(Name of Registrant as Specified In Its Charter)

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

 

Dear Stockholder,

 

It is my pleasure to invite you to attend our annual meeting of stockholders on April 30, 2008. At the meeting, we will review AptarGroup’s performance for fiscal year 2007 and our outlook for the future.

 

A notice of the annual meeting and proxy statement are attached. You will also find enclosed voting instructions. The vote of each stockholder is important to us. Whether or not you expect to attend the annual meeting, I urge you to vote by the internet or by telephone, or alternatively, to complete and return the enclosed proxy card as soon as possible in the accompanying postage-paid envelope.

 

I look forward to seeing you on April 30 and addressing your questions and comments.

 

Sincerely,

 

Peter Pfeiffer

President and Chief Executive Officer

 

NOTICE OF 2008 ANNUAL MEETING OF STOCKHOLDERS

 

The annual meeting of stockholders of AptarGroup, Inc. will be held on April 30, 2008 at 9:00 a.m., at the offices of Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois, 60603 to consider and take action on the following:

 

 

Your Board of Directors recommends a vote FOR all of the proposals listed above.

 

Stockholders owning our common stock as of the close of business on March 6, 2008 are entitled to vote at the annual meeting. Each stockholder has one vote per share.

 

Whether or not you plan to attend the annual meeting, we urge you to vote your shares by using the internet (which is the most cost effective means for AptarGroup), toll free telephone number or by completing and mailing the enclosed proxy card.

 

By Order of the Board of Directors,

 

Stephen J. Hagge

Secretary

 

475 West Terra Cotta Ave, Suite E

Crystal Lake, Illinois 60014

 

 

PROXY STATEMENT

 

Stockholders owning our common stock at the close of business on March 6, 2008 are entitled to vote at the annual meeting, or any postponement or adjournment of the meeting. Each stockholder has one vote per share on all matters to be voted on at the meeting. On March 6, 2008, there were 68,227,429 shares of common stock outstanding.

 

You are asked to vote on the following proposals:

 

 

The Board of Directors knows of no other business that will be presented at the meeting. If other matters properly come before the annual meeting, the persons named as proxies will vote on them in accordance with their best judgment.

 

The Board has unanimously approved and recommends a vote FOR each of the proposals. Unless you give other instructions when voting your proxy, the persons named as proxies will vote in accordance with the recommendation of the Board.

 

You can vote your proxy in any of the following ways:

 

 

When voting to elect directors, you have three options:

 

 

When voting on all other proposals, you again have three options, but they are different from those pertaining to the election of directors:

 

 

If you return your proxy with no votes marked, your shares will be voted as follows:

 

 

 

You can revoke your proxy at any time before it is exercised by any of the following methods:

 

 

A “quorum” is the presence at the meeting, in person or by proxy, of the holders of a majority of the outstanding shares of AptarGroup’s common stock on March 6, 2008. There must be a quorum for the meeting to be held.

 

If you hold shares of AptarGroup through your 401(k) plan, you will be instructing the trustee how to vote your shares by voting by internet or by telephone, or by completing and returning your proxy card. If you do not vote by internet or telephone or if you do not return your proxy card, or if you return it with unclear voting instructions, the trustee will not vote the shares in your 401(k) account.

 

If you own shares through a broker, you should be contacted by your broker regarding a proxy card and whether telephone or internet voting options are available. If you do not instruct your broker on how to vote your shares, your broker, as the registered holder of your shares, may represent your shares at the annual meeting for purposes of determining a quorum. Even without instructions, your broker may exercise discretion in voting for the proposal regarding the election of directors, the approval of the Annual Bonus Plan, the amendment of the Certificate of Incorporation to increase the authorized shares of common stock available for issuance and the ratification of the appointment of the independent registered public accounting firm. However, without instructions, your broker will not vote for the proposals regarding the 2008 Stock Option Plan and the 2008 Director Stock Option Plan. Any unvoted shares are called “broker non-votes”.

 

The three persons receiving the greatest number of votes will be elected to serve as directors. As a result, withholding authority to vote for a director nominee and non-votes with respect to the election of

directors will not affect the outcome of the election. Approval of the proposals regarding the Annual Bonus Plan, the 2008 Stock Option Plan, the 2008 Director Stock Option Plan and the ratification of the appointment of the independent registered public accounting firm require the affirmative vote of a majority of the shares present at the meeting and entitled to vote on the proposals; provided that, pursuant to the rules of the New York Stock Exchange, the total vote cast on each of the 2008 Stock Option Plan and 2008 Director Stock Option Plan proposals must represent over 50% of the shares of the common stock entitled to vote on the proposal. Broker non-votes will have no effect on the outcome of these proposals (other than determining whether the total vote cast is over 50% of the shares of common stock entitled to vote on the 2008 Stock Option Plan and 2008 Director Stock Option Plan proposals). Abstaining is the legal equivalent of voting against these proposals. The affirmative vote of a majority of the outstanding shares of common stock is required to approve the proposed amendment to the Certificate of Incorporation. Accordingly, abstentions and non-voted shares with respect to this proposal will have the effect of a vote against this proposal.

 

Our agent, Broadridge Financial Solutions, Inc., will count the votes cast by proxy or in person at the annual meeting.

Following are the proposals to be voted on at this year’s annual meeting.

 

The Board of Directors is currently comprised of ten members divided into three classes, with one class of directors elected each year for a three-year term. The Board of Directors proposes the following nominees, all of whom are currently serving as directors, to be elected for a new term expiring at the 2011 annual meeting.

 

If any of the director nominees is unable or fails to stand for election, the persons named in the proxy presently intend to vote for a substitute nominee nominated by the Corporate Governance Committee of the Board of Directors. The following sets forth information as to each nominee for election at this meeting and each director continuing in office.

 

 

The Board of Directors recommends a vote FOR each of the nominees for Director.

 

 

 

AptarGroup’s corporate governance documents, including our Corporate Governance Principles, Code of Business Conduct and Ethics, Director Independence Standards, and Board of Directors Committee Charters, are available through the Corporate Governance link on the Investor Relations page of the AptarGroup web site at the following address: http://www.aptargroup.com. Stockholders may obtain copies of these documents, free of charge, by sending a written request to our principal executive office at: 475 West Terra Cotta Avenue, Suite E, Crystal Lake, Illinois 60014.

 

Corporate Governance Principles

 

The Board of Directors (“Board”) has adopted a set of Corporate Governance Principles to provide guidelines for AptarGroup and the Board of Directors to ensure effective corporate governance. The Corporate Governance Principles cover topics including, but not limited to, director qualification standards, Board and committee composition, director responsibilities, director compensation, director access to management and independent advisors, director orientation and continuing education, succession planning and the annual evaluations of the Board and its committees. The Corporate Governance Committee is responsible for overseeing and reviewing the Corporate Governance Principles and recommending to the Board any changes to the principles.

 

Code of Business Conduct and Ethics

 

Ethical business conduct is a shared value of our Board, management and employees. AptarGroup’s Code of Business Conduct and Ethics applies to our Board as well as our employees and officers, including our principal executive officer and our principal financial and accounting officer.

 

The Code of Business Conduct and Ethics covers all areas of professional conduct, including, but not limited to, conflicts of interest, disclosure obligations, insider trading, confidential information, as well as

compliance with all laws, rules and regulations applicable to AptarGroup’s business. AptarGroup encourages all employees, officers and directors to promptly report any violations of the Code to the appropriate persons identified in the Code. In the event that an amendment to, or a waiver from, a provision of the Code of Business Conduct and Ethics that applies to any of our directors or executive officers is necessary, AptarGroup intends to post such information on its web site.

 

Board Structure

 

The Board has four committees: the Audit, Compensation, Corporate Governance, and Executive Committees. Each committee is governed by a charter approved by the Board. Each member of the Audit, Compensation, and Corporate Governance Committees has been determined to be independent as discussed below under “Independence of Directors”. Committees report their actions to the full Board at each next regular meeting. An affirmative vote of at least 70% of the Board is required to change the size, membership or powers of these committees, to fill vacancies in them, or to dissolve them.

 

Independence of Directors

 

Our Corporate Governance Principles provide that the Board must be composed of a majority of independent directors. No director qualifies as independent unless the Board affirmatively determines that the director has no material relationship with AptarGroup either directly or as a partner, stockholder or officer of an organization that has a relationship with AptarGroup. Our Board has determined that seven out of ten directors are independent in accordance with the New York Stock Exchange listing standards. Those directors determined to be independent are: S. Baustert, A. Chevassus, R. Goldstein, R. Gruska, L. Guthart, K. Harris, and J. Smith. The Board has made this determination based on the following categorical standards, in addition to any other relevant facts and circumstances. These standards provide that a director generally will not be independent if:

 

 

 

The Board considers the following to be immaterial when making independence determinations:

 

 

Executive Sessions

 

Non-management directors meet regularly in executive sessions without management. “Non-management” directors are all those who are not Company officers. Executive sessions are led by a “Presiding Director.” An executive session is held in conjunction with each regularly scheduled Board meeting and other sessions may be called by the Presiding Director in his or her own discretion or at the request of the Board. Mr. Harris has been designated as the Presiding Director.

 

Nomination of Directors

 

It is the policy of the Corporate Governance Committee to consider candidates for director recommended by stockholders. In order to recommend a candidate, stockholders must submit the

individual’s name and qualifications in writing to the Committee (in care of the Secretary at AptarGroup’s principal executive office at 475 West Terra Cotta Avenue, Suite E, Crystal Lake, Illinois 60014) and otherwise in accordance with all of the procedures outlined under “Other Matters — Stockholder Proposals” for a director nomination.

 

Communications with the Board of Directors

 

The Board has established a process for stockholders and other interested parties to communicate with the Board or an individual director, including the Presiding Director or the non-management directors as a group. A stockholder or other interested party may contact the Board or an individual director by writing to their attention at AptarGroup’s principal executive offices at 475 West Terra Cotta Avenue, Suite E, Crystal Lake, Illinois 60014. Communications received in writing are distributed to the Board or to individual directors as appropriate in accordance with procedures approved by AptarGroup’s independent directors.

 

Audit Committee

 

The Board has determined that each member of the Audit Committee (Messrs. Baustert, Goldstein, Guthart and Gruska) is financially literate and independent in accordance with the requirements of the New York Stock Exchange. The Board has also determined that Messrs. Baustert, Goldstein and Guthart qualify as “audit committee financial experts” as that term is defined in rules of the Securities and Exchange Commission implementing requirements of the Sarbanes-Oxley Act of 2002. In reaching this determination, the Board considered, among other things, the relevant experience of Messrs. Baustert, Goldstein and Guthart as described under “Election of Directors.” The Audit Committee operates under a written charter that complies with all regulatory requirements.

 

This committee oversees the financial reporting process, system of internal controls and audit process of AptarGroup and reviews AptarGroup’s annual and interim financial statements. In addition, the Audit Committee reviews the qualifications, independence and audit scope of AptarGroup’s external auditor and is responsible for the appointment, retention, termination, compensation and oversight of the external auditor. This committee also reviews AptarGroup’s process for monitoring compliance with laws, regulations and its Code of Business Conduct and Ethics. The Audit Committee also approves or ratifies all related party transactions involving executive officers.

 

Compensation Committee

 

The Compensation Committee is comprised solely of independent directors and is appointed by the Board to discharge the Board’s responsibilities relating to compensation of the Company’s executives. This committee may not delegate its authority. The Compensation Committee reviews and recommends to the Board compensation plans, policies and programs, as well as approves CEO and executive officer compensation, and employment and severance agreements, including change-in-control provisions. In addition, this committee annually reviews the succession plans affecting corporate and other key management positions and approves grants and/or awards of restricted stock, stock options and other forms of equity-based compensation. For further information on this committee’s procedures for consideration of executive compensation, see our “Compensation Discussion and Analysis”.

The Compensation Committee receives recommendations annually from the CEO regarding the compensation levels of our other executive officers, including salary, bonus and equity compensation. In addition, this committee receives compensation market survey information from the Vice President of Human Resources, an executive officer of AptarGroup, including information prepared for the Company by Towers Perrin, a compensation consulting firm. For a further discussion of compensation information provided to the Compensation Committee by management, see our “Compensation Discussion and Analysis”.

 

Under the Compensation Committee charter, this committee has the authority to retain outside advisers as deemed necessary. This committee has retained outside advisers in the past to validate and compare compensation information and recommendations it has received from management, including information prepared for management by outside advisers. In 2007, the Compensation Committee engaged the Hay Group, a compensation consulting firm, in order to begin a review of the compensation levels of our CEO, COO and CFO, and the presidents of our three business segments. The review will include a comparison to market survey information for salary, and short-term and long-term incentive compensation levels of similar positions at companies with revenue similar to those of AptarGroup. The Compensation Committee intends to engage outside advisers to perform similar work from time to time and at least once every three years.

 

Corporate Governance Committee

 

The Corporate Governance Committee is comprised solely of independent directors. This committee identifies, evaluates and recommends to the Board individuals qualified to stand for election as directors, including nominations received from Board members, stockholders or outside parties. This committee evaluates candidates recommended for director by stockholders in the same way that it evaluates any other nominee. In identifying and evaluating nominees for director, this committee takes into account the applicable requirements for directors under the Securities Exchange Act of 1934, as amended, and the listing standards of the New York Stock Exchange. This committee may also take into consideration such factors and criteria as it deems appropriate, including the nominee’s character, judgment, business experience and acumen.

 

The Corporate Governance Committee develops and recommends to the Board AptarGroup’s corporate governance principles and standards to be applied in determining director independence. This committee reviews and recommends to the Board appropriate compensation for directors, taking into consideration, among other things, director compensation levels of companies with similar annual revenues as AptarGroup. This committee also makes recommendations to the Board regarding changes to the size and composition of the Board or any Board Committee.

 

Executive Committee

 

The Executive Committee exercises certain powers of the Board, when the Board is not in session, in the management of the business and affairs of AptarGroup.

 

The Board met 7 times in 2007. No director attended fewer than 75% of the aggregate number of meetings of the Board and the committees on which each director served. AptarGroup does not have a formal policy regarding director attendance at the annual meeting of stockholders. Messrs. Siebel, Pfeiffer and Hagge attended the 2007 annual meeting.

 

 

X* — Chairperson; (I) — Independent Director

 

Employees of AptarGroup do not receive any additional compensation for serving as members of the Board or any of its committees. Compensation of non-employee directors consists of the following:

 

 

Each director is reimbursed for out-of-pocket expenses incurred while attending Board and committee meetings.

 

Amounts in the following discussion have been adjusted for a 2-for-1 stock split that was made May 9, 2007. Pursuant to the 2004 Director Stock Option Plan, on May 9, 2005, each non-employee director, except for Stefan A. Baustert who was not yet a member of the Board at that time, was granted a non-qualified option to purchase 16,000 shares of common stock at an exercise price of $25.66 per share. On May 8, 2006, Mr. Baustert was granted a non-qualified option to purchase 12,000 shares of common stock at an exercise price of $27.18 per share. Of the option shares granted to each non-employee director, 4,000 shares became exercisable six months after the date of grant and an additional 4,000 shares became exercisable on the earlier of each anniversary of the date of grant or the day before each annual meeting of stockholders. Under the 2004 Director Stock Option Plan, a non-employee director is only eligible for one grant under the Plan.

 

 

 

Introduction

 

AptarGroup is asking stockholders to approve the AptarGroup, Inc. Annual Bonus Plan (“Annual Bonus Plan”) under which executive officers and other employees would be eligible to participate in incentive awards based on the achievement of objective performance goals. The plan was approved by the Board of Directors on February 28, 2008.

 

Historically, the CEO, COO and CFO have been awarded bonuses at the discretion of the Compensation Committee after considering the performance of the company as well as the achievement of strategic and individual objectives. The Compensation Committee has granted incentive awards under the Annual Bonus Plan to the CEO, COO and CFO, as well as to other executive officers, subject to approval of the plan. The plan allows the Compensation Committee to utilize specified financial and individual measures (as more fully described below) when determining such awards. Should the bonus plan receive stockholder approval, it is intended that the plan will qualify for exemption under Section 162(m) of the Internal Revenue Code (the “Code”), which would allow awards to be tax deductible.

 

Description of the Plan

 

The purposes of the Bonus Plan are to:

 

 

The following is a brief summary of some of the terms of the Annual Bonus and is qualified in its entirety by, and made subject to, the more complete information set forth in the Annual Bonus Plan set forth as Appendix A to this proxy statement.

 

All officers and other employees of AptarGroup are eligible to be designated for participation in the Annual Bonus Plan. The Compensation Committee will designate the eligible employees who will participate in the Annual Bonus Plan for a specified Performance Period, and will do so not later than 90 days after the beginning of the Performance Period, or if earlier, the date on which 25% of the Performance Period has been completed (the “Applicable Period”). Currently, approximately 12 persons are eligible to participate in the Annual Bonus Plan.

 

Under the Annual Bonus Plan, payment of awards to participating employees is subject to the attainment of specific performance goals established by the Compensation Committee for each

Performance Period, and other terms and conditions that may be established by the Compensation Committee during the Applicable Period. A participant may receive an award under the Annual Bonus Plan based upon achievement of an objective performance goal or goals using one or more objective corporate-wide or subsidiary, division, operating unit or individual measures. With respect to bonuses payable to persons who are, or are expected to be, employed as the CEO or certain of the other most highly compensated executive officers of AptarGroup as of the last day of AptarGroup’s taxable year (“162(m) Covered Employees”), the applicable performance goals shall include the following objective performance measures: earnings before interest and taxes (“EBIT”); earnings before interest, taxes, depreciation and amortization (“EBITDA”); financial return ratios, consisting of return on equity, return on assets and return on invested capital; the ratio of EBIT to capital; the ratio of EBITDA to capital; net income; operating income; revenues; profit margin; cash flow(s); expense reduction; working capital ratios; successful implementation of strategic initiatives; and successful integration of acquisitions. Each such goal may be expressed on an absolute or relative basis and may include comparisons based on current internal targets, the past performance of AptarGroup (including the performance of one or more subsidiaries, divisions, or operating units) or the past or current performance of other companies (or a combination of such past and current performance). In the case of earnings-based measures, performance goals may include comparisons relating to capital (including, but not limited to, the cost of capital), shareholders’ equity, shares outstanding, assets or net assets, or any combination thereof. With respect to participants who are not 162(m) Covered Employees and who are not expected to be 162(m) Covered Employees at any time during the applicable Performance Period, the performance goals may include any objective corporate-wide or subsidiary, division, operating unit or individual measures, whether or not listed above.

 

Upon attainment of the relevant performance goals, a participant will be eligible to receive an award in cash or restricted stock units, or any combination of both. Performance goal targets are expressed in terms of an objective formula or standard which may be based on an employee’s base salary, or a multiple thereof, at the time or immediately before the performance goals for such Performance Period were established. In all cases, the Compensation Committee has the sole and absolute discretion to reduce the amount of any payment under the Annual Bonus Plan that would otherwise be made to any participant or to decide that no payment shall be made. No participant will receive a payment under the Annual Bonus Plan with respect to any Performance Period having a value in excess of $2,000,000, which maximum amount will be prorated with respect to Performance Periods that are less than one year in duration.

 

Determination of the performance compensation awarded to each participant is to be made at a time determined by the Compensation Committee after the last day of each Performance Period following a certification by the Compensation Committee that the applicable performance goals were satisfied. No payment of performance compensation shall be made later than March 15 of the year immediately following the last day of the applicable Performance Period.

 

The Compensation Committee may delegate its responsibilities under the Annual Bonus Plan to the CEO or such other executive officer of AptarGroup as it deems appropriate, except that the Compensation Committee may not delegate its responsibilities with respect to bonuses payable to 162(m) Covered Employees.

The following table shows the minimum and maximum amounts that could be awarded to the following persons and groups under the Annual Bonus Plan based on the attainment of performance goals for AptarGroup’s fiscal year ending on December 31, 2008. The precise amounts that will be payable with respect to performance during such fiscal year are not determinable until after such date:

 

NEW PLAN BENEFITS
APTARGROUP, INC. 2008 ANNUAL BONUS PLAN

 

 

 

No compensation will be paid under the Annual Bonus Plan to 162(m) Covered Employees if the Annual Bonus Plan is not approved by stockholders. If approved, the Annual Bonus Plan will remain in effect until December 31, 2012, unless terminated earlier by the Board of Directors. The actual amount of compensation that will be paid under the Annual Bonus Plan, if the approval of stockholders is obtained, cannot be determined at this time.

 

The Board of Directors recommends a vote FOR approval of the Annual Bonus Plan.

 

Introduction

 

AptarGroup is asking stockholders to approve the 2008 Stock Option Plan. The plan was approved by the Board of Directors on February 28, 2008. Historical share amounts discussed below have been adjusted to reflect the 2-for-1 stock splits made by the Company on May 9, 2007 and August 26, 1998.

 

In 2004, stockholders approved the 2004 Stock Awards Plan under which 5,000,000 shares of common stock were available for option awards. The Company has granted an average of approximately 1.2 million options to employees in each of the past 10 years. In January 2008, 1,252,000 options were granted to employees and in February 2008, approximately 10,000 restricted stock units (“RSUs”) were granted to executive officers who elected to take a portion of their 2007 bonus in the form of RSUs in lieu of cash. As of March 6, 2008, only approximately 350,000 shares remain available for grant under the 2004 Stock Awards Plan. The 2008 Stock Option Plan will make available 3,800,000 shares of common stock for new option awards.

 

AptarGroup has granted stock options to employees since becoming a publicly-owned company in 1993. During these past 15 years, the Company has consistently granted a similar amount of options each year. The Board of Directors and senior management believe that the ability to grant stock options is critical to the retention of key employees throughout the Company’s global operations and that stock options have successfully aligned the interests of our employees with those of our stockholders. Stock options are an important component of AptarGroup’s compensation package and turnover at the executive officer and senior management levels have been historically very low. Further, it is the belief of the Board and management that there is a strong correlation between our ability to consistently grant options to employees over the past 15 years, the retention of senior management, and our share performance. Twelve of the 13 executive officers as of December 31, 2007, have been employees of our company for more than 15 years.

 

To illustrate our belief in the strong correlation between the granting of options and our share performance, we have included a graph showing our share performance over the past five years. The following graph shows a comparison of the cumulative total stockholder return on AptarGroup’s common stock as compared to the cumulative total return of two other indexes: the Value Line Packaging & Container Industry Group (“Peer Group”) and the Standard & Poor’s 500 Composite Stock Price Index. The companies included in the Peer Group are: American Greetings Corporation, Inc., AptarGroup, Inc., Ball Corporation, Bemis Company, Inc., Caraustar Industries, Inc., Chesapeake Corporation, CLARCOR Inc., Crown Holdings, Inc., Mead Westvaco, Owen’s-Illinois, Inc., Packaging Corporation of America, Pactiv Corporation, Rock-Tenn Company, Sealed Air Corporation, Silgan Holdings, Inc., Smurfit-Stone Container Corporation and Sonoco Products Company. Changes in the Peer Group from year to year result from companies being added to or deleted from the Value Line Packaging & Container Industry Group. These comparisons assume an initial investment of $100 and the reinvestment of dividends.

Comparison of 5 Year Cumulative Stockholder Returns
(source: Standard & Poor’s)

 

 

Historically, stock options granted by AptarGroup have vested ratably over a three year period with the first one-third of the grant becoming exercisable on the first anniversary of the grant date. It is the Company’s intention to continue this vesting methodology. We believe time-vested stock options are an effective means to reward long-term performance.

 

Approximately 80% of our employees reside outside of the United States. We believe that the ability to grant stock options to employees abroad ensures that our employees in different geographic regions remain focused on the interest of our stockholders. Stock options are an effective means to link the interests of our overseas employees to long-term stockholder value.

 

Description of the Plan

 

The 2008 Stock Option Plan permits AptarGroup to grant stock options to employees of AptarGroup and its subsidiaries and other entities in which AptarGroup has a direct or indirect equity interest. Stock options may be either “incentive stock options” (“ISOs”) under Section 422 of the Code, or other options (“nonqualified options”). The purpose of the plan is to promote the long-term financial interests of AptarGroup and its affiliates by:

 

 

 

The following is a brief summary of some of the terms of the plan and is qualified in its entirety by, and made subject to, the more complete information set forth in the 2008 Stock Option Plan set forth as Appendix B to this proxy statement.

 

Administration and Eligibility.  The plan will be administered by the Compensation Committee of our Board of Directors. The Committee will not have authority to reprice any stock option granted under the plan. Other than stock options, no other type of award may be granted under the plan. The plan empowers the Committee, among other things,

 

 

All employees are eligible to participate in the plan. The Company currently grants stock options to approximately 300 employees.

 

Shares Subject to the Plan; Adjustment.  The Committee may award a maximum of 3,800,000 shares of common stock pursuant to the plan, subject to adjustment in the event of any stock split, stock dividend, recapitalization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event. If stock options expire unexercised or are cancelled, terminated or forfeited without the issuance of shares, such shares will again be available under the plan. Shares issued pursuant to the plan may be authorized and unissued shares, or treasury shares. The maximum number of shares of common stock subject to options granted during any calendar year to any person will be 500,000, subject to adjustment. The value of the Company’s common stock was $35.50 per share on March 6, 2008.

 

Each option will be exercisable at such time or times as the Committee determines at or subsequent to the grant; provided that no option shall be exercisable later than 10 years after the date of the grant. Pursuant to this provision of the plan, the Committee, in its sole discretion, may provide that in the event of a tender offer or accumulation of common stock, merger, consolidation, reorganization, recapitalization, sale or exchange of substantially all of the assets or dissolution of AptarGroup, awards may be accelerated and/or cash payments may be made in lieu of such awards.

An option entitles the holder to receive upon exercise up to the maximum number of shares of common stock subject to the option at an exercise price that is fixed at the time the option is granted. Options may be either ISOs or nonqualified options, except that, as long as required by Section 422 of the Code, no ISO may be awarded to any employee of an AptarGroup affiliate which is not an AptarGroup subsidiary corporation (as such term is used in Section 422(b) of the Code). An exercise price per share of common stock may not be less than 100% of the fair market value of a share of common stock at the time the option is granted and may not be less than the par value. The plan allows optionees, to the extent permitted by the Committee, to pay the exercise price of options in cash or AptarGroup common stock (valued at its fair market value on the date of exercise) or a combination thereof, or by cash payment by a broker-dealer acceptable to AptarGroup to whom optionee has submitted an irrevocable notice of exercise.

 

Transferability.  Stock options will not be transferable other than (1) by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by AptarGroup or (2) as otherwise permitted as set forth in the agreement relating to such grant. Except to the extent permitted by the foregoing sentence, each stock option may be exercised during a participant’s lifetime only by the participant or the participant’s legal representative or similar person.

 

Fair Market Value.  Fair market value on any date means either the closing price of common stock on that date (or, if the date is not a trading date, on the next preceding date which was a trading date) on the New York Stock Exchange.

 

Withholding.  AptarGroup will have the power to withhold, or require a participant to remit to AptarGroup, an amount sufficient to cover withholding taxes with respect to shares issuable pursuant to the plan. If so permitted by the Committee, a participant may elect to satisfy such taxes by making a payment to AptarGroup in cash or AptarGroup common stock (valued at the fair market value on the date of exercise), or any combination thereof, by having shares issuable under the plan withheld or by a cash payment by a broker-dealer acceptable to AptarGroup to whom optionee has submitted an irrevocable notice of exercise. Shares withheld to satisfy any taxes cannot be reissued under the plan.

 

Amendment of the Plan.  The Board of Directors may amend the plan at any time by a resolution adopted by at least 70% of the Board of Directors, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) of the Code. No amendment may impair the rights of the holder of any outstanding stock option without his or her consent.

 

Effective Date and Term of the Plan.  If approved by stockholders, the plan will be effective on the date of such approval. In the event that the plan is not approved by our stockholders, the plan will be null and void. The plan will terminate ten years after its effective date, unless terminated earlier by the Board through a resolution adopted by at least 70% of the whole Board. Termination of the plan will not affect the terms or conditions of any stock option granted prior to termination.

 

New Plan Benefits.  The number of stock options that will be granted hereafter under the plan is not currently determinable. Information regarding awards in 2007 under prior Stock Awards Plans to the named executive officers is provided in the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End” tables. In addition, in 2007, (i) options for 696,000 shares and 14,512 restricted stock units were granted to all 2007 executive officers as a group and (ii) options for

553,500 shares were granted to all other eligible employees, including current officers who are not executive officers. In 2008, as of March 6, 2008, (i) options for 589,500 shares and 9,824 restricted stock units were granted to all current executive officers as a group and (ii) options for 662,500 shares were granted to all other eligible employees, including current officers who are not executive officers. Non-employee directors are not eligible to receive awards under the 2004 Stock Awards Plan or the 2008 Stock Option Plan.

 

Federal Income Tax Consequences

 

The following is a brief summary of the U.S. federal income tax consequences of stock option grants to be made under the plan.

 

 

The Board of Directors recommends a vote FOR approval of the 2008 Stock Option Plan.

 

Introduction

 

AptarGroup is asking stockholders to approve the 2008 Director Stock Option Plan. The plan was approved by the Board of Directors on January 17, 2008. In 2004, stockholders approved the 2004 Director Stock Option Plan that provided for a one-time award of stock options to each director of AptarGroup who was not an employee of the Company or any of its affiliates. Currently, all non-employee directors, other than Mr. Siebel, have received grants under the 2004 Director Stock Option Plan and therefore are not eligible to receive further grants under that plan. Mr. Siebel retired from the Company at the end of 2007 and he continues to be a director and is eligible to receive a one-time grant of 4,000 options under the 2004 Director Stock Option Plan in 2008. As of March 6, 2008, there are 44,000 shares available for future grants under the 2004 Director Stock Option Plan, but as mentioned previously, Mr. Siebel is the only current director eligible to receive a one-time grant under the 2004 Director Stock Option plan in 2008.

 

Description of the Plan

 

The purposes of the 2008 Director Stock Option Plan are to:

 

 

The following is a brief summary of some of the terms of the plan and is qualified in its entirety by, and made subject to, the more complete information set forth in the 2008 Director Stock Option Plan set forth as Appendix C to this proxy statement.

 

Administration and Eligibility.  The plan will be administered by the Compensation Committee of our Board of Directors. The Committee will not have the authority to reprice any stock option granted under the plan. The plan empowers the Committee, among other things,

 

 

All non-employee directors are eligible to participate in the plan. There are currently eight such non-employee directors.

 

Shares Subject to the Plan; Adjustment.  Under the plan, the aggregate number of shares subject to options cannot exceed 500,000 shares of common stock, subject to adjustment in the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event. If an option expires or is cancelled, terminated or forfeited without the issuance of shares, the shares subject to that option will again be available under the plan. The value of the Company’s common stock was $35.50 per share on March 6, 2008.

The exercise price per share under each option will not be less than the closing price of common stock on the grant date (or, if the grant date is not a trading date, on the next preceding date which was a trading date) on the New York Stock Exchange. It is the Company’s intention that: (i) stock options granted under the plan will vest ratably over a three year period with the first one-third of the grant becoming exercisable on the first anniversary of the grant date, (ii) each option, to the extent then unexercised, will expire ten years after its award date and (iii) any options will be nonqualified options for purposes of the Code, which means that they will not qualify as “incentive stock options” under Section 422 of the Code.

 

Each option will be exercisable at such time or times as the Committee determines at or subsequent to the grant; provided that no option shall be exercisable later than 10 years after the date of the grant. Pursuant to this provision of the plan, the Committee, in its sole discretion, may provide that in the event of a tender offer or accumulation of common stock, merger, consolidation, reorganization, recapitalization, sale or exchange of substantially all of the assets or dissolution of AptarGroup, awards may be accelerated and/or cash payments may be made in lieu of such awards.

 

Transferability.  Participants may not transfer options other than (1) by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by us or (2) as otherwise permitted in the option agreement. Except to the extent permitted by the foregoing sentence, each option may be exercised during a participant’s lifetime only by the participant or the participant’s representative or similar person.

 

Amendment of the Plan.  The Board may amend the plan by a resolution adopted by at least 70% of the whole Board, subject to any requirement of stockholder approval required by applicable law, rule or regulation. No amendment may impair the rights of a holder of an outstanding option without the consent of the holder.

 

Effective Date and Term of the Plan.  If approved by stockholders, the plan will be effective on the date of approval. In the event that the plan is not approved by stockholders, the plan will be null and void. The plan will terminate ten years after its effective date, unless terminated earlier by the Board through resolution adopted by at least 70% of the whole Board. Termination of the plan may not affect the terms or conditions of any option granted prior to termination.

 

New Plan Benefits Under the 2008 Director Stock Option Plan.  The number of stock options that will be granted hereafter under the plan is not currently determinable. No options were granted to non-employee directors in 2007.

 

Federal Income Tax Consequences

 

The following is a brief summary of the U.S. federal income tax consequences of the options to be awarded under the plan.

 

The holder of an option will not recognize taxable income upon the grant thereof, nor will AptarGroup be entitled to a deduction in respect of such grant. Upon the exercise of an option as to any shares, the excess of the fair market value of such shares on the date of exercise over their exercise price will constitute compensation taxable to the optionee as ordinary income. AptarGroup generally will be entitled to a deduction in the year of exercise in an amount equal to such compensation.

 

The Board of Directors recommends a vote FOR approval of the 2008 Director Stock Option Plan.

 

The Board has approved and recommended to stockholders an amendment (the “Proposed Amendment”) to the Company’s Certificate of Incorporation (“Certificate”) which would amend the first sentence of Section 4.1 of Article FOUR to read as follows:

 

“4.1 Capital Stock.  The total number of shares of stock which the Corporation has authority to issue is 200,000,000 shares, consisting of 1,000,000 shares of Preferred Stock, par value $.01 per share, and 199,000,000 shares of Common Stock, par value $.01 per share.”

 

Description of the Amendment

 

The Certificate currently authorizes the issuance of 99,000,000 shares of common stock and 1,000,000 shares of Preferred Stock. On April 18, 2007, the Board announced a 2-for-1 stock split in the form of a stock dividend on the issued and outstanding shares of common stock, which was distributed on May 9, 2007 to stockholders of record at the close of business on May 2, 2008. As of March 6, 2008, 68,227,429 shares of common stock were outstanding, approximately 8,850,000 shares of common stock were reserved for issuance pursuant to outstanding and future equity awards, and only approximately 21,920,000 shares were available for issuance and not reserved. The Proposed Amendment would increase the number of authorized shares of common stock to 199,000,000. It would not change the number of authorized shares of preferred stock or have any effect on the rights attaching to common stock.

 

Although there are no current plans to issue additional shares of common stock, the Board believes the proposal to increase the number of authorized shares of common stock is in the best interests of the Company and its stockholders. If the stockholders adopt the Proposed Amendment, the Board will have the flexibility to act in a timely manner to take advantage of favorable market conditions, and additional shares will be available for other opportunities, such as future stock splits, stock dividends, financings, acquisitions, stock options or other appropriate corporate actions. The availability of these additional shares would eliminate the delay and expense involved with conducting a special meeting of stockholders in order to issue additional shares when needed.

 

If the Proposed Amendment were approved, the Board would have the authority to issue common stock as it deems appropriate, without stockholder approval, except as provided for by governing law or the rules of the New York Stock Exchange. This could result in dilution of each stockholder’s percentage of stock ownership and voting power, as well as book value per share. Additionally, the Board could use the authorized but unissued shares of common stock to discourage a change in control of the Company, merger or takeover attempt. The Proposed Amendment is not being made in response to a takeover threat or as part of a plan by management to adopt a series of amendments to the Certificate having an anti-takeover effect. A copy of the proposed amendment showing changes to the provision currently in effect is attached as Appendix D.

 

The Board recommends votes “FOR” the Proposed Amendment.

 

AptarGroup is asking stockholders to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as AptarGroup’s independent registered public accounting firm for the fiscal year ending December 31, 2008.

 

PricewaterhouseCoopers LLP has audited AptarGroup’s consolidated financial statements annually for over 10 years. Representatives of PricewaterhouseCoopers LLP are expected to be present at the annual meeting and will have the opportunity to make a statement if they desire to do so. It is also expected that those representatives will be available to respond to appropriate questions.

 

The following table sets forth the aggregate fees charged to AptarGroup by PricewaterhouseCoopers LLP for audit services rendered in connection with the audited consolidated financial statements and reports for the 2007 and 2006 fiscal years and for other services rendered during the 2007 and 2006 fiscal years to AptarGroup and its subsidiaries, as well as all out-of-pocket costs incurred in connection with these services:

 

 

Audit Fees primarily represent amounts billed for the audit of AptarGroup’s annual financial statements, reviews of SEC Forms 10-Q and 10-K, and statutory audit requirements at certain non-U.S. locations, and for work related to the effectiveness of internal controls over financial reporting.

 

Audit-Related Fees in 2006 include amounts related to consultations concerning financial accounting and reporting standards and new regulations.

 

Tax Fees primarily represent amounts billed for tax compliance and preparation services including federal, state and international tax compliance, assistance with tax audits and appeals, and tax work related to foreign entity statutory audits.

 

Other Fees represent the cost of reference materials.

 

The Audit Committee’s policies and procedures require pre-approval for all audit and permissible non-audit service to be performed by AptarGroup’s independent registered public accounting firm. These services are generally pre-approved by the entire Audit Committee.

 

The Board and the Audit Committee recommend votes “FOR” the ratification of the appointment of the Independent Registered Public Accounting Firm.

 

Introduction

 

We are a leading global supplier of a broad range of innovative dispensing systems for the personal care, fragrance/cosmetic, pharmaceutical, household and food/beverage markets. We have operations located throughout the world including North America, Europe, Asia and South America. Our senior management team is a diverse group of experienced executives who are based in the United States and in Europe. Accordingly, because certain executive officers reside in Europe, our compensation programs reflect local customary practices in order for us to retain and motivate the best executive talent around the globe. Named executive officers (“NEOs”) who reside in Europe include Mr. Siebel, our former President and Chief Executive Officer (“CEO”) who was our principal executive officer in 2007, Mr. Pfeiffer, formerly our Vice Chairman of the Board and now our current President and CEO, and Mr. Mascitelli, President of our Emsar Group. The salary and bonus amounts for Messrs. Siebel and Pfeiffer are denominated in U.S. dollars while the salary and bonus amounts for Mr. Mascitelli are denominated in Euros (and translated to U.S. dollars using the average exchange rate for the year for his salary, and the spot rate in February 2008 on the day his bonus was determined). Our other two current NEOs are Messrs. Hagge and Meshberg, each of whom resides in the United States. Mr. Hagge has been our Chief Financial Officer (“CFO”) since 1993 and is our principal financial officer. Effective January 1, 2008, Mr. Hagge was also appointed our Chief Operating Officer (“COO”). Mr. Meshberg is a Vice President of AptarGroup. Mr. Siebel decided to retire from his position as President and CEO at the end of 2007 after having been employed by the Company for over 40 years. Mr. Pfeiffer was appointed President and CEO by the Board effective January 1, 2008.

 

AptarGroup’s senior management in 2007 was comprised of 13 executive officers, 12 of whom have been employed by the Company for over 15 years, including the following four NEOs: Messrs. Siebel, Pfeiffer, Hagge, and Mascitelli. Mr. Meshberg has been with the Company for nine years.

 

When reviewing AptarGroup’s compensation practices it is important to note that our successful succession planning has been based on promotion from within our ranks. Our compensation program objectives are, first and foremost, to retain this group of experienced leaders, and secondly, to fairly reward them for growing our business and returning value to stockholders. The low turnover rate at our senior management level has been a critical factor in the consistency of our performance over the past 15 years. We believe that one of AptarGroup’s competitive advantages has been, and will continue to be, the cohesiveness and long-term experience of our executive officer group.

 

The Compensation Committee of our Board of Directors (the “Committee”) has responsibility for approving the compensation programs for our NEOs and acts pursuant to a charter that has been approved by our Board and is available through the Corporate Governance link on the Investor Relations page of the AptarGroup web site located at: www.aptargroup.com. Under this charter, the Committee has the authority to retain outside advisers as deemed necessary. The Board has determined that each member of the Compensation Committee meets the independence requirements of the New York Stock Exchange.

Following is a discussion and analysis of the compensation program in place for our NEOs for 2007. It includes information regarding how compensation is determined, each element of compensation, and an analysis of these elements.

 

Compensation Determination

 

When determining the compensation of executive officers other than the CEO, the Committee reviews recommendations prepared by the CEO, including salary and option grant level recommendations. In addition, the Committee reviews compensation survey information prepared for the Company by Towers Perrin, a compensation consulting firm, each year for the CEO, COO and CFO positions, and, every two years for executive officer positions other than those previously mentioned. The Committee takes into account an assortment of factors and reviews a variety of information before setting annual compensation levels. As its starting point, the Committee considers the tremendous value in the long-term experience of our senior management team and the importance of retaining them. The Committee also reviews past compensation levels when setting current levels. Although the Committee does not rely on benchmarking to determine any element of compensation or overall compensation, the Committee does believe compensation data and surveys are important in order to confirm the competitiveness of the Company’s compensation levels. Although the Committee uses its judgment and past experience to determine appropriate compensation for each executive, the Committee has historically striven to create a compensation package for NEOs that generally delivers combined salary, bonus, and long-term incentives, including equity awards, that is between the 50^th and 75^th percentile of similar amounts delivered to individuals with comparable duties and revenue responsibilities in companies with revenues similar to those of AptarGroup.

 

We manage our business for the long-term benefit of all stakeholders and consequently we believe that it is important that our senior management receive a substantial portion of their compensation in the form of equity awards. By making equity awards a substantial portion of senior management compensation, we are ensuring that AptarGroup’s leaders are personally sensitive to and aligned with the long-term interests of our stockholders, and that they are rewarded for increases in stockholder value. Historically, a substantial portion of NEO compensation has been delivered in the form of time-vested stock options and, to a lesser degree, restricted stock units. When determining the appropriate amount of equity compensation to be awarded to executive officers, the Committee considers the value of the equity award in relation to total compensation.

 

Our Vice President of Human Resources, an executive officer of AptarGroup, annually provides the Committee with the following information relating to the positions of CEO, COO and CFO:

 

 

 

The Committee has retained outside advisers in the past to validate and compare compensation information and recommendations it has received from management. In 2007, the Committee engaged the Hay Group, a compensation consulting firm, in order to begin a review of the compensation levels of our CEO, COO and CFO, and the presidents of our three business segments. The review will include a comparison to market survey information for salary, and short-term and long-term incentive compensation levels of similar positions at companies with revenue similar to those of AptarGroup. This review is expected to be completed in 2008. The Committee intends to engage outside advisers to perform similar work from time to time but at least once every three years.

 

Elements of Our Compensation Programs

 

Cash Compensation:

 

 

Equity-based Compensation:

 

 

Other:

 

 

Annual Bonus.  We believe that the bonus plans accomplish the important objective of rewarding short-term performance. To encourage executive officer share ownership, executive officers may elect to receive up to 50% of their annual cash bonus in the form of RSUs. If an executive elects to receive a portion of his or her bonus in RSUs, the executive will also receive an additional 20% of the elected

amount in the form of RSUs. The value of each RSU is determined by the closing share price on the New York Stock Exchange on the date of grant.

 

Equity-based Compensation.  Equity awards granted to our NEOs are made pursuant to our Stock Awards Plan (the “SAP”) which has been approved by stockholders. While the SAP provides for awards in the form of stock options, restricted stock, RSUs, and other awards, NEOs have traditionally only been awarded stock options and, to a small degree, restricted stock units, issued to NEOs at their election in lieu of a portion of their cash bonus as described above. We believe that stock options and RSUs issued under our SAP are an effective form of equity compensation. Both of these forms of equity compensation have strong retentive value because they vest ratably over a three-year period.

 

Stock options granted under the SAP vest over a three-year period, with one third becoming exercisable on each anniversary of the grant date, and have a ten-year term. All options are granted with an exercise price equal to the fair market value of our common stock on the date of grant, and option re-pricing is expressly prohibited by the SAP’s terms. Fair market value is defined as the closing market price of a share of our common stock on the date of grant.

 

All option awards made to NEOs or any other employee are authorized by the Committee. The Committee has generally followed a practice of making all option grants to executive officers, including the NEOs, on a single date each year. For 10 out of the last 11 years, the Committee has granted these annual awards at its regularly scheduled meeting in January. The one exception relates to the Committee’s decision to delay the granting of options in 2004 until stockholders approved the 2004 Stock Awards Plan, in which case the Committee granted options in June of that year. The January meeting date has historically occurred approximately three to four weeks prior to the issuance of the press release reporting our earnings for the previous fiscal year. The Committee believes that it is appropriate that annual awards be made on a consistent basis and therefore has maintained this approach over the past decade.

 

While NEO option awards have historically been made pursuant to our annual grant program, the Committee retains the discretion to make additional awards to NEOs or other employees at other times, generally in connection with the initial hiring of a new executive officer or key employee.

 

RSUs convert into shares of our common stock if the recipient is still employed by us or is an AptarGroup retiree on the date that RSUs vest. RSUs granted under the SAP vest over a three-year period, with one third vesting on each of the first three anniversaries of the grant date. Recipients of RSUs may not vote the units in stockholder votes and they do not earn or receive any dividend payments on the units.

 

Post-termination compensation.  We offer pension and profit sharing and savings plans to our employees and have entered into employment agreements with certain executive officers, including certain NEOs. We believe that the pension plans and retirement agreements are an important part of our NEO compensation program. These plans serve a critically important role in the retention of our senior executives, as plan benefits increase for each year that these executives remain employed by us. The plans thereby encourage our most senior executives to remain employed by us and continue to work on behalf of our stockholders. We believe the post-termination commitments included in the NEOs’ employment agreements are not substantially different from what is typically seen at other companies with revenues similar to those of AptarGroup.

The employment agreements of Messrs. Pfeiffer and Hagge provide for guaranteed minimum salary levels, death benefits, non-competition clauses and post-termination commitments. The post-termination commitments do not significantly affect the Committee’s decisions concerning other compensation elements. During 2007, Mr. Meshberg announced his intention to retire. Consequently, the employment agreement for Mr. Meshberg was not renewed and it expired in February 2008. As mentioned earlier, Mr. Siebel retired from the Company at the end of 2007. The Company does not have an employment agreement with Mr. Mascitelli, however, he is entitled to certain benefits that are customary in his country of residence.

 

Additional information regarding our pension plans is found under “Pension Plans” and information about the employment agreements, including a definition of key terms and a quantification of benefits that would have been received by our NEOs had termination occurred on December 31, 2007, is found under “Potential Payments Upon Termination of Employment”.

 

We maintain profit sharing and savings plans for our employees, including our NEOs, because we wish to encourage our employees to save some percentage of their cash compensation for their eventual retirement. These plans permit employees to make such savings in a manner that is relatively tax efficient.

 

U.S. Employees

 

We have a tax-qualified retirement savings plan (“U.S. Savings Plan”) that is available to our employees, including Messrs. Hagge and Meshberg. Employees may contribute a percentage of their pre-tax earnings (limited by anti-discriminatory rules and regulations) to the U.S. Savings Plan and we will make a matching contribution equal to $0.50 for each $1 contributed by our employees, up to a maximum matching contribution of 3% of the employee’s earnings. Annual contributions are in accordance with IRS regulations and limits. Amounts held in the U.S. Savings Plan accounts may not be withdrawn prior to the employee’s termination of employment, or such earlier time as the employee reaches the age of 591/2, subject to certain exceptions set forth in the regulations of the IRS.

 

Non-U.S. Employees

 

Certain employees, including certain executive officers but not including any NEOs, participate in local profit sharing and savings plans depending on the country of residence.

 

We do not have deferred compensation plans other than a customary plan for French executive officers and employees. Currently, none of our NEOs participates in this plan.

 

Perquisites.  Perquisites have historically been insignificant in comparison to total NEO compensation and therefore generally do not affect the decisions of the Committee when determining other elements of compensation. These perquisites can include a company-provided automobile, memberships in social and professional clubs, and financial advisory services. The Committee believes it is necessary to provide NEOs with a limited range of perquisites similar to those provided by other companies in order to recruit and retain the best executive talent. The Committee reviews the perquisites provided to its NEOs on a regular basis.

Analysis of Our Compensation Programs

 

AptarGroup’s compensation programs for our NEOs are designed to support our overall objectives of growing our business, increasing stockholder value, and as mentioned above, retaining our long-term, experienced senior management team. In order to achieve these objectives, the Committee aims to achieve a balance between short-term and long-term rewards using a combination of cash and equity-based compensation, while establishing a competitive overall compensation package that includes a competitive base salary. The use of time vested equity awards also allows the Committee to align the interests of NEOs with those of stockholders while providing compensation with retentive qualities.

 

The program’s specific objectives are as follows:

 

A Substantial Portion of NEO Compensation Should Be Performance-Based.  Our compensation program is designed to reward AptarGroup’s short-term and long-term performance. In addition to base salary, the two largest components of total NEO compensation are annual performance bonus amounts and stock option grants. Annual bonus amounts, which are paid in cash or, at the election of the executive officer, paid in cash and RSUs, are meant to reward our NEOs for positive current year results. The 2007 bonuses of Messrs. Siebel, Pfeiffer, and Hagge were discretionary as determined by the Committee after reviewing AptarGroup’s overall performance, strategic actions implemented, and individual leadership achievements. Annual bonuses of other executive officers, including the other NEOs, are based on formulas described under “Bonus Plans” below. Stock option awards, which vest ratably over a three-year period and have a ten-year expiration life, and RSUs that vest ratably over a three-year period, are meant to reward our NEOs for the long-term success and growth of our company that is reflected in the increased value of our common stock over time. Accordingly, such equity awards are considered performance-based compensation.

 

When reviewing the portion of compensation that is performance-based as described above in relation to total compensation, the Committee does not include in total compensation any changes in the actuarial valuation of accrued pension benefits because these values can change dramatically if actuarial assumptions change. In addition, when determining the appropriate amount of equity based compensation to be awarded to executive officers, the Committee considers the value of the equity award in relation to total compensation. AptarGroup is required to record expense related to equity awards according to specific rules contained in the Financial Accounting Standard 123R (“FAS 123R”). According to those rules, the expense related to equity awards granted to our retirement eligible employees (as defined in our Stock Awards Plan that has been approved by stockholders) must be recorded in full in the year of grant, while expense related to equity awards granted to employees not yet retirement eligible, is recorded over the vesting period of three years. Therefore the amount of equity award compensation included in the Summary Compensation Table included in this proxy statement, will depend on the retirement eligibility of each NEO. Current NEOs are all retirement eligible.

 

Taken together, the combined annual bonus amount, and stock award and option values (representing the annual compensation expense recorded on AptarGroup’s financial statements as determined under FAS 123R), represented the following percentages of total compensation (excluding changes in pension benefit valuations) for 2007: 81% for Mr. Siebel, 80% for Mr. Pfeiffer, 77% for Mr. Hagge, 65% for Mr. Meshberg, and 65% for Mr. Mascitelli.

The graphs below illustrate the amount of performance-based compensation (bonus and equity awards) in relation to salary.

 

Mascitelli

 

 

A Substantial Portion of NEO Compensation Should Be Delivered in the Form of Equity Awards.  Awarded stock option and RSU values (representing the annual compensation expense recorded on AptarGroup’s financial statements as determined under FAS 123R) represented the following percentages of total compensation (excluding changes in pension benefit valuations) for 2007: 57% for Mr. Siebel, 59% for Mr. Pfeiffer, 50% for Mr. Hagge (includes 3% related to RSUs granted in lieu of cash bonus at the election of the officer and 47% related to stock options), 38% for Mr. Meshberg, and 52% for Mr. Mascitelli (includes 15% related to RSUs granted in lieu of cash bonus at the election of the officer and 37% related to stock options).

 

When including stock options that are currently exercisable within 60 days of March 6, 2008 (date of record for voting at the annual meeting), AptarGroup’s executive officers and directors, as a group, own approximately 8.5% of the outstanding shares of our common stock.

 

Cash Compensation

 

Base Salary.  We believe that it is appropriate to provide a certain portion of NEO compensation that is fixed. The salary levels of the CEO, COO and CFO are established by the Committee each January

after evaluating individual performances and discussing the information provided by the Vice President of Human Resources and the recommendations of the CEO as discussed earlier. The salary levels of other executive officers, including the other NEOs, are also set each January after evaluating and discussing the recommendations of our CEO, and the market information provided by Towers Perrin for the other executive officer positions. For executive officers with employment agreements, a minimum level of salary is sometimes specified in the agreement. In January 2008, the Committee increased the salaries of Messrs. Pfeiffer and Hagge to $800,000 and $600,000, respectively, in relation to their appointment to their new positions as of January 1, 2008 of CEO and COO, respectively, and established the 2008 salary levels for the other NEOs as follows with the respective increases over the prior year noted in parentheses: Mr. Meshberg — $385,000 (2.7%), and Mr. Mascitelli — $356,000 (3.7%).

 

Bonus Plans.  

 

The 2007 bonuses of Messrs. Siebel, Pfeiffer, and Hagge were discretionary as determined by the Committee after reviewing AptarGroup’s overall performance, strategic actions implemented, and individual leadership achievements. Based upon an evaluation of these criteria, including, in particular, the strong financial performance of AptarGroup during 2007 in which AptarGroup reported record net sales and earnings per share and achieved its 42nd consecutive year of sales growth, the Committee established on February 7, 2008, the total 2007 bonuses for Messrs. Siebel, Pfeiffer, and Hagge as follows: Mr. Siebel — $1,000,000 in cash, Mr. Pfeiffer — $650,000 in cash, and Mr. Hagge — $575,000 of which $525,000 was in cash and $50,000 was in RSU value pursuant to Mr. Hagge’s election to take a portion of his annual bonus in RSUs. Pursuant to our program to encourage executive officer share ownership mentioned above and because Mr. Hagge elected to receive $50,000 of his annual bonus in the form of RSUs, Mr. Hagge received additional RSUs valued at $10,000 in addition to his total bonus amount.

 

The cash bonus program for the other NEOs, who are senior executives in our Beauty & Home business segment, is based on a three-part bonus formula that includes the following elements:

 

 

Rather than setting thresholds with automatic awards, the bonus formulas are designed to be flexible and will provide for awards of 0% to 200% of base salary depending on the outcome of the individual elements in the aggregate. Each element has a baseline, or starting point, from which a percentage of salary is determined. These baseline percentages are then increased or decreased depending on our actual results as described below.

 

 

 

The 2007 bonus amount earned by Mr. Meshberg was $307,500 in cash. The 2007 bonus amount earned by Mr. Mascitelli was $299,300 of which $149,650 was in cash and $149,650 was in RSU value pursuant to Mr. Mascitelli’s election to take a portion of his annual bonus in RSUs. Pursuant to our program to encourage executive officer share ownership mentioned above and because Mr. Mascitelli elected to receive $149,650 of his annual bonus in the form of RSUs, Mr. Mascitelli received additional RSUs valued at $29,930 in addition to his total bonus amount.

In 2007, the mix of salary versus bonus for the NEOs is represented in the following graphs. Bonus amounts include cash bonus and any deferred bonus taken in the form of RSUs, but exclude the value of any additional RSUs granted as part of our program to encourage executive officer share ownership.

 

 

Equity Compensation

 

As described above, we believe that a substantial portion of each NEO’s compensation should be in the form of equity awards because the Committee believes that such awards serve to align the interests of NEOs with those of our stockholders. AptarGroup is required to record expense related to equity awards according to specific rules contained in FAS 123R.

 

The amount of compensation provided in the form of equity awards as determined by the Committee in a given year is dependent on the value of the option grant on the date of grant relative to the executive’s cash compensation. We believe that our current compensation program for NEOs, pursuant to which a portion of compensation is in the form of equity, strikes a reasonable balance. This mix of equity and cash compensation gives our NEOs a substantial alignment with stockholders, while also permitting the Committee to motivate the NEOs to pursue specific short and long-term performance goals. For 2007, total equity compensation (comprised of the value of stock options and RSUs granted) represented approximately 54% of total compensation (excluding changes in pension benefit valuations) for the NEOs on an aggregate basis, and total cash and other compensation (comprised of salary, cash bonus, and other

compensation) represented approximately 46% of total compensation (excluding changes in pension benefit valuations).

 

Stock Trading Guidelines

 

We have an Insider Trading Policy that applies to senior management, including the NEOs. The Insider Trading Policy prohibits our senior management from engaging in selling short our common stock or engaging in hedging or offsetting transactions regarding our common stock. Generally, it also establishes a blackout window that prohibits senior management from entering into transactions regarding our common stock from 30 days prior to the date of a regularly scheduled financial press release, through 24 hours after such release (excluding the exercise of a vested stock option with which shares are purchased under the option but not sold). We may impose additional blackout periods from time to time, if we believe it is necessary.

 

Tax Considerations

 

Section 162(m) of the U.S. IRS Code generally disallows a tax deduction for compensation in excess of $1 million paid to our PEO and the four other most highly compensated executive officers. Certain compensation is specifically exempt from the deduction limit to the extent that it does not exceed $1 million during any fiscal year, or is performance-based, as defined in Section 162(m). It is our general policy to qualify U.S. incentive compensation of executives for deductibility under Section 162(m). Historically, U.S. covered compensation has not exceeded IRS Code Section 162(m) limits. Because Messrs. Siebel and Pfeiffer currently reside in Europe, only portions of their compensation are considered U.S. covered compensation, none of which has exceeded IRS Section 162(m) limits. None of Mr. Mascitelli’s compensation is considered U.S. covered compensation. Because it is possible that compensation to Messrs. Pfeiffer and Hagge could exceed the IRS Code Section 162(m) limit, AptarGroup is asking stockholders to approve a bonus plan that would permit bonus awards granted to Messrs. Pfeiffer and Hagge to qualify for tax deductibility under Section 162(m). See Proposal 2 — To Approve the Annual Bonus Plan for further information.

 

The Compensation Committee of the Board of Directors of AptarGroup, Inc. oversees AptarGroup’s compensation program on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement.

 

In reliance on the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and the Company’s Proxy Statement to be filed in connection with the Company’s 2008 Annual Meeting of Stockholders.

 

Compensation Committee

 

Leo A. Guthart (Chair)
Alain Chevassus
Ralph Gruska
King W. Harris

 

The table below contains compensation information for our former President and CEO (retired at the end of 2007), current President and CEO (appointed January 1, 2008), COO and CFO, and the top two compensated other executive officers of AptarGroup. The bonus amounts and non-equity incentive compensation plan amounts are presented in the fiscal year in which they were earned. These amounts were paid in February of the following year once the consolidated financial results of AptarGroup were completed. Stock awards are related to the executive’s election to receive a portion of the annual bonus or non-equity incentive compensation plan amount in the form of restricted stock units in lieu of cash. All of the named executive officers are deemed retirement eligible as defined by the Stock Awards Plans that have been approved by stockholders. As a result, in accordance with FAS 123R, any equity award granted in 2007 or 2006 reflects the full value of that award. For information concerning the objectives of our compensation program, including an analysis of individual compensation elements awarded in 2007, see our “Compensation Discussion and Analysis”.

 

 

The below footnote information relates to 2007 compensation only.

 

 

 

 

 

 

The table below includes information regarding the estimated possible bonus amounts for 2007 for Messrs. Meshberg and Mascitelli relating to their annual bonus formulas.

 

The table below also includes information regarding grants of stock options in 2007 and grants of RSUs that were awarded in 2007 in connection with the executive’s 2006 bonus if the executive elected to receive a portion of the 2006 bonus in the form of RSUs in lieu of cash. The grant date fair value of restricted stock units is calculated using, and the exercise price of option awards represents, the closing price of AptarGroup’s common stock on the New York Stock Exchange on the date of grant. The grant date fair value of option awards represents the value of the option awards as determined under FAS 123R.

 

 

 

The table below provides information on the holdings of stock option and stock awards by the named executive officers as of December 31, 2007.