UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant þ
Filed by a party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a–6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material under §240.14a–12

CAMPBELL SOUP COMPANY

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

þ No fee required

o Fee computed on table below per Exchange Act Rules 14a–6(i)(1) and 0–11

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0–11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

o Fee paid previously with preliminary materials.

o Check box if any part of the fee is offset as provided by Exchange Act Rule 0–11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

 

 

 

 

Campbell Soup Company
1 Campbell Place
Camden, New Jersey 08103-1799
856-342-4800

 

 

October 9, 2008

 

Notice of Annual Meeting of Shareowners

 

Thursday, November 20, 2008
11:30 a.m. Eastern Time
Hilton Stamford Hotel and Executive Meeting Center
One First Stamford Place
Stamford, CT 06902

 

 

AGENDA

 

1. Elect Directors.

 

2. Ratify appointment of independent registered public accounting firm.

 

3. Approve amendment of the 2005 Long-Term Incentive Plan.

 

4. Approve performance goals for the 2003 Long-Term Incentive Plan.

 

5. Transact any other business properly brought before the meeting.

 

Shareowners of record at the close of business on September 23, 2008 are entitled to receive notice of the meeting and to vote. This year the Company has decided to provide access to its proxy materials, including its annual report, to certain shareowners of record, depending upon the number of shares held by the shareowner and including certain Company savings plan participants, via the Internet instead of mailing those shareowners copies of the materials. The Company expects that this will reduce the amount of paper necessary to produce the materials, as well as the costs associated with mailing the materials to all shareowners. On or about October 9, 2008, the Company began mailing a Notice of Internet Availability of Proxy Materials (“e-proxy notice”) to certain shareowners of record and posted its proxy materials for those shareowners on the Web site referenced in the e-proxy notice (www.envisionreports.com/cpb). On or about October 9, 2008, the Company also began delivering the proxy statement and the accompanying proxy card to the remaining shareowners of record. If you do not own shares in your own name, you may access the Company’s Notice of Annual Meeting and Proxy Statement and its annual report, including the Form 10-K for the fiscal year ended August 3, 2008 at www.edocumentview.com/cpb.

 

Your vote is important. In order to have as many shares as possible represented, kindly SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED OR VOTE BY PHONE OR THE INTERNET (see instructions on your proxy card or e-proxy notice).

 

By Order of the Board of Directors,

 

John J. Furey

Vice President and Corporate Secretary

 

Important.

 

Please note that an admission ticket is required in order to attend the Annual Meeting. If you plan to attend, please request a ticket. If shares were registered in your name as of September 23, 2008, please check the appropriate box on your proxy card or when voting on the Internet, or indicate when prompted if voting by telephone. A ticket of admission will be forwarded to you. If your shares are held in the name of a broker or other nominee, please follow the instructions on page 65 to obtain an admission ticket. If you plan to attend the meeting, please bring government-issued photographic identification. You will need an admission ticket and this identification in order to be admitted to the meeting.

 

Table of Contents

 

 

 

Shareowners may receive copies of the Company’s Annual Report on Form 10-K for the year ended August 3, 2008, Code of Business Conduct and Ethics, Corporate Governance Standards, and the charters of the four standing committees of the Board of Directors, also without charge, by:

These documents are also available in the governance section of the Company’s Web site at www.campbellsoupcompany.com.

 

Shareowners may elect to receive future distributions of annual reports and proxy statements by electronic delivery and vote Campbell shares on-line. To take advantage of this service you will need an electronic mail (e-mail) account and access to an Internet browser. To enroll, go to the investor center section on www.campbellsoupcompany.com and click on “E-Delivery of Materials.” If your shares are registered in your name, you will be asked to enter your account number, which is printed on your dividend check or Dividend Reinvestment Statement. If your shares are held by a broker, you will need your account number with the broker.

 

 

The Board of Directors Recommends a Vote “For” ALL Nominees

 

The Board of Directors of the Company, pursuant to the By-Laws, has determined that the number of directors of the Company shall be 14. The directors are to be elected to hold office until the next Annual Meeting of the Shareowners and until their successors are elected and shall have qualified. Directors are elected by a plurality of the votes cast. Except as otherwise specified in the proxy, proxies will be voted for election of the nominees named below.

 

Fourteen of the current directors are standing for reelection. The Company’s Corporate Governance Standards include a mandatory retirement age for directors. Under the Standards, a director may not stand for reelection if he or she would be age 72 or over at the time of election. Philip E. Lippincott has reached our mandatory retirement age and will retire on November 20, 2008.

 

All of the nominees are independent directors, except for Mr. Conant. If a nominee becomes unable or unwilling to serve, proxies will be voted for election of such person as shall be designated by the Board of Directors. Management knows of no reason why any nominee shall be unable or unwilling to serve.

 

The following table sets forth certain information concerning the nominees at October 1, 2008:

 

 

The following table sets forth information regarding beneficial ownership as of the record date of Campbell’s Capital Stock by: each director; the Company’s Chief Executive Officer, Chief Financial Officer and the three most highly compensated other executive officers; and the directors and executive officers as a group. The table also sets forth Campbell stock units credited to the individual’s deferred compensation account. The account reflects the deferral of previously earned compensation and/or pending awards of restricted stock into Campbell stock units. The individuals are fully at risk as to the price of Campbell stock in their deferred stock accounts. Additional stock units are credited to the accounts to reflect accrual of dividends. The stock units do not carry any voting rights. Unrestricted deferred Campbell stock units are included in calculating the stock ownership required by the Company for directors and executives.

 

 

*All directors and executive officers
as a group (26 persons)

 

 

 

At the close of business on September 23, 2008, the record date for the meeting, there were outstanding and entitled to vote 360,949,300 shares of Campbell Capital Stock, all of one class and each having one vote. The holders of a majority of the shares outstanding and entitled to vote, present in person or represented by proxy, constitute a quorum for the meeting.

 

Principal Shareowners

 

Information concerning the owners of more than 5% of the outstanding Campbell Common Stock as of the record date for the meeting follows:

 

 

 

 

The foregoing information relating to Principal Shareowners is based upon the Company’s stock records and data supplied to the Company by the holders as of the record date for the meeting.

 

The Board of Directors is responsible for overseeing the business of the Company, and the competence and integrity of its management, to serve the long-term interests of the shareowners. The Board believes that sound corporate governance is essential to diligent and effective fulfillment of its oversight responsibilities.

 

Corporate Governance Standards and Committee Charters

 

Campbell first published the Corporate Governance Standards in its proxy statement in 1992. The Standards are reviewed annually by the Governance Committee and approved by the Board. In 2003, the Governance Committee and the Board undertook a comprehensive review of the Corporate Governance Standards, the charters of the standing committees, and the overall governance structure of the Company, in light of new statutory and regulatory requirements, proposed new rules and recommendations of the New York Stock Exchange, and the ongoing discussion of effective means for raising the standards of governance of public companies. Revised Corporate Governance Standards and committee charters that were developed and approved by the Board in the course of that review were included in the 2003 proxy statement. In 2004, these documents were further revised to reflect the provisions of the final New York Stock Exchange Corporate Governance Listing Standards approved by the Securities and Exchange Commission in November 2003. Additional modifications have been made since that time to take account of subsequent changes in regulatory requirements and the Board’s experience with the revised governance procedures.

 

The Company’s current Corporate Governance Standards appear in Appendix A. Also set forth in Appendix A are procedures by which interested persons can communicate concerns to the Board of Directors and the Audit Committee.

 

Director Independence

 

A statement of standards that the Board has adopted to assist it in evaluating the independence of Campbell directors is set forth in Appendix A, and appears in the governance section of the Company’s Web site at www.campbellsoupcompany.com. The Standards for the Determination of Director Independence (the “Standards”) describe various types of relationships that could potentially exist between a director and the Company, and define the thresholds at which such relationships would be deemed material. The Board will deem a director to be independent if (i) no relationship exists that would disqualify the director under the guidelines set forth in paragraphs 1 and 2 of the Standards, and (ii) the Board has determined that, based on all relevant facts and circumstances, any other relationship between the director and the Company, not covered by paragraphs 1 and 2, is not material. In any case in which the Board makes the latter determination, the relationship will be disclosed in the proxy statement, along with the basis for the Board’s conclusion that it is not material.

 

The Board has determined that no relationship exists between the Company and any nominee for director listed in this proxy statement, except Mr. Conant, that would influence or impair the nominee’s independence as a director. In making this determination, the Board considered certain transactions or relationships between the Company and entities in which individual nominees serve as a director, executive officer or operating partner, including transactions or relationships involving purchases by the Company of product ingredients or packaging supplies (Messrs. Carpenter and Patterson), sterilization materials or services (Mr. Vinney), business information services and advertising (Mr. Golub and Ms. Mathew), and information technology services (Messrs. Dorrance and Rand). In each case, the aggregate dollar amounts of the purchases are not material to the Company or the entity from which they are made, and the nominee plays no role in any of the transactions.

The Board has determined that each of the following director nominees is independent under the rules of the New York Stock Exchange and the Standards set forth in Appendix A:

 

 

Board Committees

 

Pursuant to the By-Laws, the Board had established four standing committees as of the record date, which are the Audit Committee, the Compensation and Organization Committee, the Finance and Corporate Development Committee, and the Governance Committee. Each of the standing committees has a charter that is reviewed annually by the committee. Proposed changes to the charter of any standing committee are reviewed by the Governance Committee and approved by the Board. The committee charters are available in the governance section of the Company’s Web site at www.campbellsoupcompany.com.

 

All members of the Audit Committee, the Compensation and Organization Committee and the Governance Committee are independent directors as defined by the rules of the New York Stock Exchange and the Standards set forth in Appendix A. All members of the Audit Committee also satisfy the independence requirements for audit committee members set forth in the rules of the Securities and Exchange Commission.

 

Membership in the standing committees as of the record date, September 23, 2008, was as follows:

 

 

 

 

The principal responsibilities of the standing committees, and the number of meetings held by each committee in fiscal 2008, were as follows:

 

 

 

 

 

The Compensation and Organization Committee approves the Company’s compensation policies and executive compensation programs, and approves all individual compensation actions for approximately the top 25 most highly compensated executives. The CEO and the Senior Vice President and Chief Human Resources and Communications Officer make recommendations to the Committee on compensation

actions for the Company’s senior executives and on potential changes in the design of executive compensation programs. The Chair of the Committee is authorized to approve compensation actions for senior executives between Committee meetings when necessary for business continuity. Approval of both the Chair of the Committee and the Chairman of the Board is required for equity grants made to senior executives in such circumstances.

 

In fiscal 2008, the Compensation and Organization Committee received advice on CEO compensation, compensation trends and policy issues, and projects of current interest to the Committee, from an independent compensation consultant, Yale D. Tauber, the Principal of Independent Compensation Committee Adviser, LLC. Mr. Tauber has been retained directly by the Committee and reports directly to the Committee. The Committee’s compensation consultant provides no services to management.

 

For an expanded discussion of the process by which the Compensation and Organization Committee determines executive compensation, and the roles of executive officers and the Committee’s independent compensation consultant in determining executive compensation in fiscal 2008, see “Corporate Governance of Executive Compensation” on page 18.

 

 

 

 

Reviews and makes recommendations to the Board regarding:

 

 

The Governance Committee determines the amount and design of all compensation provided to independent directors. The Senior Vice President-Law and Government Affairs and the Vice President &

Corporate Secretary make recommendations to the Governance Committee regarding changes to the director compensation program. The Governance Committee also reviews any transaction with a related person, in accordance with the Board’s policy concerning such transactions.

 

The Governance Committee seeks potential nominees for Board membership in various ways and will consider suggestions submitted by shareowners. See page 14 regarding the procedures for submitting nominee information.

 

Actions taken by any of the standing committees are reported to the Board. Generally, all members of the Board receive copies of the minutes of all committee meetings and copies of the materials distributed in advance of the meetings for all of the committees.

 

Compensation and Organization Committee Interlocks and Insider Participation

 

There are no Compensation and Organization Committee interlocks and all members of the Committee are independent.

 

Evaluations of Board Performance

 

Since 1995, the Board’s Governance Committee has led annual evaluations of Board performance. The evaluation process is designed to facilitate ongoing, systematic examination of the Board’s effectiveness and accountability, and to identify opportunities for improving its operations and procedures.

 

In accordance with the requirements of the Corporate Governance Listing Standards of the New York Stock Exchange, in 2008 the Board completed an evaluation process focusing on the effectiveness of the performance of the Board as a whole, and each standing committee conducted a separate evaluation of its own performance and of the adequacy of its charter. The Governance Committee designed and coordinated the Board evaluation and reported on its results. Each committee also reported to the Board on the results of its annual self-evaluation.

 

In the Board evaluation process, each director completed an evaluation form that solicited directors’ comments and numerical ratings on 30 questions relating to the qualifications and responsibilities of directors, the effectiveness of Board and committee operations, and the oversight of management. Following review and discussion of a composite report by the Governance Committee, the Chair of the Committee presented a report to the Board that provided recommendations to enhance Board effectiveness based upon the responses received in this process.

 

In the committee evaluation process, the members of each standing committee completed an evaluation form that elicited numerical ratings of and written comments on the appropriateness of the committee’s charter and the adequacy of the written materials distributed in advance of meetings, the time available for discussion of important policy matters, and the manner in which specific committee responsibilities were discharged. Following discussion of a composite report within each committee, the chair of the committee reported to the Board regarding its overall findings and recommendations to improve committee operations.

 

Director Continuing Education

 

Since fiscal 2005, the Company has maintained a formal program of continuing education for directors. The curriculum for fiscal 2008 included eight hours of instruction, including a two-hour program on developments and trends in the consumer packaged goods (CPG) industry, presented by an outside specialist; a 11/2 hour program on corporate social responsibility; a one-hour program focusing on the business and legal issues associated with product innovation; a one-hour program focusing on compliance challenges in emerging markets; a one-hour program on the Company’s procedures for assuring product safety; and two 45-minute online courses on corporate compliance issues. Most directors participated in all of these programs. The Company also encourages and supports directors who wish to participate in continuing education programs for directors conducted by outside parties in addition to, or in lieu of, a portion of the Company’s program.

Nomination and Evaluation of Candidates for Director

 

The Governance Committee is responsible for investigating, reviewing and evaluating the qualifications of candidates for membership on the Board and for assessing the contributions and performance of directors eligible for re-election. It is also responsible for recommending director nominees for approval by the Board and nomination for election at the Annual Meeting of Shareowners.

 

Recommendation of New Nominees.  When vacancies on the Board arise due to the retirement or resignation of directors, the Governance Committee may consult with other directors and/or with senior management to obtain recommendations of potential candidates to fill these positions, and may also retain a search firm to assist it in identifying and evaluating candidates. The Governance Committee also considers candidates for election to the Board who are recommended to the Committee by shareowners.

 

The Governance Committee believes that a nominee for election to the Campbell Board should, at minimum:

 

 

In addition, the Committee believes that, collectively, the Board should include directors who are:

 

 

All candidates considered by the Governance Committee for potential recommendation to the Board as director nominees are evaluated by the Governance Committee in light of the minimum qualifications listed above. When vacancies occur, the Governance Committee also reviews the overall composition of the Board to determine whether the addition of a director with one or more of the additional skills or qualities listed above would be desirable to enhance the effectiveness of the Board, and whether candidates with other specific experience or expertise should be sought at that particular time. If a search firm is retained to assist in identifying and evaluating candidates, the Governance Committee also considers the assessments of the search firm and the background information it provides on the persons recommended for consideration. The Chairman of the Board, the Chair of the Governance Committee and the Chief Executive Officer customarily interview leading candidates. Other directors and/or members of senior management may also interview these candidates. Candidates recommended by shareowners will be evaluated using the same process that is employed to evaluate any other candidate.

 

Re-Nomination of Incumbent Directors.  The Company’s Corporate Governance Standards require the Governance Committee to assess the performance of each director eligible for re-election at the Annual Meeting. The Governance Committee’s annual agenda contemplates that these assessments will

occur shortly before the Governance Committee recommends a slate of director nominees for approval by the Board. In the individual director assessment conducted by the Governance Committee in 2008, each director was evaluated in light of the criteria set forth in the Corporate Governance Standards with respect to the qualification of directors and the composition of the Board. In addition, the Chair of the Governance Committee solicited from the Chairman of the Board his assessment of the contributions of directors.

 

2008 Nominees.  All of the director nominees listed in this proxy statement were nominated by the Board and elected by the shareowners in 2007. Kent Foster and Philip Lippincott also were elected to the Board in November 2007. Mr. Foster has retired and Mr. Lippincott will retire on November 20, 2008.

 

Shareowner Recommendations.  Shareowners who wish to recommend candidates for nomination for election to the Board may do so by writing to the Corporate Secretary of Campbell Soup Company at 1 Campbell Place, Camden, New Jersey 08103-1799. The recommendation must include the following information:

 

 

Requirement of Majority Shareowner Votes in Uncontested Director Elections.

 

In 2007 the Board adopted a policy, set forth in the Company’s Corporate Governance Standards, which provides that any nominee for director in an uncontested election who receives more votes “withheld” from his or her election than votes “for” his or her election shall immediately tender an offer of resignation following certification of the shareowner vote. The Board will accept the resignation unless there is compelling reason for the director to remain on the Board, and will promptly disclose the action it has taken and the reasons for it.

 

Director Attendance at Board and Committee Meetings

 

Directors meet their responsibilities by preparing for and attending Board and committee meetings, and through communication with the Chairman, the Chief Executive Officer and other members of management on matters affecting the Company. During fiscal 2008, the Board of Directors met for six regular meetings and four special meetings. All directors attended more than 80% of scheduled Board meetings and meetings held by committees of which they were members.

Director Attendance at Annual Meeting of Shareowners

 

It is the Company’s policy that the Chairman of the Board, the Chief Executive Officer, and the Chairs of the Audit Committee, the Compensation and Organization Committee and the Governance Committee are expected to attend the Annual Meeting of Shareowners. The five directors who occupied these positions on November 16, 2007 as well as Messrs. Charron, Dorrance, Larrimore, Patterson, Rand, Strawbridge and Vinney, and Mses. Mathew, Malone and Weber, attended the 2007 Annual Meeting of Shareowners.

 

The Corporate Governance section beginning on page 8 was reviewed and discussed by the Governance Committee, and the Governance Committee recommended to the Board that it be included in this proxy statement.

 

Governance Committee

 

 

Under the Company’s written Policy Concerning Transactions with Related Persons (the “Related Persons Policy”), the Governance Committee is required to review and, in appropriate circumstances, approve or ratify any transaction in which the Company was or is to be a participant, the amount involved exceeded or is expected to exceed $120,000, and any related person had or will have a direct or indirect interest, as well as any material amendment to or modification of such a transaction.

 

Management has established procedures for identifying and monitoring transactions that may be subject to Governance Committee review under the Related Persons Policy or disclosure under SEC rules. Under the Company’s conflicts of interest policy, directors and executive officers have a duty to report transactions in which they or their immediate family members have a direct or indirect interest and which might be deemed to constitute related person transactions. Directors and executive officers also annually complete a proxy questionnaire in which they are asked to identify all for-profit and not-for-profit entities with which they are associated. Based on the disclosures in the proxy questionnaires, management ascertains whether the Company has engaged or is expected to engage in any transactions involving these entities, directly or indirectly, of which the relevant director or executive officer may be unaware.

 

The Related Persons Policy specifies that the Governance Committee shall review the material terms of such a transaction, including the approximate dollar amount, and the material facts as to the related person’s direct or indirect interest in, or relationship to, the transaction. In determining whether to approve or ratify a transaction, the Governance Committee is directed to consider, among other factors it may deem appropriate, whether the transaction was or will be on terms no less favorable than those generally available to an unaffiliated third party under the same or similar circumstances. No director may participate in the discussion or approval of a transaction in which he or she, or a member of his or her immediate family, has a direct or indirect interest.

 

The Chair of the Governance Committee (or, if a transaction involves the Committee Chair, the Chairman of the Board) may approve or ratify a related person transaction in which the aggregate amount involved is less than $1 million. Any transaction approved by the Chair or the Chairman is to be reported to the Governance Committee at its next regularly scheduled meeting.

 

The following types of transactions are deemed by the Policy Concerning Transactions with Related Persons to have been approved in advance by the Governance Committee, even if the aggregate amount involved exceeded or will exceed $120,000:

 

 

There were no transactions during the period from July 30, 2007 to October 1, 2008, and none are currently proposed, in which the Company was or is to be a participant, the amount involved exceeded or is expected to exceed $120,000, and any related person had or will have a direct or indirect material interest.

 

The Audit Committee is comprised of the five directors named below. The Board has determined that each member of the Committee meets the current requirements as to independence, experience and expertise established by the New York Stock Exchange and applicable rules and regulations. In addition, the Board of Directors has determined that Les C. Vinney is an audit committee financial expert as defined by SEC rules. A copy of the Audit Committee Charter, as most recently updated in September 2004, is available at the Company’s corporate website at www.campbellsoupcompany.com in the governance section under Board Committees.

 

One of the Audit Committee’s primary responsibilities is to assist the Board in its oversight of the integrity of the Company’s financial statements and financial reporting process, including its system of internal controls.

 

To fulfill these oversight responsibilities, the Committee has reviewed and discussed with management and the independent registered public accounting firm the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 3, 2008, and has reviewed and discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committee (as amended). In addition, the Committee has received from the independent auditors a written report stating that they are not aware of any relationships between the independent registered public accounting firm and the Company that, in their professional judgment, may reasonably be thought to bear on their independence, as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence. The Committee has discussed with the independent registered public accounting firm the firm’s objectivity and independence. The Committee has also considered whether the provision of non-audit services by the independent registered public accounting firm to the Company for the most recent fiscal year and the fees and costs billed and expected to be billed by the independent registered public accounting firm for those services are compatible with maintaining its independence.

 

The Audit Committee discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits. The Committee has reviewed with the internal auditors and independent registered public accounting firm, with and without members of management present, the results of their examinations, their assessment of the Company’s internal controls and the overall quality of the Company’s financial reporting. In addition, the Audit Committee has discussed with the Chief Executive Officer and the Vice President-Controller who is serving as the Company’s principal financial officer the processes that they have undertaken to evaluate the accuracy and fair presentation of the Company’s financial statements and the effectiveness of the Company’s system of disclosure controls and procedures.

 

Based on the review and discussions described in this report, the Audit Committee recommended to the Board of Directors that Campbell’s audited consolidated financial statements be included in Campbell’s Annual Report on Form 10-K for the fiscal year ended August 3, 2008, for filing with the Securities and Exchange Commission. The Audit Committee also recommended to the Board that PricewaterhouseCoopers be appointed independent registered public accounting firm for the Company for fiscal 2009.

 

Audit Committee:

 

Les C. Vinney, Chairman
Randall W. Larrimore
Philip E. Lippincott
Sara Mathew
George W. Strawbridge, Jr.

 

The aggregate fees, including expenses, billed by PricewaterhouseCoopers LLP (“PwC”), Campbell’s independent registered public accounting firm, for professional services in Fiscal 2008 and 2007 were as follows:

 

 

The Audit Committee’s Charter provides that the Committee will pre-approve all audit services and all permissible non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accounting firm. From time to time, the Committee may delegate its authority to pre-approve non-audit services to one or more Committee members. Any such approvals shall be reported at the next Audit Committee meeting.

 

The audit fees for the years ended August 3, 2008 and July 29, 2007 include fees for professional services rendered for the audits of the consolidated financial statements and the effectiveness of internal control over financial reporting of the Company, quarterly reviews and statutory audits.

 

The audit-related fees for the years ended August 3, 2008 and July 29, 2007 include fees for services related to certain agreed-upon procedures reports, accounting consultations, SAP pre-implementation controls reviews, and work related to the divestiture of Godiva.

 

Tax fees for the years ended August 3, 2008 and July 29, 2007 include fees for services related to tax compliance, including the preparation of tax returns and tax assistance with transfer pricing and tax audits.

 

In fiscal 2008 and 2007, 100% of the audit fees, audit-related fees, and tax fees were approved either by the Audit Committee or its designee.

 

The Compensation and Organization Committee has reviewed and discussed the following Compensation Discussion and Analysis with management, and based on such reviews and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

Compensation and Organization Committee

 

Paul R. Charron, Chair
Edmund M. Carpenter
Bennett Dorrance
Philip E. Lippincott
Charles R. Perrin
A. Barry Rand
Charlotte C. Weber

 

Corporate Governance of Executive Compensation

 

The Compensation and Organization Committee (“Committee”) approves the Company’s executive compensation policies and programs and reviews major organizational changes and the Company’s succession planning and leadership development processes. The Committee’s charter is available in the

governance section of the Company’s Web site at www.campbellsoupcompany.com. The Board has determined that all members of the Committee are independent directors as defined by the New York Stock Exchange rules.

 

The Committee annually reviews the Company’s compensation strategy, principles and policies, including the apportionment of pay between fixed compensation elements and incentive compensation, and the design of incentive compensation programs. The Committee approves all compensation and benefits for senior executives, authorizes the aggregate amount of annual incentive awards for all eligible participants under the Annual Incentive Plan (“AIP”) and the Long-Term Incentive (“LTI”) Program, and authorizes the Chief Executive Officer (“CEO”) to allocate the other awards, up to the aggregate amounts.

 

Each September, the Committee reviews the performance of the senior executives and approves for each executive his or her base salary, annual incentive payment and long-term incentive grant. This review of all major elements of executive compensation at one time provides the Committee with a comprehensive analysis of the target dollar amount of compensation being delivered by each element of compensation, assuming the required performance goals are 100% attained.

 

Prior to fiscal 2009, the Committee approved all compensation actions for approximately the top 40 senior executive positions in the Company, including the CEO, Chief Financial Officer and the other most highly compensated executive officers that are named in the summary compensation table (“named executive officers” or “NEOs”). In May 2008, the Committee determined that, beginning with the actions to be taken the following September, it would focus its approval of individual compensation actions on approximately the top 25 senior executive positions. The CEO and the Senior Vice President & Chief Human Resources and Communications Officer provide recommendations to the Committee on compensation actions for these senior executives, except for his or her own compensation actions, and on potential changes in the design of executive compensation programs. By the terms of its charter, the Committee has delegated to the Chair of the Compensation and Organization Committee the authority to approve compensation actions for the Company’s senior executives between Committee meetings when necessary for business continuity purposes. The Chair of the Committee and the Chairman of the Board of Directors must jointly approve any equity grants made to senior executives between meetings.

 

In fiscal 2008, the Committee retained Yale D. Tauber, the Principal of Independent Compensation Committee Adviser, LLC, an independent compensation consultant. Mr. Tauber reports directly to the Committee and advises the Committee on CEO compensation, compensation trends, governance issues, and projects of current interest to the Committee, such as changes to the design of the Company’s LTI Program. The consultant provides his advice about any proposed changes to the design of the executive compensation programs directly to the Committee. He did not provide any services to management in fiscal 2008 and will not be directly retained by management for any services.

 

The Senior Vice President — Law & Government Affairs and the Senior Vice President & Chief Human Resources and Communications Officer work with the Committee to develop the annual list of agenda items and the annual schedule of meetings for the Committee. The list of agenda items is approved by the Committee. In September 2008, the CEO and the Senior Vice President & Chief Human Resources and Communications Officer recommended to the Committee compensation actions for approximately the top 25 executive positions, including AIP awards for fiscal 2008 and base salaries and LTI grants for fiscal 2009.

 

Compensation Principles and Policies

 

The Committee annually reviews and the Board approves the principles and policies for executive compensation. The principles and policies are:

 

 

 

Compensation Objectives

 

The objectives of the Company’s executive compensation program are to:

 

 

 

Peer Groups and Benchmarking

 

The Committee identifies both a Compensation Peer Group and a Performance Peer Group in designing and determining compensation for its executive officers. In order to determine total compensation paid by companies that compete with Campbell for executive talent, in fiscal 2008 the Committee considered a comparison of Campbell’s total compensation levels with the levels at 29 companies in the food, beverage and consumer products industries (“Compensation Peer Group”), which was provided by Hewitt Associates. Given Campbell’s relatively small size in relation to many of the companies in the Compensation Peer Group, a regression analysis was performed to adjust the compensation data for the top positions for differences in the total revenues of the various companies compared to Campbell’s total revenue. The Committee believes that use of the Compensation Peer Group is the most effective method to evaluate and set the compensation needed to attract, motivate and retain the executive talent needed to manage the Company’s businesses and operations successfully, because these are the primary companies with which Campbell competes for senior executives. Use of this peer group also provides a broad database that allows Campbell to obtain accurate, representative survey information for a majority of its positions. The composition of the Compensation Peer Group is approved by the Committee each fiscal year after obtaining advice from its independent compensation consultant. For the purpose of determining fiscal 2008 compensation, the Compensation Peer Group consisted of the following companies:

 

Compensation Peer Group

 

 

 

 

The Committee uses the Compensation Peer Group to evaluate the competitiveness of executive compensation and uses the Performance Peer Group to measure the competitiveness of the Company’s TSR performance. The Performance Peer Group is independently selected by Standard and Poor’s based upon the similarities of the companies’ businesses in the packaged foods industry, and has remained relatively stable over a long period of time. Companies that are added to and deleted from the S&P Packaged Foods Group are automatically added to or deleted from the list of companies whose TSR rankings are compared to Campbell’s ranking for TSR performance-restricted stock (see below). The list of companies in the S&P Packaged Foods Group is readily available through S&P. The Committee and management exercise no discretion in selecting the companies that are included in the S&P Packaged Foods Group. The use of this Performance Peer Group for the LTI Program was recommended by the Committee’s independent compensation consultant when the current LTI Program was adopted in 2005. The Committee believes that the Performance Peer Group is the appropriate group in Campbell’s industry against which to measure the Company’s TSR performance. TSR performance of the companies in the Compensation Peer Group that are

not in the packaged foods industry is more likely to be affected by economic developments that do not affect the packaged foods industry.

 

Elements of Executive Compensation

 

The elements of Campbell’s executive compensation program are:

 

 

The proportion of compensation delivered in each of these elements is designed to:

 

 

Base Salary

 

Base salaries are intended to provide a base level of income that is competitive in relation to the responsibilities of each executive’s position. Midpoints of base salary ranges are targeted at the median of the Compensation Peer Group reduced by regression by reason of the Company’s relatively small size compared to many of the companies in the Compensation Peer Group. Salary ranges and individual salaries for senior executives are reviewed annually by the Committee. The Committee considers salary levels for senior executives each September, when it also reviews the performance of those executives. Merit increases are based on the CEO’s and Committee’s assessment of individual performance. Targets for annual incentive payments and long-term incentive grants are a percentage of base salary (see below).

 

The Committee considers a number of factors in determining individual base salaries, including the scope of an individual’s job responsibilities, his or her individual contributions, business performance, job market conditions, the Company’s salary budget guidelines, and the individual’s current base salary as compared with those of persons in similar positions at other companies in the Compensation Peer Group. The Committee does not utilize a mathematical formula in which these factors or their interrelationships are quantified and weighted (either in general, or with respect to any individual executive). During a particular year, one factor or group of factors may play a more significant role in the determination of an executive’s base salary than in other years, based on the Committee’s judgment and discretion.

 

An executive’s individual performance may be assessed based upon any of his or her demonstrated leadership skills, accomplishment of objectives, business unit or functional accountabilities, and personal contributions. A broad range of factors relevant to each of these areas, generally qualitative in nature, may be considered in this assessment. The Committee’s judgments regarding base salaries are also strongly

influenced by the judgments and recommendations of the CEO with respect to the named executive officers other than himself. In the case of the CEO’s base salary, the assessment is made by the Committee.

 

Named executive officers, like other executives of the Company, have annual performance objectives which include individual goals that relate to the business performance of the Company and/or the individual’s business unit or corporate function. As indicated above, the extent to which an executive attains these objectives is one of the factors considered in determining his or her base salary for the following year. However, no single individual performance factor or specific set of individual or business performance factors is dispositive in this determination, and no specific factor or specific set of factors was material to the determinations in September 2007 concerning base salary increases for fiscal 2008 for any of the named executive officers.

 

In September 2007, the Committee approved salary increases for the named executive officers. These increases were made to maintain market competitiveness based on available market comparison data. After these adjustments, the Committee judged each named executive officer’s salary for fiscal 2008 to be correctly positioned at or near the median of the compensation paid by companies in the Compensation Peer Group for the executive’s position. Two further adjustments to base salaries for named executive officers were subsequently made in fiscal 2008. On October 4, 2007, the Company announced the formation of a new division known as North America Soup, Sauces and Beverages, consisting of the U.S. Soup, Sauces and Beverages retail business (Campbell USA), North America Foodservice and StockPot, and the business in Canada. The three business units comprising North America Soup, Sauces and Beverages had sales of approximately $4.5 billion in fiscal 2007. Denise Morrison, then the President of Campbell USA, was appointed President-North America Soup, Sauces and Beverages, reporting to the Company’s President and CEO. In connection with her expanded responsibilities, the Committee further increased Ms. Morrison’s base salary from $484,763 to $520,000 per year. In addition, on March 26, 2008, the Committee approved an additional increase in Ellen Kaden’s base salary from $555,000 to $600,000 effective April 1, 2008, related to a qualitative assessment of her significant contributions beyond the legal and government affairs functions at the Company and her assumption of the leadership of the Company’s corporate social responsibility program. Changes in the CEO’s compensation are discussed on page 30.

 

Annual Incentive Plan (“AIP”)

 

Annual incentives are intended to motivate and reward the achievement of business goals approved by the Board of Directors in the annual Operating Plan and three-year Strategic Plan, and to assure that these goals are achieved in a manner that strengthens the business for the long term. Annual incentive targets are set at the median of the Compensation Peer Group. At the beginning of each fiscal year, the Committee establishes a competitive annual incentive target, expressed as a percent of base salary, for each executive salary level. In fiscal 2008, the annual incentive targets for senior executives, other than the CEO, ranged from 55% to 90% of base salary, with executives at the higher levels having a higher percentage at risk. These percentages are at or near the median for similar executive positions at companies in the Compensation Peer Group. The sum of the individual incentive targets for all participants (approximately 1,850 executives and managers) comprises the target incentive pool.

 

Since fiscal 2003, the Committee has used a Company “scorecard” in which many quantitative and qualitative goals for the Company as a whole and its business units are established at the beginning of each fiscal year for the purposes of the Annual Incentive Plan. The goals defined in the scorecard fall within four key measurement areas relating respectively to the Company’s financial, strategic, operational and marketplace objectives. Goals identified in each area include a mix of quantitative and qualitative factors. Corresponding goals, consistent with the total Company scorecard, are established for the respective business units. The goals listed in the scorecard are not weighted in any manner.

 

The Company scorecard adopted in connection with the administration of the AIP for fiscal 2008 included approximately one hundred performance goals. In the financial area, for example, some of the quantitative goals for fiscal 2008 related to net sales, earnings before interest and taxes, earnings per share, profit margins, administrative expenses, marketing expenditures, free cash flow, and return on invested

capital. In fiscal 2008, the adjusted EPS goal from continuing operations was $2.06, excluding certain transactions not considered to be part of the ongoing business, and the goal for net sales was $7.8 billion, excluding the impact of currency. Qualitative financial goals included, for example, quality of earnings and Company performance compared against the Performance Peer Group in sales and earnings growth. Marketplace goals included, for example, quantitative measures relating to consumption, and objectives relating to growth in market share for products sold by the Company’s 19 business units. For the operational and strategic areas, progress toward achievement of 74 business and workplace initiatives to deliver the annual Operating Plan and the three-year Strategic Plan are assessed. Operational goals included, for example, objectives relating to the success of new product launches, growth in distribution, the effectiveness of advertising campaigns, and improvements in employee engagement. Finally, goals in the strategic area included, among other things, objectives relating to the progress of research and development projects, new product development, portfolio optimization, and other key strategic platforms. The goals in the four measurement areas require effective execution of business plans and are difficult to attain.

 

After a fiscal year has ended, the Committee assesses total Company performance in light of the goals enumerated in the scorecard for that year, and, based on that assessment, determines the aggregate amount of the incentive pool for the total Company for that year. Comparable judgments are made with respect to the achievement of the goals defined in the corresponding business unit scorecards. The Committee’s determination of the overall Company score and the determinations of business unit scores are not based on any mathematical calculation or formula, and do not focus on any single performance goal. This plan intentionally provides substantial opportunity for the exercise of judgment and discretion by the Committee in determining the overall Company score and the overall scores for the respective business units. In any given year, the Committee’s assessment of total Company performance may range from 0 to 175%. For fiscal year 2008, the Committee decided upon a total annual incentive pool of 105% of the target pool. AIP awards to each executive, within the limits of the approved total pool, are based on business unit/function performance and individual performance, and can vary for executive officers from 0 to 200% of the individual’s incentive target. The sum of individual awards cannot exceed the approved total AIP pool. Extraordinary items, such as major restructuring and accounting changes, are excluded in determining the AIP pool.

 

Each participant in the AIP has an annual incentive target, which is a percent of base salary approved by the Committee at the beginning of the year for each executive salary level. Within the limits of the total AIP pool, the award paid to a participant for a given year is determined by multiplying his or her annual incentive target for that year by (x) a percentage representing the assessment of the performance of the participant’s business unit, or, if the participant is a member of the corporate staff (that is, not within a business unit), the percentage representing the Committee’s assessment of total Company performance for the year; and (y) a percentage representing an assessment of the participant’s performance against the individual objectives established for that participant at the beginning of the fiscal year.

 

At the beginning of a fiscal year, the Committee also establishes a performance goal for the AIP that is applicable only to executive officers. This goal is referred to as the “162(m) performance goal.” The 162(m) performance goal for fiscal 2008 required that the Company achieve 80% of its EPS goal for the year. In fiscal 2008, the goal for adjusted EPS from continuing operations was $2.06, excluding certain transactions not considered to be part of the ongoing business. In order for an executive officer to be eligible to receive the maximum payment of 200% of his or her annual incentive target, the Company must meet the 162(m) performance goal for the year. If the Company achieves less than 80% but not less than 50% of the EPS goal, executive officers are eligible to receive a maximum of 100% of his or her annual incentive target. If the Company does not achieve at least 50% of the EPS goal, executive officers are not eligible for any AIP award. The Company’s adjusted EPS from continuing operations for fiscal 2008 was $2.09, excluding certain transactions not considered to be part of the ongoing business.

 

The Company’s achievement of the 162(m) performance goal does not assure that an executive officer will receive the maximum incentive award, because the Committee has retained “negative discretion” to reduce the award based upon the assessment of the performance of his or her business unit (or, in the case of an executive officer who is a member of the corporate staff, the assessment of total Company performance) in light of the goals set forth in the scorecard, and the assessment of his or her individual performance against

individual annual objectives. The Committee has consistently exercised its negative discretion in determining annual incentive payments to executive officers. Although the Company has regularly achieved the 162(m) performance goal of 80% of the EPS goal established annually by the Committee, no named executive officer in the applicable fiscal year has received an award equal to the maximum potential payment.

 

As indicated above, payments made to participants in the AIP are influenced by their managers’ assessments of individual performance against objectives established for each participant at the beginning of the fiscal year. In the case of named executive officers other than the CEO, the Committee’s assessments of individual performance are based primarily on the CEO’s judgments and recommendations. The assessment of the CEO’s individual performance is made by the Committee itself. However, awards made to named executive officers under the AIP were so closely tied to the assessment of overall Company performance or, in relevant cases, to the assessments of business unit performance, that determinations relating to individual performance for fiscal 2008 were not a significant differentiating factor for these executives.

 

Based on its review of the results achieved in fiscal 2008 against the objectives defined at the beginning of the year in each of the four measurement areas of the Company scorecard, the Committee made the qualitative judgments that total Company performance with respect to financial and operational goals was on target, that performance with respect to strategic goals was significantly above target, and that performance with respect to marketplace goals was slightly below target. Based on its assessment of the Company’s overall performance in fiscal 2008, the Committee determined that the aggregate amount of the incentive pool should be 105% of target. In making this determination, the Committee applied no mathematical calculations or specific weightings to individual objectives identified in the scorecard. Its determination of the total Company score was based on its qualitative judgment of overall Company performance, with particular attention to the fact that management had operated the business successfully through a period of unprecedented cost inflation and, at the same time, successfully executed a number of complex strategic projects to focus the Company for sustainable long-term growth. Incentive payments to the named executive officers listed on page 31 for fiscal 2008 ranged from 100% to 113% of the target incentive amount, with an average of 105%. The annual incentive awards made to the named executive officers for fiscal 2008 are listed in the summary compensation table on page 31 in the column captioned “Non-Equity Incentive Plan Compensation.

 

Long-Term Incentive Compensation

 

Prior Long-Term Incentive Programs

 

Long-term incentives are intended to motivate and reward executives based upon the Company’s success in delivering superior value to its shareowners and to retain executives. For several years prior to fiscal 2006, Campbell used two long-term incentive programs for approximately 350 top executives, a time-lapse restricted stock program and a stock option program. The value delivered to these executives through each program was intended to be approximately 50% of total competitive long-term incentive value. For other participants (about 850 people) the long-term incentive program consisted entirely of stock options. While these programs were replaced in fiscal 2006 with a new long-term incentive program consisting entirely of restricted stock, grants under the former programs are still outstanding and expense was incurred in fiscal 2008. The former programs were described in prior years’ proxy statements.

 

Current Long-Term Incentive (“LTI”) Program

 

During fiscal 2005, the Committee conducted a comprehensive analysis of the Company’s LTI Program during four separate meetings. The Committee’s independent consultant at the time, Frederic W. Cook & Co., Inc., advised the Committee throughout this project. As a result of this analysis, the Committee approved a new LTI Program recommended by the independent consultant for the period beginning in fiscal 2006, consisting of three types of restricted shares: (1) TSR performance-restricted shares which are earned based on the Company’s TSR compared to the TSRs of the companies in the Performance Peer Group over a three-year performance period; (2) EPS performance-restricted shares which are earned based on the achievement of a minimal level of EPS in each fiscal year in a three-year performance period, which is designed to

qualify the payment of the shares as tax deductible; and (3) time-lapse restricted shares which vest over three years based on continued employment.

 

For fiscal 2008, long-term incentive targets were significantly above the median of the Compensation Peer Group at median performance. The long-term incentive targets for senior executives, other than the CEO, ranged from 128% to 285% of base salary, with executives at higher levels having a higher percentage at risk. For executive officers, 70% of the long-term incentive opportunity was delivered in TSR performance-restricted shares and 30% in EPS performance-restricted shares. For senior executives who were not executive officers, 70% of the long-term incentive opportunity was delivered in TSR performance-restricted shares and 30% in time-lapse restricted shares. Linking a significant portion of long-term compensation to the Company’s TSR performance aligns the interests of executives with those of Campbell’s shareowners. Other participants in the program received a higher proportion of time-lapse restricted shares and a lower proportion of TSR performance-restricted shares. Regular awards of stock options are not part of the current LTI Program, and no stock options have been granted to executives after fiscal 2005.

 

Grants under the program were made at the beginning of the fiscal year to approximately 1,200 participants, and the performance period for TSR shares is the current and subsequent two fiscal years. For the past five years, equity grants have been approved by the Committee in September, which is near the beginning of the Company’s fiscal year. Individual grants were based on the executive’s level of responsibility in the Company, possession of critical skills, individual performance and future leadership potential as assessed in the Company’s human resources organization planning process. All shares used in the Company’s executive compensation programs were shares which were previously issued and outstanding and were reacquired by the Company.

 

TSR performance-restricted shares are paid out based upon the Company’s TSR performance over a three-year period compared to the TSRs of the other 11 companies in the Performance Peer Group. For fiscal years 2006-2008, 2007-2009 and 2008-2010, the following percentage of TSR shares that were granted at the beginning of the three-year performance period will be paid out based upon the Company’s TSR performance ranking:

 

 

In order to maintain focus and interest in the TSR performance-restricted share portion of the program during the first and second years of the performance period, one-third of the TSR performance-restricted shares initially granted can be earned at the end of the first year, provided the Company’s TSR performance ranking is median (#6) or above during the one-year period. An additional one-third of the TSR performance-restricted shares initially granted can be earned at the end of the second year, provided the Company’s TSR performance ranking is median or above during the two-year period. At the end of the three-year performance period, a participant will be paid the greater of (i) the earned shares from the first two years or (ii) the TSR performance-restricted shares determined by the Company’s TSR ranking for the full three-year period. The earned shares will be forfeited if the participant resigns prior to the pay-out date, which is two months following the end of the three-year performance period. At the time of payment, the Committee can exercise negative discretion in determining Campbell’s ranking under the TSR performance-restricted share portion of the program in the event of extraordinary circumstances.

 

As noted above, beginning with the grants approved for fiscal 2009, TSR performance-restricted grants will be delivered in units rather than shares. In May 2008, the Committee approved modifications to the payout grid for TSR units in order to provide for no payout for bottom quartile performance and to enhance the payout percentage for strong performance. Beginning with the grant for fiscal years 2009-2011, the following

percentage of TSR units granted at the beginning of the three-year performance period will be paid out based upon the Company’s TSR performance ranking:

 

 

By way of illustration, if, at the end of the three-year performance period, the Committee determines that the Company’s cumulative TSR for fiscal years 2009-2011 ranks in fifth place compared with those of the 11 other companies in the Performance Peer Group, TSR performance-restricted units granted in October 2008, at the beginning of the performance period, will be paid out at 125% of the original grants.

 

As noted above, beginning with the grants approved for fiscal 2009, EPS performance-restricted grants will also be delivered in units rather than in shares. EPS performance-restricted awards are paid out two months following the end of each fiscal year in the three-year performance period, provided that the EPS achieved in the fiscal year is at least 50% of the EPS goal for the AIP approved by the Committee for that fiscal year. This performance goal is designed to qualify the payment of EPS performance-restricted awards as deductible under Section 162(m) of the Internal Revenue Code. The payout of EPS performance-restricted shares or units is either 0 or 100%. For fiscal 2008, the goal for adjusted EPS from continuing operations for the AIP was $2.06, and actual adjusted EPS from continuing operations was $2.09. Estimated future payouts of TSR and EPS performance-restricted awards to the Company’s named executive officers are listed in the table of Grants of Plan-Based Awards on page 34.

 

Following its review of the competitive positioning of the LTI Program in fiscal 2007, the Committee determined to reduce the size of the LTI grants for all participants. Beginning with fiscal 2009 (fiscal 2008 for the CEO), the Company has reduced long-term incentive targets so that the Company’s target total direct compensation will be in the range of 10%-15% above market median in the Compensation Peer Group.

 

Executive Stock Ownership

 

The Company requires senior executives to own shares to further align their interests with those of shareowners. In fiscal 2008 approximately the top 85 executives were required to achieve an ownership stake in the Company that was significant in comparison with the executive’s salary. Until the ownership level is achieved, executives must retain at least half of the after-tax value of each equity award in Campbell shares upon the vesting of restricted shares or exercise of options. Executive officers are prohibited from selling in a twelve-month period more than 50% of (1) the value of shares owned plus (2) the after-tax value of vested options, in excess of the applicable ownership standard.

 

The ownership requirements for corporate officers, expressed in terms of the value of shares to be owned, were as follows:

 

 

Executives may count toward these requirements the value of shares owned and shares which are deferred and fully vested in the Company’s 401(k) plan and other deferred compensation programs. Restricted shares and unexercised stock options are not counted in calculating ownership. Company policy prohibits executives from hedging the economic risk associated with fully owned shares, restricted shares and unexercised stock options.

 

To better align the stock ownership program with market practice while ensuring that the primary objectives of the program are maintained, in May 2008, the Committee approved two modifications to the program. As of August 1, 2008, ownership requirements apply to executives at the highest levels in the

Company, approximately the top 35 executive positions, and the ownership standard is expressed as a multiple of salary that is determined based on organization level or title. Establishing ownership standards as a multiple of base salary links the program with pay actions (i.e., base salary increases) which are performance-based, and ensures that ownership objectives remain competitive.

 

 

The ownership multiple for the CEO has been set at the market 75^th percentile while the ownership standards for others covered by the program have been set at market median.

 

Retirement Plans

 

Senior executives participate in two defined benefit plans: (1) the Retirement and Pension Plan (“Qualified Plan”) and (2) the Mid-Career Hire Pension Plan (“MCHP”). The Qualified Plan provides funded, tax-qualified benefits up to the limits allowed under the Internal Revenue Code (“IRC”) for most of the Company’s full-time U.S. employees. The MCHP provides unfunded benefits for senior executives who are hired in the middle of their careers and that are in excess of the IRC limits applicable to the Qualified Plan. Such executives give up future pension benefits that they would have earned if they remained with their prior employers. The MCHP is consistent with the Company’s objective to attract and retain experienced senior executives in order to execute the Company’s business strategies. MCHP benefits are offset by benefits under the Qualified Plan.

 

These plans prohibit duplication of benefits. The Company adopted these plans as an additional means to attract and retain employees and to provide a competitive level of pension benefits. The retirement plans provide employees, including the NEOs listed on page 31, the opportunity to plan for future financial needs during retirement. Other than the MCHP, the actual pension benefit is calculated on the same basis for all participants, and is based on:

 

 

Stock option gains, time-lapse restricted shares and performance-restricted shares, as well as any extraordinary remuneration, play no part in the calculation of retirement benefits. For a more detailed discussion of the retirement plans and the accumulated benefits under these plans, see the Pension Benefits table and the accompanying narrative on page 38.

 

Deferred Compensation Plans

 

The Company adopted the Deferred Compensation Plans to provide an opportunity for the U.S.-based participants, including the eligible NEOs, to save for future financial needs. The amount of salary and annual incentive earned by the employee is not affected by the plans. The plans essentially operate as unfunded, tax-advantaged personal savings accounts of the employee, administered by the Company, and contribute to the Company’s attractiveness as an employer. For a more detailed discussion of the deferred compensation arrangements relating to the NEOs, see the Nonqualified Deferred Compensation table and accompanying narrative on page 41.

 

Perquisites

 

The Company’s Personal Choice Program provides quarterly cash payments to executives in lieu of reimbursements for items such as tax or estate planning services or financial planning services. For NEOs, the annual cash payments range from $32,000 to $48,000, are reviewed by the Committee annually, and are included in the summary compensation table on page 31. The Committee believes that perquisite payments are appropriate to reimburse executives for financial and tax planning services or other purposes, so that the

executives are not distracted from devoting their time and energy to their responsibilities to the Company. In addition to tax and estate planning services or financial planning services, executives may use the payments made under this program, at their discretion, for such other purposes as home security systems, country club dues and automobile expenses. The Company also provides long-term disability protection for NEOs. Other perquisites provided by the Company to NEOs in 2008 were the payment of car and driver expenses for Mr. Conant, driver expenses for Ms. Kaden and commuting expenses for Mr. Schiffner. When these executives were hired in 1998 and 2001, the Company agreed to pay these expenses in lieu of paying for relocation expenses.

 

Severance Plans

 

The Company has severance plans for its U.S.-based exempt employees. All exempt salaried employees in the U.S., including NEOs, are covered by the plans, under which payments are based on level of responsibility, seniority and/or length of service. For the NEOs, the maximum payment under the plans is two times base salary. The payment and benefit levels defined in the Company’s severance plans for U.S.-based exempt employees have been determined primarily by reference to the amount of time customarily required for employees who are involuntarily terminated without cause to find other employment. The Company believes that, due to the relative scarcity of senior executive roles, employees at higher levels in the organization generally need more time to locate comparable positions elsewhere than those at lower levels. The Company also periodically reviews the severance benefits provided at other Fortune 500 companies. Assurance of a reasonable measure of financial security in the event of involuntary termination is important to candidates for executive positions, and the extent of the severance benefits offered by Campbell in comparison with those available at other companies is sometimes a significant factor in their evaluations of the attractiveness of opportunities at Campbell. The Company generally does not enter into employment contracts in the United States. The Company provides the severance plans to reassure employees of assistance in their transition to new employment in the event the Company terminates their employment. For a more detailed discussion of these severance arrangements, see Potential Payments on Termination or Change in Control beginning on page 41.

 

Change in Control Benefits

 

The Company has entered into Special Change in Control Severance Protection Agreements (“Special CIC Agreements”) with the NEOs as well as all other executive officers. The Special CIC Agreements provide for severance pay and continuation of certain benefits should a change in control occur. The independent members of the Board of Directors unanimously approved entry into the Special CIC Agreements beginning in 2000. The Committee believes that the Special CIC Agreements are necessary in order to retain stability in the senior executive team in the event there is a threatened or actual change in control. The Agreement requires the occurrence of the following two events in order for an executive to receive payments and benefits: 1) the executive’s employment must be terminated involuntarily and without cause (whether actual or “constructive”); and 2) the termination must occur within two years following a change in control. The Company also has change in control provisions in its AIP, its long-term incentive plans and its U.S. retirement plans, and these provisions apply equally to all participants in the plans, including the NEOs.

 

Accounting and Tax Implications

 

Section 162(m) of the Internal Revenue Code (“IRC”) limits the tax deductibility of compensation paid to an NEO to $1 million, except to the extent the compensation is performance based. The Committee’s policy is to comply with the requirements of section 162(m) except where the Committee determines that compliance is not in the best interests of the Company and its shareowners. All annual incentive payments and restricted stock grants to executive officers for fiscal year 2008 met the requirements for deductibility under section 162(m).

 

Beginning on August 1, 2005, the Company began accounting for stock-based compensation, including unvested stock options and any restricted shares, in accordance with the requirements of Financial

Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (“FAS 123R”).

 

CEO Compensation and Evaluation

 

The NEOs’ compensation, other than the CEO’s compensation and the CFO’s special grant described below, are not materially different from each other. The compensation components for the CEO, Douglas Conant, are consistent with the program generally described above. Mr. Conant’s compensation is designed to be competitive with the CEO compensation paid in the Compensation Peer Group and his incentive compensation is directly linked to both Company performance and his performance. The process used to review and establish Mr. Conant’s compensation for fiscal 2008 was as follows:

 

 

The Board evaluated Mr. Conant’s performance based on the Company’s total performance as measured by the scorecard approach described above under “Annual Incentive Plan,” and evaluated his personal performance in the following areas:

 

 

Based on the above review of competitive data, Company performance and Mr. Conant’s performance, on October 1, 2007, his salary was increased to $1,185,000, and he received a grant of 122,585 TSR performance-restricted shares and 52,537 EPS performance-restricted shares. His annual incentive award earned in fiscal 2008 was $1,866,375. This award was based on Company performance compared to the goals for the AIP described on pages 23 through 25 and his performance as determined by the Board in the CEO evaluation process.

CFO Resignation and Retirement

 

On April 22, 2008, the Company announced that Robert Schiffner would resign from his position as Senior Vice President and Chief Financial Officer by August 1, 2008, or earlier if his successor were appointed, and will retire from the Company on January 31, 2009. Mr. Schiffner has agreed to continue as an employee of the Company beyond the date of his resignation from his former position and until January 31, 2009 to facilitate the Company’s smooth transition to a new Chief Financial Officer. His base salary will remain the same at $525,000, and he will be eligible for annual incentive compensation and long-term incentive compensation in accordance with the regular terms and conditions of those programs. On April 22, 2008, the Company made a special grant to Mr. Schiffner of 55,265 shares of performance-restricted stock under the 2005 Long-Term Incentive Plan. The performance-restricted stock will vest on January 31, 2009, provided Mr. Schiffner remains employed by the Company through that date and successfully assists the Company with the financial reporting, operational, and business transition projects specified in the restricted stock grant agreement. In the event the Company terminates his employment for reasons other than for cause or as a result of his total disability or death prior to January 31, 2009, the shares will vest immediately and will be paid to him or his estate. The shares will be forfeited if, prior to January 31, 2009, Mr. Schiffner retires or is terminated for cause.

 

The following Summary Compensation Table (“SCT”) provides information concerning the compensation of the Company’s Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers (“named executive officers” or “NEOs”) for fiscal 2008 and 2007. However, fiscal 2007 information for Ms. Morrison is not provided because she was not a named executive officer of the Company during fiscal 2007. In addition, Mr. Schiffner resigned from the position of Senior Vice President and Chief Financial Officer effective August 1, 2008 and will retire from the Company on January 31, 2009. For a complete understanding of the table, please read the narrative disclosures that follow the table.

 

 

Salary (Column C)

 

The amounts reported represent base salaries paid to each of the NEOs for fiscal 2008 and 2007.

Bonus (Column D)

 

No discretionary bonus was paid to any NEO in fiscal 2008. Payments under the AIP are listed in column G.

 

Stock Awards (Column E)

 

The amounts reported represent the compensation expense recognized for financial reporting purposes in accordance with FAS 123R for restricted share awards for each of the NEOs for financial reporting purposes for fiscal 2008 and 2007. The assumptions used by the Company in calculating these amounts are included in Notes 1 and 13 to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended August 3, 2008 (“Form 10-K”). Compensation expense includes amounts from awards granted in and prior to fiscal 2008. The FAS 123R value of a grant is amortized for financial reporting purposes over the number of months to vest, except for awards to retirement-eligible participants, which are amortized over an accelerated period. To see the value of awards made to the NEOs in fiscal 2008, see the Grants of Plan-Based Awards table on page 34. To see the value actually received by the NEOs in fiscal 2008, see the Option Exercises and Stock Vested table on page 36.

 

The amounts reported in the SCT for these awards may not represent the amounts that the NEOs will actually realize from the awards. Whether, and to what extent, a NEO realizes value will depend on the Company’s actual operating performance, stock price fluctuations and the NEO’s continued employment. Additional information on all outstanding stock awards is reflected in the Outstanding Equity Awards at Fiscal Year-End table on page 35.

 

Option Awards (Column F)

 

The amounts reported represent the compensation expense recognized for financial reporting purposes for the fiscal year ended August 3, 2008 for grants of options made prior to fiscal 2006, to each of the NEOs, calculated in accordance with the provisions of FAS 123R. The Company ceased issuing stock options to employees beginning in fiscal 2006. To see the value actually received by the NEOs in fiscal 2008, see the Option Exercises and Stock Vested table on page 36. Details for each of the outstanding option awards to NEOs can be found in the Outstanding Equity Awards at Fiscal Year-End Table on page 35.

 

The assumptions used by the Company in calculating these amounts are incorporated herein by reference to Notes 1 and 13 to Consolidated Financial Statements in the Form 10-K. The amounts reported in the SCT for these awards may not represent the amounts that the NEOs will actually realize from the awards. Whether, and to what extent, a NEO realizes value will depend on the Company’s actual operating performance, stock price fluctuations and the NEO’s continued employment. Additional information on all outstanding option awards is reflected in the Outstanding Equity Awards at Fiscal Year-End table on page 35.

 

Non-Equity Incentive Plan Compensation (Column G)

 

The amounts reported reflect the amounts earned and paid to each NEO for fiscal 2008 and 2007 under the AIP. Payments under the AIP were calculated as described in the Compensation Discussion and Analysis beginning on page 23.

 

Change in Pension Value and Nonqualified Deferred Compensation Earnings (Column H)

 

The change in pension amounts reported for fiscal 2008 are comprised of changes between July 29, 2007 and August 3, 2008 in the actuarial present value of the accumulated pension benefits for each of the NEOs. The NEOs receive pension benefits under the same formula applied to all U.S. salaried employees, except for benefits accrued under the Mid-Career Hire Pension Plan. The assumptions used by the Company in calculating the change in pension value are described beginning on page 40.

 

The values reported in this column are theoretical, as those amounts are calculated pursuant to SEC requirements and are based on assumptions used in preparing the Company’s consolidated audited financial statements for the years ended July 29, 2007 and August 3, 2008. The Company’s pension plans utilize a different method of calculating actuarial present value for the purpose of determining a lump sum payment, if

any, under the plan. The change in pension value from year to year as reported in the table is subject to market volatility and may not represent the value that a NEO will actually accrue under the Company’s pension plans during any given year. The material provisions of the Company’s pension plans and deferred compensation plans are described beginning on page 38 and on page 41.

 

The change in pension amounts for executives was as follows: Mr. Conant: $158,953; Mr. Schiffner: $0; Ms. Kaden: $0; Mr. McWilliams: $187,445; and Ms. Morrison: $573,981.

 

Messrs. Conant, Schiffner and McWilliams received above-market earnings (as this term is defined by the SEC) on their nonqualified deferred compensation accounts because part of their accounts was credited with interest at The Wall Street Journal indexed prime rate. This rate of 7.8% for fiscal 2008 exceeded 120% of the applicable federal long-term rate by 2.24%, and this additional amount is included in column H. The additional amount for these executives was as follows: Mr. Conant: $65,452; Mr. Schiffner: $58,011; and Mr. McWilliams: $4,583.

 

All Other Compensation (Column I)

 

The amounts reported reflect, for each NEO, the sum of (i) the incremental cost to the Company of all perquisites and other personal benefits; (ii) amounts contributed by the Company to the 401(k) plan and the 401(k) supplemental program; and (iii) the premiums paid by the Company for executive long-term disability benefits.

 

The following table outlines those (i) perquisites and other personal benefits and (ii) additional all other compensation required by the SEC rules to be separately quantified:

 

 

 

 

Total Compensation (Column J)

 

The amounts reported in column J are the sum of columns C through I for each of the NEOs. All compensation amounts reported in column J include amounts paid and amounts deferred.