the Committee elected to award 100% restricted stock units to all employees receiving a grant. The Committee believes this provides added retention value across our talent pool while also focusing grantees on creating stockholder value.

 

Determining Award Levels.  The Committee’s philosophy is to target an economic value for LTI awards to executive officers that approximate the 65th percentile of the competitive market. DolmatConnell provides the Committee with grant ranges for executive officers with the midpoint of the range aligned to this strategy. The Committee then reviews the CEO’s recommendation for individual grants to executive officers based on his assessment of individual performance and potential contribution to the Company’s success. In addition to taking into account the CEO’s recommendations, the Committee decides the final award level for each executive officer based upon:

 

 

The Committee believes this approach balances the short, mid, and long-term goals and interests of stockholders and executives officers.

 

Stock Option Awards.  Any stock options awarded to employees have an exercise price equal to the closing price of the Company’s common stock on the Nasdaq market on the date of grant. Stock options generally vest ratably over four years following the grant date and have a ten-year total exercise term, which term may be shorter under certain circumstances such as a termination of employment.

 

Restricted Stock Unit Awards.  Outstanding restricted stock units fully vest, which is also referred to as “cliff vesting,” on the third anniversary of the grant date. Restricted stock units granted on or after April 1, 2011 will generally vest annually in 25% increments over four years from the date of grant. The Committee believes this change more closely aligns with practices among our peer group of companies.

Other Long-Term Incentive Awards.  In addition to the stock option and restricted stock unit awards, most executive officers (excluding the CEO) are eligible for a one-time cash incentive for achieving synergy goals related to the merger of Invitrogen and Applied Biosystems. Under this plan, which became effective upon the merger in November 2008, executive officers had the opportunity to receive a cash award payable in March 2010 and / or March 2011 if certain performance goals were achieved.

 

Specifically, eligible executive officers have synergy goals relating to their functional areas of responsibility. Every executive officer had both a FY2009 and FY2010 financial goal to achieve cost synergies related to the merger and other FY2009 / 2010 goals customized to their function and areas of responsibility.

 

In general, an executive officer’s total payout under this incentive was targeted at 150% of his or her FY2009 annual ICP target bonus opportunity. To focus executive officers on accelerating the achievement of synergies, the plan paid out 60% of the target award opportunity in March 2010 for achieving FY2009 goals and 40% of the target award in March 2011 for achieving FY2010 goals. The final 40% was eligible for acceleration if FY2010 goals were achieved in FY2009. This design feature was added to incentivize accelerated achievement of the planned synergy objectives. None of the NEOs achieved goals to accelerate their 2010 payouts under the plan.

 

Following are the total target payouts for the NEOs who received a synergy cash incentive award:

 

 

The CEO was excluded from this one-time synergy incentive plan because the Committee believes he already had adequate ICP and long-term incentives tied to the successful integration of Invitrogen and Applied Biosystems.

 

Each of the NEOs participating in the plan received their target payouts for FY2009 in March 2010 and their target payout for FY2010 in March 2011. The specific synergy bonus paid to each individual for FY2010 is included in the Summary Compensation Table.

 

Employee Benefits and Perquisites

 

The Committee oversees the strategy, design, and administration of all broad-based and supplemental executive benefit / perquisite programs. The Company offers a limited number of supplemental benefits and perquisites to executive officers relative to the proxy peer group. As a result, this provides the Committee with flexibility to place greater emphasis / weight on short and long-term incentive compensation. Specifically, the Company provides supplemental long-term disability and life insurance (CEO only) to make-up for limits in the Company’s group insurance contracts, a financial counseling allowance, a non-qualified deferred compensation plan (described in more detail below), and an annual executive physical benefit. The Committee has approved these benefits and perquisites because it believes they are market competitive, reasonable, and allow executive officers to focus their primary attention on the strategic objectives of the Company versus personal matters.

 

Non-Qualified Deferred Compensation.  The Deferred Compensation Plan (DCP) is a nonqualified defined contribution plan which provides for the voluntary deferral of cash compensation. Participants may defer up to 75 percent of base salary and/or up to 100 percent of annual ICP or sales incentive. Participation in the DCP is limited to designated employees above a certain level. Contributions may be directed into a

selection of underlying funds, including the Life Technologies Stock Fund, which invests solely in shares of Life Technologies.

 

We provide a 25 percent match on deferrals of ICP and sales incentive awards to the Life Technologies Stock Fund, up to an annual maximum of 100% of the participant’s target incentive. Matching contributions are credited to the Life Technologies Stock Fund on the date incentive awards are paid and cliff / 100% vest over a period of three years.

 

The DCP also has an additional matching provision, providing a supplemental make-up match to employees whose 401(k) matching contributions are reduced as a result of IRS limitations. Make-up matching contributions made by Life Technologies are 50% vested after one year of service and fully vested after two years of service.

 

One executive officer, Mark Stevenson, also participated in a supplemental executive retirement plan that was implemented in August 2007 while Mr. Stevenson was an Applied Biosystems executive. Effective January 1, 2010, the Committee froze the supplemental executive retirement plan, and Mr. Stevenson ceased accruing any additional benefits under this arrangement.

 

Other Benefits and Perquisites.  The Company also owns an aircraft which is operated by a third party and made available for charter when not in use by the Company. Executive officer family members / guests may accompany an executive for business related activities. However, if family members or guests accompany an executive on a business trip and their travel is not business related, the executive reimburses the cost of such family member / guest travel to the Company at the then prevailing Standard Industry Fare Level rates.

 

The Company does not provide an income tax gross-up for the executive officer’s cost associated with these benefits or perquisites. The amounts relating to benefits and perquisites are disclosed in the footnotes to the Summary Compensation Table.

 

Executive Severance Plan and Agreements

 

The following benefits are provided to executive officers eligible under the Executive Severance Plan and whose employment is involuntarily terminated without cause (as defined under the plan):

 

(i) an amount of cash severance equal to twelve (12) months base salary continuation plus an equivalent to the incumbent’s pro-rated ICP award,

 

(ii) nine months of outplacement assistance, and

 

(iii) up to twelve months of health benefits continuation.

 

The Company has also entered into individual agreements with the CEO and Chief Financial Officer providing them with specific benefits if their employment is terminated involuntarily without cause or they voluntarily terminate employment for “good reason” (as defined in their agreements). Specifically, their agreements provide the following benefit upon termination:

 

(i) a cash lump-sum payment in an amount equal to 1.5 times the sum of the executive’s base salary plus the ICP target bonus for the year in which the termination occurred, and

 

(ii) eighteen months of group health benefits continuation.

 

Each executive is required to sign a Confidential Separation Agreement and General Release of All Claims (Separation Agreement) as defined under the Life Technologies Executive Officer Severance Plan as a condition to receiving any benefits. The Committee believes these benefits are competitive and reasonable and that they avoid lengthy negotiations with executives when they leave the Company.

 

Executive Change-in-Control (CIC) Agreements

 

The Company has entered into change-in-control (CIC) agreements with the NEOs and a very small group of other executives because the Committee believes these individuals are the most likely to lose their

jobs due to redundancy but not performance, and believe these agreements provide any potential buyer with the flexibility to retain the management team if so desired.

 

The CIC agreements are “double trigger” agreements, meaning no payouts are made to the executives unless there is a:

 

(i) change in ownership, and

 

(ii) termination or constructive termination of the executive’s employment within twenty-four months following the change in ownership.

 

If a double-trigger occurs the agreement provides for the executive to receive:

 

(i) a cash lump-sum payment in an amount equal to two times his or her existing base salary plus two times the higher of the last bonus paid or their target bonus; (ii) up to twenty-four months of group health insurance continuation coverage (which ceases should the executive accept employment that allows the executive to participate in group health insurance coverage before the twenty-four month period ends);

 

(iii) outplacement assistance for nine months;

 

(iv) acceleration of vesting of all outstanding long-term incentive awards; and

 

(v) a tax gross-up if an Internal Revenue Code section 280G excise tax penalty is imposed for excess parachute payments.

 

In April 2009, the Committee agreed not to include a gross-up of any excise tax in future CIC agreements, except in extraordinary circumstances. Additionally, any new CIC agreements offered to a current or prospective employee must be approved by the Committee. Additional information regarding applicable payments under the CIC and executive severance arrangements for the NEOs is provided below under the heading “Potential Payments Upon Termination or Change-in-Control.”

 

Other Policies and Practices

 

Stock Ownership Guidelines.  The Committee has determined each of the executive officers should own a significant amount of the Company’s common stock to more closely align the financial interests of the executive officers with those of stockholders. Executive officers are expected to attain these ownership levels within four years after their election or appointment to the specified officer position. The Committee expects the CEO to hold at least 90,000 shares of the Company’s common stock, the Chief Operating Officer to hold at least 40,000 shares, and senior vice presidents to hold at least 20,000 shares. The Company’s policy regarding shares included for the purposes of ownership guidelines was amended in February 2010. In determining individual ownership levels, all shares held outright (not including unvested RSUs or unexercised stock options), shares acquired through the ESPP, and deferred stock units are counted towards the ownership guidelines. Previously, unvested RSUs were included in determining ownership levels. The deadline to achieve the guideline amounts is February 2013.

 

As of March 1, 2011, all executive officers either met or were on target to be in compliance with these stock ownership guidelines.

 

Equity Grant Practices.  The Committee awards stock options at an exercise price equal to the closing price of the Company’s common stock reported on the date of the grant. The date of grant is the first trading day of the month following the date the grants are approved. Under the terms of the Company’s equity plans, stock option re-pricing is not permitted without stockholder approval.

 

Deductibility of NEO Compensation.  In evaluating compensation program alternatives, the Committee considers the potential impact of Section 162(m) of the Internal Revenue Code. Section 162(m) eliminates the deductibility of compensation over $1 million paid to NEOs (with the exception of the Chief Financial Officer under current IRS rules) of a publicly-traded company that is not “performance-based compensation” as defined under the specific rules.

The Committee endeavors to maximize deductibility of compensation under Section 162(m) to the extent practicable while maintaining competitive, performance-based compensation. However, the Committee believes it is important to retain maximum flexibility in designing compensation programs that meet its stated objectives and fit within the Committee’s compensation philosophy. Further, the actual impact of the loss of deduction for compensation paid to NEOs over the limitation would have a minimal impact on the Company’s financial position. Therefore, the Committee may choose not to limit compensation to preserve deductibility for certain payments under various compensation programs. The Committee will consider alternative forms of compensation that preserve deductibility, consistent with its compensation goals.

 

Clawback Policy.  In April 2010, the Committee adopted a Compensation Recovery Policy. The Company believes that the strong financial controls in place provide a substantial safeguard against the risk of a financial restatement. However, if an extraordinary event were to occur, resulting in a material restatement of the Company’s financial performance, the Committee is authorized to seek recovery of compensation from responsible employees. The Committee may take all relevant factors into account when deciding subsequent compensation actions and exercise business judgment and discretion to determine amounts to recoup, if any. For these purposes “material restatement” does not include a restatement caused by one or more changes in applicable accounting rules or interpretations.

 

Policy on Stock Hedging.  Executive officers are prohibited from participating in short sales on the Company’s stock, or the purchase or sale of options, puts, calls, straddles, equity swaps or other derivative securities that are directly linked to Life Technologies securities.

 

REPORT OF THE
COMPENSATION AND ORGANIZATIONAL DEVELOPMENT COMMITTEE
OF THE
BOARD OF DIRECTORS

 

The Compensation and Organizational Development Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K with management. Based on such review and discussions, the Compensation and Organizational Development Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the registrant’s Proxy Statement on Schedule 14A.

 

Ronald A. Matricaria (Chairman)
Donald W. Grimm
William H. Longfield
David C. U’Prichard, Ph.D.

 

2010 Summary Compensation Table

 

The following table sets forth information for the fiscal year ended December 31, 2010, concerning the compensation of the CEO and CFO of the Company and each of the three other most highly compensated executive officers as of December 31, 2010.

 

 

 

 

 

 

 

 

 

 

 

 

Grants of Plan-Based Awards Table

 

The following table sets forth certain information with respect to stock and option awards and other plan-based awards granted to the Named Executive Officers during the fiscal year ended December 31, 2010.

 

 

 

 

Options Exercised and Stock Vested Table

 

The following information sets forth the stock awards vested and stock options exercised by the Named Executive Officers during the fiscal year ended December 31, 2010.

 

 

 

Outstanding Equity Awards at Fiscal Year-end Table

 

The following table sets forth certain information with respect to the value of all unexercised options and unvested stock awards previously awarded to the Named Executive Officers as of December 31, 2010 (market value for stock awards is determined by multiplying the number of shares by the closing price of Life Technologies’ common stock on the last trading day of the fiscal year).

 

 

 

 

Employment and Severance Arrangements

 

Employment Agreements

 

On February 24, 2011, the Company entered into an amended and restated employment agreement with Gregory T. Lucier, the Company’s Chairman and Chief Executive Officer, modifying his existing employment agreement entered into in 2003. Under the terms of this agreement, the Company intends to grant Mr. Lucier at least 150,000 time-based vesting restricted stock units each year in 2012 and 2013 but the economic value

of each award will not exceed $12,000,000 on the date of grant. Grants made in 2012 and 2013 will require approval by the C&OD Committee and the Board at the time of award.

 

If the Company terminates his employment not for cause (or he voluntarily terminates for Good Reason as defined in his agreement), he will receive cash severance equal to 1.5X his annual salary plus target ICP opportunity, 18 months of health care benefits, and accelerated vesting of all equity-based incentives (excluding stock options that have an exercise price above the closing price of the Company’s common stock on his termination date). Any vested stock options will remain exercisable until the earlier to occur of the first anniversary of his termination date and their final stated expiration date. At any time on or after September 1, 2013, he can provide the Company written notice of his voluntary resignation not less than six months prior to the effective date of the resignation. If this were to occur, all of his outstanding equity-based incentive compensation awards (excluding stock options that have an exercise price above the closing price of the Company’s common stock on his termination date) shall become fully vested on his termination date (accelerated vesting does not apply to any equity-based incentives granted on or after January 1, 2013). Any vested stock options will remain exercisable until their final stated expiration date. If Mr. Lucier continues to have superior performance, the Company expects to amend this agreement prior to September 1, 2013 to retain Mr. Lucier for an appropriate future period of time. The Employment Agreement, 2011 equity grant agreement, and amended equity grant agreements were filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 25, 2011.

 

The Company entered into an Employment Agreement, effective on October 13, 2004, with David F. Hoffmeister, for Mr. Hoffmeister to serve as the Company’s Chief Financial Officer. Under the terms of this Employment Agreement, Mr. Hoffmeister received his target bonus under the Incentive Compensation Plan for his first year of employment. Mr. Hoffmeister received a one time signing bonus of $375,000. Mr. Hoffmeister also received a $225,000 employment bonus which was paid on or before each of the first three anniversary dates of Mr. Hoffmeister’s initial employment. The Employment Agreement also provides Mr. Hoffmeister with severance benefits in the event of his termination for certain reasons. The Employment Agreement was filed as Exhibit 10.1 to an 8-K filed with the SEC on October 18, 2004.

 

The Company entered into an Employment Agreement, effective on November 20, 2008, with Mark P. Stevenson, for Mr. Stevenson to serve as the Company’s President and Chief Operating Officer. Under the terms of the Agreement, Mr. Stevenson was to receive a cash lump sum payment in the amount of $3.744 million, plus reimbursement and gross up for excise taxes. The Agreement also provides that Mr. Stevenson was to receive an Equity Incentive Award by way of (i) an option to purchase a number of shares of Company common stock that have a grant face value of $3.6 million, vesting ratably over four years, and (ii) a grant of restricted stock units of Company common stock that have a grant face value of $1.0 million, vesting 100% on the third anniversary of the date of grant. In addition, Mr. Stevenson is eligible for certain severance benefits in the event of his termination for certain reasons. The Employment Agreement was filed as Exhibit 99.4 to an 8-K filed with the SEC on November 29, 2008.

 

The Company has entered into letter agreements with each of our other executive officers outlining the terms of their employment and the elements of their compensation. Each of these letter agreements follows our standard employment offer template, and provides for employment at will.

Compensation of Directors

 

During 2010, certain directors who are not executive officers received compensation as described below:

 

Director Compensation Table

 

 

 

 

Effective April 1, 2009, the Board adopted annual compensation guidelines as follows. Each Director receives a fixed annual compensation of $325,000 with $100,000 payable in cash, and $225,000 payable in restricted stock units. Cash payments are made in advance at the start of each calendar quarter, and the Board, at its first meeting following the Annual Meeting of stockholders, determines the amount of each cash

payment for the subsequent four quarters. The Presiding Director and each Committee Chairman receive an additional $12,500 per year. In addition, Directors are reimbursed for the reasonable out-of-pocket expenses that they incur in attending meetings of the Board, committee meetings of the Company, and director-related education seminars.

 

Restricted stock units (RSUs) are granted at the first Board meeting following the Annual Meeting. The Board anticipates that members of the Board will receive RSUs with a Fair Market Value on the date of grant of $225,000 for each year. Each RSU grant completely vests at the earlier of the anniversary of its grant date, or the date of the next annual meeting. Each Director may elect to have the company settle his or her RSUs at a specified time after the vesting period has lapsed. If no election is made, the RSUs will be settled at termination of such Director’s service.

 

Cash and equity compensation for newly appointed directors are pro-rated to the date of the next annual meeting.

 

On February 24, 2011 the Board adopted a policy regarding the compensation of directors that provides that if a non-employee director is unable to accept the compensation as described above due to restrictions imposed on such director by his or her employer, then the compensation structure and amount may be amended for such director by the Compensation & Organizational Development Committee to comply with such restrictions, provided that in no event shall the annual compensation for a director exceed the aggregate value of compensation then in effect for a non-employee director, as established by the annual compensation guidelines adopted by the Board. The Board adopted this rule to address any internal policies set forth by employers of director nominees, as may arise from time to time, including Class I director nominee Ora H. Pescovitz, M.D.