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 Pursuant to §240.14a-12

 

Kimberly-Clark Corporation

(Name of Registrant as Specified In Its Charter)

 

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

Payment of Filing Fee (Check the appropriate box):

þ		No fee required.
o		Fee computed on table below per Exchange Act Rules 14a-6(i)(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:

March 12, 2010

 

Thomas J. Falk

Chairman of the Board and

Chief Executive Officer

 

FELLOW STOCKHOLDERS:

 

It is my pleasure to invite you to the Annual Meeting of Stockholders of Kimberly-Clark Corporation. The meeting will be held on Thursday, April 29, 2010, at 9:00 a.m. at the Four Seasons Resort and Club, which is located at 4150 North MacArthur Boulevard, Irving, Texas.

 

At the Annual Meeting, stockholders will be asked to elect twelve directors for a one-year term, ratify the selection of the Corporation’s independent auditors and vote on a stockholder proposal. These matters are fully described in the accompanying Notice of Annual Meeting and proxy statement.

 

Your vote is important. Regardless of whether you plan to attend the meeting, I urge you to vote your shares as soon as possible. You can vote by marking and dating the proxy form, by using the Internet or by telephone. Instructions regarding all three methods of voting are contained on the proxy form.

 

This year, we are utilizing rules that allow companies to furnish proxy materials to their stockholders on the Internet. We believe furnishing proxy materials in this manner allows us to continue to make this information available to our stockholders, while reducing printing and delivery costs and acting in a sustainable manner.

 

Also provided is our annual report for 2009. You will notice that we have taken a different approach to our annual report this year. My letter to stockholders, along with other information about Kimberly-Clark that in past years has been included in the front portion of the annual report, will be posted online in the Investors section of our website at www.kimberly-clark.com. Posting this information online is more cost-effective and sustainable.

 

Sincerely,

 

 

Thomas J. Falk

KIMBERLY-CLARK CORPORATION

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

TO BE HELD APRIL 29, 2010

 

 

The Annual Meeting of Stockholders of Kimberly-Clark Corporation will be held at the Four Seasons Resort and Club, 4150 North MacArthur Boulevard, Irving, Texas, on Thursday, April 29, 2010, at 9:00 a.m. for the following purposes:

 

1. To elect as directors the twelve nominees named in the accompanying proxy statement;

 

2. To ratify the selection of Deloitte & Touche LLP as our independent auditors for 2010;

 

3. To vote on one stockholder proposal that may be presented at the meeting; and

 

 

Stockholders of record at the close of business on March 1, 2010 are entitled to notice of and to vote at the meeting or any adjournments.

 

It is important that your shares be represented at the meeting. I urge you to vote promptly by using the Internet or telephone or by signing, dating and returning your proxy form.

 

The accompanying proxy statement also is being used to solicit voting instructions for shares of Kimberly-Clark common stock that are held by the trustees of our employee benefit and stock purchase plans for the benefit of the participants in the plans. It is important that each participant in the plans indicates his or her preferences using the Internet or telephone or otherwise signs, dates and returns the voting instruction card, which is enclosed with the proxy statement, in the business reply envelope provided.

 

By Order of the Board of Directors.

 

 

John W. Wesley
Vice President and Secretary

 

P.O. Box 619100

Dallas, Texas 75261-9100

March 12, 2010

TABLE OF CONTENTS

 

March 12, 2010

 

PROXY STATEMENT

 

PART ONE

VOTING INFORMATION

 

A proxy is solicited on behalf of the Board of Directors of Kimberly-Clark Corporation for use at the Annual Meeting of Stockholders to be held on April 29, 2010 and at any adjournment of the Annual Meeting. We are first mailing either a notice containing instructions on how to access this proxy statement and our annual report online, or a printed copy of these proxy materials and the accompanying proxy form, to holders of Kimberly-Clark common stock on or about March 12, 2010.

 

As permitted by rules of the Securities and Exchange Commission (“SEC”), we are making this proxy statement and our annual report available to our stockholders electronically via the Internet. The notice of electronic availability contains instructions on how to access this proxy statement and our annual report and vote online. If you received a notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the notice instructs you on how to access and review all of the important information contained in the proxy statement and annual report online. The notice also instructs you on how you may submit your proxy over the Internet or by telephone. If you received a notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials contained in the notice.

 

Each stockholder of record at the close of business on March 1, 2010 will be entitled to one vote for each share registered in the stockholder’s name. On that date, 416,128,552 shares of our common stock were outstanding.

 

If you received a notice of electronic availability, you cannot vote your shares by filling out and returning the notice. The notice, however, provides instructions on how to vote in person, by Internet, by telephone or by mail.

 

You may vote in person by attending the meeting, by using the Internet or telephone, or (if you received printed proxy materials) by completing and returning a proxy form by mail. To vote your proxy using the Internet or telephone, see the instructions on the notice of electronic availability or the proxy form and have the notice or proxy form available when you access the Internet website or place your telephone call. To vote your proxy by mail, mark your vote on the proxy form, then follow the instructions on the card.

 

The named proxies will vote your shares according to your directions. If you sign and return your proxy form, or if you vote using the Internet or by telephone, but do not specify how you want to vote your shares, the named proxies will vote your shares for the election of directors, for ratification of the selection of our independent auditors and against approval of the stockholder proposal.

 

You may revoke your proxy before the time of voting at the meeting in any of the following ways:

 

 

 

Proxy forms are received by our independent proxy processing agent, and the vote is certified by independent Inspectors of Election. Proxy forms and ballots that identify the vote of stockholders and plan participants will be kept confidential, except as necessary to meet legal requirements, in cases where stockholders and participants request disclosure or write comments on their cards, or in a contested matter involving an opposing proxy solicitation. During the proxy solicitation period, we will receive daily tabulation reports from the independent proxy processing agent, but these reports provide only aggregate data. In addition, the agent may identify stockholders who fail to vote so that we may contact them and request they do so.

 

Kimberly-Clark will bear the cost of preparing, printing and delivering materials in connection with this solicitation of proxies, including the cost of the proxy solicitation and the expenses of brokers, fiduciaries and other nominees in forwarding proxy materials to beneficial owners. In addition to the use of mail and electronic delivery, solicitation may be made by telephone or otherwise by our employees. We have retained D. F. King & Co., Inc. to aid in the solicitation at a cost of approximately $17,000 plus reimbursement of out-of-pocket expenses.

 

A majority of the shares of our common stock, present in person or represented by proxy, will constitute a quorum for purposes of the Annual Meeting. The twelve nominees for director receiving a majority of the votes cast at the meeting in person or by proxy will be elected. If a nominee does not receive a majority of the votes cast, then the nominee will be subject to the Board’s existing policy regarding resignations by directors who do not receive a majority of “for” votes. For approval, all other matters require the affirmative vote of a majority of shares that are present at the Annual Meeting in person or by proxy and entitled to vote on that matter.

 

Abstentions are treated as votes against a proposal, and broker non-votes will not be considered present and entitled to vote. Generally, a broker non-vote occurs on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner of the shares, and instructions are not given.

 

Stockholders are urged to vote their shares. Previously, for shares held by stockholders in street name, if the stockholders did not indicate how to vote their shares in the election of directors or for stockholder proposals, banks and brokers could vote the shares on behalf of these stockholders for these items as the banks and brokers deemed appropriate. Beginning this year, banks and brokers are no longer permitted to vote uninstructed shares for these items. Therefore, stockholders should vote to ensure their shares are represented in these matters.

 

If a stockholder is a participant in our Direct Stock Purchase and Dividend Reinvestment Plan, the proxy form represents the number of full shares in the stockholder’s account in the plan, as well as shares registered in the stockholder’s name.

 

We also are sending or otherwise making this proxy statement and voting materials available to participants in various Kimberly-Clark employee benefit and stock purchase plans. The trustee of each plan, as the stockholder of record of the shares of our common stock held in the plans, will vote whole

shares of stock attributable to each participant’s interest in the plans in accordance with the directions the participant gives or, if no directions are given by the participant, in accordance with the directions of the respective plan committee.

 

Stockholders as of the record date, March 1, 2010, or their duly appointed proxies, may attend the Annual Meeting. If you plan to attend the meeting, please check your proxy form in the space provided or so indicate electronically or by telephone. This will assist us with meeting preparations and will help us to expedite your admittance. If your shares are not registered in your own name and you would like to attend the meeting, please ask the broker, trust, bank or other nominee that holds your shares to provide you with evidence of your share ownership, which will enable you to gain admission to the meeting.

 

To obtain directions to attend the meeting and vote in person, please contact Stockholder Services by telephone at (972) 281-1522 or by e-mail at stockholders@kcc.com.

 

Because many stockholders hold shares of our common stock in multiple accounts or share an address with other stockholders, stockholders may receive duplicate mailings of notices or proxy materials. Stockholders may avoid receiving duplicate mailings as follows:

 

 

The Board of Directors met six times in 2009. All of the directors attended in excess of 75 percent of the total number of meetings of the Board and committees of the Board on which they served.

 

Although we do not have a formal policy with respect to director attendance at Annual Meetings, since 1997 all nominees and continuing directors have attended the Annual Meetings. Each director attended the 2009 Annual Meeting.

 

The standing committees of the Board include the Audit Committee, Management Development and Compensation Committee, Nominating and Corporate Governance Committee and Executive Committee. In compliance with applicable New York Stock Exchange (“NYSE”) corporate governance listing standards, the Board has adopted charters for the Audit, Management Development and Compensation, and Nominating and Corporate Governance Committees. These charters are available in the Investors section of our website at www.kimberly-clark.com.

 

Dennis R. Beresford is the Chairman of our Audit Committee. The other members of this Committee are John R. Alm, John F. Bergstrom, Robert W. Decherd and Linda Johnson Rice. The Committee met eight times in 2009. In addition, Mr. Beresford participated in three conference calls as Chairman of the Committee to preview earnings press releases during 2009.

 

Each member of the Audit Committee is an Independent Director under the independence standards set forth in our Corporate Governance Policies. See “Director Independence” for additional information on Independent Directors.

 

Each member of the Audit Committee satisfies the financial literacy requirements of the NYSE, and the Board has determined that Mr. Beresford is an “audit committee financial expert” under the rules and regulations of the SEC.

 

The principal functions of the Audit Committee, as specified in its charter, include the following:

 

 

 

 

For additional information about the Audit Committee’s oversight activities in 2009, see “Part Three — Proposals to be Voted on at the 2010 Annual Meeting — Ratification of Auditors — Audit Committee Report.”

No member of the Audit Committee simultaneously serves on the audit committees of more than three public companies. If a member were to simultaneously serve on more than three public company audit committees, information regarding the Board’s determination of whether this simultaneous service impairs the ability of the member to effectively serve on the Audit Committee will be available in the Investors section of our website at www.kimberly-clark.com.

 

James M. Jenness is the Chairman of our Management Development and Compensation Committee. In addition to Mr. Jenness, the current members of this Committee are Abelardo E. Bru, Mae C. Jemison, M.D. and Ian C. Read. The Committee met six times in 2009. Each member of this Committee is an Independent Director.

 

The principal functions of the Management Development and Compensation Committee, as specified in its charter, include the following:

 

 

 

 

Compensation Processes and Procedures

 

On an annual basis, the Committee reviews and sets the compensation of our elected officers, including all of our executive officers. The Committee’s charter does not permit the Committee to delegate to anyone the authority to establish any compensation policies or programs for elected officers, including our executive officers. Our Chief Executive Officer has the authority to establish compensation programs for non-elected officers. Additionally, as discussed in “Part Four — Other Important Information — Executive Compensation — Compensation Discussion and Analysis,” the Committee has delegated limited authority to our Chief Executive Officer to grant stock options, restricted stock and restricted share units to non-executive officers for recruiting or retention purposes.

 

Our Chief Executive Officer makes a recommendation to the Committee each year on the appropriate target direct annual compensation to be paid to our executive officers, excluding himself. The Committee makes the final determination of the target direct annual compensation to be awarded to each executive officer, including our Chief Executive Officer. While our Chief Executive Officer and Chief Human Resources Officer typically attend Committee meetings, none of the other executive officers is present during the portion of the Committee’s meetings when compensation for executive officers is set. In addition, our Chief Executive Officer is not present during the portion of the Committee’s meetings when his compensation is set.

 

For additional information on the Committee’s processes and procedures for determining executive compensation, and for a detailed discussion of our compensation policies, see “Part Four — Other Important Information — Executive Compensation — Compensation Discussion and Analysis.”

 

Use of Compensation Consultants

 

The Committee’s charter provides that the Committee has the authority to retain advisors, including compensation consultants, to assist the Committee in its work. The Committee believes that compensation consultants can provide important market information and perspectives that can help

the Committee determine compensation programs that best meet the objectives of our compensation policies.

 

Corporation Consultant.  To assist management and the Committee in assessing and determining appropriate, competitive compensation for our executive officers, we annually engage an outside compensation consultant. In 2009, Mercer Human Resource Consulting (“Mercer”) was retained for this purpose. Mercer has provided consulting services to the Corporation on a wide variety of human resources and compensation matters, both at the officer and non-officer levels. In 2009, Mercer was retained by the Corporation to provide advice and counsel regarding executive and director remuneration matters on an ongoing basis, including the following services in connection with our executive compensation program:

 

 

Independent Committee Consultant.  The Committee has also retained The Delves Group as its independent executive compensation consultant. The Committee has adopted a written policy providing that the independent Committee consultant may provide services only to the Committee and not to the Corporation. The Delves Group has no other business relationship with the Corporation and receives no payments from us other than fees for services to the Committee. The Delves Group reports directly to the Committee, and the Committee may replace The Delves Group or hire additional consultants at any time. The Delves Group attends Committee meetings and communicates with the Chairman of the Committee between meetings from time to time.

 

The Committee instructed The Delves Group to provide an independent review of the data and recommendations provided by management and Mercer. The scope of The Delves Group’s engagement in 2009 included:

 

 

During 2009, at the request of the Committee, Don Delves, the President of The Delves Group, attended all of the in-person Committee meetings, as well as one of the teleconference Committee meetings.

Committee Report

 

The Committee has reviewed the “Compensation Discussion and Analysis” section of this proxy statement and has recommended that it be included in this proxy statement. The Committee’s report is located at “Part Four — Other Important Information — Executive Compensation — Management Development and Compensation Committee Report.”

 

G. Craig Sullivan is the Chairman of our Nominating and Corporate Governance Committee. In addition to Mr. Sullivan, the current members of this Committee are Abelardo E. Bru, Mae C. Jemison, M.D. and Ian C. Read. The Committee met four times in 2009. Each member of this Committee is an Independent Director.

 

The principal functions of the Nominating and Corporate Governance Committee, as specified in its charter, include the following:

 

 

 

 

The Nominating and Corporate Governance Committee, in accordance with its charter and our Certificate of Incorporation, has established criteria and processes for director nominees, including nominations proposed by stockholders. Those criteria and processes are described in “Director Nominee Criteria and Process” and “Stockholder Nominations for Directors.”

 

Marc J. Shapiro is the Chairman of our Executive Committee. In addition to Mr. Shapiro, the current members of this Committee are Dennis R. Beresford, Thomas J. Falk, James M. Jenness and G. Craig Sullivan. The Committee met one time in 2009.

 

The principal function of the Executive Committee is to exercise the powers of the Board to direct our business and affairs between meetings of the Board.

 

None of the members of the Management Development and Compensation Committee is a current or former officer or employee of the Corporation. No interlocking relationship exists between the members of our Board of Directors or the Management Development and Compensation Committee and the board of directors or compensation committee of any other company.

 

Since 1996, our By-Laws have provided that a majority of our directors be independent directors (“Independent Directors”). In addition, our Corporate Governance Policies adopted by the Board provide independence standards consistent with the rules and regulations of the SEC and the listing standards of the NYSE. Our Corporate Governance Policies are available in the Investors section of our website at www.kimberly-clark.com, and the independence standards are set forth in Section 17 of our Corporate Governance Policies.

 

The nominees for director are such that immediately after the election of the nominees to the Board, eleven of the twelve directors holding office will be Independent Directors. Our independent Board helps ensure good corporate governance and strong internal controls. We are in compliance with all corporate governance requirements of the NYSE, the SEC and the Sarbanes-Oxley Act of 2002.

 

The Board has determined that all directors and nominees, except for Thomas J. Falk, are Independent Directors and meet the independence standards set forth in our Corporate Governance Policies. When making these determinations, the Board considered the following:

 

 

The amount involved in each of these items is less than the amounts established by the NYSE and our Corporate Governance Policies as potentially affecting a director’s independence.

 

The Board of Directors is responsible for approving candidates for Board membership. The Board has delegated the screening and recruitment process to the Nominating and Corporate Governance Committee, in consultation with the Chairman of the Board and Chief Executive Officer. The Nominating and Corporate Governance Committee believes that the criteria for director nominees should ensure effective corporate governance, support our strategies and businesses, include

consideration of diversity, account for individual director attributes and the effect of the overall mix of those attributes on the Board’s effectiveness and support the successful recruitment of qualified candidates for the Board.

 

Qualified candidates for director are those who, in the judgment of the Nominating and Corporate Governance Committee, possess all of the personal attributes and a sufficient mix of the experience attributes listed below to ensure effective service on the Board.

 

 

The Nominating and Corporate Governance Committee may receive recommendations for Board candidates from various sources, including our directors, management and stockholders. In addition, the Nominating and Corporate Governance Committee has retained a search firm to assist it in identifying and recruiting director candidates meeting the criteria specified by the Committee.

 

The Nominating and Corporate Governance Committee recommends to the Board nominees to fill any vacancies. As provided in the Corporation’s Certificate of Incorporation, the Board elects a new director when a vacancy occurs between annual meetings of stockholders. The Nominating and Corporate Governance Committee also recommends to the Board any new appointments and nominees for election as directors at our annual meeting of stockholders, as well as assesses the performance of each director at least once every three years in accordance with our Corporate Governance Policies.

 

The Nominating and Corporate Governance Committee has reviewed the background of each of the Corporation’s current directors and his or her service on the Board and committees on which he or she serves, based on the personal and experience attributes described above. The Committee has determined

that each director possesses all of the personal attributes, as well as a sufficient mix of the experience attributes. For the experience attributes, the Committee considered the following:

•	Satisfies the financial literacy requirements of the NYSE

•	Qualifies as an audit committee financial expert under the rules and regulations of the SEC

•	Has an accounting, finance or banking background

•	Possesses knowledge about our industries

•	Has international experience

•	Has branded consumer packaged goods experience

•	Has health care experience

•	Has leadership experience as a chief executive officer or as a senior executive officer

•	Brings a diverse viewpoint that is representative of our customer, consumer, employee and stockholder base

•	Provides a different perspective (stemming, for example, from an academic background or experience from outside the consumer packaged goods or health care industries)

•	Has marketing experience

•	Has compensation experience (including from executive officer experience)

•	Has governance/public company board experience

 

The Committee has identified specific experience attributes for each director, based on the list above. See “Certain Information Regarding Directors and Nominees” for information regarding these specific attributes.

 

As noted above, the Nominating and Corporate Governance Committee believes that diversity of backgrounds and viewpoints is a key attribute for directors. As a result, the Committee seeks to have a diverse Board that is representative of its customer, consumer, employee and stockholder base. While the Committee carefully considers this diversity when considering nominees for director, the Committee has not established a formal policy regarding diversity in identifying director nominees.

 

The Nominating and Corporate Governance Committee considers nominees recommended by stockholders as candidates for election to the Board of Directors. A stockholder wishing to nominate a candidate for election to the Board at an annual stockholders meeting is required to give written notice to the Secretary of the Corporation of his or her intention to make a nomination in accordance with the Corporation’s Certificate of Incorporation and By-Laws. The notice of nomination must be received by us not less than 75 days nor more than 100 days prior to the stockholders’ meeting, or if we give less than 75 days notice of the meeting date, the notice of nomination must be received within 10 days after the meeting date is announced. The notice of nomination is required to contain information, as set forth in the Certificate of Incorporation and By-Laws, about both the nominee and the stockholder making the nomination, including information sufficient to allow the Nominating and Corporate Governance Committee to determine if the candidate meets the director nominee criteria described above. The notice must also contain information about certain stock holdings of the nominee and the stockholder making the nomination, including derivative holdings, dividend rights that are separated from or separable from the underlying shares and certain performance-related fees, as well as information that would be required to be disclosed in connection with a proxy solicitation (and whether a proxy solicitation will be conducted). The notice is also required to contain information about certain related person transactions, contact and related information regarding the nominee, understandings regarding the nomination of the

nominee and the nominee’s consent to be nominated. We may require that the proposed nominee furnish other information to determine that person’s eligibility to serve as a director. A nomination that does not comply with the requirements set forth in the Certificate of Incorporation and By-Laws will not be considered for presentation at the annual meeting, but will be considered by the Nominating and Corporate Governance Committee for any vacancies arising on the Board between annual meetings in accordance with the process described in “Director Nominee Criteria and Process.” There are twelve director positions on the Board, and there are no vacant director positions as of the date of this proxy statement.

 

The Board has established a process by which stockholders and other interested parties may communicate with the Board, including the Lead Director. That process can be found in the Investors section of our website at www.kimberly-clark.com.

 

The Board has established a leadership structure in which responsibilities are allocated between the Chairman of the Board and Chief Executive Officer and the Lead Director. The Board believes this allocation of responsibilities between these two positions provides for dynamic Board leadership while maintaining strong independence and is therefore an effective and appropriate leadership structure.

 

Chairman of the Board and Chief Executive Officer Positions.  Mr. Falk serves as Chairman of the Board and Chief Executive Officer. As noted in our Corporate Governance Policies, the Board believes that it is appropriate for a single person to serve in both positions. The Board believes that combining these roles unifies the Corporation’s leadership and enhances the Corporation’s ability to execute its Global Business Plan. The Board has the discretion to separate the roles in the future if it deems it advisable and in the best interest of the Corporation to do so.

 

Lead Director.  Mr. Shapiro served as Lead Director in 2009. The Lead Director serves as Chairman of the Executive Committee. Our Corporate Governance Policies outline the role and responsibilities of the Lead Director, which include coordinating the activities of the independent directors, providing input with regard to agendas and schedules for Board meetings, leading (with the Chairman of the Nominating and Corporate Governance Committee) the annual Board evaluation discussion, leading (with the Chairman of the Management Development and Compensation Committee) the Board’s review and discussion of the Chief Executive Officer’s performance, providing feedback to individual directors following their periodic evaluations, speaking on behalf of the Board and chairing Board meetings when the Chairman of the Board is unable to do so and acting as a direct conduit to the Board for stockholders, employees and others pursuant to policies adopted by the Board.

 

The Lead Director also chairs executive session meetings of non-management directors. The non-management directors are scheduled to meet in executive session without the presence of management at least quarterly.

 

Corporate Governance Policies.  The Board of Directors adopted Corporate Governance Policies in 1994, which have been amended from time to time in accordance with changes in rules and regulations and developing governance practices. These policies guide the Corporation and the Board on matters of corporate governance, including director responsibilities, Board committees and their charters, director independence, director compensation and performance assessments, director orientation and education, director access to management, Board access to outside financial, business and legal advisors, and management development and succession planning. These policies, which include our director independence standards, are available in the Investors section of our website at www.kimberly-clark.com.

 

Code of Conduct.  Kimberly-Clark has a Code of Conduct that applies to all of our directors, executive officers and employees, including our Chief Executive Officer, Chief Financial Officer and

Corporate Controller. Our Code of Conduct is available in the Investors section of our website at www.kimberly-clark.com. Any amendments to or waivers of our Code of Conduct applicable to our Chief Executive Officer, Chief Financial Officer or Corporate Controller will be posted at this location.

 

Board and Management Roles in Risk Oversight.  The Board reviews and oversees management’s response to key risks facing us as we implement our Global Business Plan, which provides a long-term roadmap for our overall strategic direction, business operations and finances. Our senior executive team identifies and monitors key enterprise-wide and business unit risks, which are integrated into our Global Business Plan, providing the basis for the Board’s risk review and oversight process. The Board believes these roles complement the Board’s leadership structure described above, including the combination of the Chairman of the Board and Chief Executive Officer positions.

 

The Audit Committee’s role regarding risk oversight, as specified in its charter, is to provide oversight of our risk management program and receive periodic reports from management on risk assessments, the risk management process and issues related to the risks of managing our business. As part of its oversight role, the Audit Committee receives an annual enterprise risk management update, which discusses our key financial, strategic, operational and compliance risks, as well as other periodic updates and reports regarding risks in these and other areas. Our Global Risk Oversight Committee, consisting of management members from key business units, finance, treasury, information technology, global risk management and legal, identifies key risks for review and updates our policies in risk management areas such as hedging and foreign currency and country risks, property and casualty risks and supplier and customer risks.

 

Committee Authority to Retain Independent Advisors.  Each of the Audit, Management Development and Compensation, and Nominating and Corporate Governance Committees has the authority to retain independent advisors and consultants, with all fees and expenses to be paid by the Corporation.

 

Whistleblower Procedures.  The Audit Committee has established procedures for (1) the receipt, retention and treatment of complaints we receive regarding accounting, internal accounting controls or auditing matters and (2) the confidential and anonymous submission by our employees and others of concerns regarding questionable accounting or auditing matters. We also maintain a toll-free, around-the-clock Code of Conduct telephone hotline that allows our employees and others to voice their concerns anonymously. The whistleblower procedures and information on how to access the hotline are available in the Investors section of our website at www.kimberly-clark.com.

 

Chief Compliance Officer.  Thomas J. Mielke is the Senior Vice President — Law and Government Affairs and Chief Compliance Officer and oversees our compliance programs. He reports to the Audit Committee on the programs’ effectiveness, provides periodic reports to the Board and works closely with our various compliance functions to provide coordination and sharing of best practices across the compliance groups.

 

Disclosure Committee.  We have established a Disclosure Committee composed of members of management and chaired by our Vice President and Controller to assist in fulfilling our obligations to maintain disclosure controls and procedures and to coordinate and oversee the process of preparing our periodic securities filings with the SEC.

 

No Executive Loans.  We do not extend loans to our executive officers or directors and do not have any such loans outstanding.

 

Stockholder Rights Plan.  The Board has adopted the following policy statement on stockholder rights plans: “Kimberly-Clark does not have a ‘poison pill’ or stockholder rights plan. If Kimberly-Clark were to adopt a stockholder rights plan, the Board would seek prior stockholder approval of the plan unless, due to timing constraints or other reasons, a majority of independent directors of the Board determines that it would be in the best interests of stockholders to adopt a plan before obtaining stockholder approval. If a stockholder rights plan is adopted without prior stockholder approval, the plan must either be ratified by stockholders or must expire, without being renewed or replaced, within one year. The Nominating and Corporate Governance Committee shall review this policy statement periodically and report to the Board on any recommendations it may have concerning the policy.”

Annual Election of Directors.  Our Certificate of Incorporation provides that directors are elected on an annual basis. Our Certificate of Incorporation is available in the Investors section of our website at www.kimberly-clark.com.

 

Majority Voting for Election of Directors.  The Corporation’s By-Laws provide that, in uncontested elections, directors will be elected by a majority vote rather than by a plurality. If an incumbent director does not receive a majority of votes, the director is required to tender his or her resignation for consideration by the Board. Our By-Laws are available in the Investors section of our website at www.kimberly-clark.com.

 

Simple Majority Voting Provisions.  In 2008, stockholders approved an amendment to our Certificate of Incorporation to eliminate supermajority voting provisions.

 

Special Stockholder Meetings.  In 2009, stockholders approved an amendment to our Certificate of Incorporation to allow the holders of not less than 25 percent of the Corporation’s issued and outstanding shares of capital stock to request that a special meeting of stockholders be called, subject to our By-Law procedures.

 

Charitable Contributions.  The Nominating and Corporate Governance Committee has adopted guidelines for review and approval of charitable contributions by us and any foundation we control to organizations or entities with which a member of the Board of Directors or an executive officer is or may be affiliated. Any contributions made by us to any tax-exempt organization in which any Independent Director serves as an executive officer will be disclosed in the Investors section of our website at www.kimberly-clark.com, if within the preceding three years contributions in any single year from us to the organization exceeded the greater of $1 million or 2 percent of the tax-exempt organization’s consolidated gross revenues.

 

PROPOSAL 1. ELECTION OF DIRECTORS

 

As of the date of this proxy statement, the Board of Directors consists of twelve members. Each director’s term expires at this year’s Annual Meeting.

 

All the nominees for director set forth on the following pages are proposed to be elected at this year’s Annual Meeting to serve for a term to expire at the 2011 Annual Meeting of Stockholders and until their successors have been duly elected and qualified. Should any nominee become unable to serve, proxies may be voted for another person designated by the Board. All nominees have advised us that they will serve if elected.

 

The names of the nominees, their ages as of the date of the Annual Meeting, the year they first became directors, their principal occupations during at least the past five years, other public company directorships held by them as of February 23, 2010, public company boards they have served on since January 1, 2005, information regarding director attributes the Nominating and Corporate Governance Committee determined qualify them to serve as directors and certain other biographical information are set forth below. See “Committee Review of Attributes of Current Directors” for a discussion of director attributes considered by the Nominating and Corporate Governance Committee.

 

John R. Alm, 64, Director since 2006

 

Retired President and Chief Executive Officer, Coca-Cola Enterprises Inc.

 

Mr. Alm retired as President and Chief Executive Officer of Coca-Cola Enterprises Inc., a beverage company, in 2005. He had been Chief Executive Officer since 2004 and President and Chief Operating

Officer since 2000. Mr. Alm joined Coca-Cola Enterprises Inc. in 1992 and held the position of Chief Financial Officer until 2000.

 

Public company boards served on since 2005: Washington Group International, Inc. (February 2006 through November 2007).

 

Experience attributes:  Mr. Alm satisfies the financial literacy requirements of the NYSE, has leadership experience as a chief executive officer, has knowledge about our industries, has international experience and experience with branded consumer packaged goods, and has marketing, compensation, governance and public company board experience.

 

Dennis R. Beresford, 71, Director since 2002

 

Ernst & Young Executive Professor of Accounting, University of Georgia

 

Mr. Beresford has served as Ernst & Young Executive Professor of Accounting at the J.M. Tull School of Accounting, Terry College of Business, University of Georgia since 1997. From 1987 to 1997, he served as the Chairman of the Financial Accounting Standards Board. Prior to that, Mr. Beresford held various positions at the accounting firm of Ernst & Young. He serves on the board of directors and audit committees of Legg Mason, Inc. and the Federal National Mortgage Association (Fannie Mae).

 

Public company boards served on since 2005: Legg Mason, Inc., Fannie Mae (since May 2006) and MCI, Inc. (July 2002 through January 2006).

 

Experience attributes:  Mr. Beresford has been determined to be an “audit committee financial expert” under the SEC’s rules and regulations and has a background in accounting, provides diversity of background and viewpoint, and has governance and public company board experience.

 

John F. Bergstrom, 63, Director since 1987

 

Chairman and Chief Executive Officer, Bergstrom Corporation

 

Mr. Bergstrom has served as Chairman and Chief Executive Officer of Bergstrom Corporation, Neenah, Wisconsin, for more than the past five years. Bergstrom Corporation owns and operates automobile sales and leasing businesses and a credit life insurance company based in Wisconsin. Mr. Bergstrom is a director of the Wisconsin Energy Corporation and its wholly-owned subsidiary Wisconsin Electric Power Company. He also is a member of the board of directors of Advance Auto Parts, Inc., and a member of the board of directors and executive committee of Green Bay Packers, Inc.

 

Public company boards served on since 2005: Wisconsin Energy Corporation, Wisconsin Electric Power Company, Advance Auto Parts, Inc. (since May 2008), Sensient Technologies Corp. (through April 2006), Banta Corporation (through January 2007) and Midwest Air Group, Inc. (through June 2007).

 

Experience attributes:  Mr. Bergstrom satisfies the financial literacy requirements of the NYSE, has leadership experience as a chief executive officer, provides diversity of background and viewpoint, and has marketing, compensation, governance and public company board experience.

 

Abelardo E. Bru, 61, Director since 2005

 

Retired Vice Chairman, PepsiCo, Inc.

 

Mr. Bru retired as Vice Chairman of PepsiCo, a food and beverage company, in 2005. He joined PepsiCo in 1976. Mr. Bru served from 1999 to 2003 as President and Chief Executive Officer and in 2003 to 2004 as Chief Executive Officer and Chairman of Frito-Lay Inc., a division of PepsiCo. Prior to leading Frito-Lay, Mr. Bru led PepsiCo’s largest international business, Sabritas Mexico, as President and General Manager from 1992 to 1999. Mr. Bru is a member of the board of directors of S. C. Johnson & Son, Inc. and the Education is Freedom Foundation.

Public company boards served on since 2005: Office Depot, Inc. (through December 2008).

 

Experience attributes:  Mr. Bru satisfies the financial literacy requirements of the NYSE, has leadership experience as a chief executive officer, has knowledge about our industries, provides diversity of background and viewpoint, has international experience and experience with branded consumer packaged goods, and has marketing, compensation, governance and public company board experience.

 

Robert W. Decherd, 59, Director since 1996

 

Chairman of the Board, President and Chief Executive Officer, A. H. Belo Corporation

 

Mr. Decherd has served as Chairman of the Board, President and Chief Executive Officer of A. H. Belo Corporation, a newspaper publishing and Internet company, since it was spun off from Belo Corp. in February 2008. Prior to February 2008, Mr. Decherd was Chief Executive Officer of Belo Corp., a broadcasting and publishing company, for 21 years. He is a director of both A. H. Belo Corporation and Belo Corp., where he is non-executive chairman. Mr. Decherd is a member of the Advisory Council for the Harvard University Center for Ethics and the Board of Visitors of the Columbia Graduate School of Journalism. During the past decade, he has held appointments to Presidential and Federal Communications Commission commissions concerned with public policy matters related to the media industry.

 

Public company boards served on since 2005: Belo Corp. and A. H. Belo Corporation (since February 2008).

 

Experience attributes:  Mr. Decherd satisfies the financial literacy requirements of the NYSE, has leadership experience as a chief executive officer, provides diversity of background and viewpoint, and has marketing, compensation, governance and public company board experience.

 

Thomas J. Falk, 51, Director since 1999

 

Chairman of the Board and Chief Executive Officer

 

Mr. Falk was elected Chairman of the Board and Chief Executive Officer of the Corporation in 2003 and President and Chief Executive Officer in 2002. Prior to that, he served as President and Chief Operating Officer since 1999. Mr. Falk previously had been elected Group President — Global Tissue, Pulp and Paper in 1998, where he was responsible for the Corporation’s global tissue businesses. Earlier in his career, Mr. Falk had responsibility for the Corporation’s North American Infant Care, Child Care and Wet Wipes businesses. Mr. Falk joined the Corporation in 1983 and has held other senior management positions in the Corporation. He also serves on the board of directors of Catalyst and the University of Wisconsin Foundation, and serves as a governor of the Boys & Girls Clubs of America.

 

Public company boards served on since 2005: Centex Corporation (through August 2009).

 

Experience attributes:  Mr. Falk satisfies the financial literacy requirements of the NYSE and has a background in accounting, has leadership experience as a chief executive officer, has knowledge about our industries, has international experience and experience with branded consumer packaged goods, and has marketing, compensation, governance and public company board experience.

 

Mae C. Jemison, M.D., 53, Director since 2002

 

President, BioSentient Corporation

 

Dr. Jemison is founder and President of The Jemison Group, Inc., a technology consulting company, and BioSentient Corporation, a medical devices company. She chairs The Earth We Share international science camp. Dr. Jemison served as a professor of Environmental Studies at Dartmouth College from 1995 to 2002. From 1987 to 1993, she served as a National Aeronautics and Space Administration (NASA)

astronaut. Dr. Jemison serves on the board of directors of Scholastic Corporation, Valspar Corporation and The Dorothy Jemison Foundation for Excellence and is a member of the National Academy of Sciences’ Institute of Medicine. She is also the Chairman of the State of Texas Product Development and Small Business Incubator Board, and she is a member of the National Advisory Council for Biomedical Imaging and Bioengineering, the Greater Houston Partnership Board of Directors, and the Board of Trustees of Morehouse College.

 

Public company boards served on since 2005: Scholastic Corporation, Valspar Corporation and Gen-Probe Incorporated (through November 2007).

 

Experience attributes:  Dr. Jemison satisfies the financial literacy requirements of the NYSE, has knowledge about our industries, provides diversity of background and viewpoint, has experience in the health care field, and has compensation, governance and public company board experience.

 

James M. Jenness, 63, Director since 2007

 

Chairman of the Board, Kellogg Company

 

Mr. Jenness was elected Chairman of the Board of Kellogg Company, a producer of cereal and convenience foods, in 2005. He also served as Chief Executive Officer of Kellogg from 2004 through 2006. Mr. Jenness was Chief Executive Officer of Integrated Merchandising Systems LLC, a market leader in outsource management for retail promotion and branded merchandising, from 1997 to 2004. He served in various positions of increasing responsibility at Leo Burnett Company, Kellogg’s major advertising agency partner, from 1974 to 1997, including as Vice Chairman, Chief Operating Officer and Director. He is a senior director of Children’s Memorial Hospital and a director of Mercy Home for Boys and Girls. He also serves on the DePaul University College of Commerce Advisory Council, is Vice Chairman of DePaul’s Board of Trustees and is co-trustee of the W. K. Kellogg Foundation Trust.

 

Public company boards served on since 2005: Kellogg Company.

 

Experience attributes:  Mr. Jenness satisfies the financial literacy requirements of the NYSE, has leadership experience as a chief executive officer, has knowledge about our industries, has international experience and experience with branded consumer packaged goods, and has marketing, compensation, governance and public company board experience.

 

Ian C. Read, 56, Director since 2007

 

Senior Vice President, Pfizer, Inc.

 

Mr. Read is a Senior Vice President of Pfizer, Inc., a drug manufacturer, and Group President of its Worldwide Biopharmaceutical Businesses. Mr. Read joined Pfizer in 1978 in its financial organization. He worked in Latin America through 1995, holding positions of increasing responsibility, and was appointed President of the Pfizer International Pharmaceuticals Group, Latin America/Canada in 1996. In 2000, Mr. Read was named Executive Vice President of Europe/Canada and was named a corporate Vice President in 2001.

 

Experience attributes:  Mr. Read satisfies the financial literacy requirements of the NYSE and has a background in finance, has leadership experience as a senior executive officer, has knowledge about our industries, has international experience and experience in the health care field, and has marketing and compensation experience.

 

Linda Johnson Rice, 52, Director since 1995

 

Chairman and Chief Executive Officer, Johnson Publishing Company, Inc.

 

Ms. Johnson Rice is Chairman and Chief Executive Officer of Johnson Publishing Company, Inc., a multi-media company. She joined that company in 1980, became Vice President in 1985, was elected

President and Chief Operating Officer in 1987 and became Chairman and Chief Executive Officer in 2008. Ms. Johnson Rice is a director of Omnicom Group, Inc.

 

Public company boards served on since 2005: Bausch & Lomb Incorporated (through October 2007), MoneyGram International, Inc. (through March 2008) and Omnicom Group, Inc.

 

Experience attributes:  Ms. Johnson Rice satisfies the financial literacy requirements of the NYSE, has leadership experience as a chief executive officer, provides diversity of background and viewpoint, has international experience, and has marketing, compensation, governance and public company board experience.

 

Marc J. Shapiro, 62, Director since 2001

 

Retired Vice Chairman, JPMorgan Chase & Co.

 

Mr. Shapiro retired in 2003 as Vice Chairman of JPMorgan Chase & Co., a financial services company. Before becoming Vice Chairman of JPMorgan Chase & Co. in 1997, Mr. Shapiro was Chairman, President and Chief Executive Officer of Chase Bank of Texas, a wholly-owned subsidiary of JPMorgan Chase & Co., from 1989 until 1997. He now serves as a consultant to JPMorgan Chase & Co. as a non-executive Chairman of its Texas operations. Mr. Shapiro is a member of the board of directors of The Mexico Fund, and a trustee of Weingarten Realty Investors. He also serves on the boards of M.D. Anderson Cancer Center, Baylor College of Medicine, Rice University, BioHouston and the Menninger Clinic.

 

Public company boards served on since 2005: Burlington Northern Santa Fe Corporation (through February 2010), The Mexico Fund (since March 2006) and Weingarten Realty Trust.

 

Experience attributes:  Mr. Shapiro satisfies the financial literacy requirements of the NYSE and has a banking and finance background, has leadership experience as a chief executive officer, provides diversity of background and viewpoint, and has compensation, governance and public company board experience.

 

 

Retired Chairman and Chief Executive Officer, The Clorox Company

 

Mr. Sullivan retired as Chairman and Chief Executive Officer of The Clorox Company, a consumer products company, in 2003. He joined The Clorox Company in 1971 and held a number of senior sales and management positions during his career, culminating in his election as Chief Executive Officer and Chairman of the Board in 1992. Mr. Sullivan also serves as a director of Mattel, Inc., The Goodyear Tire & Rubber Company and The American Ireland Fund. He also serves on the capital campaign committee for St. Anthony’s Foundation in San Francisco and is a member of Hoover Institution’s Board of Overseers.

 

Public company boards served on since 2005: Mattel, Inc. and The Goodyear Tire & Rubber Company (since April 2006).

 

Experience attributes:  Mr. Sullivan satisfies the financial literacy requirements of the NYSE, has leadership experience as a chief executive officer, has knowledge about our industries, has international experience and experience with branded consumer packaged goods, and has marketing, compensation, governance and public company board experience.

 

 

Directors who are not officers or employees of the Corporation or any of its subsidiaries, affiliates or equity companies are “Outside Directors” for compensation purposes. Outside Directors are compensated for their services under our Outside Directors’ Compensation Plan, which we adopted in 2001. Our objectives for Outside Director compensation are to remain competitive with the compensation paid to

outside directors of comparable companies, to keep pace with changes in practices in director compensation, to attract qualified candidates for Board service and to reinforce our practice of encouraging stock ownership by our directors. In 2008, to assist the Nominating and Corporate Governance Committee in assessing and determining appropriate, competitive Outside Director compensation, the Committee engaged Mercer, an outside compensation consultant. Based on that assessment, in 2008 the Committee recommended to the Board, and the Board approved, the Outside Director compensation for 2009 and 2010.

 

In 2009, each Outside Director received:

 

 

Outside Directors who join the Board during a calendar year receive the full quarterly amount of the annual retainer for the quarter in which they join the Board and each quarter thereafter, and a pro-rated grant of restricted share units.

 

Outside Directors who were also chairmen of the Audit, Management Development and Compensation and Nominating and Corporate Governance Committees each received an additional grant of restricted share units with a value of $20,000, and the Lead Director received an additional grant of restricted share units with a value of $30,000. In addition, we reimbursed Outside Directors for expenses incurred as a result of attending Board or committee meetings.

 

Restricted share units are not shares of our common stock. Rather, restricted share units represent the right to receive an amount, payable in shares of our common stock, equal to the value of a specified number of shares of our common stock within 90 days following the restricted period. The restricted period for the restricted share units begins on the date of grant and expires on the date the Outside Director retires from or otherwise terminates service on the Board. During the restricted period, restricted share units may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. Outside Directors also receive additional restricted share units equivalent in value to the dividends that would have been paid to them if the restricted share units granted to them were shares of our common stock.

 

2009 Outside Director Compensation

 

The following table sets forth the compensation paid to each Outside Director in 2009 for his or her service as a director:

 

 

 

 

 

 

 

 

 

 

Other than the cash retainer, grants of restricted share units and the other compensation previously described, no Outside Director received any compensation or perquisites from us for services as a director in 2009.

 

A director who is not an Outside Director does not receive any compensation for services as a member of the Board or any committee, but is reimbursed for expenses incurred as a result of the services.

 

The Board of Directors unanimously recommends a vote FOR the election of the twelve nominees for director.

 

The Audit Committee of the Board of Directors has selected Deloitte & Touche LLP as the independent registered public accounting firm to audit our financial statements for 2010, subject to ratification by the stockholders. If the stockholders do not ratify the selection of Deloitte & Touche LLP, the selection of other independent auditors will be considered by the Audit Committee. Deloitte & Touche LLP have been our independent auditors since 1928.

 

Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

 

The aggregate fees (excluding value added taxes) of the Corporation and its subsidiaries with respect to the fiscal years ended December 31, 2009 and 2008 by the Corporation’s principal accounting firm,

Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, “Deloitte”), were:

 

 

 

 

 

All audit and non-audit services provided by Deloitte to the Corporation are pre-approved by the Audit Committee using the following procedures. At or before the first meeting of the Audit Committee each year, our Vice President and Controller prepares a detailed memorandum outlining the audit services to be provided by Deloitte together with the related fees. In addition, our business and staff units prepare individual requests for non-audit services to be provided by Deloitte during the year. These requests describe the services to be provided, the estimated cost of these services, why the requested service is not inconsistent with applicable auditor independence rules and why it is appropriate to have Deloitte provide such services. Our Vice President and Controller reviews and summarizes the individual non-audit service requests and fees (separately describing audit-related services, tax services and other services) to be provided by Deloitte. Before each subsequent meeting of the Committee, our Vice President and Controller prepares an additional memorandum that includes updated information regarding approved services and highlights any new audit and non-audit services to be provided by Deloitte. All new non-audit services to be provided are described in individual requests for services. The Audit Committee reviews these memoranda and the individual requests for non-audit services and approves the services if acceptable to the Committee.

 

To ensure prompt handling of unexpected matters, the Committee delegates to the Chairman of the Audit Committee the authority to amend or modify the list of audit and non-audit services and fees between meetings, as long as the additional or amended services do not affect Deloitte’s independence under applicable rules. The Chairman reports action taken to the Audit Committee at its next Committee meeting.

 

All Deloitte services and fees in 2009 and 2008 were pre-approved by the Audit Committee.

 

The Board of Directors unanimously recommends a vote FOR ratification of this selection.

 

In accordance with its written charter adopted by the Board of Directors, the Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Corporation.

 

In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent registered public accounting firm (the “auditors”) a formal written statement describing all relationships between the auditors and the Corporation that might bear on the auditors’ independence, as required by Public Company Accounting Oversight Board (PCAOB) Rule 3526, Communication with Audit Committees Concerning Independence, discussed with the auditors any relationships that may impact their objectivity and independence and satisfied itself as to the auditors’ independence. The Audit Committee also discussed with management, the internal auditors and the auditors the quality and adequacy of the Corporation’s internal controls and the internal audit function’s organization, responsibilities and budget and staffing. The Audit Committee reviewed with both the auditors and the internal auditors their audit plans, audit scope and identification of audit risks.

 

The Audit Committee discussed and reviewed with the auditors all communications required by the auditing standards of the PCAOB, including those required by PCAOB AU 380, “Communications with Audit Committees,” and, with and without management present, discussed and reviewed the results of the auditors’ examination of the financial statements and the Corporation’s internal control over financial reporting. The Committee also discussed the results of the internal audit examinations.

 

The Audit Committee discussed and reviewed the audited financial statements of the Corporation as of and for the fiscal year ended December 31, 2009, with management and the auditors. The Audit Committee also reviewed management’s assessment of the effectiveness of internal controls as of December 31, 2009 and discussed the auditors’ examination of the effectiveness of the Corporation’s internal control over financial reporting. Management has the responsibility for preparing the Corporation’s financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) and for establishing and maintaining the Corporation’s internal control over financial reporting. The auditors have the responsibility for performing an independent audit of the Corporation’s financial statements and internal control over financial reporting, and expressing opinions on the conformity of the Corporation’s financial statements with GAAP and the effectiveness of internal control over financial reporting.

 

Based on the above-mentioned review and discussions with management and the auditors, the Audit Committee recommended to the Board that the Corporation’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2009, for filing with the Securities and Exchange Commission. The Audit Committee also has selected and recommended to stockholders for ratification the reappointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2010.

 

AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS

 

Dennis R. Beresford, Chairman

John R. Alm
John F. Bergstrom
Robert W. Decherd
Linda Johnson Rice

 

Mr. Nick Rossi, P.O. Box 249, Boonville, California 95415, owning 3,000 shares of our common stock, has given notice that he or his designee intends to present for action at the Annual Meeting the resolution set forth below. The Board of Directors opposes this stockholder proposal for the reasons set forth below the proposal.

 

Proxies solicited by management will be voted against the stockholder proposal below unless stockholders specify a contrary choice in their proxies.

 

In accordance with applicable rules of the SEC, we have set forth Mr. Rossi’s proposal below:

 

3 — Special Shareowner Meetings

 

RESOLVED, Shareowners ask our board to take the steps necessary to amend our bylaws and each appropriate governing document to give holders of 10% of our outstanding common stock (or the lowest percentage allowed by law above 10%) the power to call special shareowner meetings. This includes a combination of small shareowners who can combine their holdings to equal the above 10% of holders. This includes that such bylaw and/or charter text will not have any exception or exclusion conditions (to the fullest extent permitted by state law) that apply only to shareowners but not to management and/or the board.

 

Special meetings allow shareowners to vote on important matters, such as electing new directors, that can arise between annual meetings. If shareowners cannot call special meetings investor returns may suffer. Shareowners should have the ability to call a special meeting when a matter merits prompt attention. This proposal does not impact our board’s current power to call a special meeting.

 

This proposal topic won more than 60% support the following companies in 2009: CVS Caremark (CVS), Sprint Nextel (S), Safeway (SWY), Motorola (MOT) and R. R. Donnelley (RRD). William Steiner and Nick Rossi sponsored these proposals.

 

Please encourage our board to respond positively to this proposal which could exceed the outstanding 61%-support for this topic at our 2008 annual meeting: Special Shareowner Meetings — Yes on 3.

 

The Board of Directors unanimously recommends a vote AGAINST this proposal for the reasons set forth below.

 

The Board recommends a vote against this proposal because the Corporation’s Certificate of Incorporation already permits stockholders to request that a special meeting be called. In 2009, the Board recommended that stockholders approve an amendment to the Corporation’s Certificate of Incorporation to allow holders of 25 percent or more of the Corporation’s shares to request that a special meeting of stockholders be called, subject to the Corporation’s By-Law procedures. That recommendation was made in response to a previous proposal from Mr. Chris Rossi requesting that holders of 10 percent to 25 percent of outstanding stock be granted the right to call a special meeting. Stockholders can read the Corporation’s Certificate of Incorporation and By-Laws in the Investors section of our website at www.kimberly-clark.com.

 

The Board believes that this ownership threshold of 25 percent to request a special meeting helps to ensure that a significant number of stockholders considers a particular matter important enough to merit a special meeting. The Board believes that the proposal’s 10 percent threshold is too low and creates the risk that a small minority of stockholders could trigger a special meeting and the resulting extraordinary financial and administrative expense of holding a special meeting. We maintain governance mechanisms

that afford management and the Board the ability to respond to proposals and concerns of all stockholders, regardless of the level of share ownership.

 

As a result, the Board believes the current rights of stockholders to call a special meeting respond to the essence of the proposal.

 

The Board unanimously recommends that the stockholders vote AGAINST the adoption of this proposal.

 

The following table sets forth information as of December 31, 2009 regarding the number of shares of our common stock beneficially owned by each director and nominee, by each executive officer named in “Executive Compensation” (collectively, the “named executive officers”) and by all directors, nominees and executive officers as a group.

 

		Amount and Nature of
Name		Beneficial Ownership(1)(2)(3)(4)(5)
Robert E. Abernathy			591,596	(6)
John R. Alm			12,441	(7)
Dennis R. Beresford			23,472	(6)
John F. Bergstrom			33,914	(6)(8)
Robert W. Black			110,433	(6)
Abelardo E. Bru			9,905
Mark A. Buthman			370,782	(6)
Robert W. Decherd			49,139	(6)(9)
Thomas J. Falk			1,774,664	(6)(10)
Mae C. Jemison, M.D.			20,383	(6)
James M. Jenness			7,013
Anthony J. Palmer			75,065	(6)(11)
Ian C. Read			6,202
Linda Johnson Rice			26,919	(6)(12)
Marc J. Shapiro			45,005	(6)
G. Craig Sullivan			13,484	(13)
All directors, nominees and executive officers as a group (21 persons)			3,759,659	(6)(14)

 

 

 

		Time-Vested				Performance-Based
		Restricted Share				Restricted Share
Name		Units(#)				Units(#)
Robert E. Abernathy			19,072				59,920
Robert W. Black			12,278				36,338
Mark A. Buthman			16,920				47,575
Thomas J. Falk			79,247				205,013
Anthony J. Palmer			10,101				27,884

 

 

		Number of Shares That Could be Acquired
Name		Within 60 Days of December 31, 2009
Robert E. Abernathy			405,110
Dennis R. Beresford			5,084
John F. Bergstrom			2,745
Robert W. Black			59,174
Mark A. Buthman			245,316
Robert W. Decherd			8,236
Thomas J. Falk			1,148,400
Mae C. Jemison, M.D.			5,084
Anthony J. Palmer			31,251
Linda Johnson Rice			5,084
Marc J. Shapiro			17,924
All directors, nominees and executive officers as a group (21 persons)			2,322,496

 

 

 

 

To further align management’s financial interests with those of the stockholders, the Corporation maintains stock ownership guidelines for key managers, including the named executive officers. See “Part Four — Other Important Information — Executive Compensation — Compensation Discussion and Analysis — Additional Compensation Information — Target Stock Ownership Guidelines.”

 

In addition, our Corporate Governance Policies provide that, within three years of joining the Board, all Outside Directors should own an amount of the Corporation’s common stock or share units at least equal in value to three times the annual Board cash compensation. For the purpose of these stock ownership guidelines, a director is deemed to own beneficially-owned shares, as well as restricted stock and restricted share units (whether or not any applicable restrictions have lapsed), but not stock options (whether vested or unvested). As of December 31, 2009, the stock ownership levels specified by these guidelines had been met or exceeded by each of the Outside Directors.

 

The following table sets forth the information, as of December 31, 2009, regarding persons or groups known to us to be beneficial owners of more than five percent of our common stock.

 

		Number of Shares				Percentage
		of Common Stock				of Common
Name and Address of Beneficial Owner		Beneficially Owned				Stock Outstanding
BlackRock, Inc.(1) 40 East 52nd Street New York, NY 10022			28,868,164			6.95%

 

 

 

 

This Compensation Discussion and Analysis is intended to provide investors with an understanding of our compensation policies and decisions regarding compensation for our named executive officers for 2009. Our named executive officers are our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers.

 

We will discuss and analyze the following topics in this Compensation Discussion and Analysis:

 

Executive Summary

 

The Management Development and Compensation Committee (the “Committee”) authorized an executive compensation program in 2009 that is designed to achieve our executive compensation objectives described below. Consistent with our pay-for-performance objective, a significant portion of the 2009 annual cash compensation and long-term equity incentive compensation for our named executive officers was performance-based.

 

Committee Assessment of 2009 Performance.  The Committee believes that management delivered positive results in 2009, not only in terms of annual performance, as reflected in the annual cash incentives paid for 2009 performance, but also in terms of a foundation for long-term performance, as reflected in enhancements to our Global Business Plan. The Committee believes these results further support our pay-for-performance objectives.

 

Establishment of 2009 Direct Annual Compensation.  In February 2009, while establishing 2009 direct annual compensation (which consists of annual cash compensation and long-term equity incentive compensation granted in 2009) for our named executive officers, the Committee considered the overall economic environment and its anticipated impact on the Corporation and the executive compensation practices of our peer groups. As a result, Mr. Falk’s 2009 direct annual compensation target was 18.3 percent lower than his 2008 direct annual compensation target. The 2009 targets for the other named executive officers were, on average, 13.8 percent lower than the targets for 2008. For more information regarding the components of the direct annual compensation targets, see “Direct Annual Compensation” below.

 

In response to market conditions, when establishing the value of long-term equity incentive compensation awards in February 2009, the Committee decreased the target value of these awards for Mr. Falk by 25 percent from the 2008 target value of these awards. The target value of these awards for the other named executive officers decreased, on average, by 23.1 percent from the 2008 target value.

 

In addition, the Committee did not increase the base salaries of any of the named executive officers in 2009. Mr. Falk’s base salary did not increase from 2007 through 2009.

 

Overview of Annual Cash Incentive Paid for 2009 Performance.  In 2009, we delivered substantial improvements in our gross and operating margins, resulting in earnings per share of $4.52 that were significantly above our target of $4.14. These margin improvements, along with working capital improvements, contributed to a Return on Invested Capital (“ROIC”) of 15.7 percent, compared to our target of 14.25 percent. These earnings per share and ROIC results were offset somewhat by our 2009 net sales of $19.1 billion, which were slightly less than our target of $19.4 billion. As a result, consistent with our pay-for-performance philosophy described below, the Committee determined that the corporate performance component of the annual cash incentives for 2009 should be 165 percent of target. As a result, Mr. Falk’s annual incentive payout for 2009 was 165 percent of target, and after applying business unit or staff function performance, payouts for the other named executive officers ranged from 152 to 162 percent of target. See “Annual Cash Compensation — Committee Assessment of 2009 Annual Cash Incentive Performance” for more information regarding target levels and our 2009 performance.

 

Other Key Actions Taken Regarding Executive Compensation Program.  As part of the Committee’s ongoing review of our executive compensation program in comparison to developing trends, as well as in response to economic conditions, several changes were implemented to our executive compensation program in 2009, including:

 

 

 

The Committee believes these measures to be appropriate in light of evolving executive compensation practices, while still providing a competitive compensation package to our executive officers.

 

Executive Compensation Objectives and Policies

 

The Committee is responsible for establishing and administering our policies governing the compensation of our elected officers, including our named executive officers. Consistent with its charter, the Committee has adopted executive compensation policies that are designed to achieve the following objectives:

 

 

These compensation objectives and policies seek to align the compensation of our elected officers, including our named executive officers, with the objectives of our Global Business Plan. Our Global Business Plan, established by our senior management and the Board, is designed to make the Corporation a stronger and more competitive company and to increase our total return to stockholders.

 

Elements of Executive Compensation Program

 

For 2009, the Committee authorized an executive compensation program to effect these objectives. The following table provides additional information regarding how the program is designed to achieve these objectives:

 

 

When setting compensation for our executive officers, the Committee considers direct annual compensation, which consists of the base salary, annual cash incentive, and long-term equity incentive compensation elements described above. While the Committee reviews each of these compensation elements, the Committee’s decisions regarding a particular element are not necessarily impacted by other elements, other than to the extent that they affect direct annual compensation. See “Direct Annual Compensation.”

Peer Groups for Executive Compensation Purposes

 

2009 Peer Groups.  To ensure that our compensation programs are reasonable and competitive in the marketplace, the Committee compared our programs to those at other companies. To facilitate this comparison, in 2009 the Committee used, with respect to the named executive officers, two peer groups, the Consumer Goods Peer Group and the General Industry Peer Group:

 

 

Consumer Goods Peer Group

 

 

 

General Industry Peer Group

 

 

The Consumer Goods Peer Group represents companies in our industry, while the General Industry Peer Group consists of companies that are similar in size to us and against which the Committee believes we compete for executive talent. The Committee averages the results of the two peer groups together for the purposes of establishing comparative data.

 

The peer groups are developed without consideration of individual company compensation practices, and no company has been included or excluded from our peer groups because they are known to pay above-average or below-average compensation. The Committee and compensation consultants retained by the Committee and us also periodically review the peer groups, and the peer groups are revised as appropriate to ensure that they continue to represent similar global organizations with which we compete for executive talent in the marketplace. There were no changes in the composition of either peer group from 2008 prior to our analysis regarding 2009 compensation. Although Anheuser-Busch Companies, Inc. was included in our peer group analysis in connection with the determination of our 2009 compensation, it has been acquired and will not be included in our peer group analysis for our 2010 compensation. Washington Mutual, Inc. and Wyeth were also acquired following our analysis regarding 2009 compensation.

 

The following table sets forth comparative data regarding the peer groups, at the time our 2009 compensation and performance objectives were determined:

 

						Range of Individual
		Median Annual Revenue				Company Revenues
Consumer Goods Peer Group		$	13.7 billion			$	4.9 billion to $83.5 billion
General Industry Peer Group		$	19.0 billion			$	10.3 billion to $38.1 billion

 

Our net sales for 2008 were $19.4 billion.

 

2010 Peer Group Review.  In April 2009, the Committee reviewed its practice of using two peer groups for executive compensation benchmarking purposes for our named executive officers. The review indicated that market data for the two peer groups have converged recently, leading to only a small difference between the data provided by the two groups. The review also noted that most of our peers use a single peer group comprised of companies in similar industries and that the use of a single peer group simplifies data analysis. Based on its review, the Committee adopted the use of only the Consumer Goods Peer Group for executive compensation benchmarking purposes, beginning with the 2010 executive compensation program. The Committee believes that this peer group represents the companies against which we compete for executive talent, customers and stockholders and that the use of only this peer group does not create a material difference from our current use of two peer groups.

 

Direct Annual Compensation

 

In setting 2009 compensation for our executive officers, including our Chief Executive Officer, the Committee focused on direct annual compensation, which consists of annual cash compensation (base salary and annual cash incentive) and long-term equity incentive compensation (performance-based restricted share units and stock options). The Committee considered annual cash and long-term equity incentive compensation both separately and as a package to help ensure that our executive compensation objectives are met.

 

Consistent with its approach to direct annual compensation, the Committee established 2009 direct annual compensation targets for each of our named executive officers. These target amounts formed the basis for the Committee’s compensation decisions in 2009, and the Committee believes that the 2009 target amounts it established were appropriate and consistent with our executive compensation objectives. For 2009, the direct annual compensation targets for our named executive officers were as follows:

 

		2009 Direct Annual
Name		Compensation Target
Thomas J. Falk		$	8,940,000
Mark A. Buthman		$	2,646,000
Robert E. Abernathy		$	3,056,250
Robert W. Black		$	2,161,000
Anthony J. Palmer		$	1,750,000

 

The 2009 direct annual compensation target amounts differ from the amounts set forth in the Summary Compensation Table because:

 

 

As shown in the following charts, performance-based compensation (annual cash incentive, performance-based restricted share units and stock options) constituted a significant portion of our named executive officers’ direct annual compensation targets. Similarly, a large percentage of the direct compensation targets was in the form of equity (performance-based restricted share units and stock options).

 

 

Process for Setting Direct Annual Compensation.  In setting the direct annual compensation of our executive officers, the Committee evaluates both market data provided by the compensation consultants and information on the performance of each executive officer for prior years. In order to remain competitive in the marketplace for executive talent, the target levels for the executive officers’ compensation elements, including our Chief Executive Officer, are compared to the median of the peer groups described above. Because of the anticipated effects of market and economic conditions that occurred after the market data was gathered, for 2009 the Committee also compared these target levels to the peer groups assuming a 20 percent reduction in the peer groups’ long-term equity incentive compensation component. As a result, although target direct annual compensation for most of our named executive officers was at or near the adjusted median of the peer group data, it was below the actual median of the peer group data.

 

In order to reinforce a “pay-for-performance” culture, targets for individual executive officers may be set above or below this median depending on the individual’s performance in prior years and experience in the position, as well as any applicable retention concerns. The Committee believes that comparing target levels to the median (as well as the adjusted median, as discussed above), setting targets as described above, and providing incentive compensation opportunities that will enable executives to earn above-target compensation if they deliver above-target performance on their performance goals, are consistent with the objectives of our compensation policies. In particular, the Committee believes that this approach enables us to attract and retain skilled and talented executives to guide and lead our businesses and supports a “pay-for-performance” culture.

 

In setting compensation for executive officers who join us from other companies, the Committee evaluates both market data for the position to be filled as well as the officer candidates’ compensation history at other companies. The Committee recognizes that, in order to successfully recruit candidates to leave their current position and to join us, the candidate’s compensation package will likely have to exceed their current compensation and may put an executive’s compensation above the median of the peer groups.

 

Chief Executive Officer Direct Annual Compensation.  Mr. Falk’s direct annual compensation is determined by the Committee in the same manner as the direct annual compensation of the other named executive officers, based on the policies and process described above. Mr. Falk’s direct annual target

compensation is at or near the adjusted median (which reflects a 20 percent reduction in long-term equity incentive compensation, as discussed above) of direct compensation for chief executive officers of companies included in the peer group comparison with comparable levels of responsibilities.

 

The difference between Mr. Falk’s compensation and that of the other named executive officers reflects the significant difference in their relative responsibilities. Mr. Falk’s responsibilities for management and oversight of a global enterprise are significantly higher than those of the other executive officers. A contributing factor in the disparity of responsibilities is that the Corporation’s organizational structure does not include a Chief Operating Officer. As a result, the market pay level for Mr. Falk is substantially higher than the market pay for other officer positions.

 

Annual Cash Compensation

 

In order to attract and retain high caliber executives, we pay our executives an annual cash amount that is considered by the Committee to be competitive in the marketplace. The cash compensation is divided between base salary and an annual cash incentive payment.

 

Base Salary.  Salary ranges and individual salaries for executive officers are reviewed annually, and salary adjustments generally are effective on April 1 of each year. In determining individual salaries, the Committee considers the market levels of similar positions at our peer group companies, as well as the individual executive’s performance and experience in the position. Performance is based on the executive’s individual performance during the prior year against results-based objectives established at the beginning of each year. In addition, the executive’s leadership performance is measured against the following behaviors viewed as describing an executive that is adept at leading the strategic, operational and organizational aspects of our global business:

 

 

In addition, executives and other employees may receive an additional increase if warranted because of promotion, retention concerns, or market conditions. In general, an experienced executive who is performing at a satisfactory level will receive a base salary at or around the median of our peer group companies. Executives may be paid above or below the median depending on their experience and performance.

 

In 2009, the Committee did not increase our named executive officers’ base salaries, in light of market and business conditions in early 2009, as well as in response to anticipated practices at peer group companies. Mr. Falk’s base salary did not increase from 2007 through 2009.

 

The base salaries paid to our named executive officers in 2009 can be found in the Summary Compensation Table. As noted above, salary adjustments for our named executive officers take place on April 1 in years with increases. As a result, 2009 base salary amounts reflected in the Summary Compensation Table for our named executive officers (other than Mr. Falk) are slightly higher than 2008 base salary amounts because of base salary increases effective April 1, 2008.

 

Annual Cash Incentives.  Consistent with our compensation objective to support a performance-oriented environment, our executive compensation program includes an annual cash incentive program to motivate and reward executives in achieving our annual performance objectives.

The target level for these annual payments is a percentage of the executive’s base salary, and that target level is compared to the median of the peer group comparison described above and is set as described under “Direct Annual Compensation.” The range of possible payouts is expressed as a percentage of the target level and was determined based on competitive factors and the goal of encouraging a performance-oriented environment. In 2009, the Committee reduced the maximum payout from 228 percent to 200 percent of the target payment amount to align with the practices of our peer groups. The target payment amounts and range of possible payouts for 2009 were as follows:

 

 

Under the program, a significant percentage of the annual cash incentive is dependent on performance measured against corporate goals and business unit or staff function goals established by the Committee at the beginning of each year. These performance goals, which are communicated to our executives at the beginning of each year, are derived from the financial and strategic goals stated in our Global Business Plan. The Committee has adjusted in the past, and may adjust in the future, the calculation of financial goals to eliminate the effect of items or events that the Committee determines in its discretion should be excluded for compensation purposes, such as the effect of extraordinary gains or losses. Establishing performance goals and target levels represents an exercise of discretion by the Committee under this program to limit the amount of the incentive payments, consistent with our pay-for-performance policy. In the absence of this exercise of discretion, each of the executive officers would be entitled to an award equal to 0.3 percent of the Corporation’s earnings before unusual items; however, the Committee has exercised its discretion to limit the amount of the incentive payments each year of the program, and this maximum award has consequently never been paid to any of the executive officers.

 

For 2009, the Committee established the following performance goals and relative weights for our named executive officers:

 

 

Corporate performance consists of (i) corporate key financial goals and (ii) other corporate financial and strategic performance goals, with these components weighted 70 percent and 30 percent, respectively.

 

The Committee has established these allocations to strike an appropriate balance between aligning the executives with our overall corporate objectives and with individual performance accountability for each executive’s area of responsibility. Each year, the Committee determines the appropriate split between corporate and business unit or staff function performance goals based on its assessment of the appropriate balance.

 

 

 

 

 

 

Actual performance in these areas is reviewed following the end of the year, and the Committee determines a payout percentage based on its assessment of the degree to which these goals are achieved.

 

 

Committee Assessment of 2009 Annual Cash Incentive Performance.

 

 

		Potential Payout as a Percentage of Target
		0%				100%				200%				Actual
Net Sales (billions)		$	17.00			$	19.40			$	21.80			$	19.10
EPS		$	3.73			$	4.14			$	4.55			$	4.52
			0.8 x				1.0 x				1.2 x
ROIC multiplier (basis point (bps) improvement)			(26) bps				14 bps				54 bps				160 bps

 

Based on these results, the Committee determined that the payout percentage for achieving the key financial goals should be 171 percent of target.

 

 

 

Payouts for 2009.  The following table summarizes the payout opportunities and shows the actual payout of annual cash incentives for 2009 for our named executive officers:

 

 

The cash incentive payments were paid to the executives in February 2010 and are included in the Summary Compensation Table.

 

Information Regarding Annual Cash Incentive Payouts from 2005 through 2009.  The following table sets forth information regarding payouts for corporate goals (the combination of corporate key financial goals and other corporate financial and strategic performance goals), as well as the average total payout percentages (including business unit or staff function performance) for the current named executive officers, from 2005 through 2009:

 

 

From 2005 through 2009, total payout percentages (including business unit or staff function performance) for the current named executive officers ranged from 55 percent to 187 percent of the participant’s target award opportunity. Generally, the Committee seeks to set the minimum, target and maximum levels such that the relative difficulty of achieving the target level is consistent from year to year.

 

Long-Term Equity Incentive Compensation

 

The Committee awards long-term equity incentive grants to executive officers as part of their overall compensation package. These awards are consistent with the Committee’s objectives of aligning our senior leaders with the financial interests of our stockholders, focusing on our long-term success, supporting our performance-oriented environment and offering competitive compensation packages. When determining the amount of long-term equity incentive plan awards to be granted to executives, the Committee considered the following factors, among others: the specific responsibilities and performance

of the executive, our business performance, our stock price performance and other market factors. The 2009 long-term equity incentive awards were granted to the named executive officers in February 2009 based on an assessment of those factors at that time. Because these awards are part of our annual compensation program that compares direct annual compensation to the median of our peer group comparison, adjusted as described under “Direct Annual Compensation,” grants from prior years were not considered when setting 2009 targets or granting awards.

 

For 2009, the Committee set the long-term equity incentive compensation grant value for each executive based on first comparing direct annual compensation to the median of our peer groups, adjusted as described under “Direct Annual Compensation” and reflecting the performance of the executive officer. This grant value was then divided into two grants, described in more detail below, consisting of:

 

 

Performance-Based Restricted Share Unit Awards.  In February 2009, executives received awards of performance-based restricted share units with a value equal to two-thirds of the target grant date value for long-term equity incentive compensation. For this purpose, performance-based restricted share units are valued on the basis that one unit has the same value as one share of our common stock on the date of grant.

 

2009-2011 Performance-Based Restricted Share Unit Goals and Targets.  For the performance-based restricted share unit awards granted in 2009, the actual number of shares to be received by the executives will range from zero to 200 percent of the target levels established by the Committee for each executive, depending on the degree to which the performance objectives are met. The Committee increased the maximum payout for these awards in 2009 from 150 percent to 200 percent to align with the practices of our peer groups. The performance objectives for the 2009 awards are based on average annual net sales growth and the average ROIC for the period January 1, 2009 through December 31, 2011, as follows:

 

		Relative				Potential Payout as a Percentage of Target
Goal		Weight				0%				100%				200%
Annual Net Sales Growth			50	%			0.0	%			2.0	%			4.0	%
ROIC			50	%			13.4	%			14.4	%			15.4	%

 

The performance objectives attempt to balance our Global Business Plan objectives, including annual net sales growth of two percent and average ROIC improvement of approximately 15 basis points per year during this period, peer group performance and our past and future performance. Information regarding restricted share unit awards granted to our named executive officers can be found under “Summary Compensation Table,” “Grants of Plan-Based Awards,” and “Discussion of Summary Compensation and Plan-Based Awards Tables.”

 

2006-2008 Performance-Based Restricted Share Unit Goals and Targets.  In April 2009, the Committee determined the results of the 2006 through 2008 performance period for the performance-based restricted share units granted in 2006. The performance objective for the 2006 awards was based on adjusted ROIC for the period January 1, 2006 through December 31, 2008. The average adjusted ROIC objective, the potential payouts for achieving the objective and the actual results for this period as determined by the Committee were as follows:

 

		Potential Payout as a Percentage of Target
		0%				50%				100%				150%				Actual
Adjusted ROIC			14.8	%			15.3	%			15.8	%			16.3	%			15.1	%

 

For purposes of calculating average adjusted ROIC, the impact of the adoption of Financial Accounting Standards Board Interpretation (“FASB”) No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109 (“FIN 48”), and the effect of an extraordinary loss related to the

consolidation of certain financing entities and certain notes receivable related to these financing entities were excluded from the ROIC calculation.

 

Based on this review, the Committee determined that the payout percentage should be 30 percent of target. The following table includes information about the opportunities and payouts regarding these grants to our named executive officers:

 

 

When these grants were made in 2006, Mr. Palmer was not employed by the Corporation. The shares underlying these performance-based restricted share unit awards were distributed to our named executive officers in April 2009 and are included in the Option Exercises and Stock Vested in 2009 table.

 

Stock Option Awards.  In April 2009, executive officers also received awards of stock options with a value equal to one-third of the target grant date value for long-term equity incentive compensation. For this purpose, stock options are valued on the basis that one option has the same value as 20 percent of the price of one share of the Corporation’s common stock on the date of grant. The value we use for this purpose differs from, and in 2009 was higher than, the value we use for financial statement purposes. The Committee believes that this value is an appropriate way to determine the number of options to be granted under the 2001 Plan because it provides more consistent application and is not subject to the volatility inherent in the Black-Scholes-Merton valuation method used for financial statement purposes. This value was reduced from 20 percent to 15 percent in November 2009, as a result of a review of the Corporation’s Black-Scholes-Merton valuation of the previous five years. The Black-Scholes-Merton valuation has declined from its 2005 level and has remained at approximately ten percent for 2008 and 2009. Due to this decline, the Committee believed it was appropriate to adjust the value used for option grants. This reduced value will apply to executives’ option grants beginning in 2010. Information regarding stock options granted to our named executive officers can be found under “Summary Compensation Table,” “Grants of Plan-Based Awards,” and “Discussion of Summary Compensation and Plan-Based Awards Tables.”

 

Retirement Benefits

 

Our named executive officers participate in our defined benefit pension plans and defined contribution plans. These plans are consistent with those maintained by our peer group companies and are therefore necessary in order to remain competitive with them for recruiting and retaining executive talent. Additionally, these plans help encourage retention of our senior executives because their retirement benefits under these plans generally increase for each year they remain employed by us. The Committee believes that these retirement benefit and contribution plans are important parts of our compensation program.

 

Pension Plans.  We maintain a funded, tax-qualified, non-contributing defined benefit pension plan for employees, including named executive officers, who joined the Corporation before January 1, 1997. We also maintain supplemental pension plans that provide benefits to the participants in the pension plan as are necessary to fulfill the intent of our pension plan without regard to the limitations imposed by the Internal Revenue Code on qualified pension plans. We stopped accruing compensation and benefit service under these plans for most of our U.S. employees, including named executive officers, for plan years after 2009. These changes will not affect benefits earned by participants prior to January 1, 2010. For a more detailed explanation of our pension plans, and the present value of the accumulated benefits of our named executive officers, see “Pension Benefits.”

Defined Contribution Plans.  For employees who joined the Corporation on or after January 1, 1997, or for those employees who elected to opt out of continuing service accruals in our pension plans, through December 31, 2009 we maintained an additional tax-qualified defined contribution plan (the Retirement Contribution Plan). In addition, we maintained the Retirement Contribution Excess Benefit Program (the “supplemental Retirement Contribution Program”), a nonqualified defined contribution plan intended to provide benefits to the extent necessary to fulfill the intent of the Retirement Contribution Plan without regard to the limitations imposed by the Internal Revenue Code. For a more detailed explanation of the Retirement Contribution Plan and supplemental Retirement Contribution Program, and the balance of amounts contributed on behalf of our named executive officers who participated in these plans, see “Nonqualified Deferred Compensation.”

 

We also maintained through December 31, 2009 a tax-qualified defined contribution plan (the Incentive Investment Plan), which was a 401(k) plan that covered eligible employees, including our named executive officers. For more information, see “Nonqualified Deferred Compensation — Overview of Qualified and Non-Qualified Plans.”

 

We discontinued all contributions and accruals to the Retirement Contribution Plan and the Incentive Investment Plan, and modified the accruals for the supplemental Retirement Contribution Program, for plan years after 2009 for most of our U.S. employees, including named executive officers. Effective January 1, 2010, we adopted the Kimberly-Clark Corporation 401(k) and Profit Sharing Plan (the “401(k) Profit Sharing Plan”), a new 401(k) profit sharing plan to provide for a matching contribution of 100 percent of a U.S. employee’s contributions to the plans, to a yearly maximum of four percent of eligible compensation, as well as a discretionary profit sharing contribution, in which contributions will be based on our profit performance. Also effective January 1, 2010, the supplemental Retirement Contribution Program was renamed the Kimberly-Clark Corporation Supplemental Retirement 401(k) and Profit Sharing Plan (the “Supplemental 401(k) Plan”) and amended to provide benefits to the extent necessary to fulfill the intent of the 401(k) Profit Sharing Plan without regard to the limitations imposed by the Internal Revenue Code on qualified defined contribution plans. Most U.S. employees’ investment balances, including those of our named executive officers, in the Incentive Investment Plan and Retirement Contribution Plan were transferred to the new 401(k) Profit Sharing Plan.

 

Other Compensation

 

We provide our executive officers with minimal perquisites. In general, perquisites made up less than 0.4 percent of aggregate total compensation for our named executive officers in 2009.

 

These perquisites include personal financial planning services provided by an independent firm, an executive health screening program where executives may receive comprehensive physical examinations from an independent health care provider and permitted personal use of corporate aircraft consistent with the Corporation’s policy. The personal financial planning program is designed to provide executives with access to knowledgeable resources that understand our compensation and benefit plans and can assist our executives in efficiently and effectively managing their financial and tax planning issues. Our Chief Executive Officer no longer receives personal financial planning services pursuant to this program. The executive health screening program provides executives with additional services that help maintain their overall health. We encourage our executives to take advantage of this service.

 

The Board of Directors has approved an executive security program for our Chief Executive Officer. Under this program, our Chief Executive Officer is required to use our corporate aircraft for all business and personal travel, consistent with the Corporation’s policy, and security services are provided for him at all times, including at his office, other company locations and his residences. Periodically, a security assessment is conducted by an independent security consultant, and the program is reviewed by the Board, to ensure that security measures provided by us are appropriate. The Board considers these security arrangements to be appropriate and reasonable in light of the security risks identified in the independent security assessment. In addition, if a corporate aircraft is already scheduled for business purposes and can accommodate additional passengers, executive officers and their guests may, under

certain circumstances, join flights for personal travel. The incremental cost to us of providing security services at Mr. Falk’s residences, personal travel for our named executive officers and their guests on our corporate aircraft and any related tax reimbursements and gross-ups is included in “All Other Compensation” in the Summary Compensation Table. In February 2009, the Committee adopted a policy that limits the personal use of corporate aircraft by the Chief Executive Officer to an aggregate annual incremental cost to the Corporation of $100,000, and generally prohibits the personal use of corporate aircraft by other executive officers unless there is no incremental cost to the Corporation for the use. In addition, the Committee adopted a policy in February 2009 providing that executive officers will no longer receive tax reimbursement and a related gross-up for perquisites (including personal use of corporate aircraft), except for certain relocation benefits.

 

Post-Termination Benefits

 

We maintain several severance plans for our executive officers. Benefits under these plans are payable only if the executive’s employment terminates as specified in the applicable severance plan. An executive officer may not receive severance benefits under more than one severance plan. We believe that our severance plans are consistent with those maintained by our peer group companies and that they are therefore important for attracting and retaining executives who are critical to our long-term success and competitiveness. For more information about these severance plans and their terms, see “Potential Payments on Termination or Change in Control — Severance Benefits.”

 

Severance Pay Plan.  Our Severance Pay Plan provides severance benefits to most of our U.S. hourly and salaried employees, including our named executive officers, who are involuntarily terminated under the circumstances described in the plan. The objective of this plan is to facilitate the employee’s transition to his or her next position, and it is not intended to serve as a reward for the employee’s past service. See “Potential Payments on Termination or Change in Control — Severance Benefits.”

 

Executive Severance Plan.  Our Executive Severance Plan provides severance benefits to eligible employees, including our named executive officers, in the event of a qualified termination of employment (as defined in the plan) in connection with a change in control. For an eligible employee to receive a payment under this plan, both a change in control must occur and the eligible employee’s employment must be terminated (often referred to as a “double trigger”). Each of the named executive officers has entered into an agreement under the plan that expires on December 31, 2011. The plan and the agreements were amended in 2009 in order to comply with recent rulings regarding the tax deductibility of payments under the plan and agreements, as well as to eliminate benefits under the plan related to the Corporation’s pension plans, supplemental pension plans, the Retirement Contribution Plan and the supplemental Retirement Contribution Program and to provide instead corresponding benefits related to the new 401(k) Profit Sharing Plan and Supplemental 401(k) Plan. See “Potential Payments on Termination or Change in Control — Severance Benefits.”

 

Executive Compensation for 2010

 

Base Salary.  In February 2010, the Committee approved the following base salaries for our named executive officers, effective on April 1, 2010:

 

 

Annual Cash Incentives.  In February 2010, the Committee also established objectives for 2010 annual cash incentives payable in 2011 to our named executive officers. Depending on actual performance

in 2010 against the financial and non-financial goals, 2010 incentive payments could range from zero to 200 percent of the named executive officers’ target payments.

 

As discussed in “Annual Cash Compensation — Annual Cash Incentives” above, the Committee sets the appropriate split among corporate key financial goals, other corporate financial and strategic performance goals and business unit or staff function objectives each year.

 

Incentive payments for 2010 will be based on the Committee’s judgment regarding our corporate and the executive officers’ performance in 2010 against those objectives. The corporate key financial goals for 2010 are designed to encourage a continued focus on executing our long-term Global Business Plan objectives and include achieving net sales, adjusted operating profit return on sales, and adjusted earnings per share goals.

 

The Committee also established other corporate financial and non-financial goals for 2010. These goals, intended to further align compensation with achieving our Global Business Plan, include:

 

 

In addition, goals have been established for each named executive officer, other than our Chief Executive Officer, relating to his business unit or specific staff function.

 

Long-Term Equity Incentive Compensation.  The Committee granted performance-based restricted share units to our named executive officers in February 2010. The performance objectives for the performance-based restricted share unit awards granted in 2010 are based on average annual net sales growth and average adjusted ROIC for the period January 1, 2010 through December 31, 2012. The actual number of shares to be received by our named executive officers will range from zero to 200 percent of the target levels established by the Committee for each executive, depending on the degree to which the performance objectives are met.

 

Information regarding the performance-based restricted share unit awards granted on February 22, 2010 to our named executive officers is set forth below.

 

 

In addition, on February 22, 2010, the Committee granted Mr. Abernathy 8,347 shares of time-vested restricted share units. This retention grant will vest in full on the third anniversary of the date of grant. Dividend equivalents on these units will be accumulated and paid in additional shares after the time-vested restricted share units vest.

 

Additional Compensation Information

 

Use of Independent Compensation Consultant.  As previously discussed, the Committee engaged The Delves Group as its independent consultant to assist it in determining the appropriate executive officer compensation in 2009 pursuant to our compensation policies described above. Consistent with the

Committee’s policy in which its independent consultant may provide services only to the Committee, The Delves Group had no other business relationship with the Corporation and received no payments from us other than fees for services to the Committee. See “Part Two — Corporate Governance Information — Management Development and Compensation Committee” for information about the use of compensation consultants.

 

Role of the Chief Executive Officer in Compensation Decisions.  Our Chief Executive Officer makes a recommendation to the Committee each year on the appropriate target direct annual compensation to be awarded to our executive officers, excluding himself. The Committee makes the final determination of the target direct annual compensation to be awarded to each executive officer, including our Chief Executive Officer, based on the Committee’s determination of how that compensation will aid in achieving the objectives of our compensation policies. While our Chief Executive Officer and Chief Human Resources Officer typically attend Committee meetings, none of the other executive officers is present during the portion of the Committee’s meetings when compensation for executive officers is set. In addition, our Chief Executive Officer is not present during the portion of the Committee’s meetings when his compensation is set.

 

Analysis of Risks Arising from Design of Executive Compensation Program.  The Committee, with the assistance of its independent consultant and the Corporation’s consultant, has reviewed an assessment of our compensation programs, including our executive compensation program. Based on this assessment, the Committee believes that the design of our executive compensation program does not encourage our named executive officers to take unnecessary and excessive risks and that the risks arising from the design of these programs are not reasonably likely to have a material adverse effect on the Corporation. The Committee reached the same conclusion for our other compensation programs. For a discussion of the factors that contributed to the Committee’s conclusions, see “Analysis of Risks Arising from Design of Compensation Programs.”

 

Timing of Long-Term Equity Grants.  Our policies and the 2001 Plan require stock options to be granted at no less than the closing price of our common stock on the date of grant. The Committee’s practice is to award options at its April Committee meeting. Committee meeting dates are set by the Committee at least one year in advance. We do not have any process or practice to time the grant of equity awards in advance of our release of earnings or other material non-public information.

 

In 2009, the Committee awarded performance-based restricted share units to executive officers at its February Committee meeting, and it intends to continue this practice. We believe this practice is consistent with award practices at other large public companies. Through 2008, the Committee had awarded executive officers restricted share units at the same time it granted stock options. Prior to 2004, restricted stock was awarded at various meetings of the Committee for retention purposes. Our executives are not permitted to choose the grant date for their individual restricted stock or restricted share unit awards.

 

The Committee administers our equity plans, which were approved by our stockholders in 1992 and 2001. Two categories of stock grants have been made under our equity plans: annual grants and recruiting or retention grants. Annual grants are made each year at a meeting of the Committee, as described above. Annual grants have accounted for approximately 99.5 percent of all options granted under these plans since 1993. Our executives are not permitted to choose the grant date for their individual stock option grants.

 

Our Chief Executive Officer has limited authority to grant employee stock options, restricted stock and restricted share units in connection with recruiting and special employee recognition and retention matters. Any recruiting and retention grants may not exceed 200,000 stock options, shares of restricted stock or restricted share units, in the aggregate, in any calendar year. These recruiting and retention grants are made on a pre-determined date following the release of our earnings during each quarter. Our Chief Executive Officer is not permitted to make any recruiting and retention grants to any of our executive officers. In 2009, our Chief Executive Officer authorized recruiting and retention grants consisting of an

aggregate of 100,202 time-vested restricted share units, performance-based restricted share units and stock options.

 

Policy on Incentive Compensation Claw-back.  As described above, a significant percentage of our executive officer compensation is incentive-based. The determination of the extent to which the incentive objectives are achieved is based in part on the Committee’s discretion and in part on our published financial results. The Committee has the right to reassess its determination of the performance awards if the financial statements on which it relied are restated. The Committee has the right to direct the Corporation to seek to recover from any executive officer any amounts determined to have been inappropriately received by the individual executive officer. In addition, the Sarbanes-Oxley Act of 2002 mandates that the chief executive officer and the chief financial officer reimburse us for any bonus or other incentive-based or equity-based compensation paid to them in a year following the issuance of financial statements that are later required to be restated as a result of misconduct.

 

Target Stock Ownership Guidelines.  We strongly believe that the financial interests of our executives should be aligned with those of our stockholders. Accordingly, the Committee has established stock ownership guidelines for our corporate officers, including our named executive officers.

 

All executive officers are expected to own our common stock in an amount equivalent to three times their annual base salary. The Chief Executive Officer is expected to own an amount of our common stock which is six times his annual base salary. Failure to attain targeted stock ownership levels within five years from date of hire for, or appointment to, an eligible position can result in a reduction in future long-term equity incentive awards granted to the executive. In determining whether our stock ownership guidelines have been met, any restricted stock and time-vested restricted share units held are considered as being owned and performance-based restricted share units are excluded until they vest. Executive officer stock ownership levels were reviewed in 2009 for compliance with these guidelines. Based on our stock price as of the compliance date for this review, the stock ownership levels specified by the guidelines have been met or exceeded by each of our named executive officers, other than Messrs. Black and Palmer, who joined the Corporation in 2006 and who have less than five years of service.

 

We have a policy requiring all executive officers to review transactions involving our common stock or other securities related to our common stock with our Legal Department prior to entering into the transactions.

 

Although we do not have a formal policy prohibiting transactions that hedge an executive officer’s economic risk of owning shares of our common stock, an executive officer must obtain prior clearance from our Legal Department prior to engaging in any hedging transaction to ensure compliance with applicable laws. Any shares an employee owns subject to a market put or call option are excluded for purposes of determining compliance with our stock ownership guidelines. None of our named executive officers engaged in any hedging transactions in 2009.

 

Tax Deduction for Executive Compensation.  The United States income tax laws generally limit the deductibility of compensation paid to the chief executive officer and each of the three highest-paid executive officers (not including the chief financial officer) to $1,000,000 per annum. An exception to this general rule exists for performance-based compensation that meets certain regulatory requirements. Several classes of executive compensation including the option awards to executive officers are designed to meet the requirements for deductibility. Other classes of executive compensation including the long-term equity grants as described above may be subject to the $1,000,000 deductibility limit.

 

Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs. In our view and the view of the Committee, meeting the compensation objectives set forth above is more important than the benefit of being able to deduct the compensation for tax purposes.

 

In accordance with its written charter adopted by the Board, the Management Development and Compensation Committee has oversight of compensation policies designed to align elected officers’ compensation with our overall business strategy, values and management initiatives. In discharging its oversight responsibility, the Committee has retained an independent compensation consultant to advise the Committee regarding market and general compensation trends.

 

The Committee has reviewed and discussed the Compensation Discussion and Analysis with our management, which has the responsibility for preparing the Compensation Discussion and Analysis. Based upon this review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2009.

 

MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

 

James M. Jenness, Chairman
Abelardo E. Bru
Mae C. Jemison, M.D.
Ian C. Read

 

The following table contains information concerning compensation awarded to, earned by, or paid to our named executive officers in the last three years. Our named executive officers include our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers serving as of December 31, 2009. Additional information regarding the items reflected in each column follows the table.

 

Summary Compensation Table