UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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155 South Limerick Road, Limerick, Pennsylvania 19468

 

 

Notice of Annual Meeting of Stockholders

To Be Held on May 1, 2008

 

 

March 28, 2008 

 

TO THE STOCKHOLDERS OF TELEFLEX INCORPORATED:

 

The Annual Meeting of Stockholders of Teleflex Incorporated (the “Annual Meeting”) will be held on Thursday, May 1, 2008 at 11:00 a.m., local time, at the Crowne Plaza Valley Forge, 260 Mall Boulevard, King of Prussia, Pennsylvania 19406, for the following purposes:

 

1. To elect four directors of the Company to serve for a term of three years, until their successors have been elected and qualified;

 

2. To vote upon a proposal to approve the Company’s 2008 Stock Incentive Plan;

 

3. To vote upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the 2008 fiscal year; and

 

4. To transact such other business as may properly come before the meeting.

 

The Board of Directors has fixed Monday, March 10, 2008, as the Record Date for the meeting. This means that owners of the Company’s common stock at the close of business on that date are entitled to receive notice of and to vote at the Annual Meeting.

 

STOCKHOLDERS ARE REQUESTED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES OR CANADA. YOU MAY ALSO VOTE BY TELEPHONE BY CALLING TOLL FREE 1-800-PROXIES (776-9437), OR VIA THE INTERNET AT WWW.VOTEPROXY.COM.

 

By Order of the Board of Directors,

 

LAURENCE G. MILLER, Secretary

 

 

PLEASE VOTE — YOUR VOTE IS IMPORTANT

 

TABLE OF CONTENTS

 

 

TELEFLEX INCORPORATED
155 South Limerick Road
Limerick, Pennsylvania 19468

 

 

PROXY STATEMENT

 

 

This proxy statement is furnished to stockholders in connection with the solicitation of proxies by the Board of Directors for use at the Company’s Annual Meeting of Stockholders to be held on Thursday, May 1, 2008, 11:00 a.m. local time, at the Crowne Plaza Valley Forge at 260 Mall Boulevard, King of Prussia, Pennsylvania 19406. The proxies may also be voted at any adjournment or postponement of the Annual Meeting. Only stockholders of record at the close of business on March 10, 2008, the “Record Date,” are entitled to vote. Each owner of record on the Record Date is entitled to one vote for each share of common stock held. On the Record Date, the Company had 39,536,847 shares of common stock outstanding.

 

This proxy statement and the enclosed form of proxy were mailed to stockholders on or about March 28, 2008. A copy of the Company’s Annual Report is provided with this proxy statement.

 

The Company will pay the cost of solicitation of proxies. In addition to this mailing, proxies may be solicited, without extra compensation, by our officers and employees, by mail, telephone, facsimile, electronic mail and other methods of communication. The Company reimburses banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in forwarding solicitation materials to the beneficial owners of the Company’s common stock.

 

Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be Held on May 1, 2008

 

This proxy statement and the accompanying Notice of Annual Meeting are available at http://phx.corporate-ir.net/phoenix.zhtml?c=84306&p=irol-sec. In addition, our 2007 Annual Report is available at http://phx.corporate-ir.net/phoenix.zhtml?c=84306&p=irol-reportsannual.

 

 

It is your way of legally designating another person to vote for you. That other person is called a “proxy.” If you designate another person as your proxy in writing, the written document is called a “proxy” or “proxy card.”

 

 

It is a document required by the Securities and Exchange Commission (the “SEC”) that contains information about the matters that stockholders will vote upon at the Annual Meeting. The proxy statement also includes other information required by SEC regulations.

 

 

A quorum is the minimum number of stockholders who must be present or voting by proxy in order to conduct business at the meeting. A majority of the outstanding shares, whether present in person or represented by proxy, will constitute a quorum at the Annual Meeting. Shares represented by proxies marked to “abstain” from voting for a proposal or to “withhold” voting for one or more nominees and broker non-votes are counted for purposes of determining the presence of a quorum.

 

 

A broker “non-vote” occurs when a nominee, such as a broker or bank, holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.

 

 

A plurality of the votes cast at the meeting is required to elect directors; that is, the four nominees receiving the highest number of votes for the class whose term expires at the 2011 Annual Meeting will be elected.

 

The affirmative vote of a majority of outstanding shares present, in person or by proxy, and entitled to vote is necessary to approve the 2008 Stock Incentive Plan, to ratify the appointment of PricewaterhouseCoopers LLP and to approve any other proposal.

 

Abstentions will be included in the vote count and have the same effect as voting “against” a proposal. Broker non-votes will not be included in the vote count and will have no effect on the vote with respect to the proposal concerning the ratification of the appointment of the Company’s independent registered public accounting firm.

 

 

You may vote through any of the following methods:

 

 

The shares represented by each proxy will be voted in accordance with the instructions you provide in the proxy card or that you may submit via telephone or the internet, unless the proxy is revoked before it is exercised. Any proxy card which is signed and returned without any markings

indicating how you wish to vote will be counted as a vote FOR the election of directors, FOR the proposal to approve the 2008 Stock Incentive Plan and FOR the ratification of PricewaterhouseCoopers LLP as independent registered public accounting firm for 2008.

 

If your shares are held by a broker, bank or other holder of record, please refer to the instructions it provides for voting your shares. If you want to vote those shares in person at the Annual Meeting, you must bring a signed proxy from the broker, bank or other holder of record giving you the right to vote the shares.

 

 

You may revoke your proxy at any time before the proxy is exercised by submitting a notice of revocation or submitting an executed proxy card bearing a later date to the Secretary of the Company at the Company’s principal executive offices, at 155 South Limerick Road, Limerick, Pennsylvania 19468. You may also revoke your proxy by attending the Annual Meeting in person and giving notice of your intention to vote at the Annual Meeting. Attendance at the Annual Meeting will not by itself revoke a previously granted proxy.

 

Our Board of Directors (the “Board”) currently consists of eleven members divided into three classes, with one class being elected each year for a three-year term. At the Annual Meeting, four directors will be elected for terms expiring at our Annual Meeting of Stockholders in 2011 and until their successors are elected and qualified. The Board, upon the recommendation of the Governance Committee, has nominated George Babich, Jr., William R. Cook, Stephen K. Klasko and Benson F. Smith for election to the Board for three-year terms.

 

Messrs. Babich, Cook and Smith are continuing directors who previously were elected by our stockholders. John J. Sickler, who served as a director of the Company since 2006 and was an employee of the Company for over thirty-five years, retired as Vice Chairman of the Company in October of 2007. Mr. Sickler is not standing for reelection to the Board. The Board is grateful for Mr. Sickler’s many contributions to the Company over the course of his career. Mr. Klasko is a new nominee standing for election as director in this class.

 

The persons named in the enclosed proxy intend to vote properly executed proxies for the election of Messrs. Babich, Cook, Klasko and Smith. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, the proxies may be voted for one or more substitute nominees designated by the Board, or the Board may decide to reduce the number of directors.

 

Information with respect to the nominees and continuing directors is set forth below.

 

Nominees for election to the Board of Directors — Terms expiring in 2011

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE ELECTION OF ALL NOMINEES.

The following individuals currently serve as directors in the two other classes. Their terms will end at the Annual Meetings in 2009 and 2010, respectively.

 

 

Our Corporate Governance Principles, including guidelines for the determination of director independence, the operations, structure and meetings of the Board, the committees of the Board and other matters relating to our corporate governance, are available on the Investors page of our website, www.teleflex.com. Also available on the Investors page are other corporate governance documents, including the Code of Ethics, the Code of Ethics for Chief Executive Officer and Senior Financial Officers, the Charter of the Audit Committee, the Charter of the Governance Committee and the Charter of the Compensation Committee. Any amendments to, or waivers of, the codes of ethics will be disclosed on our website promptly following the date of such amendment or waiver. You may also request these documents in print form by contacting us at Teleflex Incorporated, 155 South Limerick Road, Limerick, Pennsylvania 19468, Attention: Corporate Communications.

 

The Board has affirmatively determined that George Babich, Jr., Patricia C. Barron, William R. Cook, Jeffrey A. Graves, Stephen K. Klasko, Sigismundus W.W. Lubsen, Judith M. von Seldeneck, Benson F. Smith, Harold L. Yoh III and James W. Zug are independent within the meaning of the rules of the New York Stock Exchange (the “NYSE”). All of such independent directors meet the categorical standards set forth in the Corporate Governance Principles, which have been adopted by the Board to assist it in making determinations of independence. The Board has further determined that the members of the Audit Committee, the Compensation Committee and the Governance Committee are independent within the meaning of NYSE rules, and that the members of the Audit Committee meet the additional independence requirements of the NYSE applicable to Audit Committee members.

 

To assist the Board in making determinations of independence, the Board has adopted the following categorical standards. The Board will determine the materiality of any relationship which a director has with us by considering all relevant facts and circumstances. The Board may determine that a director is not independent notwithstanding that none of the following categorical disqualifications apply. However, if any of the following categorical disqualifications apply, a director may not be considered independent.

 

 

In March 2006, the Board established the position of Lead Director. The Lead Director is an independent director of the Board whose duties and responsibilities include:

 

 

The independent directors of the Board have the authority to make decisions concerning the Lead Director, including the power to appoint and remove the Lead Director and the authority to modify the Lead Director’s duties and responsibilities. The Lead Director is appointed annually by the independent directors of the Board. Mr. Cook currently serves as the Lead Director.

 

Directors who are not executive officers or otherwise employed by us or any of our subsidiaries, who we refer to as the non-management directors, meet regularly in accordance with a schedule adopted at the beginning of each year and on such additional occasions as a non-management director may request. Such meetings are held in executive session, without the presence of any directors who are executive officers. The Lead Director presides over such meetings.

 

Stockholders or other interested persons wishing to communicate with members of the Board should send such communications to Teleflex Incorporated, 155 South Limerick Road, Limerick, Pennsylvania 19468, Attention: Corporate Communications. These communications will be forwarded to specified individual directors, or, if applicable, to all the members of the Board as deemed appropriate. Stockholders or other interested persons may also communicate directly and confidentially with the Lead Director, the non-management directors as a group or the Chairman or other members of the Audit Committee through the Teleflex Ethics Hotline at 1-888-883-1499 or, for international calls, 1-203-557-8604.

 

The Board held eleven meetings in 2007. Each of the directors attended at least seventy-five percent of the total number of Board meetings held in 2007. The Board does not have a formal policy concerning attendance at its Annual Meeting of Stockholders but encourages all directors to attend. All of the Board members attended the 2007 Annual Meeting of Stockholders.

 

The Board has established a Governance Committee, a Compensation Committee and an Audit Committee.

 

Governance Committee

 

The Governance Committee is responsible for identifying qualified individuals for board membership and recommending individuals for nomination to the Board and its committees. In addition, the Governance Committee reviews and makes recommendations to the Board as to the size and composition of the Board and Board committees and eligibility criteria for Board and Board committee membership. The Governance Committee is also responsible for developing and recommending corporate governance principles to the Board and overseeing the evaluation of the Board and management.

 

The Governance Committee considers candidates for Board membership. Our Corporate Governance Principles provide that directors are expected to possess the highest character and integrity, and to have business, professional, academic, government or other experience which is relevant to our business and operations. In addition, directors must be able to devote substantial time to our affairs. The charter of the Governance Committee provides that in evaluating nominees, the Governance Committee should consider the attributes set forth above. Under our Corporate Governance Principles, a director must retire from the Board at the expiration of his or her term following attainment of age 70, except in special circumstances which shall be described in a resolution adopted by the Board requesting such director to defer retirement.

 

The Governance Committee will consider recommendations for director candidates from stockholders. Stockholders can recommend candidates for nomination by delivering or mailing written recommendations to Teleflex Incorporated, 155 South Limerick Road, Limerick, Pennsylvania 19468, Attention: Secretary. In order to enable consideration of the candidate in connection with our 2009 Annual Meeting, a stockholder must submit the following information by December 1, 2008:

 

 

In considering any candidate proposed by a stockholder, the Governance Committee will reach a conclusion based on the criteria described above. The Governance Committee may seek additional information regarding the candidate. After full consideration, the stockholder proponent will be notified of the decision of the Governance Committee. The Governance Committee will consider all potential candidates in the same manner regardless of the source of the recommendation.

 

The current members of the Governance Committee are Mrs. Barron and Messrs. Graves and Cook. Mrs. Barron currently serves as the chair of the Governance Committee. The Governance Committee held five meetings in 2007. Each of the members of the Governance Committee attended at least seventy-five percent of the total number of Governance Committee meetings held in 2007.

Compensation Committee

 

The duties and responsibilities of the Compensation Committee include, among others, the following:

 

 

The current members of the Compensation Committee are Mrs. von Seldeneck and Messrs. Lubsen, Smith and Yoh. Mr. Lubsen currently serves as the chair of the Compensation Committee. The Compensation Committee held five meetings in 2007. Each of the members of the Compensation Committee attended at least seventy-five percent of the total number of Compensation Committee meetings held in 2007.

 

Audit Committee

 

The Audit Committee has responsibility to assist the Board in its oversight of the following matters, among others:

 

 

The Audit Committee has sole authority to appoint, retain, compensate, evaluate and terminate the independent auditors, and reviews and approves in advance all audit and lawfully permitted non-audit services performed by the independent registered public accounting firm. In addition, the Audit Committee oversees the performance of the persons performing our internal audit function; and periodically meets separately with management, our independent auditors and our own internal auditors. The Audit Committee also periodically discusses with management our policies with respect to risk assessment and risk management.

 

Stockholders may contact our Audit Committee to report complaints about our accounting, internal accounting controls or auditing matters by writing to the following address: Teleflex

Incorporated, 155 South Limerick Road, Limerick, Pennsylvania 19468, Attention: Audit Committee. Stockholders can report their concerns to the Audit Committee anonymously or confidentially.

 

The current members of the Audit Committee are Messrs. Cook, Babich and Zug. Mr. Zug currently serves as the chair of the Audit Committee. The Audit Committee held nine meetings in 2007. Each of the members of the Audit Committee attended at least seventy-five percent of the total number of Audit Committee meetings held in 2007. The Board has determined that each of the Audit Committee members is an “audit committee financial expert” as that term is defined in SEC regulations.

 

Directors who are also employees of ours or any of our subsidiaries receive no additional compensation for their service as directors. Non-management directors receive an annual cash retainer of $25,000, which is payable in equal monthly installments. In addition, non-management directors currently are paid the following equity based compensation under our 2000 Stock Compensation Plan:

 

 

For 2008, the market value on the grate date of the restricted stock was increased from $25,000 to $50,000.

 

The non-management directors also receive a fee for each Board meeting attended of $2,000 for meetings attended in person and $1,000 for telephonic participation. Members of our Audit, Compensation and Governance Committees also receive a fee of $1,000 for each committee meeting attended, whether in person or telephonically.

 

In addition, the Lead Director receives an annual restricted stock award having a market value of $20,000 on the grant date. The chairpersons of our Audit, Compensation and Governance Committees receive an annual stipend of $10,000, $5,000 and $5,000, respectively. In February 2008, our Board, upon the recommendation of the Governance Committee, approved an increase of $2,500 in the annual stipend paid to each chairperson, which will become effective May 1, 2008. We do not provide any pension benefits to the non-management directors.

 

We provide the non-management directors with $100,000 of life insurance and $100,000 of accidental death or dismemberment coverage during their service on the Board.

The table below summarizes the compensation paid to non-management directors during the fiscal year ended December 31, 2007.

 

 

 

 

In February 2008, our Board established stock ownership guidelines for our directors to further align the interests of our directors with those of our stockholders. The ownership guidelines require our directors to own shares of our common stock, shares of restricted stock and shares underlying stock options with an aggregate value equal to two times the annual compensation paid to our directors. Directors have until the later of February 2013 or five years from the date they are first elected to the Board to meet the required ownership level.

 

The Audit Committee of the Board of Directors is comprised of three non-management directors, each of whom has been determined by the Board to be independent under the rules of the NYSE and the SEC. The Audit Committee’s responsibilities are set forth in its amended and restated charter, which was adopted by the Board on March 7, 2005.

 

Generally, the Audit Committee oversees and reviews with the full Board any issues with respect to the Company’s financial statements, the structure of our legal and regulatory compliance, the performance and independence of our independent registered public accounting firm and the performance of our internal audit function. The Committee retains our independent registered public accounting firm to undertake appropriate reviews and audits of our consolidated financial statements and our internal control over financial reporting, determines the compensation of the independent registered public accounting firm and pre-approves all of their services. The preparation of our consolidated financial statements is the responsibility of our management. The Audit Committee maintains oversight of the independent registered public accounting firm by discussing the overall scope and specific plans for their audits, the results of their examinations and the overall quality of our financial reporting.

 

The Audit Committee maintains oversight of our internal audit function by reviewing the appointment and replacement of our director of internal auditing and periodically meets with the director of internal auditing to receive and review reports of the work of our internal audit department. The Audit Committee meets with management on a regular basis to discuss any significant matters, internal audit recommendations, policy or procedural changes, and risks or exposures, if any, that may have a material effect on our financial statements.

 

The Audit Committee has taken the following actions:

 

 

In reliance on the reviews, reports and discussions referred to above, the Audit Committee recommended to our Board, and the Board has approved, the inclusion of the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2007, for filing with the SEC.

 

AUDIT COMMITTEE

 

 

 

In this Compensation Discussion and Analysis, we address the compensation paid or awarded to our executive officers listed in the Summary Compensation Table that follows this discussion. We refer to these executive officers as our “named executive officers.”

 

Compensation Objectives

 

Our executive compensation program is designed principally to promote the achievement of specific annual, long-term and strategic goals by our executive management team and to align our executives’ interests with those of our stockholders. In this regard, the components of the compensation program for our executives, including the named executive officers, are intended to meet the following objectives:

 

 

We have fashioned the components of our 2007 executive compensation program to meet these objectives as follows:

 

 

With respect to the 2008 program, our Compensation Committee decided to modify a component of our long-term compensation to award shares of restricted stock subject to time-based vesting to our named executive officers in lieu of the long-term compensation cash awards. We address the reasons for this determination below under “Long-Term Incentive Compensation.” However, our Compensation Committee may decide to issue cash award opportunities under our long-term compensation program in the future.

 

Role of Compensation Committee and Executive Officers

 

The Compensation Committee of our Board of Directors is responsible for the oversight of our executive compensation program. The Compensation Committee makes all decisions concerning compensation awarded to our executive officers, other than Jeffrey P. Black, our Chairman, Chief

Executive Officer and President. Determinations concerning Mr. Black’s compensation are made by our Board of Directors upon the recommendation of the Compensation Committee.

 

Mr. Black, with the assistance of our human resources department and our compensation consultant, Mercer (US) Inc., which we refer to below as “Mercer,” provides statistical data to the Compensation Committee to assist it in determining appropriate compensation levels for our executives. Mr. Black also provides the Compensation Committee with recommendations as to components of the compensation of our executives. Mr. Black does not make recommendations as to his own compensation. While the Compensation Committee utilizes this information, and values Mr. Black’s observations with regard to other executive officers, the ultimate decisions regarding executive compensation are made by the Compensation Committee.

 

Determination of Compensation

 

Introduction

 

In 2007, we executed a number of acquisitions and divestitures designed to provide greater consistency of performance, improved profitability and sustainable growth. The most significant of these transactions was our acquisition of Arrow International, a leading global provider of catheter-based access and therapeutic products for critical and cardiac care, and the divestiture of our automotive and industrial businesses. Together, these transactions changed the nature of our businesses from a diversified industrial company to a company principally engaged in the medical technology business. As a result, in 2008, our Compensation Committee engaged in a review of our compensation program for executive officers and determined that certain adjustments to our compensation practices were appropriate to reflect these changes in our business. The following discussion summarizes the compensation determinations made with respect to compensation of our named executive officers in 2007 and the subsequent changes to our compensation practices approved for 2008.

 

2007 Compensation Determinations

 

In making our compensation determinations, we periodically reference reports provided by Mercer that include compensation data Mercer derives from several published compensation surveys. These surveys provide information regarding compensation paid by manufacturing companies to executives in functionally comparable positions to our executives. The survey data is size adjusted by Mercer using a regression analysis where available; otherwise, we limited the sample to companies having annual revenues ranging from approximately 0.5 to 2 times our annual revenues. In making our compensation decisions for 2007, we utilized a Mercer report that referenced data from a survey completed in 2005. Mercer provided samplings with respect to functionally comparable executives from 100 to 400 companies, depending on the comparable executive position. We refer to these companies as the “general market companies.” In light of the fact that we wish to emphasize a performance orientation in our compensation program, we position base salaries to be at a lower level relative to the general market companies than total direct compensation, which includes the target amounts of annual bonus and long-term incentive compensation in addition to base salary. In assessing our compensation against the market, we use survey data as a general reference point. Specifically, we generally seek to position executive salaries to fall within the competitive range of the median of the salaries paid to comparable executives by the general market companies, while positioning total direct compensation to fall within the competitive range of the 65th percentile of total direct compensation paid by the general market companies. We also seek to position total cash compensation, which includes salary and target amount of annual bonus, to fall within the competitive range of the 65th percentile of the market. While the market data is one reference in our pay determinations, we may set compensation below or above these levels as we deem appropriate. Factors that affected our determination in 2007 included the executive’s role within the organization, tenure, individual performance and comparable data relating to a peer group of publicly traded

manufacturing companies selected by our Compensation Committee, which we refer to as the “peer group companies.”

 

We used the peer group companies as a secondary point of evaluation to validate compensation decisions, and in certain instances we have adjusted compensation in response to peer group data. Moreover, as explained in more detail below, the cash incentive opportunities awarded to our executives in 2007 and prior years under our long-term incentive compensation program were based on our “total shareholder return” as compared to the total shareholder return of the peer group companies.

 

The peer group companies for 2007 consisted of the following:

 

 

These companies were initially selected by our Compensation Committee in 2003 and continued to be referenced through 2007 because they were diversified industrial companies of roughly comparable size to ours, which we believed were considered by analysts to be competitors for investor capital during that period.

 

In determining executive compensation in 2007, we considered, among other things, Mercer’s advice that compensation that is within 15 percent above or below the 65th percentile market reference point for total direct compensation and total cash compensation and the 50th percentile market reference point for salary is within the competitive range we are seeking.

 

Changes in Compensation Determinations for 2008

 

In 2008, our Compensation Committee conducted a review of the peer group companies using data provided by Mercer to determine whether any modifications to the group would be necessary or appropriate in light of the significant changes in our operations that occurred in 2007, as discussed above. Upon conclusion of this review, the Compensation Committee determined that the peer group companies should be adjusted to reflect an increased emphasis on the medical industry. The revised peer group companies selected by the Compensation Committee, which were used as a secondary reference to the general market companies in connection with decisions relating to executive compensation matters for 2008, consist of the following:

 

 

Salaries

 

Base salary ranges for our executives are determined based on each executive’s position and responsibility. As noted above, we generally seek to position salaries for our named executive officers within a competitive range of the median of salaries for positions of comparable responsibility reported by the general market companies. Salary levels are typically considered annually as part of our performance review process. In addition, salary reviews may occur at other times due to events such as a promotion or other change in job responsibility.

For 2007, salary increases for all named executive officers other than Mr. Gordon did not exceed five percent. Mr. Gordon’s salary was increased in March 2007 by approximately 44 percent over his salary in 2006 in connection with his promotion to Executive Vice President and Chief Financial Officer. We determined this increase in salary to be appropriate for Mr. Gordon in light of the duties and responsibilities associated with this position and the fact that it was substantially consistent with the level of salary paid to Mr. Gordon’s predecessor. The salaries paid to our named executive officers in 2007 were within the competitive range described above.

 

Annual Executive Incentive Compensation

 

Annual Incentive Award Components

 

We provide annual cash incentive opportunities to subject a meaningful amount of an executive’s total cash compensation to the achievement of business performance objectives. In this regard, we assess our total cash compensation, which is the sum of an executive’s salary and target amount of annual bonus, to fall within a competitive range of the 65th percentile of total cash compensation for comparable executives in the general market companies, in contrast to the median reference point used in connection with salaries. Nevertheless, the actual amounts of annual bonus paid out to our executives is based on achievement of applicable corporate, business segment or individual performance goals and can vary considerably from the target amount.

 

Under our annual incentive plan, 80 or 90 percent of the target award opportunity, depending on the executive, is based on corporate or business segment financial performance measures, while the remaining 10 or 20 percent of the target award opportunity is based on individual performance. We have weighted the annual incentive awards largely to the financial performance measures because we believe that emphasizing corporate or business unit financial performance encourages a unified commitment by our executives to performance that we believe more directly affects stockholder value.

 

2007 Award Components

 

In 2007, the criteria under our annual incentive program for our named executive officers who do not have responsibility for a specific business segment, namely Messrs. Black, Gordon, Sickler and Miller, were as follows:

 

 

We continue to use EPS as a performance measure because we believe that a fundamental objective of an executive officer is to significantly increase stockholder value, and for a large, well established industrial enterprise like ours, EPS is a key metric affecting share price and, thus, stockholder value. We excluded restructuring and other special charges from our EPS target because such charges are not contained within our earnings guidance and adjusted results reported to investors and are generally disregarded in assessing whether stockholder value has been generated. For 2007, we decided to add cash flow as a performance measure because we believe it is an important indicator of our ability to service our indebtedness, make capital expenditures and provide flexibility with regard to the pursuit of other operating initiatives. We excluded the effect of acquisitions and divestitures because they reflect events that do not affect the day-to-day management of our business. For 2007, we also decided to add revenue growth without giving effect to acquisitions or divestitures because we wanted to emphasize sales growth with respect to our core operations. We excluded the impact of foreign currency fluctuations from both cash flow and revenue growth because

they are factors that generally are outside of our control. We continued to include individual performance as a performance measure in order to provide these executives with an award opportunity based upon their overall performance during the preceding fiscal year, including their satisfaction of individual performance objectives that are established at the beginning of the preceding fiscal year.

 

For Messrs. Waaser and Northfield, who each have responsibility with respect to one of our business segments, the criteria under our 2007 annual incentive program were as follows:

 

 

We believe that PBFI is a reliable overall measure of the performance of a business segment. Therefore, we believe that a significant portion of the financial performance-based component for an executive who is responsible for a business segment should be based on this measure. We excluded the impact of foreign currency fluctuations from this measure for the reason stated above. We use AVI as a performance measure because we believe that an important factor in our performance is the effective utilization of our cash resources and other working capital items. Executives with responsibility for individual business segments are most directly involved in managing these assets; therefore, we applied this performance measure to them. We included EPS as a performance measure in order to attribute a certain portion of their opportunity to the overall financial performance of our company. For 2007, we decided to add individual performance as a performance criteria for Messrs. Waaser and Northfield because we believed it was important to emphasize certain individual performance objectives established for these executives at the beginning of the preceding fiscal year.

 

For 2007, an executive’s award payout related to EPS could range from 50 percent of the target award, if threshold levels of performance equivalent to approximately 93 percent of the EPS target were achieved, to 200 percent of the target award, if the maximum performance level equivalent to approximately 105 percent of the EPS target was achieved or exceeded. Award payouts related to other financial performance-based measures, other than cash flow and AVI, could similarly range from 50 percent to 200 percent of the target award, if achievement were below or exceeded threshold levels, respectively. With respect to the cash flow and AVI measures, an executive’s opportunity ranged from 100 percent of the target award if the target levels were achieved to 200 percent if certain maximum performance targets were achieved or exceeded. In addition, depending on the extent to which the executive satisfies the objectives, he may receive no payment or a payment of up to 200 percent of the individual performance component of the target award opportunity.

 

2007 Executive Incentive Compensation Targets and Awards

 

The target award payable to a named executive officer for 2007 if the target financial performance-based objective or objectives were achieved and 100 percent of the individual

performance component award opportunity was paid is equal to a percentage of the executive’s salary, as shown on the following table:

 

 

The following table provides information for each named executive officer regarding applicable performance measures, targets and actual payments with respect to 2007 based on the degree of achievement with respect to each performance measure:

 

 

For 2007, the individual performance objectives established for Mr. Black included achievement of our financial and growth targets, execution on certain elements of our strategic plan, continued development of management across the company, continued development and improvement with respect to the processes involving strategic planning and implementation and continuing to provide support for our Board of Directors. The individual performance objectives established for each of our other named executive officers included various matters related to their specific functions, including matters relating to the development and implementation of our overall strategy.

The actual award payments are reflected in the “Bonus” column of the Summary Compensation Table. As a result of his retirement prior to the end of our fiscal year, Mr. Sickler was not eligible to receive an award under the 2007 annual incentive program.

 

Senior Executive Recognition Bonus Awards

 

In February 2008, our Board of Directors, upon the recommendation of our Compensation Committee, approved one-time recognition bonus awards for each of our named executive officers. The amount of the bonus award approved for each named executive officer is set forth below.

 

 

The awards were approved by the Board in recognition of the executives’ contributions in our achievement of certain key initiatives in 2007. Chief among these initiatives was the completion of a number of significant strategic acquisitions and divestitures, which included the acquisition of Arrow International and the divestiture of our automotive and industrial businesses. These transactions were instrumental in enabling us to focus our operations on businesses with improved product margins and reduced cyclicality. In addition, we believe these transactions helped to position us for future growth and continued expansion in new products and markets. The awards also reflected the executives’ role in successfully securing financing for the Arrow acquisition at aggregate borrowing costs that were in line with our original expectations in the midst of a volatile financing market, and in the implementation of a third party enterprise resource management system across our medical operations in North America.

 

In addition, in October of 2007, our Compensation Committee approved a cash bonus award of $250,000 to Mr. Sickler in recognition of his achievement of several objectives specified in a bonus program established for Mr. Sickler in 2006 in connection with his appointment as Interim President of the Company’s Medical Segment. These objectives included the successful development of the 2007 operating and strategic plans for the Medical Segment and the successful transition of the leadership of the Medical Segment to its new management team.

 

The bonus award payments described above are reflected in the “Bonus” column of the Summary Compensation Table.

 

Long-Term Incentive Compensation

 

Our long-term incentive compensation program is designed to promote achievement of corporate goals, encourage the growth of stockholder value and enable participation in our long-term growth and profitability. We seek to fashion long-term incentive compensation so that it falls within a competitive range of the 65th percentile of the general industry companies. The long-term incentive compensation opportunity established for each of our named executive officers was designed to be equivalent to 140 percent to 300 percent of a named executive officer’s salary because those percentages fell within the competitive range of the 65th percentile of the market, and also reflected each individual’s role within the organization, contributions of each position to the organization’s objectives, individual performance and other factors. We refer to this percentage of salary as the

“long-term incentive percentage.” The 2007 long-term incentive percentage for each named executive officer and the dollar amount of the executive’s long-term compensation opportunity is as follows:

 

 

Mr. Sickler did not participate in our 2007 long-term incentive program because we believe that the compensation arrangement set forth in Mr. Sickler’s employment agreement, taken together with prior equity awards granted to Mr. Sickler, provided him with an appropriate level of compensation.

 

Our long-term incentive compensation for 2007 included stock options issued under our 2000 Stock Compensation Plan and cash incentive opportunities awarded under our Executive Incentive Plan. We applied 65 percent of the long-term compensation opportunity to stock options, and the remaining 35 percent to a cash incentive opportunity that is payable based upon the extent to which our total shareholder return during a three year performance period beginning in 2007 exceeds the total shareholder return achieved by the peer group companies. We designed these components and the weighting of our long-term compensation to align the interests of our named executive officers to our stockholders, by providing an incentive to our executives for the favorable performance of our common stock both in absolute terms, in the case of stock options, and in terms of its relative performance as against peer group common stock, in the case of cash awards based on comparative total shareholder return.

 

In 2007, we allocated 65 percent of the long-term award to stock options because we believed that absolute return should be the principal determinant of the economic return received by our executives from long-term compensation. We did not allocate the entire award to stock options because we believed that if we underperform in relation to the peer group companies, our executives should not realize the total long-term compensation opportunity. Conversely, we provided a cash award component based on total shareholder return because we believed that if our common stock outperforms the common stock of our peers, some economic benefit is appropriate, even if absolute returns do not result in the stock options accruing meaningful value. In addition, we believed this comparative approach to a portion of our long-term compensation supports retention of our executives, as they may be subject to recruiting activity by companies that have not performed as well.

 

However, in light of the significant changes in our business that occurred in 2007, we have concluded that using total shareholder return relative to the peer group as the basis of a portion of our long-term incentive program is not effective, particularly because the peer group utilized in 2007 and prior years does not reflect the current nature of our business. Moreover, uncertain economic conditions and the need for stability in the management of our business suggest that stronger incentives for long-term executive commitment to our business and to increasing shareholder value are necessary. Therefore, in February 2008, our Board of Directors, upon the recommendation of our Compensation Committee, approved a change in our long-term compensation program for 2008 to allocate 35 percent of the long-term award opportunity to shares of restricted stock rather than a cash award component. In taking this action, our Board determined that it was appropriate to provide an award that has an intrinsic value when granted. The shares of restricted stock granted pursuant to this award vest in their entirety on the third anniversary of the grant date if the executive remains continuously employed by us during the vesting period. We will continue to evaluate and consider the type of awards granted under our long-term incentive program and may, in the future, decide that cash or other types of awards provide appropriate incentives to promote our then current goals and objectives.

Stock Option Awards

 

In accordance with the rationale described above, we granted stock options to our named executive officers in 2007 based upon 65 percent of the total long-term incentive compensation opportunity. Using a Black Scholes methodology, we valued the stock options at $21.05 per underlying share. In calculating this value, we assumed that options are held for their full ten-year term.

 

As a result of these computations, the named executive officers received stock options for the respective numbers of underlying shares set forth below in the Grants of Plan-Based Awards table under the column heading, “All Other Option Awards: Number of Securities Underlying Options.” The dollar amount for option awards shown in the Summary Compensation Table generally reflects the dollar amount recognized for financial statement purposes in accordance with Statement of Financial Account Standards 123R. Therefore, it includes amounts with respect to only a portion of the options granted in 2007, while also including amounts from earlier option grants. See note 2 to the Summary Compensation Table for further information.

 

Stock options awarded under the long-term incentive compensation program are granted in the first quarter of each year and have an exercise price equal to the average of the high and low sales prices of our common stock on the date of grant rounded to the nearest $0.25 increment. Our options generally vest in equal annual increments on the first three anniversaries of the date of grant. We believe that these vesting terms, together with the new restricted stock component of our long-term incentive program, provide our executives with meaningful incentive for continued employment. For additional information regarding stock option terms, see the footnotes accompanying the Grants of Plan-Based Awards table.

 

Cash Incentive Awards

 

The remaining 35 percent of the long-term compensation opportunity for 2007 represents the target award based on total shareholder return as compared to the peer group companies. “Total shareholder return” is the appreciation in value of a share of stock of a company from the first trading day to the last trading day of the specified performance period, assuming reinvestment of dividends. Payment is based on a sliding scale so that the amount of the payment generally increases to the extent that our total shareholder return exceeds the total shareholder return of the peer group companies. Specifically, if our total shareholder return exceeds the return of five of the peer group companies, the threshold payment equal to 72 percent of the target award will be paid. If our total shareholder return exceeds one-half of the peer group companies, 100 percent of the target amount will be paid. The maximum payout, equal to 200 percent of the target amount, will be paid if our total shareholder return exceeds that of at least ten of the peer group companies. These award levels are subject to adjustment in the event that merger or acquisition activity changes the number of peer group companies. The amount that actually will be paid out with regard to cash incentive opportunities awarded in 2007 will be determined following 2009.

 

We have used the long-term compensation methodology described above for the past few years, and the three year performance period for the 2005 cash incentive opportunity was completed in 2007. For that period, our total shareholder return did not meet the minimum threshold for payment.

 

Special Equity Award for Kevin K. Gordon

 

In 2007, our Compensation Committee granted Mr. Gordon a special equity award of stock options to purchase 30,000 shares of our common stock, which will vest in three equal annual installments, and 5,000 shares of restricted stock, which will vest in two equal annual installments on the first and second anniversaries of the grant date. The Compensation Committee approved these grants in connection with Mr. Gordon’s appointment as Executive Vice President and Chief Financial Officer. The equity award is addressed in the “All Other Stock Awards: Number of Shares of Stock or Units” and “All Other Option Awards: Number of Securities Underlying Options” columns of the Grants of Plan Based Awards Table and in the accompanying footnotes.

Personal Benefits

 

We provide our named executive officers with personal benefits that we believe are appropriate as part of a competitive compensation package that better enables us to attract and retain highly skilled executives. We periodically review the levels of perquisites and other personal benefits provided to our named executive officers. The personal benefits currently provided to our named executive officers include personal use of our corporate aircraft by Mr. Black, a company car, life insurance coverage and club membership fees for certain of our named executive officers. Additional information regarding these benefits is provided in the Summary Compensation Table and the accompanying footnotes.

 

We have several plans and agreements addressing compensation for our named executive officers that accrue value as the executive continues to work for us, provide special benefits upon certain types of termination events and provide retirement benefits. These plans and agreements were designed to be a part of a competitive compensation package that would encourage our executives to remain employed by us. Not all plans apply to each named executive officer, and the participants are indicated in the discussion below.

 

Change in Control Arrangements

 

We have change in control arrangements with each of our named executive officers other than Mr. Sickler. The terms of Mr. Black’s change in control arrangement are set forth in Mr. Black’s employment agreement, and the terms of our change in control arrangements with each of our other named executive officers is set forth in a change of control agreement that we have entered into with each of the executives. Our agreement with each executive provides for payments and other benefits to the executive if we terminate the executive’s employment for any reason other than disability or cause or if the executive terminates employment for “good reason” within two years following a change in control. The change in control provisions in Mr. Black’s employment agreement differ from the change in control provisions for the other named executive officers with respect to the amount of the payments upon the relevant termination following the change in control. For a more detailed discussion of these arrangements, see “Potential Payments Upon Termination or Change in Control,” below. If an executive becomes liable for payment of any excise tax under Section 4999 of the Internal Revenue Code with respect to any payment received in connection with a change in control, we will make an additional payment to the executive. This payment is designed so that, after payment of all excise taxes and any other taxes payable in respect of the additional payment, the executive will retain the same amount as if no excise tax had been imposed. See “Tax Considerations” below for further information regarding the additional payment. We entered into these change in control arrangements so that our executives can focus their attention and energies on our business during periods of uncertainty that may occur due to a potential change in control. In addition, we want our executives to support a corporate transaction involving a change in control that is in the best interests of our stockholders, even though the transaction may have an effect on the executive’s continued employment with us. We believe these arrangements provide a key incentive for our executives to remain with us.

 

Executive Severance Arrangements

 

In addition to the change in control provisions described above, we have also agreed to provide payments and other benefits to our named executive officers, other than Mr. Sickler, if, outside of the context of a change in control, we terminate their employment without cause or they terminate employment for “good reason.” See “Potential Payments Upon Termination or Change in Control” for additional information.

Teleflex Incorporated Retirement Income Plan

 

The Teleflex Incorporated Retirement Income Plan, or TRIP, is a tax qualified defined benefit plan that provides benefits to all salaried employees following retirement based upon a formula relating to years of service and annual compensation. The plan was closed to new participants on January 1, 2006. All of our named executive officers, other than Mr. Waaser, who became an employee after January 1, 2006, participate in this plan. See the Pension Benefits table and accompanying narrative, and “Potential Payments Upon Termination or Change-in-Control” for additional information.

 

Supplemental Executive Retirement Plan

 

We maintain a Supplemental Executive Retirement Plan, or SERP, which is a non-qualified defined benefit plan that provides benefits for executives to the extent that their compensation cannot be taken into account under the TRIP because the compensation exceeds limits imposed under the Internal Revenue Code. We refer to the compensation that exceeds these limits as “excess compensation.” For 2007, compensation in excess of $225,000 constitutes excess compensation. Under the SERP, a participant accumulates units of annual pension benefit equal to 2.0% of his or her eligible excess compensation for the first 35 years of service, and 1.833% of such compensation for each additional year of service. All of the named executive officers, other than Mr. Waaser, participate in the SERP. Mr. Waaser does not participate in the plan since he is not eligible to participate in the TRIP due to the fact that his employment commenced after the date on which the TRIP was closed to new participants. See the Pension Benefits table and accompanying narrative, and “Potential Payments Upon Termination or Change in Control” for additional information.

 

Deferred Compensation Plan

 

We maintain a Deferred Compensation Plan, which is a non-qualified plan under which executives may defer certain amounts of their annual and long-term incentive compensation. Salary deferral elections are made annually by eligible executives in respect of salary amounts to be earned in the following year. Participants may direct the investment of deferred amount into a fixed interest fund or one or more notional funds. All of the named executive officers are eligible to participate in the Deferred Compensation Plan. See the “Non-qualified Deferred Compensation — 2007” table for additional information.

 

John J. Sickler Employment Agreement

 

In October 2007, Mr. Sickler retired as Vice Chairman. Under our March 7, 2005 employment agreement with Mr. Sickler, during the three years immediately following his retirement, he will make himself available to us as an independent consultant and will be paid a monthly retainer fee at the rate of his base salary in effect immediately before his retirement, which was $440,001 per year. In addition, we are required to pay Mr. Sickler compensation for each day he provides consulting services to us at a rate mutually agreed in writing. In the event of Mr. Sickler’s death during the three year post-employment consultancy period, he will be entitled to a lump sum payment equal to any unpaid retainer fees to be paid to Mr. Sickler for that period. Moreover, if he becomes disabled during the consultancy period, he will continue to receive the retainer fees and will not be required to provide service beyond those he reasonably is capable of providing. In addition, during the four years immediately following his retirement he is entitled to health insurance at our expense and is subject to a non-competition covenant. See “Potential Payments Upon Termination or Change in Control” for additional information.

 

Section 162(m) of the Internal Revenue Code limits to $1 million the deductibility for federal income tax purposes of annual compensation paid by a publicly held company to its chief executive

officer and other executives named in the summary compensation table, unless certain conditions are met. To the extent feasible, we structure executive compensation to preserve deductibility for federal income tax purposes. In this regard, our stock compensation plans are designed to preserve, to the extent otherwise available, the deductibility of income realized upon the exercise of stock options. Moreover, our Executive Incentive Plan is designed to facilitate the deductibility of the non-discretionary portion of annual bonus awards and the cash portion of long-term incentive awards that meet the conditions for “qualified performance-based compensation” under Section 162(m). Nevertheless, we retain the discretion to authorize compensation that may not be deductible. The compensation paid to Mr. Black in 2007 exceeded the deductible limit by approximately $426,858. In addition, it is possible that some portion of compensation paid to our executives in future years will be non-deductible, particularly if a change-in-control occurs or, in the case of Mr. Black, upon vesting of the restricted stock award granted to him in 2006.

 

As noted above, under our change in control arrangements, we will make an additional payment to our executives if payments to them resulting from a change in control are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. It is possible that a change in control could result in our making additional payments to our executives, particularly Mr. Black, who is entitled to receive a larger payment than other executives following a change in control if the conditions for payment are satisfied. Nevertheless, we believe that our payments relating to the excise tax are appropriate to preserve the incentive for executives to maintain their employment with us.

 

In February 2008, our Board established stock ownership guidelines for our named executive officers and other executives to further align the interests of management with those of our stockholders and to further encourage long-term performance and growth. The ownership guidelines are expressed in terms of the value of the common stock, restricted stock and stock options, including shares in our 401(k) plan, held by the executive as a multiple of that executive’s base salary, which are as follows:

 

 

Executives who are subject to the ownership guidelines have five years to meet the required ownership level.

 

The Compensation Committee of the Company has reviewed and discussed with management the Compensation Discussion and Analysis required by SEC regulations and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

SIGISMUNDUS W.W. LUBSEN, CHAIRMAN

 

 

The following table sets forth, for the fiscal year ended December 31, 2007, compensation information with respect to the Company’s Chief Executive Officer, Chief Financial Officer and each of the three other most highly compensated executive officers, determined in accordance with SEC regulations, for the fiscal years ended December 31, 2007 and 2006. These individuals are referred to in this Proxy Statement as the “named executive officers.”

 

 

 

 

401(k)

Life Insurance

Tax Gross-

Consulting

Name

Contributions

Premiums

Ups

Fees(a)

Perquisites

Mr. Black

$6,750

$13,700

$6,513

–

$90,370

(b)

Mr. Gordon

$6,750

$1,764

–

–

$32,602

(c)

Mr. Waaser

$10,987

$1,260

$7,305

–

$82,569

(d)

Mr. Miller

$6,750

$1,764

–

–

$36,161

(e)

Mr. Sickler

–

$12,903

–

$73,334

$37,551

(f)

Mr. Northfield

$4,260

$1,260

–

–

$51,581

(g)

 

 

 

 

We entered into an employment agreement with Mr. Black, which became effective as of May 5, 2006. Mr. Black’s agreement provides for his employment as our Chairman, President and Chief Executive Officer through May 5, 2009. Mr. Black’s agreement provides that he will receive an annual base salary of at least $850,000, and will be eligible to participate in the annual, long-term incentive and equity compensation programs that we provide for our senior executives, as well as to participate in our retirement and welfare benefit plans and programs. The agreement also provides that Mr. Black will be reimbursed by us for premiums on $1 million of life insurance coverage and income taxes attributable to those premium reimbursements. In addition, Mr. Black will be entitled to personal use of company aircraft for up to fifty hours per year.

 

Mr. Black’s employment agreement provides for certain payments and benefits to be made available to him in the event his employment is terminated under certain circumstances, which are described below under “Potential Payments Upon Termination or Change in Control.”

 

The following table sets forth information regarding our grants of plan based awards to the named executive officers during the fiscal year ended December 31, 2007:

 

 

 

 

The following table sets forth information with respect to the outstanding option awards and unvested stock awards held by each named executive officer on December 31, 2007:

 

 

 

 

The following table sets forth information regarding the named executive officers’ exercise of stock options and the vesting of the named executive officers’ restricted stock during the fiscal year ended December 31, 2007:

 

 

 

 

We sponsor the Teleflex Incorporated Retirement Income Plan (“TRIP”), a qualified defined benefit pension plan, as well as the Supplemental Executive Retirement Plan (“SERP”), a non-qualified defined benefit pension plan providing benefits that would otherwise be denied to participants by reason of Internal Revenue Code limitations on compensation that can be taken into account in qualified plans.

 

A participant accumulates units of annual pension benefit for each year of service. For each of the first thirty-five years of service, a participant’s unit is equal to 1.375% of his or her prior year’s annual plan compensation not in excess of social security covered compensation, plus 2.0% of such compensation in excess of the social security covered compensation. For each year of service in excess of thirty-five, a participant’s unit is equal to 1.833% of his or her prior year’s annual plan compensation. The annual earnings taken into account under this formula include base salary and bonus payments. The amount of compensation that can be taken into account in the TRIP is subject to limits imposed by the Internal Revenue Code, and the maximum annual benefits payable under the plan are also subject to Internal Revenue Code limits. The SERP takes into account only base pay in excess of the Internal Revenue Code limit.

 

Participants in the TRIP generally vest in their plan benefits after they complete five years of qualifying service or, if earlier, upon reaching normal retirement age, which, for purposes of the TRIP, is age 65. In addition to the normal retirement benefit, the TRIP provides reduced benefits upon early retirement, which may occur after a participant has reached age 60 and has completed 10 years of qualifying service. The TRIP also provides limited benefits upon termination due to disability. Eligibility for payment of SERP benefits is dependent on eligibility under the TRIP, and reductions for early payment are calculated in the same way as they would be under the TRIP. However, SERP benefits become fully vested upon a change of control of Teleflex. A participant is generally required to take distributions from the TRIP and the SERP at the same time and in the same payment method, although the timing and form of payment under the SERP may be affected by Section 409A of the Internal Revenue Code, which limits the participant’s right to make changes to the timing and form of payment of nonqualified retirement benefits. Payment options include various annuities.

 

Effective January 1, 2006, the TRIP and SERP were closed to new employees.

 

All of our named executive officers, other than Mr. Waaser, participate in the TRIP and the SERP. Mr. Waaser does not participate in the plans due to the fact that his employment commenced after the date on which the TRIP was closed to new participants. The table below shows, as of December 31, 2007, the number of years of service credited under the TRIP and the SERP to each named executive officer that participates in those plans and the present value of accumulated benefits payable to each such named executive officer under such plans.

 

 

 

We maintain a Deferred Compensation Plan under which executives, including named executive officers, may defer up to 50% of their salary, 75% of their annual incentive award and 75% of their long-term cash incentive award. Salary deferral elections are made by eligible executives in December of each year in respect of salary amounts to be earned in the following year. With respect to deferral elections for annual incentive and long term cash incentive awards, the election must be made no later than six months prior to the end of the performance period applicable to such award.

 

Participants in our Deferred Compensation Plan may direct the investment of deferred amount into a fixed interest fund or one or more notional funds, and the value of the participants’ investments will increase or decrease based on the performance of the underlying securities.

 

The following table shows the funds available under the Deferred Compensation Plan and their annual rate of return for the calendar year ended December 31, 2007. Account balances in the Teleflex Stock Fund must remain in that fund and cannot be transferred to any other investment option. Additionally, distributions of balances invested in the Teleflex stock fund are made in the form of shares of Teleflex stock; distributions from other funds are payable in cash.

 

 

Distributions under the Deferred Compensation Plan may be paid either in the year immediately following the executive’s retirement or termination of employment or on such other date during the term of the participant’s employment as the participant may elect. Participants may elect to receive payments under the Deferred Compensation Plan either in a lump-sum or in annual installments over five or ten years.

 

In addition to the Deferred Compensation Plan, we maintain additional deferred compensation accounts for certain of our current and former executives under two deferred compensation programs that were previously offered to those executives. Amounts deferred by participants under these programs earn interest at a rate equal to the Moody’s long-term corporate bond-yield average, which we refer to as the “Moody’s rate,” plus a certain percentage. Amounts deferred under the initial program, offered between 1985 and 1988, earn interest at a rate equal to the Moody’s rate plus 3%. Amounts deferred under the second of these programs, offered between 1991 and 1994, earn interest at a rate equal to the Moody’s rate plus 1.5%. Distributions under the Moody’s plans commence once a participant reaches the age of 65. Mr. Sickler is the only current named executive officer that participated in the Moody’s plans and, consequently, is the only named executive officer for whom accounts under the Moody’s plans are currently maintained.

The following table sets forth information for the fiscal year ended December 31, 2007 regarding contributions, earnings and balances under our deferred compensation plans for each named executive officer:

 

 

 

 

In this section, we describe payments and benefits that would be provided to our named executive officers upon several events of termination, including termination in connection with a change of control, assuming the termination event occurred on December 31, 2007 (except as otherwise noted). The information in this section does not include information relating to the following:

 

 

Under the terms of our employment agreement with Mr. Black, if we terminate Mr. Black’s employment without cause or if Mr. Black terminates his employment for good reason (as defined in the agreement) prior to the time Mr. Black reaches age 62, other than in connection with a change of control (as defined in the agreement), he is entitled to receive the following payments and benefits:

 

 

Any stock options held by Mr. Black that are not exercisable as of the date of his termination of employment will expire on the termination date, and any exercisable stock options held by Mr. Black may be exercised for a period of three months after the date of termination.

 

Mr. Black’s agreement also provides for certain compensation to be paid to Mr. Black in the event of a change of control, as more fully described in the discussion of change of control agreements below.

Mr. Black’s agreement has a term of three years. However, notwithstanding any termination of the agreement by us, the agreement will remain in effect for a period of at least two years following a change of control that occurs during the term of the agreement.

 

In October 2007, Mr. Sickler retired as Vice Chairman of the Company. Under our March 7, 2005 employment agreement with Mr. Sickler, during the three years immediately following his retirement, he will make himself available to us as an independent consultant and will be paid a monthly retainer fee at the rate of his base salary in effect immediately before his retirement, which was $440,001 per year. In addition, we are required to pay Mr. Sickler compensation for each day he provides consulting services to us at a rate mutually agreed in writing. Mr. Sickler’s agreement provides that he will receive his vested and other benefits to which he is entitled under our benefit plans upon retirement. In addition, during the four years immediately following his retirement, Mr. Sickler is entitled to health insurance at our expense. He is subject to a non-competition covenant during this four-year period.

 

In March 2007, we entered into agreements with certain of our executive officers, including Messrs. Gordon, Waaser, Miller and Northfield, that provide for specified severance compensation and benefits in the event we terminate their employment without cause or if the executive terminates employment for good reason, other than in connection with a change of control. The severance compensation consists of continued payment of the executive’s base salary for a period of 18 months and, in some circumstances, the payment of a pro rated amount of the annual incentive award the executive would have been entitled to for the year in which his employment was terminated. In addition, the executive is entitled to receive continued health, life and accident insurance, exclusive of costs that would have been borne by the executive in accordance with our applicable policy then in effect, until the executive is eligible for such benefits in connection with future employment or until 18 months after termination, whichever occurs first. The executive is also entitled to a vehicle allowance for a period of 18 months after termination and reimbursement of expenses for outplacement services. The 18 month period referred to above is subject to increase by one month for each year of full-time employment by the executive from and after January 1, 2007, up to an additional six months.

 

The following table sets forth the potential post-termination payments and benefits the named executive officers would be entitled to receive under the agreements described above assuming the triggering event under the agreements occurred on December 31, 2007.