STERIS Shareholders Getting a Vote on Executive Pay

STERIS Corp. shareholders will have the chance next month to provide input on the company’s executive pay program.

The Mentor, Ohio-based sterilization products manufacturer is asking shareholders to approve a nonbinding advisory proposal on executive pay. The vote, more commonly referred to as a “Say on Pay” proposal, allows shareholders to endorse or reject the company’s compensation policies and procedures, according to a proxy statement sent to investors.

“We believe that our compensation policies and procedures are based on a pay-for-performance philosophy and are aligned with the long-term interests of our shareholders,” read the proxy statement for the company’s July 29 annual meeting.

STERIS’ pay-for-performance philosophy resulted in a total compensation package of $3.6 million last year for President and CEO Walter M. Rosenbrough Jr., who joined the firm in October 2007. His base salary is $750,000, according to data included in the proxy statement. He is slated to earn a total of $3 million this year through stocks and other compensation methods.

Senior vice president and Chief Financial Officer Michael J. Toklich is expected to earn a total of $720,500 from the company this year through a mix of salary, stock, bonus options and other compensation methods. The total compensation package for Timothy L. Chapman, senior vice president and president of STERIS’ healthcare division, will fall 0.6 percent compared to last year’s plan. However, the $918,528 he stands to earn this year represents a staggering 26.3 percent increase compared with his 2008 total compensation package of $727,172, according to the proxy statement.

A similar earnings surge will occur for Peter A. Burke, senior vice president and chief technology officer at STERIS. His total compensation package this year is expected to be $908,816, a 4.6 percent increase compared with his income last year ($869,048) and a whopping 30.3 percent jump compared with his 2008 earnings of $697,034.

Besides voting on the compensation policy for company executives, STERIS shareholders also are being asked to provide their input on the payment program for members of the Board of Directors. According to the proxy statement, each board member receives $150,000; the director is entitled to $240,000. Board members (as well as the chairman) receive half of the $150,000 in STERIS stock and half in restricted stock shares. The board’s Audit and Financial Committee chair receives an additional $10,000, while each of the other board committee chairs receive an extra $5,000.

Though the board is asking shareholders to “carefully review” the firm’s compensation packages, it notes that the investors’ final decision is merely an advisory one. “It will not be binding on the board,” the proxy statement read. The board, however, promised to take shareholders’ input into account when considering future executive compensation agreements.