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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.          )

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

 

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

(Name of Registrant as Specified In Its Charter)

 

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LOGO

March 31, 2016

Dear Shareholder,

        You are cordially invited to attend the 2016 Annual Meeting of Shareholders of Charles River Laboratories International, Inc. to be held at 8:30 a.m. on Wednesday, May 11, 2016, at the Conference Center at the offices of Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, Massachusetts 02109.

        At the Annual Meeting, nine persons will be elected to our Board of Directors. We will also seek shareholder approval of the Charles River Laboratories International, Inc. 2016 Incentive Plan. In addition, we will also hold a vote on an advisory resolution on our executive compensation and ask shareholders to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2016. Our Board of Directors recommends the approval of the proposals to elect the nine directors, to authorize the new equity incentive plan, to approve the advisory vote on our executive compensation and to ratify the selection of PricewaterhouseCoopers LLP. Such other business will be transacted as may properly come before the Annual Meeting.

        Whether you plan to attend the Annual Meeting or not, it is important that your shares are represented. Therefore, we urge you to complete, sign, date and return the enclosed proxy card promptly in accordance with the instructions set forth on the card. This will ensure your proper representation at the Annual Meeting.

    Sincerely,

 

 


GRAPHIC

 

 

James C. Foster
Chairman, President and Chief Executive Officer

YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.


        Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 11, 2016.

        This Proxy Statement and our Annual Report to Shareholders are available at www.criver.com/annual2016.

        In addition, our Annual Report on Form 10-K for fiscal year 2015 can be found on the same website.


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.




NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on May 11, 2016



To the Shareholders of
Charles River Laboratories International, Inc.:

        NOTICE IS HEREBY GIVEN that the Annual Meeting of Charles River Laboratories International, Inc., a Delaware corporation, will be held on Wednesday, May 11, 2016, at the Conference Center at the offices of Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, Massachusetts 02109, at 8:30 a.m., for the following purposes:

        The Board of Directors has fixed the close of business on March 15, 2016 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournments thereof.

        All shareholders are cordially invited to attend the Annual Meeting. Attendance at the Annual Meeting will be limited to shareholders and those holding proxies from shareholders.

        An admission ticket and government-issued picture identification will be required to enter the Annual Meeting. Any individual arriving without an admission ticket will not be admitted to the Annual Meeting unless it can be verified that the individual is a Charles River shareholder as of the record date for the Annual Meeting. Shareholders may obtain an Annual Meeting ticket by writing to the Corporate Secretary, Charles River Laboratories International, Inc., 251 Ballardvale Street, Wilmington, Massachusetts 01887. If you are a registered holder, please so indicate in your request. If your shares are held by a bank, broker, or nominee, you must enclose evidence of your ownership of shares with your ticket request, which you can obtain from your broker, bank or nominee. Please submit your ticket request and proof of ownership as promptly as possible in order to ensure you receive your ticket in time for the meeting. Admission to the Annual Meeting will be on a first-come, first-served basis.

    By Order of the Board of Directors

 

 


GRAPHIC
    David P. Johst
Corporate Secretary

March 31, 2016

        Whether you plan to attend the Annual Meeting or not, you are requested to complete, sign, date and return the enclosed proxy card as soon as possible in accordance with the instructions on the proxy card. A pre-addressed, postage prepaid return envelope is enclosed for your convenience.



PROXY SUMMARY

        The following is a summary which highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider, and you are urged to read the entire Proxy Statement carefully before voting.

Annual Meeting of Shareholders

Time and Date   8:30 a.m. on Wednesday, May 11, 2016
Place   Conference Center at Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, Massachusetts 02109
Record Date   March 15, 2016

Voting Matters and Vote Recommendations

        There are four items of business which we currently expect to be considered at our 2016 Annual Meeting. The following table lists those items of business and our Board's vote recommendation.

  PROPOSAL   BOARD VOTE RECOMMENDATION  
    Election of Directors   For each director nominee    
    Advisory Vote to Approve Executive Officer Compensation   For    
    2016 Incentive Plan   For    
    Ratification of Independent Registered Public Accounting Firm   For    

Director Nominees

        The following table provides summary information about each of our director nominees.

 

         
Director

              2015 Committee Memberships

                                           

 

Name


 
Age

 
Since

  Occupation

  Independent

  AC

  CC

  CGNC

  SPCAC

  STC

  EC

 

James C. Foster

        65         1989       Chairman, President and CEO and of Charles River Laboratories International, Inc.       No                               M               C    

 

Robert Bertolini

        54         2011       Former President and CFO of Bausch and Lomb Incorporated and former Executive Vice President and Chief Financial Officer of Schering-Plough Corp.       Yes       M                       C               M    

 

Stephen D. Chubb

        72         1994       Special Limited Partner of Catalyst Healthcare Ventures and Former President and CEO of Allegro Diagnostics, Inc.       Yes       M                               M            

 

Deborah T. Kochevar

        59         2008       Dean, Cummings School of Veterinary Medicine, Tufts University       Yes               M       M               M            

 

George E. Massaro

        68         2003       Former Vice Chairman, Huron Consulting Group, Inc.       Yes       C                                       M    

 

George M. Milne, Jr.

        72         2002       Venture Partner, Radius Ventures and former EVP, Pfizer Global Research and Development       Yes                       C               M       M    

 

C. Richard Reese

        70         2007       Former CEO and Chairman of Iron Mountain Incorporated       Yes               C               M               M    

 

Craig B. Thompson

        63         2013       President and CEO, Memorial Sloan-Kettering Cancer Center       Yes                       M               C       M    

 

Richard F. Wallman

        64         2011       Former Senior Vice President and CFO, Honeywell International, Inc.       Yes               M               M                    

Key: AC: Audit Committee; CC: Compensation Committee; CGNC: Corporate Governance and Nominating Committee; SPCAC: Strategic Planning and Capital Allocation Committee; STC: Science and Technology Committee; EC: Executive Committee; C: Chairperson; M: Member.


Advisory Vote on Executive Compensation/Changes to Executive Compensation Program in Fiscal 2015

        Charles River shareholders provided very strong majority support for our named executives' compensation at our 2015 annual meeting of shareholders (97.7% of shares voted on this matter; 98.2% excluding abstentions). We attribute this level of support to the significant actions we implemented from 2012 through 2014, including significant changes to our executive compensation program during that period, as noted below:

        In addition to the changes noted above, we have taken further action this year by including "double-trigger" accelerated equity vesting in the 2016 Incentive Plan, which we are submitting to shareholders for their approval this year.

        The Compensation Committee believes that these changes were responsive to feedback from investors and enhanced the performance orientation of our executive compensation program. In addition, we had a very strong fiscal year in 2015, with a 24.6% increase in our total shareholder return, and an 8.7% increase in non-GAAP EPS from continuing operations. Please see Appendix A to this Proxy Statement for a reconciliation of our non-GAAP EPS to GAAP EPS for 2015.

        Accordingly, we are asking for shareholder approval of the compensation of our named executive officers as disclosed in this Proxy Statement.

2016 Incentive Plan

        We are asking our shareholders to approve our 2016 Incentive Plan (the Plan) authorizing the issuance of up to 6,116,000 shares of our common stock. This includes 3,649,000 new shares and 2,467,000 of the shares remaining available for issuance under the existing 2007 Incentive Plan, which expires in 2017. Our Board believes that our continued growth depends, in large part, upon our ability to attract, motivate and retain key employees and directors, and that stock incentive awards are an important means of doing so. However, our current pool is not likely to be sufficient to satisfy our prospective equity compensation needs and with the 2007 Incentive Plan expiring, approval of a new plan is necessary to ensure that we can continue to issue stock incentive awards without disruption.

        In addition, there are a number of other reasons why we believe approving this 2016 Incentive Plan is important:

2


Ratification of Auditors

        We are asking our shareholders to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal 2016. Set forth below is a summary of PricewaterhouseCoopers' fees for services for fiscal years 2015 and 2014.

 
  2015   2014  

Audit fees

  $ 5,015,295   $ 4,944,012  

Audit-related fees

    1,560,100     869,500  

Tax fees

    1,468,071     791,442  

All other fees

    7,200     7,200  

Total

  $ 8,050,666   $ 6,612,154  

        Detail regarding these fees can be found on page 82 of this Proxy Statement.

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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
251 Ballardvale Street
Wilmington, Massachusetts 01887
(781) 222-6000



PROXY STATEMENT

For Annual Meeting of Shareholders
To be Held May 11, 2016




GENERAL INFORMATION

        This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Charles River Laboratories International, Inc., a Delaware corporation, of proxies, in the accompanying form, to be used at the Annual Meeting of Shareholders to be held at the Conference Center at the offices of Goodwin Procter LLP, Exchange Place, 53 State Street, Boston, Massachusetts 02109 on Wednesday, May 11, 2016, at 8:30 a.m., and any postponements or adjournments thereof (the Meeting). The Notice of Meeting, this Proxy Statement, the enclosed proxy card and our Annual Report to Shareholders for the year ended December 26, 2015 are being mailed to shareholders on or about March 31, 2016. Copies of these documents may also be obtained free of charge through our website at www.criver.com/annual2016.

        When proxies in the accompanying form are properly executed and received, the shares represented thereby will be voted at the Meeting in accordance with the directions noted thereon. If no direction is indicated on the proxy and it is signed, the shares represented thereby will be voted "FOR" the election of the Board's nominees as directors, 2016 Incentive Plan, the advisory vote on executive compensation, and the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2016.

        Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by delivering to us a written notice of revocation or a duly executed proxy bearing a later date. Any shareholder who has executed a proxy but is present at the Meeting, and who wishes to vote in person, may do so by revoking his or her proxy as described in the preceding sentence. Shares represented by valid proxies in the form enclosed, received in time for use at the Meeting and not revoked at or prior to the Meeting, will be voted at the Meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of our common stock is necessary to constitute a quorum at the Meeting. Votes of shareholders of record who are present at the Meeting in person or by proxy, abstentions, and broker non-votes are counted as present or represented at the Meeting for purposes of determining whether a quorum exists.

        If you hold your shares of common stock through a broker, bank or other representative, generally the broker or your representative may only vote the common stock that it holds for you in accordance with your instructions. However, if it has not timely received your instructions, the broker or your representative may vote on certain matters for which it has discretionary voting authority. Brokers may not vote without specified instruction in the election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 2), and the 2016 Incentive Plan (Proposal 3), but may cast discretionary votes in the ratification of the independent registered public accounting firm (Proposal 4). If a broker or your representative cannot vote on a particular matter because it does not have discretionary voting authority, this is considered to be a "broker non-vote" on that matter.

        The close of business on March 15, 2016 has been fixed as the record date for determining the shareholders entitled to notice of and to vote at the Meeting. As of the close of business on March 15,

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2016, we had 47,101,221 shares of common stock outstanding and entitled to vote. Holders of common stock at the close of business on the record date are entitled to one vote per share on all matters to be voted on by shareholders.

        An admission ticket and government-issued picture identification will be required to enter the Meeting. Any individual arriving without an admission ticket will not be admitted to the Meeting unless it can be verified that the individual is a Charles River shareholder as of the record date for the meeting. You may obtain a Meeting ticket by writing to the Corporate Secretary, Charles River Laboratories International, Inc., 251 Ballardvale Street, Wilmington, Massachusetts 01887. If you are a registered holder, please indicate that in your request. If your shares are held by a bank, broker or nominee, you must enclose with your request evidence of your ownership of shares with your ticket request, which you can obtain from your broker, bank or nominee (and, if you wish to vote in person at the Meeting, you will need to bring a proxy from your broker, bank or nominee). Please submit your ticket request and proof of ownership as promptly as possible in order to ensure you receive your ticket in time for the Meeting. Admission to the Meeting will be on a first-come, first-served basis.

        The cost of soliciting proxies, including expenses in connection with preparing and mailing this Proxy Statement, will be paid by the Company. In addition, we will reimburse brokerage firms and other persons representing beneficial owners of our common stock for their expenses in forwarding proxy material to such beneficial owners. Solicitation of proxies by mail may be supplemented by telephone, facsimile and personal solicitation by our directors, officers or employees. No additional compensation will be paid for such solicitation. We have retained Morrow & Co., LLC to assist in the solicitation of proxies at a cost of approximately $12,500 plus reimbursement of expenses.

Votes Required

        In accordance with our amended and restated by-laws, nominees for election as directors at the Meeting will be elected by a majority of the votes of the shares properly cast at the Meeting. The affirmative vote of the holders of a majority of the shares of common stock cast on the matter is required to approve the 2016 Incentive Plan. The affirmative vote of the holders of a majority of the votes cast is required to approve our 2016 Incentive Plan and ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016, and will constitute the shareholders' non-binding approval with respect to our executive compensation program.

        Shares which abstain from voting as to a particular matter and broker non-votes will not be voted in favor of such matter, and will also not be counted as shares voting on such matter. Accordingly, broker non-votes and abstentions will have no effect on the voting on any matter that requires the affirmative vote of a majority of the shares cast on the matter (with the exception of Proposal 3, in which case abstentions will have the effect of a vote counted "against" the proposal).

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PROPOSAL ONE
ELECTION OF DIRECTORS

        Under our By-laws, the number of members of our Board of Directors is fixed from time to time by the Board of Directors, but may be increased or decreased either by the shareholders or by the majority of directors then in office. Directors serve in office until the next annual meeting of shareholders and until their successors have been elected and qualified, or until their earlier death, resignation or removal.

        The Board of Directors has voted to nominate Mr. James C. Foster, Mr. Robert Bertolini, Mr. Stephen D. Chubb, Dr. Deborah T. Kochevar, Mr. George E. Massaro, Dr. George M. Milne, Jr., Mr. C. Richard Reese, Dr. Craig B. Thompson, and Mr. Richard F. Wallman for election at the Meeting. There are no family relationships between any of our directors or executive officers.

        In the event that any nominee shall become unable or unwilling to serve, the shares represented by the enclosed proxy may be voted for the election of such other person as the Board of Directors may recommend in that nominee's place or the Board may reduce its size. Our Board of Directors has no reason to believe that any nominee will be unable or unwilling to serve.

        The Board of Directors unanimously recommends a vote "FOR" the election of each of these nominees for directors.

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NOMINEES FOR DIRECTORS

        The following table provides information as of the date of this Proxy Statement about each nominee. In addition to the information presented below regarding each nominee's specific experience, qualifications, attributes, and skills that led our Board to the conclusion that he or she should serve as a director, we also believe that all of our director nominees have a reputation for integrity, honesty, and adherence to high ethical standards. They each have demonstrated business or scientific acumen and an ability to exercise sound judgment, as well as a commitment of service to Charles River and our Board.

Name and Age as of the
2016 Annual Meeting

   
  Position, Principal Occupation, Business Experience and Directorships
 

James C. Foster

GRAPHIC

 

65

 

Mr. Foster joined us in 1976 as General Counsel and over his tenure has held various staff and managerial positions. Mr. Foster was named President in 1991, Chief Executive Officer in 1992 and Chairman in 2000. Mr. Foster has been a director since 1989.

Mr. Foster was selected to serve as a director on our Board due to his role as our Chief Executive Officer, his depth of knowledge of us and our operations, his acute business judgment, extensive familiarity with the businesses in which we compete, and his lengthy experience with us.

Robert Bertolini

GRAPHIC

 

54

 

President and Chief Financial Officer of Bausch & Lomb Incorporated from February 2013 to August 2013 (until its acquisition by Valeant Pharmaceuticals International Inc.). Mr. Bertolini served as Executive Vice President and Chief Financial Officer at Schering-Plough Corp. from November 2003 until November 2009 (until its merger with Merck & Co) with responsibility for tax, accounting, and financial asset management. Prior to joining Schering-Plough, Mr. Bertolini spent 20 years at PricewaterhouseCoopers LLP, ultimately leading its global pharmaceutical industry practice. Mr. Bertolini also serves as a director of Actelion Pharmaceuticals Ltd. He served as a director of Genzyme Corporation until its merger with Sanofi-Aventis in 2011. Mr. Bertolini has been a director since January 2011.

Mr. Bertolini's qualifications to serve as a director include his industry and financial expertise. He has extensive experience in building world-class finance and information technology functions and in leading business development and strategy. Having joined Schering-Plough at a time when it was facing challenges across several areas, Mr. Bertolini was part of the team that turned Schering-Plough around and drove strategic decisions. He has had responsibility for key financial areas including tax, accounting, and financial asset management, and extensive experience in audit, financial controls and corporate governance. He has expertise in working with small and large health care companies on initial public offerings, licensing, and other strategic issues. As a result of his extensive background in public accounting and prior experience as a public company Chief Financial Officer, Mr. Bertolini qualifies as an "audit committee financial expert" under SEC guidelines.

7


Name and Age as of the
2016 Annual Meeting

   
  Position, Principal Occupation, Business Experience and Directorships
 

Stephen D. Chubb

GRAPHIC

 

72

 

Special Limited Partner of Catalyst Healthcare Ventures, a venture investment firm specializing in medical devices and diagnostic products, since June 2010. From September 2010 through March 2011, Mr. Chubb served as President and Chief Executive Officer of Allegro Diagnostics, Inc., a privately held molecular diagnostics company focused on the development and future sale of innovative genomic tests for the diagnosis, staging and guided treatment of lung cancer and lung diseases. Mr. Chubb was previously Chairman and Chief Executive Officer of Matritech, Inc., a publicly traded leading developer of proteomics-based diagnostic products for the early detection of cancer, from its inception in 1987 until December 2007. Mr. Chubb served as President and Chief Executive Officer of T Cell Sciences, Inc. and as President and Chief Executive Officer of Cytogen Corp., both publicly traded biotechnology companies. Mr. Chubb also previously served as Chairman of the Board of Trustees of Mount Auburn Hospital in Cambridge, Massachusetts and as a director of Caregroup Healthcare System, and currently serves as a director of Immunetics, Inc. and Amylyx Pharmaceuticals Inc. Mr. Chubb has been a director since 1994.

Mr. Chubb brings to the Board a wealth of industry and business expertise, drawing upon his 30-year history as a Chief Executive Officer, president and board member at a variety of public and private life sciences companies. The Board benefits particularly from Mr. Chubb's strong biotechnology industry expertise, and he also brings a valued perspective given his service to hospitals and healthcare providers. In addition, as a result of his background as a Certified Public Accountant and prior service as a public company Chief Financial Officer, Mr. Chubb qualifies as an "audit committee financial expert" under SEC guidelines.
Deborah T. Kochevar,
    D.V.M., Ph.D.

GRAPHIC
    
59
    
Dean of the Cummings School of Veterinary Medicine at Tufts University since 2006. Previously, Dr. Kochevar was a long-time faculty member and administrator at the College of Veterinary Medicine and Biomedical Sciences, Texas A&M University, where she held the Wiley Chair of Veterinary Medical Education. Dr. Kochevar is a past-president of the Association of American Veterinary Medical Colleges and American College of Veterinary Clinical Pharmacology. Dr. Kochevar is active in the American Veterinary Medical Association, having chaired its Council on Education and the Educational Commission for Foreign Veterinary Graduates. Dr. Kochevar has been a director since October 2008.

Dr. Kochevar was selected to the Board in recognition of her distinct perspective as a highly distinguished academic and educator in the life sciences. As a boarded diplomate of the American College of Veterinary Clinical Pharmacology, with a Ph.D. in cell and molecular biology combined with a D.V.M. degree, and with a deep knowledge base of comparative medicine and complex animal models, Dr. Kochevar's training and experience is particularly suited to understanding and providing insights into the veterinary medical, contract research and drug development support activities that we conduct. Dr. Kochevar also provides the Board with current industry and scientific insights through her on-going involvement in a broad array of biomedical professional and trade organizations.

8


Name and Age as of the
2016 Annual Meeting

   
  Position, Principal Occupation, Business Experience and Directorships
 

George E. Massaro

GRAPHIC

 

68

 

Director and Vice Chairman of Huron Consulting Group, Inc., a management consulting company, since May 2010. Mr. Massaro was non-Executive Chairman of the Board of Huron Consulting Group from July 2009 to May 2010, Director and Vice Chairman of Huron Consulting Group since June 2004 (Vice Chairman since March 2005), Chief Operating Officer of Huron Consulting Group, Inc. and Huron Consulting Services LLC from June 2003 until March 2005, and Managing Director of Huron Consulting Services LLC from August 2002 to May 2003. He was the Managing Partner of Arthur Andersen LLP's New England practice from 1998 to 2002. Mr. Massaro also serves as a director of Eastern Bank Corporation, an independent mutual bank holding company in New England. Mr. Massaro has been a director since 2003.

Mr. Massaro has more than 35 years of accounting and auditing experience with expertise in a broad range of areas. As a former managing partner of a major accounting firm, Mr. Massaro brings a deep knowledge of financial reporting, and auditing and tax matters applicable to a variety of industries. Mr. Massaro also provides business acumen from his numerous senior positions at Huron Consulting, as well as his service on boards of other companies. As a result of his extensive background in public accounting and prior experience at Arthur Andersen, Mr. Massaro qualifies as an "audit committee financial expert" under SEC guidelines.

George M. Milne, Jr., Ph.D.

GRAPHIC

 

72

 

Venture partner of Radius Ventures LLC since 2003. Dr. Milne retired from Pfizer Inc. in 2002 after a 32-year career encompassing a broad array of management responsibilities, including as Executive Vice President, Pfizer Global Research and Development; President, Worldwide Strategic Sales and Operations Management; President of Central Research with global responsibility for Pfizer's Human and Veterinary Medicine Research and Development; Senior Vice President of Pfizer Inc.; and a member of the Pfizer Management Council. Dr. Milne is a director of Mettler-Toledo International, Inc. and also serves on the boards of several private companies and charitable organizations. He was previously a director of MedImmune, Inc. from 2005-2007, Athersys, Inc. from 2002-2012, Aspreva Pharmaceutical Corporation from 2004-2007, and Conor Medsystems, Inc. from 2003-2006. Dr. Milne has been a director since 2002.

With his strong scientific background (including a Ph.D. in Organic Chemistry), his long tenure at Pfizer Inc., his work as a venture partner with Radius Ventures and through his service on multiple life science boards, Dr. Milne has a deep understanding of R&D processes and the services, tools and technologies used in the life sciences industry, and supplies particular insights into industry drivers as well as the concerns and perspectives of the consumers of our products and services. In addition, he has had exposure to strategic and operational issues relevant to board leadership through his prior roles at Pfizer and on other public and private company boards. Dr. Milne also brings a unique industry perspective from his biomedical venture capital activities through Radius Ventures.

9


Name and Age as of the
2016 Annual Meeting

   
  Position, Principal Occupation, Business Experience and Directorships
 

C. Richard Reese

GRAPHIC

 

70

 

Former Chairman and Chief Executive Officer of Iron Mountain Incorporated, a global public information protection and storage company. Mr. Reese originally served as the Chief Executive Officer of Iron Mountain from 1981-2008 and then again from 2011-2012, and served as its Chairman from 1995-2008 and as Executive Chairman between June 2008 and April 2011. Mr. Reese has been a director since 2007.

Mr. Reese is a proven global business leader who, from the time he joined Iron Mountain as its president in 1981 with only $3 million in annual revenue, developed it into a global company with over $3 billion in revenue and more than 100,000 corporate customers. As a member of our Board, Mr. Reese provides us with invaluable guidance and advice, particularly in the areas of strategic execution, customer service, and innovation, drawing upon his extensive experience, entrepreneurial spirit, and proven track record.

Craig B. Thompson, M.D.

GRAPHIC

 

63

 

President and Chief Executive Officer of Memorial Sloan-Kettering Cancer Center since November 2010. From 2006 to 2010, Dr. Thompson served as the Director of the Abramson Cancer Center at the University of Pennsylvania School of Medicine, and, from 1999 to 2011, he was a Professor of Medicine and Cancer at the University of Pennsylvania. Dr. Thompson is a fellow of the American Academy of Arts and Sciences; and member of the Medical Advisory Board of the Howard Hughes Medical Institute, and of the National Academy of Sciences and its Institute of Medicine. Dr. Thompson is a director of Merck & Co. He has been a director since 2013.

Dr. Thompson was selected to the Board in recognition of his distinct perspective as a highly distinguished academic and educator in medicine as well as his extensive scientific and medical expertise relevant to life science industries, including the research and development activities of our clients. Dr. Thompson's training and experience is particularly suited to understanding and providing insights into the contract research and drug development support activities we conduct. Dr. Thompson also provides the Board with current industry and medical insights.

Richard F. Wallman

GRAPHIC

 

64

 

From 1995 through 2003, Mr. Wallman served as the Senior Vice President and Chief Financial Officer of Honeywell International, Inc., a diversified technology company, and AlliedSignal, Inc. (prior to its merger with Honeywell). He is also a member of the boards of directors of Convergys Corporation, Roper Industries Inc., Wright Medical Group, Inc., and Extended Stay America, Inc., and in the past five years has served as a member of the boards of Dana Holding Corporation and Ariba, Inc. Mr. Wallman has been a director since January 2011.

Mr. Wallman's leadership experience, including his role as a Chief Financial Officer, and his, financial and outside board experience, provide him with an informed understanding of the financial issues and risks that affect us.

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Corporate Governance

        We are committed to operating our business with integrity and accountability. We aim to meet or exceed all of the corporate governance standards established by the New York Stock Exchange (NYSE) and the Securities and Exchange Commission (SEC). Each member of our Board of Directors (Board), other than Mr. Foster who is also our Chief Executive Officer and President, is independent and has no significant financial, business or personal ties to us or management, and all of our required Board committees are composed of independent directors. Our Board adheres to our Corporate Governance Guidelines and our Code of Business Conduct and Ethics, which have been communicated to employees and posted on our website. We are diligent in complying with established accounting principles and are committed to providing financial information that is transparent, timely, and accurate. We have a Related Person Transactions Policy in order to promote the timely identification of transactions with related persons (as defined by the SEC) and to ensure we give appropriate consideration to any real or perceived conflicts in our commercial arrangements. We have established global processes through which employees, either directly or anonymously, can notify management (and the Audit Committee of the Board of Directors) of alleged accounting and auditing concerns or violations including fraud. Our internal Disclosure Committee meets regularly and operates pursuant to formal disclosure procedures and guidelines to help ensure that our public disclosures, including our periodic reports filed with the SEC, earnings releases and other written information that we disclose to the investment community, are complete, accurate and timely. We will continue to monitor developments in the law and stock exchange regulations and will adopt new procedures consistent with new legislation or regulations. Copies of our Corporate Governance Guidelines and our Related Person Transactions Policy are available on our website at www.criver.com under the "Investor Relations—Corporate Governance" caption.

        All our employees and officers, including our Chief Executive Officer and Chief Financial Officer, and members of our Board, are required to abide by our Code of Business Conduct and Ethics (Code) to ensure that our business is conducted in a consistently legal and ethical manner. This Code forms the foundation of a comprehensive process that includes compliance with all corporate policies and procedures, an open relationship among colleagues that contributes to good business conduct, and an abiding belief in the importance of integrity of our employees. Our policies and procedures cover areas of professional conduct, including employment policies, conflicts of interest, intellectual property and the protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of our business.

        Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Business Conduct and Ethics. Consistent with the Sarbanes-Oxley Act of 2002, we maintain procedures to receive, retain and treat complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

        The full text of our Code is available on our website at www.criver.com, under the "Investor Relations—Corporate Governance" caption. We will disclose any future material amendments to the Code and any waivers granted to any director or officer within the period required following the date of such amendment or waiver on our website.

        In order to provide shareholders and other interested parties with a direct and open line of communication to the Board, we adopted the following procedures for communications to directors. Shareholders and other interested parties may contact the lead director, any other directors, or the

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independent members of the Board as a group through its Lead Director, Dr. Milne, by writing to the Lead Director, c/o Corporate Secretary, Charles River Laboratories International, Inc., 251 Ballardvale Street, Wilmington, Massachusetts 01887, or by email at CRLLeadDirector@crl.com. All communications received in this manner will be kept confidential and relevant information will be forwarded by the Corporate Secretary to the Lead Director or to other directors if the communication is so directed. Items that are unrelated to a director's duties and responsibilities as a board member may be excluded by the Corporate Secretary including, without limitation, solicitations and advertisements; junk mail; product-related communications; job referral materials such as resumes; surveys; and material that is determined to be illegal or otherwise inappropriate. Any communication so excluded will be made available to any independent director upon request.

        Our Board has adopted a formal set of Director Qualification Standards (Standards) with respect to the determination of director independence. The Standards specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate families with respect to past employment or affiliation with us or our independent registered public accounting firm. In accordance with these Standards, we must determine that the director has no material relationship with us other than as a director. The Standards also prohibit Audit Committee members from any direct or indirect financial relationship with us, and restrict commercial relationships of all directors with us. Directors may not be given personal loans or extensions of credit by us, and all directors are required to deal at arm's length with us and our subsidiaries and to disclose any circumstance that might be perceived as a conflict of interest. The full text of our Standards is available on our website at www.criver.com under the "Investor Relations—Corporate Governance" caption, within our Corporate Governance Guidelines.

        The Board has determined that eight of the nine directors standing for re-election to the Board are independent under these Standards. The Board has determined that Mr. Foster does not qualify as an independent director due to his employment as our Chief Executive Officer and President. As a result, with the exception of the Strategic Planning and Capital Allocation Committee and the Executive Committee, Mr. Foster does not serve as a member of any committee of the Board.

        In the course of the Board's determining the independence of each director other than Mr. Foster, it considered any transactions, relationships and arrangements as required by the Standards. In particular, with respect to each of the most recent three completed fiscal years, the Board evaluated:

In all such evaluations, we determined that the applicable amounts were below the greater of (1) $1 million or (2) two percent (2%) of the consolidated gross annual revenue of each of those organizations.

        In addition, with respect to all of our non-employee directors, the Board considered the amount of our discretionary charitable contributions to organizations where he or she serves as an officer, director or trustee, and determined that our contributions constituted less than the greater of $1 million or two percent (2%) of such organization's total annual gross revenue in each of the organization's last three completed fiscal years.

        In conducting this analysis, the Board considered all relevant facts and circumstances, utilizing information derived from our records and responses to questionnaires completed by the directors in

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connection with the preparation of this Proxy Statement. For information about the entities our non-employee directors serve or have served as either (1) an executive officer or (2) an officer, director or trustee of a charitable institution (other than any such charitable institution with which the Company has no transactions, relationships or arrangements), you are directed to their biographies adjacent to their pictures above in this Proxy Statement.

        The independent members of the Board typically meet in executive session following each regularly scheduled meeting of the full Board. Dr. Milne leads these sessions.

The Board of Directors and its Committees

        We are led by Mr. James C. Foster, who has served as Chief Executive Officer (CEO) since 1992 and Chairman of the Board since 2000. Our Board of Directors is currently comprised of Mr. Foster and eight independent directors. One of these directors, currently Dr. George M. Milne, serves as our Lead Director.

        It is our current practice that the positions of Chairman of the Board and CEO be held by the same person. We believe that this leadership structure has been effective for us because it promotes clear accountability, effective decision-making and alignment on corporate strategy. Our Corporate Governance Guidelines require the election, by the independent directors, of a Lead Director. The Lead Director helps to provide independent oversight and is responsible for ensuring that the Board is acting in conformity with good corporate governance practices and in our long-term best interests. Our Lead Director has broad responsibility and authority, including to:

        We believe that having a combined chairman/CEO, independent chairs for each of our Board committees and an independent Lead Director provides the right form of leadership for us. The benefit of a combined chairman/CEO roles is complemented by the benefit of oversight of our operations by experienced independent directors who have appointed a Lead Director and independent committee chairs. This combination has served us well for many years and we have found it to be an efficient and effective leadership model for us. The Board selects our CEO and Chairman in the manner that it determines to be in the best interests of our shareholders. From time to time, and at least annually, the Corporate Governance and Nominating Committee conducts an assessment of this leadership structure.

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        The Board oversees our risk oversight process and performs this oversight role using several different levels of review. In connection with its reviews of the operations of our business units and corporate functions, particularly during the annual strategic planning sessions, the Board is informed of the primary risks associated with those units and functions. Principally, the Board satisfies its responsibility through receiving regular reports from each committee chair regarding such committee's consideration and actions, as well as through receiving regular reports directly from officers responsible for oversight of our particular risks, including operational, financial, legal, regulatory, strategic and reputational risks. Such reporting enables the Board to understand our risk identification, management, and mitigation strategies.

        Areas of risk oversight which generally remain at the Board level and are not delegated to any Committee include risks related to our operational regulatory matters (such as quality control and humane care), cybersecurity, and significant business decisions. The Board satisfies this oversight responsibility through regular reports from our officers responsible for each of these risk areas, reports from Board committees and related discussions, as well as through periodic progress reports from officers on our critical on-going initiatives. The Board also consults periodically with outside financial advisors.

        Each of the Board's committees oversees the management of our risks that fall within the committee's areas of responsibility. A description of each committee's risk oversight focus is below. In performing this function, each committee has full access to management, as well as the ability to engage advisors. When a committee receives a report or update regarding an area of potential risk to us, the chairman of the relevant committee determines whether it is materially significant enough to report on the discussion to the full Board at the next Board meeting. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

        The Audit Committee met eight times in 2015. During 2015, the members of the Audit Committee included Messrs. Bertolini, Chubb and Massaro (Chair). The Board of Directors has unanimously determined that Messrs. Bertolini, Chubb, and Massaro qualify as "audit committee financial experts" under Item 401(h) of Regulation S-K promulgated under the Securities Exchange Act of 1934 and the NYSE regulations. In addition, the Board has determined that each of the members of the Audit Committee is "independent" under the rules of the NYSE and the SEC. The Audit Committee is responsible for the engagement of our independent registered public accounting firm; reviewing the plans and results of the audit engagement with our independent registered public accounting firm; approving services performed by, and the independence of, our independent registered public accounting firm; considering the range of audit and non-audit fees; discussing with our independent registered public accounting firm the adequacy of our internal control over financial reporting; and reviewing annual and quarterly financial statements. The Audit Committee is also responsible for administering our Related Persons Transaction Policy. A copy of the Audit Committee Charter is available on our website at www.criver.com under the "Investor Relations—Corporate Governance" caption.

        As part of its charter and as required by the NYSE, the Audit Committee discusses our policies with respect to risk assessment and risk management, including our major financial risk exposures and the steps that have been taken to monitor and control these exposures. The Audit Committee assumes primary oversight responsibility for our risk management framework as it applies to our financial reporting, system of internal controls, and operations, including the identification of the primary risks to our business and interim updates of those risks, and periodically monitors and evaluates the primary risks associated with particular business units and functions through participation and monitoring of the development of the annual external and internal audit plans. The Audit Committee is particularly responsible for oversight of our risks relating to accounting matters, financial reporting (including tax,

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legal and related regulatory compliance), financial policies, and cash management. The head of our Internal Audit department, who functionally reports to the Audit Committee, assists us in identifying and evaluating risk management controls and methodologies to address identified risks. At each of its regularly scheduled meetings, the Audit Committee meets in executive session with representatives from our independent registered public accounting firm. The Audit Committee also has direct interaction with our Chief Financial Officer, Chief Accounting Officer, our General Counsel, and other members of management. In addition to the items mentioned above, the Audit Committee also receives regular reports regarding issues such as the status of material litigation, allegations of accounting and auditing concerns or fraud and related party transactions.

        The Compensation Committee met five times during 2015 and was comprised of the following members: Dr. Kochevar and Messrs. Reese (Chair) and Wallman. Our Board of Directors has determined that each of the members of the Compensation Committee is "independent" under the rules of the NYSE and the SEC. The primary objective of the Compensation Committee is to develop and implement compensation policies and plans that are appropriate for us in light of all relevant circumstances and which provide incentives that further our long-term strategic plan and are consistent with our culture and the overall goal of enhancing shareholder value. The Compensation Committee reviews compensation structure, policies, and programs to ensure (1) that legal and fiduciary responsibilities of the Board of Directors are carried out, and (2) that such structure, policies and programs contribute to our success. In addition, the Compensation Committee reviews, approves and makes recommendations on our compensation and benefit plans to ensure that they meet corporate objectives. The Compensation Committee determines and approves the compensation of the CEO and reviews the CEO's recommendations on compensation for all of our executive officers, and approves such compensation when determined. As discussed below under "Compensation Discussion and Analysis—Compensation Elements—Compensation Setting Process," other than Mr. Foster and Mr. David P. Johst, our Corporate Executive Vice President, Human Resources, General Counsel and Chief Administrative Officer, none of our executive officers plays a significant, ongoing role in assisting the Compensation Committee in setting executive compensation. The Compensation Committee also administers our equity incentive plans. A copy of the Compensation Committee Charter is available on our website at www.criver.com under the "Investor Relations—Corporate Governance" caption.

        The Compensation Committee is responsible for oversight of risks relating to employment policies and our general compensation and benefits programs. The Compensation Committee considers the impact of our executive compensation program, and the incentives created by the compensation awards that it administers, on our risk profile. To assist it in satisfying these oversight responsibilities, from time to time the Compensation Committee has retained its own outside compensation consultant and it meets both regularly and periodically as needed with management to understand the financial, human resources, and shareholder implications of compensation decisions being made. Between formal Compensation Committee meetings, the Compensation Committee Chairman also interacts regularly with management and the Committee's outside consultants. In addition, at the direction of the Compensation Committee, Mr. Johst and his staff annually conduct a review of our overall compensation programs.

        The Compensation Committee engaged Pay Governance, LLC (Pay Governance) as the sole independent compensation consultant to advise the Compensation Committee on matters related to 2015 executive compensation. Pay Governance is engaged by, and reports directly to, the Compensation Committee, which has the sole authority to hire or dismiss Pay Governance and to approve fee arrangements for work performed. Pay Governance generally assists the Compensation Committee in fulfilling its responsibilities under its charter, including advising on proposed compensation packages for our top executives, compensation program design, and market practices generally. The Compensation

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Committee has authorized Pay Governance (1) to interact with management on behalf of the Compensation Committee, as needed, in connection with advising the Compensation Committee, and (2) to assist with the calculations of compensation information to be included in our proxy statements. For more information on assistance Pay Governance provided to our fiscal year 2015 compensation determinations, please see "Compensation Discussion and Analysis—Compensation Elements—Compensation Setting Process" on pages 48-49 of this Proxy Statement.

        Except as described above, in 2015 we did not receive any other services from Pay Governance, nor have we utilized the services of any other compensation consultant in matters affecting senior executive or director compensation. Any significant Pay Governance fees outside of the normal scope of work are approved for payment by the Chairman of the Compensation Committee, with authority delegated to Mr. Johst to approve the processing of payment of routine invoices.

        Pay Governance provided the Compensation Committee with a letter addressing the independence factors under NYSE listing rules, and in compliance with SEC and the NYSE disclosure requirements regarding the independence of compensation consultants, the Committee took that information into account in concluding that there was no conflict of interest within the meaning of Section 10C-1 of the Securities Exchange Act of 1934. Based upon this and other relevant factors, the Compensation Committee has assessed the independence of Pay Governance and concluded that Pay Governance's work for the Compensation Committee does not raise any conflict of interest.

        The Corporate Governance and Nominating Committee met three times during 2015. The members of the committee included Drs. Kochevar, Milne (Chair), and Thompson. The Board of Directors has determined that each of the members of the Corporate Governance and Nominating Committee is "independent" under the rules of the NYSE. The Corporate Governance and Nominating Committee makes recommendations to the Board on all matters relating to the Board, including development and implementation of policies on composition, participation and size of the Board, changes in the organization and procedures of the Board, the processes used by the Board in its self-assessment, and compensation (including equity compensation) of non-employee directors. The Corporate Governance and Nominating Committee oversees matters of corporate governance, including Board performance and director education, and considers and selects director nominees, including those submitted by shareholders in accordance with the by-laws. The Corporate Governance and Nominating Committee also recommends directors for appointment to committees of the Board. Typically, committee rotations are determined in February, made effective immediately following the annual meeting of shareholders, and are reevaluated on a yearly basis. The Corporate Governance and Nominating Committee oversees our Corporate Governance Guidelines and Code. A copy of the Corporate Governance and Nominating Committee Charter is available on our website at www.criver.com under the "Investor Relations—Corporate Governance" caption.

        The Corporate Governance and Nominating Committee is responsible for conducting an annual evaluation of the performance of the full Board and its committees to determine whether it and the committees are functioning effectively. This process includes annual self-assessments by each Board committee with performance criteria for each committee established on the basis of its charter, as well as interviews conducted by the chair of the committee. As part of this process, the Corporate Governance and Nominating Committee also assesses the performance of each individual director. This performance assessment addresses factors such as each director's meeting attendance, core competencies, independence, and level of commitment. Upon completion of the individual director evaluation process, the Committee reports its conclusions to the full Board.

        The Corporate Governance and Nominating Committee is responsible for oversight of risks relating to Board succession planning, ethics practices, matters addressed in our Corporate Governance

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Guidelines, and other corporate governance issues, particularly to the extent that any of these could affect our operations and strategic decisions. To satisfy these oversight responsibilities, the Committee receives assistance and reports from our senior management from time to time.

        The Corporate Governance and Nominating Committee uses a variety of methods to identify and evaluate nominees for director. The Corporate Governance and Nominating Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to pending retirement or other factors. In the event that vacancies are anticipated, or otherwise arise, the Corporate Governance and Nominating Committee considers various potential candidates for director. Candidates may come to the attention of the Corporate Governance and Nominating Committee through current Board members, executive officers, professional search firms, shareholders, or other persons. All candidates complete a nominee questionnaire that solicits information regarding the nominee's background, board experience, industry experience, independence, financial expertise, and other relevant information, and are interviewed by at least one member of the Corporate Governance and Nominating Committee. These candidates are discussed at regular or special meetings of the Committee, and may be considered at any point during the year. As described below, the Corporate Governance and Nominating Committee considers any director candidates recommended by shareholders as well as properly submitted shareholder nominations for candidates for the Board. If any materials are provided by a shareholder in connection with the nomination of a director candidate, such materials are forwarded to the Corporate Governance and Nominating Committee. Such nominations must be in accordance with our bylaws. The Corporate Governance and Nominating Committee also reviews materials provided by professional search firms or other parties. The Corporate Governance and Nominating Committee evaluates all candidates based on the minimum qualifications described below as well as the criteria set forth in our Corporate Governance Guidelines. In evaluating nominations, the Corporate Governance and Nominating Committee seeks to recommend to shareholders a group that can best oversee our success and represent shareholder interests through the exercise of sound judgment using its diversity of experience in various areas. Whether the nominee is recommended by a shareholder or the Board, there is no difference in the manner in which the Committee evaluates nominees.

        The Science and Technology Committee met once during 2015 and was comprised of the following members: Drs. Kochevar, Milne, and Thompson (Chair) and Mr. Chubb. The Science and Technology Committee is responsible for identifying and discussing significant emerging trends and issues in science and technology. The Science and Technology Committee is responsible for periodically reviewing and advising the Board on our strategic direction, and on investment in research and development and in technology. To satisfy these oversight responsibilities, the Committee may obtain advice and assistance from consultants and has access to members of management.

        The Strategic Planning and Capital Allocation Committee met six times during 2015 and was comprised of the following members: Messrs. Bertolini (Chair), Foster, Reese and Wallman. The Strategic Planning and Capital Allocation Committee is responsible for reviewing our capital structure, financial strategies, major acquisitions and investment policies to support prudent and effective capital allocation. The Strategic Planning and Capital Allocation Committee is responsible for oversight of risks relating to material financial decisions, credit policies and ratings, investment strategies, and our debt and equity structure. To satisfy these oversight responsibilities, the Committee receives assistance and reports from our senior management from time to time.

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        While it is our general policy that all major decisions be considered by the Board as a whole, the Board has delegated authority to an Executive Committee to act on its behalf only in circumstances in which it is not feasible to convene the full Board or when authority has been specifically delegated to the Executive Committee by the full Board. In 2015, the Executive Committee (which did not meet) consisted of Messrs. Bertolini, Foster (Chair), Massaro, and Reese, and Drs. Milne and Thompson.

        The Corporate Governance and Nominating Committee adopted criteria regarding the qualifications required for Board nominees, which can be found in our Corporate Governance Guidelines. These criteria are designed to assure that the Board of Directors is composed of successful individuals who demonstrate integrity, reliability, knowledge of corporate affairs, and an ability to work well together. The primary consideration in the selection and retention of directors is their respective ability to fairly represent the interests of our stakeholders. Diversity in business background, area of expertise, skills, educational background, gender, national origin and ethnicity are also considered, as well as other factors that can provide the Board with a range of informative viewpoints and perspectives. The criteria for director nominees include: the candidate's professional experience and personal accomplishments; the candidate's independence from us and management; the ability of the candidate to attend Board and committee meetings regularly and devote an appropriate amount of effort in preparation for those meetings; the candidate's ability to function as a member of a diverse group; and the candidate's understanding of the Board's governance role. In addition, the Board evaluates each individual in the context of the Board as a whole, with the objective of recommending to shareholders a group that can best oversee the success of the business and represent shareholder interests through the exercise of sound judgment using its diversity of experience in various areas. In determining whether to recommend a director for re-election, the director's past attendance at meetings and participation in and contributions to the activities of the Board is also taken into consideration.

        The Corporate Governance and Nominating Committee will consider director candidates recommended by shareholders. Shareholders may submit director recommendations to the Corporate Secretary, Charles River Laboratories International, Inc., 251 Ballardvale Street, Wilmington, MA 01887. Pursuant to our bylaws, nominations for directors at the Annual Meeting of Shareholders must be received not less than 90 days nor more than 120 days prior to the first anniversary of the date of our Proxy Statement released to shareholders in conjunction with the previous year's meeting For information about submitting shareholder proposals, including director nomination proposals, please see the section of this Proxy Statement entitled "Shareholder Proposals for 2017 Annual Meeting."

        All Board members are expected to attend our Annual Meetings of Shareholders, unless an emergency prevents them from doing so. All members of the Board serving at that time attended the 2015 Annual Meeting of Shareholders. During 2015 there were six meetings of the Board of Directors. Each director attended 75% or more of the aggregate number of Board meetings and the committee meetings of the Board on which he or she served during 2015.

        Our Corporate Governance Guidelines provide that directors generally may not serve on more than five boards of directors of other publicly traded companies (in addition to our Board or the board of directors of a director's employer). Members of the Audit Committee generally may not serve on more than two publicly traded company audit committees simultaneously (including that of our

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company). In addition, service on boards and/or committees of other organizations must be consistent with our conflict of interest policies.


2015 Director Compensation

        We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. Linking a portion of their compensation to stock aligns the interests of directors with the interests of shareholders. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties to us as well as the skill level required by us of members of the Board.

        The following table sets forth all of the compensation awarded to, earned by, or paid to our directors for the year ended December 26, 2015. Please note that Mr. Foster receives no compensation for his role as director, and the entirety of his compensation is reported in the Summary Compensation Table located on pages 62-63 of this proxy statement.

Name
  Fees Earned or
Paid in Cash
($)(1)
  Stock Awards
($)(2)
  Option Awards
($)(3)
  All Other
Compensation
($)(4)
  Total
($)
 

George M. Milne, Jr.

    85,000     138,471     46,252         269,723  

George E. Massaro

    80,000     138,471     46,252         264,723  

Robert Bertolini

    75,000     138,471     46,252         259,723  

C. Richard Reese

    70,000     138,471     46,252         254,723  

Craig B. Thompson

    70,000     138,471     46,252         254,723  

Stephen D. Chubb

    65,000     138,471     46,252         249,723  

Deborah T. Kochevar

    60,000     138,471     46,252         244,723  

Richard F. Wallman

    60,000     138,471     46,252         244,723  

(1)
Reflects aggregate dollar amount of all fees earned for services as a director, including annual retainer fees, committee, and/or committee chair fees. A description of the applicable fees can be found below.

(2)
Amounts reflect the full grant date fair value of the restricted stock awards granted to directors in fiscal year 2015 as part of their annual equity grant in May 2015, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718. As of December 26, 2015, each current director held the aggregate number of unvested restricted stock awards as follows: Bertolini—1,970, Chubb—1,970, Kochevar—1,970, Massaro—1,970, Milne—1,970, Reese—1,970, Thompson—1,970 and Wallman—1,970.

(3)
Amount reflects the grant date fair value of directors' stock options granted in fiscal year 2015 as part of their annual equity grant in May 2015, computed in accordance with FASB ASC Topic 718, and calculated using the Black-Scholes valuation model utilizing our assumptions. See Note 11 to our Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-based Compensation" in our Annual Report on Form 10-K for the fiscal year ended December 26, 2015 for a discussion of the assumptions used by us in the Black-Scholes valuation model. As of December 26, 2015, each current director held the aggregate number of option awards as follows: Bertolini—34,970, Chubb—44,130, Kochevar—3,140, Massaro—15,240, Milne—44,130, Reese—44,130, Thompson—11,790 and Wallman—34,970.

(4)
None of our directors received perquisites or other personal benefits equal to or exceeding $10,000 in the aggregate.

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        We pay each non-employee director an annual fee of $60,000 for service as our director, except for members of the Audit Committee, who are paid an annual fee of $65,000. Additional fees are paid to the Lead Director ($15,000), the Chair of the Audit Committee ($15,000), the Chair of the Compensation Committee ($10,000), the Chair of the Corporate Governance and Nominating Committee ($10,000), the Chair of the Science and Technology Committee ($10,000), and the Chair of the Strategic Planning and Capital Allocation Committee ($10,000) for their added responsibilities. No additional fees are paid for attending meetings of the Board or any Committee of the Board. We reimburse expenses incurred by directors in attending Board of Directors meetings and committee meetings.

        The policy established by the Corporate Governance and Nominating Committee is to award each unaffiliated non-employee director (1) stock options and restricted stock having an intended value of approximately $275,000 on the first day of the month following his or her initial election or appointment to the Board and (2) stock options and restricted stock having an intended value of approximately $185,000 on an annual basis following our annual meeting of shareholders. Consistent with the long-term incentive equity awards to our employees, the targeted award value has been traditionally issued in the form of a blend of stock options and restricted stock awards/units (in the same proportions as issued to non-officers during that same fiscal year) utilizing Black-Scholes pricing models. At the time this policy was established, effective in 2009, the Corporate Governance and Nominating Committee consulted with an independent compensation consultant in determining these values, which were based upon a general comparative review of director compensation and competitive market practices for similarly sized companies operating in the area of life sciences, with a target value based upon the 50th percentile. Options and restricted stock granted to non-employee directors in 2015 expire five years after grant and vest upon the earlier of (1) the first anniversary of the date of grant or (2) the business day prior to the Company's next annual meeting of stockholders after the date of grant of the option or restricted share.

        In order to further align the interests of directors and shareholders, the Board of Directors has mandated that, to the extent permissible, directors have a significant financial stake in the Company. Accordingly, as set forth in our Corporate Governance Guidelines, each director who has served on the Board for at least three years is required to own a minimum of 5,000 shares of our stock (excluding stock options, stock subject to future vesting requirement, or other similar unvested and inchoate equity holdings). Board members who are subject to third-party restrictions on their stock holdings (e.g., certain academic institutions) shall be permitted to own stock in an amount that is appropriate for them in light of such other restrictions. As of the date of this Proxy Statement, all of our directors who have served at least three years are in compliance with this holding requirement.

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BENEFICIAL OWNERSHIP OF SECURITIES

        The following table sets forth certain information as of March 11, 2016, with respect to the beneficial ownership of shares of our common stock by (1) each person known to us to own beneficially more than 5% of the outstanding shares of common stock, (2) each of our current directors and nominees for director, (3) each of the executive officers listed in the Summary Compensation Table set forth below under the caption "Compensation of Executive Officers" (the named executives), and (4) our current directors and executive officers as a group. As of March 11, 2016, there were 47,101,221 shares of common stock outstanding.

Name of Beneficial Owner
  Number of Shares
Beneficially Owned
as of March 11, 2016
  Percentage
of Shares
Outstanding
 

5% Shareholders

             

The Vanguard Group, Inc. 

    4,182,744 (1)   8.9 %

BlackRock, Inc. 

    4,163,617 (2)   8.8 %

Named Executive Officers

   
 
   
 
 

James C. Foster

    380,408 (3)   * %

David R. Smith

    6,932 (4)   *  

Nancy A. Gillett

    11,034 (6)   *  

David P. Johst

    240,198 (7)   *  

Davide A. Molho

    113,201 (8)   *  

Thomas F. Ackerman

    112,778 (5)   *  

Outside Directors

   
 
   
 
 

Robert Bertolini

    52,860 (9)   *  

Stephen D. Chubb

    51,569 (10)   *  

Deborah T. Kochevar

    11,160 (11)   *  

George E. Massaro

    28,360 (12)   *  

George M. Milne, Jr. 

    62,450 (13)   *  

C. Richard Reese

    64,813 (14)   *  

Craig B. Thompson

    20,380 (15)   *  

Richard F. Wallman

    53,120 (16)   *  

All executive officers and directors as a group (12 persons)

    1,085,451 (17)   2.3 %

*
Less than 1%.

(1)
The information reported in based on a Schedule 13G/A filed with the SEC on February 11, 2016 by The Vanguard Group, Inc. Vanguard has sole voting power with respect to 34,492 shares, sole dispositive power with respect to 4,148,352 of the shares and shared disposition power with respect to 34,392 shares reported in the table. The address of Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

(2)
The information reported is based on a Schedule 13G/A filed with the SEC on January 26, 2016 by BlackRock, Inc. BlackRock has sole voting power with respect to 3,972,151 shares and sole dispositive power with respect to 4,163,617shares reported in the table. The address of BlackRock is 55 East 52nd Street, New York, New York 10022.

(3)
Includes 21,577 shares of common stock subject to options held by Mr. Foster that are exercisable within 60 days of March 11, 2016.

(4)
Includes 4,047 shares of common stock subject to options held by Mr. Smith that are exercisable within 60 days of March 11, 2016.

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(5)
Includes 21,088 shares of common stock subject to options held by Mr. Ackerman that are exercisable within 60 days of March 11, 2016.

(6)
Includes 0 shares of common stock subject to options held by Dr. Gillett that are exercisable within 60 days of March 11, 2016.

(7)
Includes 92,261 shares of common stock subject to options held by Mr. Johst that are exercisable within 60 days of March 11, 2016.

(8)
Includes 53,282 shares of common stock subject to options held by Dr. Molho that are exercisable within 60 days of March 11, 2016.

(9)
Includes 34,970 shares of common stock subject to options held by Mr. Bertolini that are exercisable within 60 days of March 11, 2016.

(10)
Includes 33,690 shares of common stock subject to options held by Mr. Chubb that are exercisable within 60 days of March 11, 2016.

(11)
Includes 3,140 shares of common stock subject to options held by Dr. Kochevar that are exercisable within 60 days of March 11, 2016.

(12)
Includes 15,240 shares of common stock subject to options held by Mr. Massaro that are exercisable within 60 days of March 11, 2016.

(13)
Includes 33,690 shares of common stock subject to options held by Dr. Milne that are exercisable within 60 days of March 11, 2016.

(14)
Includes 33,690 shares of common stock subject to options held by Mr. Reese that are exercisable within 60 days of March 11, 2016.

(15)
Includes 11,790 shares of common stock subject to options held by Dr. Thompson that are exercisable within 60 days of March 11, 2016.

(16)
Includes 34,970 shares of common stock subject to options held by Mr. Wallman that are exercisable within 60 days of March 11, 2016.

(17)
Includes 372,347 shares of common stock subject to options exercisable within 60 days of March 11, 2016. None of the 1,085,451 shares reflected have been pledged as security. Total excludes Dr. Gillett and Mr. Ackerman, since as of the date of this Proxy Statement neither is a current executive officer of the Company.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934 requires our directors and officers, and persons who own more than 10% of our common stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of our common stock and other equity securities. Officers, directors and such beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 26, 2015 our officers, directors and such beneficial owners complied with all applicable Section 16(a) filing requirements.

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PROPOSAL TWO—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

        In 2011, our shareholders approved the Board of Director's recommendation that we conduct an annual advisory vote on executive compensation on an annual basis. Accordingly, Proposal Two requests shareholder approval of the 2015 compensation of our named executives as disclosed in this Proxy Statement.

        We had a very strong fiscal year 2015. Demand for outsourced services increased, as did demand for products and services to support our clients' manufacturing activities. Our pharmaceutical and biotechnology clients continued to intensify their use of strategic outsourcing to improve their operating efficiency and access capabilities that they do not maintain internally. Many of our large biopharmaceutical clients have refocused their efforts on drug discovery and early-stage development, after a period of greater emphasis on delivering late-stage programs to bring new drugs to market. In addition, small and mid-size biotechnology clients benefited from continued strength in the funding environment, including the capital markets, partnering with large biopharmaceutical companies, and investment by venture capital. Academia has also benefited from partnering activities, as large biopharmaceutical companies have increasingly utilized academic research to broaden the scope of their drug discovery activities.

        The primary result of these trends was improved demand for our discovery and safety assessment services in 2015, particularly from biotechnology clients. This improvement led to capacity continuing to fill in our safety assessment facilities which were open during 2015, and in which utilization approached optimal levels.

        Demand for our products and services that support our clients' manufacturing activities was also robust in 2015. Our Biologics Testing Solutions (Biologics) business continued to benefit from increased demand for services associated with the growing proportion of biologic drugs in the pipeline and on the market. Demand for our Microbial Solutions (formerly Endotoxin and Microbial Detection, or EMD) products and services also remained strong as we addressed manufacturers' requirements for a comprehensive rapid microbial testing solution. To further enhance our rapid testing portfolio, we acquired Celsis in 2015 to expand in the non-sterile quality control testing market.

        Our clients' intensified focus on the earliest stages of their pipelines has been visible in increasing demand for discovery services, and the willingness to outsource new areas of their research programs. To address these emerging needs and move further upstream in the drug research and development continuum, we have significantly enhanced our Discovery Services capabilities over the past two years to enable us to work with clients at the earliest stages of the discovery process. We acquired the Discovery Services businesses of Argenta, BioFocus, ChanTest, and VivoPath in 2014, and Oncotest in 2015.

        Demand for research models continued to stabilize in 2015, particularly in North America and Europe. Clients' efforts to consolidate infrastructure and seek greater pipeline productivity have begun to moderate as these initiatives generate the desired benefits.

        We believe the strong results in 2015 were, in part, derived from our focus on our key initiatives of:

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        Our continued actions toward the achievement of these initiatives in 2015 included the following:

        We believe these actions significantly contributed to the 24.6% increase in our total shareholder return during 2015, and the 8.7% increase in non-GAAP earnings per share from continuing operations in 2015. For a detailed discussion of our 2015 financial performance, the factors that we believe are influencing demand from our clients, and the actions we have taken during the past years, please see the sections entitled "Our Strategy" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on February 12, 2016.

        Pursuant to Section 14A of the Securities Exchange Act, we are asking our shareholders to approve an advisory resolution on our executive compensation as described in this Proxy Statement. This proposal, commonly known as a "say-on-pay" proposal and required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), provides our shareholders with the opportunity to express their views, on an advisory (non-binding) basis, on our executive compensation for our named executives for fiscal year 2015 as described in the "Compensation Discussion and Analysis" (CD&A) section beginning on page 41 of this Proxy Statement, as well as the Summary Compensation Table and other related compensation tables and narratives found on pages 62 through 63 of this Proxy Statement. The advisory vote is not a vote on our general compensation policies, the compensation of our Board of Directors, or our compensation policies as they relate to risk management.

        Charles River shareholders provided very strong majority support for our named executives' compensation at our 2015 Annual Meeting of Shareholders (97.7% of shares voted on this matter; 98.2% excluding abstentions). We attribute this level of support to the significant actions we

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implemented from 2012 through 2014, including significant changes to our executive compensation program during that period, as noted below:

        In addition to the changes noted above, we have taken further action this year by including "double-trigger" accelerated equity vesting in the 2016 Incentive Plan, which we are submitting to shareholders for their approval this year.

        The Compensation Committee believes that these changes were responsive to feedback from investors and enhanced the performance orientation of our executive compensation program. As those elements of our executive compensation program continue today, we encourage shareholders to take these into account in considering the vote presented below.

        Notwithstanding the significant vote of approval for our executive compensation program in 2015, we have embraced the idea of continuing outreach with our shareholders, particularly for executive compensation and corporate governance issues. In the fall of 2015, we reached out to our top 25 shareholders (which included, to the best of our knowledge, shareholders holding nearly 65% of our outstanding stock) and inquired whether they wanted to meet and/or speak with us to discuss our executive compensation and corporate governance practices. We received positive responses from, and held one-on-one conversations with, a small subset of these shareholders, with the remainder indicating they were satisfied with our compensation and governance practices or otherwise not responding to our inquiries. In these one-on-one meetings, shareholders offered their perspectives on relevant issues, and in each case we were informed that the shareholders were very satisfied with our financial performance, changes to our executive compensation program, and corporate governance profile. In the few areas where the shareholders indicated they might see opportunities for enhancement, management forwarded the information to our Board of Directors for future consideration.

        We urge shareholders to read the CD&A on pages 41-60 of this Proxy Statement, which describes in more detail how our executive compensation policies and procedures operate and how they are designed to achieve our compensation objectives. The CD&A includes informative data that demonstrates our pay-for-performance alignment, as well as the Summary Compensation Table and other related compensation tables and narratives. Furthermore, for a detailed discussion of our 2015 financial performance and the actions we have taken during the past four years, please also see the sections entitled "Our Strategy" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 12, 2016.

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Advisory Vote and Board Recommendation

        We request shareholder approval of the 2015 compensation of our named executives as disclosed in this Proxy Statement pursuant to the SEC's compensation disclosure rules (which disclosure includes the CD&A, the compensation tables and narrative disclosures that accompany the compensation tables within the Executive Compensation section of this Proxy Statement). This vote is not intended to address any specific element of compensation, but rather the overall compensation of our named executives and the compensation philosophy, policies, and practices described in this Proxy Statement.

        Accordingly, we ask our shareholders to vote on the following resolution at the Annual Meeting:

        This advisory resolution is non-binding on the Board of Directors. Although non-binding, our Board of Directors and the Committee value the opinions of our shareholders, and will carefully review and consider the voting results when making future decisions regarding our executive compensation program.

        The affirmative vote of the majority of the votes cast will constitute the shareholders' non-binding approval with respect to our executive compensation programs. Abstentions and broker non-votes will have no effect on the outcome of this Proposal.

        The Board of Directors recommends a vote "FOR" the approval of the advisory resolution on executive compensation.

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PROPOSAL THREE—APPROVAL OF THE 2016 INCENTIVE PLAN
(INCLUDING SECTION 162(m) PERFORMANCE GOALS)

        The Board of Directors believes that the continued growth of the Company depends, in large part, upon our ability to attract, motivate, and retain key employees and directors, and that stock incentive awards are an important means of doing so.

        On March 28, 2016, the Board of Directors adopted the 2016 Incentive Plan (the Plan), subject to shareholder approval. The Plan is intended to replace the Company's existing equity compensation plan, the Charles River Laboratories International, Inc. Amended and Restated 2007 Incentive Plan (as amended, the 2007 Incentive Plan). The Board of Directors believes that the Plan will help the Company continue to achieve our goals by keeping the incentive compensation program dynamic and competitive with that of other companies, and ensuring that we may continue to attract and retain key employees who are expected to contribute to our success. The Plan will also allow us to accommodate and to create the appropriate incentives for a large pool of employees who will join us following the pending acquisition of WIL Research, and to promote retention among employees of this newly acquired business. Furthermore, as the 2007 Incentive Plan will expire in 2017, approval of a new plan is necessary to ensure that we can continue to issue stock incentive awards without disruption.

        The Plan, similar to the 2007 Incentive Plan, will utilize a fungible pool concept (described in more detail below) where each share issued in connection with awards that do not have option-like features (full-value awards) such as restricted stock and unrestricted stock (including shares issued for above-target payouts earned through performance awards) is counted as 2.3 units, and each share issued that is subject to options, stock appreciation rights, and other awards that have option-like features and that expire no more than seven years from the date of grant is counted as 1 unit against the overall reserved and available shares. The aggregate number of shares being requested for authorization under the Plan is 6,116,000 shares, which includes (i) an initial reserve of 2,467,000 of the shares of stock remaining available for issuance under the 2007 Incentive Plan and (ii) an increase of 3,649,000 shares of stock, as approved by the Board of Directors, subject to approval by the shareholders of the Company. As such, the requested aggregate share reserve under the Plan represents only an additional 2,489,396 shares in excess of the remaining share capacity under the 2007 Incentive Plan (which is 3,626,604 shares as of March 15, 2016). If the Plan is approved by our shareholders, the Plan will replace the 2007 Incentive Plan and no additional grants will be made from the remaining share reserve under the 2007 Incentive Plan. However, shares forfeited or otherwise not delivered in accordance with the 2007 Incentive Plan (such as shares currently reserved for settlement of outstanding Performance Share Unit (PSU) awards at a maximum payout level) will become available for issuance under the Plan.

        Depending on the forms of awards granted under the Plan, a maximum of 6,116,000 stock options or stock appreciation rights or 2,659,130 full-value awards could be granted under the Plan. Except as described above, no further awards are permitted to be granted under any of our preexisting stock option and incentive plans. The number of shares authorized under the Plan is anticipated to enable us to grant stock-based awards through 2019. In 2013, our shareholders approved an amendment to the 2007 Incentive Plan authorizing an increase in the number of shares that could be granted under such plan. Our Board of Directors projected then that shares authorized under the 2007 Incentive Plan would enable the Company to grant stock-based awards through 2016, and we have managed our share reserve to meet this projection.

        The closing price of Charles River common stock on the NYSE on March 15, 2016 was $71.07.

        The Compensation Committee worked with Pay Governance LLC, its outside compensation consultant, to develop the Plan, while taking into account the many institutional investor dilution guidelines, as well as the guidelines of investor advisory firms. We will continue to monitor the comparative advantages and accounting treatment of equity compensation awards going forward, in

27


order to ensure that the Plan promotes retention and creates incentives in a manner which benefits our shareholders.

        The affirmative vote of a majority of the votes present or represented and entitled to vote at the Meeting is required to approve the proposed Plan. This means that, assuming a quorum is present, the number of votes cast in favor of the proposal must exceed the number of votes cast against it. In addition, under New York Stock Exchange rules, an "abstention" is counted as a vote "against" the proposal. If the Plan is not approved by shareholders, we will not be able to make the proposed additional 3,649,000 shares available for issuance under the Plan.

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Section 162(m) Performance Goals

        Shareholder approval of the Plan will constitute approval of the material terms of the performance goals under the Plan for purposes of Section 162(m) of the Internal Revenue Code (Code). We are seeking shareholder approval of the material terms of the performance goals under the Plan to provide us with additional flexibility to grant awards that meet the requirements to avoid the disallowance of tax deductibility under Section 162(m) of the Code.

        Section 162(m) of the Code generally limits the federal income tax deduction for compensation paid to any person who serves as chief executive officer or who is one of the three other most highly compensated executive officers, other than the chief financial officer, of a publicly held corporation (each such person, a Covered Employee) to $1 million per year, with an exception for qualified performance-based compensation.

        One of the requirements of the qualified performance-based compensation exception under Section 162(m) of the Code is that the material terms of the performance goals under which compensation may be paid be disclosed to, and approved by, shareholders. For purposes of Section 162(m) of the Code, the material terms of the performance goals are:

        By approving the Plan, our shareholders will provide us with more flexibility and an additional means to ensure that the compensation we pay to our executive officers is fully deductible for federal income tax purposes under Section 162(m) of the Code. If our shareholders do not approve the Plan, the compensation paid to our executive officers may not be entirely deductible under Section 162(m) of the Code.

The Board of Directors believes that the Plan, authorizing the issuance of
6,116,000 shares of common stock, is in the best interest of the Company
and its shareholders and recommends a vote "FOR" the approval of the Plan.

Summary of the Plan

        The following is a brief summary of the material terms of the Plan, as proposed. This summary is qualified in its entirety by reference to the Plan, a copy of which is attached as Appendix B to the electronic version of this Proxy Statement as filed with the SEC and may be accessed from the SEC's website (www.sec.gov). In addition, a hard copy may be obtained by making a written request to our Corporate Secretary.

        The Board of Directors approved the Plan, which authorizes a total of 6,116,000 shares of common stock, on March 28, 2016. The total of 6,116,000 shares of common stock includes (i) an initial reserve of 2,467,000 of the shares of stock remaining available for issuance under the 2007 Incentive Plan as of March 15, 2016, and (ii) an increase of 3,649,000 shares of stock, as approved by the Board of Directors, subject to approval by the shareholders of the Company. The Plan may be

30


amended by the Board of Directors or the Compensation Committee, provided that any amendment which requires shareholder approval in order to ensure (i) continued qualification under the NYSE rules, (ii) favorable federal income tax treatment for any incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, (iii) eligibility for the performance-based exception under Section 162(m) of the Code or (iv) compliance with, or the avoidance of adverse consequences under, Section 409A of the Code, is subject to obtaining such shareholder approval. As of March 15, 2016, the market value of the total number of shares to be reserved for issuance under the Plan was $71.07. The Plan is being submitted for shareholder approval at the Meeting to ensure qualification of the Plan under the NYSE rules and Sections 422 and 162(m) of the Code.

Eligibility to Receive Awards

        All employees, non-employee directors, and individuals providing services to the Company or its affiliates (approximately 8,700 people as of March 15, 2016) are potentially eligible to participate in the Plan. Eligibility for incentive stock options is limited to those individuals whose employment status would qualify them for the tax treatment of Sections 421 and 422 of the Code. Participants are not required to provide consideration to the Company or its affiliates for the grant or extension of awards under the Plan, other than to provide services to the Company or its affiliates.

Non-Employee Director Limit

        The aggregate grant date fair value (determined as of the date of grant) of any equity award granted under the Plan to an individual upon becoming a non-employee member of the Board of Directors (Initial Non-Employee Director Grant) shall not exceed $800,000. All awards granted under the Plan to any individual non-employee member of the Board of Directors during any one-year term (excluding an Initial Non-Employee Director Grant) shall not exceed $600,000.

New Plan Benefits

        The granting of awards under the Plan is discretionary, and we cannot now determine the number or type of awards to be granted in the future to any particular group or person. Accordingly, a new plan benefits table for the Plan and the benefits or amounts that would have been received by or allocated to participants for the last completed fiscal year under the Plan if the Plan was then in effect, as described in the proxy rules, are not provided because all awards made under the Plan will be subject to the terms of the Plan and made at the discretion of the Compensation Committee (with respect to all participants other than non-employee directors) or the Corporate Governance and Nominating Committee (with respect to non-employee directors). As of the date of this Proxy Statement, no awards have been granted under the Plan. Therefore, the benefits and amounts that will be received or allocated under the Plan are not determinable at this time. Nevertheless, the Company anticipates that awards will be made under the Plan (if approved by shareholders at the Annual Meeting) to our non-employee directors in May 2016. If each non-employee director were awarded stock options and restricted stock in 2016 with the same grant date fair value as the award the director received in 2015, then as of March 11, 2016, each director would receive 3,070 stock options and 1,850 shares of restricted stock pursuant to the Plan. For additional information on our annual equity awards to non-employee directors in the last fiscal year, please see the 2015 Director Compensation Table on page 19 of this Proxy Statement. Please also refer to the Summary Compensation Table on page 61 in this Proxy Statement which sets forth certain information regarding awards granted to our named executives during fiscal 2015.

Administration of the Plan

        The Compensation Committee administers the Plan. Subject to the provisions of the Plan, the Compensation Committee determines the persons to whom awards will be granted, the number of

31


shares to be covered by each stock award, and the terms and conditions upon which each of the awards may be granted including vesting periods and transferability.

Available Shares

        Subject to adjustment upon certain corporate transactions or events, as proposed, up to a maximum of 6,116,000 shares of common stock (the Fungible Pool Limit), which includes (i) an initial reserve of 2,467,000 of the shares of stock remaining available for issuance under the 2007 Incentive Plan as of March 15, 2016, and (ii) an increase of 3,649,000 shares of stock, as approved by the Board of Directors, subject to approval by the shareholders of the Company, may be subject to stock options, restricted stock, stock appreciation rights, unrestricted stock, deferred stock, and other equity-based awards under the Plan. Each share issued or to be issued in connection with awards such as restricted stock and unrestricted stock that do not have option-like features (full-value awards) shall be counted against the Fungible Pool Limit as 2.3 units. Each share issued or to be issued that is subject to options, stock appreciation rights and other awards that have option-like features and that expire no more than seven years from the date of grant shall be counted against the Fungible Pool Limit as 1 unit. Awards not denominated in shares shall not count against the Fungible Pool Limit.

        Shares that are forfeited or cancelled shall not be considered to have been delivered under the Plan (and thus will be available for future grant under the Plan), but shares retained by the Company in satisfaction of the exercise price or tax withholding requirements of an award will be considered to have been delivered under the Plan (and thus will not be available for future grant under the Plan). In addition, shares repurchased by the Company with proceeds collected in connection with the exercise of outstanding options will not be added to the number of shares available for future grant under the Plan. The Compensation Committee will administer the appropriate methodology for calculating the number of shares of common stock issued pursuant to the Plan in accordance with the foregoing.

Description of Awards

        The Plan provides for a range of awards including stock options, stock appreciation rights, restricted stock, unrestricted stock, deferred stock, cash performance awards, and grants of cash made in connection with other awards in order to help defray in whole or in part the economic cost (including tax cost) of the award to the participant. In addition, the Plan provides that certain awards may be designated as performance awards if they are related to a performance period determined at the time of grant.

        Stock options under the Plan may be either (1) options intended to qualify as "incentive stock options" under Section 422 of the Code or (2) non-qualified stock options. Incentive stock options may be granted under the Plan to employees of the Company and its affiliates. Non-qualified stock options may be granted to employees of the Company and its affiliates, consultants, and directors.

        In accordance with federal tax laws, the aggregate fair market value (determined at the time of grant) of shares issuable pursuant to incentive stock options which first become exercisable in any calendar year under any incentive stock option of the Company may not exceed $100,000 calculated individually for each option holder. Options granted under the Plan may not be granted at a price less than the fair market value of the common stock on the date of grant, or 110% of fair market value in the case of incentive stock options granted to an employee holding 10% or more of the voting stock of the Company. The Compensation Committee determines the exercise price of each stock option, provided that each option must have an exercise price that is not less than the fair market value of the common stock on the date of grant.

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        SARs are rights entitling the holder upon exercise to receive cash or stock, as the Compensation Committee determines, equal to a function (determined by such factors as the Compensation Committee deems appropriate) of the amount by which the stock has appreciated in value since the date of the award. The Compensation Committee determines the exercise price of each SAR, provided that each SAR must have an exercise price that is not less than the fair market value of the common stock on the date of grant.

        Restricted stock is an award of stock subject to restrictions requiring that such stock be redelivered to the Company if specified conditions are not satisfied.

        Unrestricted stock is an award of stock not subject to any restrictions under the Plan.

        Deferred stock is a promise to deliver stock, other securities, or other property in the future on specified terms described in each deferred stock agreement to a participant (including, for the avoidance of doubt, a director of the Company). Our Restricted Stock Units (RSUs) are a form of Deferred Stock.

        A cash performance award is a performance award payable in cash.

        A performance award refers to an award granted to employees where receipt of an underlying final award is dependent upon satisfaction of specified performance criteria. At the beginning of each performance period, targeted performance levels will be established at which a target performance award may be earned, with a threshold or minimum performance level below which no award will be paid, and a maximum beyond which no additional amounts will be paid. The percentage of each performance award that will become a final award will be determined by the Compensation Committee on the basis of the performance goals established and the performance achieved. A final award may be less than or greater than the target performance award. Final awards may relate to, and upon vesting be paid in the form of, restricted stock, unrestricted stock, deferred stock, cash performance awards or cash (or any combination). Except in the case of a participant's full career retirement, which is subject to age, service, and advance notice requirements, payment of final awards will be contingent upon the participant continuing to render services to the Company at such time (unless this condition is waived by the Compensation Committee). For more information about full career retirement provisions in our equity awards, please see page 56 of this Proxy Statement.

Vesting and Exercisability

        The Compensation Committee determines the time or times at which awards under the Plan will vest or become exercisable and the terms on which an award will remain exercisable. However, as discussed below, there are certain minimum vesting periods for issuances of full-value awards that are not performance awards.

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Repricings

        Options and SARs may not be repriced, or replaced with any other award (including full-value awards) or repurchased for cash, without shareholder approval.

Transferability of Awards

        No award granted under the Plan is transferable by the holder except by will or by the laws of descent and distribution.

Certain Share Limits on Awards under the Plan

        All full-value awards that are not performance-based shall vest over a period of time at least three years or more from the date of grant and all performance-based full-value awards shall be subject to the attainment of performance objectives which require at least 12 months to achieve. However, full-value awards aggregating not more than 5% of the number of shares reserved for issuance under the Plan, as well as full-value awards to non-employee directors, may be awarded without regard to such vesting requirements.

        The maximum number of shares of stock for which stock options may be granted to any person annually from and after adoption of the Plan and prior to March 28, 2026, the maximum number of shares of stock subject to SARs granted to any person annually during such period, and the aggregate maximum number of shares of stock subject to other awards that may be delivered (or the value of which may be paid) to any person annually during such period, shall each be 2,000,000, subject to adjustments as provided in Section 5 of the Plan. For purposes of the preceding sentence, the repricing of stock options or SARs will be treated as a new grant to the extent required under Section 162(m) of the Code, assuming that the repricing is permitted by shareholders. Subject to these limitations, each person eligible to participate in the Plan will be eligible to receive awards covering up to the full number of shares of stock then available for awards under the Plan. No awards may be granted under the Plan after March 28, 2026, but previously granted awards may extend beyond that date.

        In addition, no more than $3,000,000 may be paid to any individual with respect to any cash performance award (other than an award expressed in terms of shares of stock or units representing stock). In applying the dollar limitation of the preceding sentence, multiple cash performance awards to the same individual that are determined by reference to performance periods of one year or less ending with or within the same fiscal year of the Company shall be subject in the aggregate to the $3,000,000 limit. Multiple cash performance awards to the same individual that are determined by reference to one or more multi-year performance periods ending in the same fiscal year of the Company are not included in the limit described above; instead, they are subject in the aggregate to a separate $3,000,000 limit.

Reclassification of Stock

        Under the Plan, if the shares of common stock shall be subdivided or combined into a greater or smaller number of shares, or if the Company shall issue any shares of common stock as a stock dividend on its outstanding common stock, the Compensation Committee will make appropriate adjustments to the maximum number of shares that may be delivered under the Plan and to the maximum share limits described above, and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to awards then outstanding or subsequently granted,

34


including any exercise prices relating to the awards and any other provision of awards affected by such change.

Certain Transactions

        Other than in connection with awards that are denominated and subject to settlement in cash, awards will not vest in connection with a Covered Transaction unless such Covered Transaction is accompanied by a "double trigger event". For this purpose, a "double trigger event" occurs in connection with a Covered Transaction if (i) the award is not appropriately assumed nor an equivalent award substituted by the surviving, continuing, successor or purchasing company or other business entity or parent thereof, as the case may be, (ii) cash or cash equivalents are the sole or primary form of consideration to be received by the shareholder of the Company or (iii) at the time of, or within 12 months following the Covered Transaction, the participant incurs a termination of employment without Cause or for Good Reason (each as defined in the Plan, which is attached as Appendix B to the electronic version of this Proxy Statement as filed with the SEC and may be accessed from the SEC's website (www.sec.gov)).

        Upon a Covered Transaction "double trigger event": (i) in the case of a stock option or SAR, the stock option or SAR shall become fully vested and exercisable immediately upon the occurrence of the double trigger event; (ii) in the case of restricted Stock, deferred stock or restricted stock units (in each case other than an award of restricted stock, award of deferred stock or award of restricted stock units that is a performance award), the restriction period shall lapse and the restricted stock, deferred stock or restricted stock unit (as applicable) shall fully vest immediately upon the occurrence of the double trigger event; and (iii) in the case of a performance award, payment under the award shall be subject to the terms set forth in the applicable award agreement.

        A Covered Transaction is deemed to occur where the Company undergoes any of (1) a consolidation, merger or other transaction which results in any individual, entity or "group" acquiring the beneficial ownership directly or indirectly of more than 50% of either the then-outstanding shares of common stock of the Company or the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors, (2) at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board of Directors and any new member of the Board of Directors whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board of Directors, (3) a sale or transfer of all or substantially all the Company's assets, or (4) a dissolution or liquidation of the Company.

Forfeiture or Clawback of Awards

        The Compensation Committee may determine that any award under the Plan shall be subject to provisions for the forfeiture and/or reimbursement of all amounts received in connection with an award in the event of breach of noncompetition, nonsolicitation, or confidentiality agreements. All awards granted under the Plan are subject to recoupment, to the extent applicable, under the Company's Corporate Governance Guidelines and/or any other recoupment, clawback or similar policy that may be approved by the Board of Directors or any committee thereof. Notwithstanding any other provision of the Plan, a participant shall be required to reimburse the Company amounts received in connection with an award to the extent required under Section 304 of the Sarbanes-Oxley Act of 2002 and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

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Federal Income Tax Considerations

        The following is a description of certain U.S. federal income tax consequences of the issuance and exercise of awards under the Plan under U.S. federal income tax laws as currently in effect:

        An optionee is generally not taxed on the grant or exercise of an incentive stock option. The difference between the exercise price and the fair market value of the shares on the exercise date will, however, be considered an adjustment for purposes of the alternative minimum tax. If an optionee holds the shares acquired upon the exercise of an incentive stock option for at least two years following grant and at least one year following exercise, the optionee's gain (or loss), if any, upon a subsequent disposition of such shares is a long-term capital gain (or loss). The measure of the gain is the difference between the proceeds received on disposition and the optionee's basis in the shares (which generally equals the exercise price). If an optionee disposes of stock acquired pursuant to exercise of an incentive stock option before satisfying the one and two-year holding periods described above, the optionee will recognize both ordinary income and capital gain (or loss) in the year of disposition. The amount of the ordinary income will be the lesser of (1) the amount realized on disposition less the optionee's adjusted basis in the stock (usually the exercise price) or (2) the difference between the fair market value of the stock on the exercise date and the exercise price. The balance of the consideration received on such a disposition will be short-term capital gain or long-term capital gain depending on the holding period of the share. The Company is not entitled to an income tax deduction on the grant or exercise of an incentive stock option or on the optionee's disposition of the shares after satisfying the required holding periods described above. If the holding periods are not satisfied, the Company will be entitled to a deduction in the year the optionee disposes of the shares, in an amount equal to the ordinary income recognized by the optionee.

        The grant of a non-qualified option will not result in taxable income to the optionee or deduction to the Company at the time of grant. The optionee will recognize taxable compensation, and the Company will have a corresponding deduction, at the time of exercise in the amount of the excess of the then fair market value of the shares acquired over the exercise price, and the optionee will be required to satisfy the tax withholding requirements applicable to such income. Upon disposition of the shares, the optionee will generally realize capital gain or loss (short- or long-term, depending on the length of the period the shares were held), and the optionee's basis for determining gain or loss will be the sum of the exercise price paid for the shares plus the amount of compensation income recognized on exercise of the option.

        The amount of any cash or the fair market value of any stock received by a participant upon the exercise of SARs under the Plan will be subject to ordinary income tax in the year of receipt, and the Company will be entitled to a deduction for such amount.

        A participant who receives restricted stock will recognize no income on the grant of the restricted stock and the Company will not qualify for any deduction, unless the election described below is made by the participant. At the time the restricted stock is no longer subject to a substantial risk of forfeiture, a participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the restricted stock at the time the restriction lapses over the consideration paid for the restricted stock, if any. The holding period that determines whether the

36


participant has short- or long-term capital gain or loss begins when the restriction period expires, and the tax basis for the shares will generally be the fair market value of the shares on such date.

        A participant may elect, under Section 83(b) of the Code, within 30 days of his or her receipt of the restricted stock, to recognize ordinary compensation income on the date of transfer in an amount equal to the excess, if any, of the fair market value on the date of such transfer of the shares of restricted stock, determined without regard to certain restrictions, over the consideration paid for the restricted stock, if any. Additional special tax rules apply if the participant forfeits the shares. On a disposition of the shares, a participant will recognize gain or loss equal to the difference between the amount realized and the tax basis for the shares.

        Whether or not the participant makes an election under Section 83(b), the Company generally will qualify for a deduction, subject to the reasonableness of compensation limitation and Section 162(m) of the Code, at the time and equal to the amount that is taxable as ordinary income to the participant.

        Upon receiving an award of unrestricted stock under the Plan, the participant will realize ordinary income to the extent of the fair market value (determined at the time of transfer to the employee) of such shares, over the amount, if any, paid by the employee for the shares. Such taxable amounts will generally be deductible as compensation by the Company, subject to Section 162(m) of the Code.

        A participant generally does not recognize income, and the Company generally will not be allowed a tax deduction, at the time an RSU is granted. When the RSUs vest and are settled for cash or shares, the participant generally will be required to recognize as income an amount equal to the fair market value of the shares or the amount of cash on the date of settlement, and the Company generally will be allowed a corresponding tax deduction at that time, subject to the reasonableness of compensation limitation and Section 162(m) of the Code. Any gain or loss recognized upon a subsequent sale or exchange of the shares (if settled in shares) is generally treated as capital gain or loss for which we are not entitled to a deduction. For purposes of clarity, for federal income tax considerations, our PSUs are considered a variant of RSUs.

        A participant who receives an award of deferred stock will recognize no income on the grant of such award. However, he or she will recognize ordinary compensation income on the later transfer of the actual stock. If at the time of transfer the stock received is subject to a substantial risk of forfeiture, the tax treatment will be the same as discussed above under the caption "Restricted Stock." The Company generally will qualify for a deduction, subject to the reasonableness of compensation limitation and Section 162(m) of the Code, at the time and equal to the amount that is taxable as ordinary income to the participant.

        Generally, a participant will recognize ordinary income and the Company will generally be entitled to a deduction (and will be required to withhold federal income taxes), subject to Section 162(m) of the Code, with respect to such cash awards at the earliest time at which the participant has an unrestricted right to receive the amount of such cash payment.

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        Section 162(m) of the Code provides that the deduction by a publicly held corporation for compensation paid in a taxable year to the chief executive officer and the three other most highly compensated executive officers of the corporation is limited to $1 million per each individual officer. For purposes of Section 162(m), compensation which meets the requirements of "qualified performance-based compensation" is not subject to the deductibility limitation. There can be no assurance that such compensation under the Plan will be fully deductible under all circumstances.

        This general tax discussion is intended for the information of shareholders considering how to vote with respect to this proposal and not as tax guidance to participants in the Plan. Different tax rules may apply to specific participants and transactions under the Plan, particularly in jurisdictions outside the United States.

        To the extent applicable, awards granted under the Plan are intended to comply with or be exempt from Section 409A of the Code, and the Plan will be interpreted and administered in accordance therewith. The administrator of the Plan will have the authority unilaterally to accelerate or delay a payment to which the holder of any award may be entitled to the extent necessary or desirable to comply with, or avoid adverse consequences under, Section 409A of the Code (including with regard to an individual deemed to be a "specified employee" under Section 409A of the Code who has received an amount under the Plan deemed to be "deferred compensation" subject to Section 409A of the Code).

        Notwithstanding the foregoing, the Company does not guarantee that the Plan, any awards or any payments with respect thereto are in compliance with Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Internal Revenue Code are satisfied, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest penalties and additional state taxes).

Registration with the SEC

        If our shareholders approve the Plan, we will file a Registration Statement on Form S-8 with the Securities and Exchange Commission as soon as reasonably practical after the approval, to register the shares available for issuance under the Plan.

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Equity Compensation Plan Information

        The following table summarizes, as of December 26, 2015, the number of options issued under the Company's stock option plans and the number of options available for future issuance under these plans.

Plan Category
  Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
  Weighted average
exercise price of
outstanding options,
warrants and rights
  Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
 
 
  (a)
  (b)
  (c)
 

Equity compensation plan approved by security holders:

                   

2007 Incentive Plan

    2,065,057   $ 50.62     4,389,102 (2)

Equity compensation plans not approved by security holders

             

Total

    2,065,057 (1)         4,389,102 (3)

(1)
None of the options outstanding under any of our equity compensation plans include rights to any dividend equivalents (i.e., a right to receive from us a payment equal to dividend payments received by holders of our common stock or our other equity instruments).

(2)
Additionally, we note that as of December 26, 2015, the 4,389,102 shares remaining in the 2007 Incentive Plan Fungible Pool reflect the balance available after earmarking the full number of shares which may be necessary to settle outstanding 2014 and 2015 PSUs at their potential maximum payouts, taking into account the impact of non-GAAP EPS performance on both grants (in total, 694,608 shares).

(3)
On March 22, 2007, the Board of Directors determined that, upon approval of the 2007 Incentive Plan, no future awards would be granted under the preexisting equity compensation plans, including the Charles River 1999 Management Incentive Plan and the Charles River 2000 Incentive Plan. Shareholder approval was obtained on May 8, 2007. Previously, on February 28, 2005, the Board of Directors terminated the Inveresk 2002 Stock Option Plan to the extent that no further awards would be granted thereunder. The 2007 Incentive Plan utilizes a fungible pool concept where each share issued in connection with awards that do not have option-like features (full-value awards) is counted as 2.3 units and each share issued that is subject to options, stock appreciation rights, and other awards that expire no more than seven years from the date of grant is counted as 1 unit against the overall reserved and available shares.

        The following table provides additional information regarding the aggregate issuances under our existing equity compensation plans as of December 26, 2015:

Category
  Number of
securities
outstanding
  Weighted
average
exercise
price
  Weighted
average
term
 
 
  (a)
  (b)
  (c)
 

Total number of restricted stock/units outstanding(1)

    607,094   $      

Total number of options outstanding(2)

    2,065,057   $ 50.62     3.7  

Total number of performance share units outstanding(3)

    652,948   $      

(1)
For purposes of this table, only unvested restricted stock and unvested restricted stock units as of December 26, 2015 are included.

(2)
For purposes of this table, only options outstanding as of December 26, 2015 are included.

(3)
For purposes of this table, reflects currently projected potential maximum payouts of outstanding 2014 and 2015 PSUs, taking into account the impact of non-GAAP EPS performance on both grants.

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        In February 2016, the Company issued its annual equity compensation awards to its employees and on March 1, 2016 issued awards to new hires. Accordingly, the following table summarizes, as of March 15, 2016, the updated number of options issued under the Company's stock option plans and the updated number of options available for future issuance under these plans.

Plan Category
  Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
  Weighted average
exercise price of
outstanding options,
warrants and rights
  Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
 
 
  (a)
  (b)
  (c)
 

Equity compensation plan approved by security holders:

                   

2007 Incentive Plan

    2,257,529   $ 58.44     2,468,434 (2)

Equity compensation plans not approved by security holders

             

Total

    2,257,529 (1)         2,468,434 (3)

(1)
None of the options outstanding under any equity compensation plan of the Company include rights to any dividend equivalents (i.e., a right to receive from the Company a payment equal to dividend payments received by holders of common stock or other equity instruments of the Company).

(2)
In addition, we note that as of March 15, 2016, the 2,468,434 shares remaining in the 2007 Incentive Plan Fungible Pool reflect the balance available after earmarking the full number of shares (at the 2.3 fungible ratio) which may be necessary to settle outstanding 2014, 2015 and 2016 PSUs at their potential maximum payouts (in total, 1,158,170 shares).

(3)
On March 22, 2007, the Board of Directors determined that, upon approval of the 2007 Incentive Plan, no future awards would be granted under the preexisting equity compensation plans, including the Charles River 1999 Management Incentive Plan and the Charles River 2000 Incentive Plan. Shareholder approval was obtained on May 8, 2007. Previously, on February 28, 2005, the Board of Directors terminated the Inveresk 2002 Stock Option Plan to the extent that no further awards would be granted thereunder. The 2007 Incentive Plan utilizes a fungible pool concept where each share issued in connection with awards that do not have option-like features (full-value awards) is counted as 2.3 units and each share issued that is subject to options, stock appreciation rights, and other awards that expire no more than seven years from the date of grant is counted as 1 unit against the overall reserved and available shares.

        The following table provides additional information regarding the aggregate issuances under the Company's existing equity compensation plans as of March 15, 2016.

Category
  Number of
securities
outstanding
  Weighted
average
exercise price
  Weighted
average term
 
 
  (a)
  (b)
  (c)
 

Total number of restricted stock/units outstanding(1)

    518,773   $      

Total number of options outstanding(2)

    2,257,529   $ 58.44     4.0  

Total number of performance shares outstanding(3)

    1,062,872   $      

(1)
For purposes of this table, only unvested restricted stock and unvested of restricted stock units as of March 15, 2016 are included.

(2)
For purposes of this table, only options outstanding as of March 15, 2016 are included.

(3)
For purposes of this table, reflects currently projected potential maximum payouts of outstanding 2014, 2015, and 2016 PSUs, taking into account the impact of non-GAAP EPS on the 2014 and 2015 grants.

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Share Utilization Disclosure

        The following table summarizes our share utilization with respect to the 2007 Plan over the past three fiscal years. We include this table in recognition that many shareholders find this information useful in evaluating equity compensation proposals, such as this Proposal 3.

Year
  Stock Options
Granted
  Restricted
Stock/Restricted
Stock Units
Granted
  Performance
Shares
Earned(1)
  Total   Basic Weighted
Average
Common Shares
Outstanding
 

Fiscal Year 2013

    600,249     407,652     0     1,171,748     47,740,000  

Fiscal Year 2014

    568,615     258,481     0     1,047,719     46,627,000  

Fiscal Year 2015

    473,506     197,810     168,223 (2)   835,579     46,496,000  

(1)
In fiscal years 2013, 2014, and 2015, the following Performance Share Units were granted (at target levels), respectively: 163,847; 220,623; 164,263.

(2)
Reflects shares earned for 2013 PSU grants, taking into account all performance factors as of fiscal year end 2015 (the Final Award).


COMPENSATION DISCUSSION AND ANALYSIS

        The purpose of our compensation program is to recruit and retain the strongest possible management team, while simultaneously aligning management's interest with those of our shareholders. With these considerations in mind, the Compensation Committee (referred to in this section of the Proxy Statement as the Committee) has overseen the development, implementation and administration of our Executive Compensation Program (the Compensation Program or Program), described below, for members of senior management including the Chief Executive Officer and the other five executives who are identified in the Summary Compensation Table below (our named executives), which includes one former executive officer and another executive officer who retired in March 2016. Our philosophy behind the Compensation Program is that it should appropriately align executive compensation with both the short- and long-term performance of the Company. Our named executives for fiscal year 2015 are: James C. Foster (Chief Executive Officer and President), David R. Smith (Corporate Executive Vice President and Chief Financial Officer), Thomas F. Ackerman (formerly our Corporate Executive Vice President and Chief Financial Officer; as of the end of fiscal year 2015, Senior Financial Advisor), Dr. Nancy A. Gillett (Corporate Executive Vice President and Chief Scientific Officer), David P. Johst (Corporate Executive Vice President, Human Resources, General Counsel and Chief Administrative Officer), and Dr. Davide A. Molho (Corporate Executive Vice President and President, Global RMS, Safety Assessment & Biologics).

Executive Summary

        We believe that the design of our 2015 Compensation Program is best understood by evaluating it in the context of the business environment in which we have been operating since the end of the previous decade. At that time, large pharmaceutical and biotechnology companies began to undertake significant changes in their operations as they endeavored to improve the productivity of their drug development pipelines, and at the same time, streamline their infrastructures in order to improve efficiency and reduce operating costs. Until a few years ago, these actions had an unfavorable impact on sales of our products and services, and our financial performance, and this was reflected in the compensation earned by our officers.

        Over the past four to five years, however, the demand for our outsourced services steadily improved, as has demand for products and services to support our clients' manufacturing activities. We

41


took several important steps in the past two years to position the company to meet this increased demand and to maintain responsiveness to clients' needs, including:

        Additionally, in the past five to six years we have taken a variety of decisive, and sometimes difficult, actions targeted at strengthening the business, enhancing client satisfaction and returning value to shareholders. Our continued actions toward the achievement of these initiatives in 2015 included the following:

        We believe these actions contributed significantly to our strong financial performance in fiscal 2015, in which we achieved:

        We believe that, when viewed in this context, the compensation for our executive officers was appropriately aligned to our financial performance. For instance, our CEO's annual cash bonus amount was 156.6% of the target, due to the fact that we generally outperformed the measures on which the annual cash bonus is based: free cash flow far exceeded expectations, operating income and EPS moderately exceeded expectations, and revenue was slightly above our expectations. Our other named executives received annual cash bonus amounts ranging from 81.4% to 197.3% of the target amount.

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(For a detailed discussion of our 2015 financial performance, the factors that we believe are influencing demand from our clients, and the actions we have taken during the past years, please see the sections entitled "Our Strategy" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on February 12, 2016.)

        Charles River shareholders provided very strong majority support for our named executives' compensation at our 2015 annual meeting of shareholders (97.7% of shares voted in support on this matter; 98.2% excluding abstentions). We attribute this level of support to our performance in 2014 and the significant actions we implemented from 2012 through 2014, including significant changes to our executive compensation program during that period, which followed a period of substantial outreach to our shareholders, as follows:

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        In addition to the changes noted above, we have taken further action this year by including "double-trigger" accelerated equity vesting in the 2016 Incentive Plan, which we are submitting to shareholders for their approval this year.

        The Compensation Committee believes these changes have been responsive to feedback from investors and enhance the performance orientation of our executive compensation program. Following further shareholder outreach in the fall of 2015, we once again received positive response to the changes that were made during the preceding years, and none of our shareholders advocated for any substantial changes to our executive compensation program. Notwithstanding this positive reception, the Board and Committee will continue to explore ways in which Charles River's executive compensation programs could be improved, and we remain committed to ongoing engagement with our shareholders on the various corporate governance topics that are of interest to them.

        Certain elements of our compensation practices reflect legacy decisions and changes that were made in prior years (since 2009) which were designed to ensure alignment between executive compensation and Company performance, and which continue to carry forward and have influence in our program:

        We believe that all of these adjustments to our Program during this period were appropriate in light of, and consistent with, the economic and market environments, our financial performance, the corporate actions taken, and executive compensation trends. Furthermore, the increased focus on near-term financial and operational objectives properly aligned management's incentives with the interests of our shareholders. For example, our pay mix maintains a continued focus on variable, or "at risk," compensation. On average, approximately 71.9% of 2015 target annual compensation for our named executives was based on long-term equity incentives and performance-based bonuses (87.9% for our CEO). Furthermore, annual base salary for our named executives remains a relatively small portion (28.1%) of our named executives' core intended compensation (12.1% for our CEO). We note that these averages are slightly skewed due to the absence of any 2015 equity grant to Dr. Gillett in light of her impending retirement. Absent Dr. Gillett's compensation, annual base salary for our named executives is only 22.0% of intended core compensation.

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        Furthermore, as seen in the graph below, the alignment between executive pay and our performance is demonstrated by the close correlation from 2008 to 2015 between (1) the total compensation paid (consistent with the Summary Compensation Table) to our CEO in those years and (2) our non-GAAP earnings per share from continuing operations during that period. As illustrated, compensation generally increased with strong performance and decreased when performance declined.

GRAPHIC

A very similar alignment can be seen between our performance and the average pay (based on Summary Compensation Table disclosure) for the four other named executives who have consistently been included in the summary compensation table during the period from 2010 to 2015 (Mr. Ackerman, Mr. Johst, Dr. Gillett and Dr. Molho).

GRAPHIC

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        For purposes of these graphs, "Other" refers to the total average amounts set forth in the following columns in the Summary Compensation Table on page 61: (1) Change In Pension Value and Non-qualified Deferred Compensation Earnings; and (2) All Other Compensation. Information with respect to 2008, 2009, 2010, 2011 and 2012 compensation is set forth in our 2011, 2012, 2013, 2014 and 2015 Proxy Statements, respectively.

        Please see Appendix A to this Proxy Statement for reconciliation of our non-GAAP EPS to GAAP EPS for 2008-2015.

        In addition to the changes summarized above and the quantified alignment between executive pay and our performance, we maintain existing compensation practices that represent strong corporate governance, including the following:

        The changes to the Program made during the past few years reflect our flexibility in responding to changing market conditions, our business strategy and financial performance, executive compensation standards, and the opinions and suggestions of our investors.

        In addition to changes to the Program, in light of periodic discussions with shareholders and observation of general governance trends, we have recently made modifications to our corporate governance structure. For instance, in December 2014 we amended our bylaws to provide for a majority vote standard for election of directors in uncontested elections, and in January 2016 we amended our bylaws to authorize the removal of directors by shareholders without cause upon an affirmative vote of the holders of a majority of shares entitled to vote.

        We remain committed to ongoing engagement with our shareholders on various corporate governance topics that are of interest to them. We conduct these efforts through meetings and telephone calls throughout the year with our senior management, and provide shareholders with the opportunity to cast an annual say-on-pay advisory vote on executive compensation. We have determined that our shareholders should vote on a say-on-pay proposal every year, consistent with the preference expressed by our shareholders at the 2011 Annual Meeting. The Committee is always open to the input of our shareholders in making future compensation decisions for the named executives. At the same time, we believe it is important to maintain consistency in our compensation philosophy and approach. While the Committee and our management team understand the impact that immediate economic conditions and our operating performance may have on our stock price, it is important to us that the elements of the Program continue to incentivize management to achieve important short- and long-term operating goals that are intended to strengthen the company and translate ultimately into stock price appreciation for our shareholders.

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Objectives of the Compensation Program

        The Committee reviews and monitors the Compensation Program and compensation policies by reference to specific objectives which are established in accordance with its charter. The Committee recognizes the importance of establishing clear objectives for the Program and evaluating the relative effectiveness of current and proposed compensation policies and practices in advancing those objectives. In keeping with our philosophy that the Program should appropriately align executive compensation with both the short- and long-term performance of the Company, the Committee has determined that the Compensation Program should achieve the following objectives:

        To achieve these broader objectives, the current design of the Compensation Program has also been crafted to accomplish the following:

Compensation Elements

        Our Compensation Program for fiscal year 2015 consisted of the following core and supplemental elements:

 
   
   
   
   
  Core Elements

  Supplemental Elements

 
       
   

Base Salary

Annual Cash Incentive Awards (EICP Plan)

Long-Term Equity Incentive Awards

     

Deferred Compensation Plan

Termination and Change-in-Control Agreements

Retirement Plans

   

        The core elements of compensation are typically those which the Committee evaluates on an annual basis, while the supplemental elements are programs or arrangements that we have included for strategic reasons and are evaluated on a less frequent basis by the Committee.

        Annual base salary represents the smallest portion of our named executives' target core compensation (less than 30%). Over 70% of 2015 targeted annual compensation for our named executives was based on variable or "at-risk" compensation elements, reflecting the Committee's focus on ensuring that senior management is appropriately rewarded for actual performance achievements.

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The following table shows the 2015 total core compensation mix, based on targeted (not actual) compensation.

2015 Targeted Compensation Mix for Named Executive Officers(1)
 
                                     
        Core
Compensation
Element



 
Foster

 
Smith

 
Gillett

 
Johst

 
Molho

 
Ackerman

 
Average

 


Average
excluding
Dr. Gillett
 
    "Fixed"
Compensation
      Base
Salary(2)
        12.1%         31.4%         58.8%         19.1%         19.4%         28.0%         28.1%         22.0%  
    "At Risk"       Annual Cash
Incentive
Awards
        12.1%         21.9%         41.2%         13.3%         13.6%         19.6%         20.3%         16.1%  
    Compensation
Elements
      Long-Term
Equity
Incentive
Awards(3)
        75.8%         46.7%         0.0%         67.6%         67.1%         52.4%         51.6%         61.9%  
(1)
Due to rounding, the columns may add to more or less than 100%.

(2)
For purposes of this table, base salary is determined by the base salary effective as of April 1, 2015, assuming such salary was in effect for all of 2015.

(3)
Dr. Gillett did not receive an equity award in 2015 due to her planned transition from the Company.

        As described above on pages 15-16 of this Proxy Statement, the Compensation Committee engaged Pay Governance as its independent compensation consultant to advise the Compensation Committee on matters related to 2015 executive compensation. Pay Governance generally assists the Compensation Committee in fulfilling its responsibilities under its charter, including advising on proposed compensation packages for our top executives, compensation program design and market practices generally, guidance on how to appropriately compensate officers, and other topics as the Compensation Committee deems appropriate. The Compensation Committee has authorized Pay Governance to interact with management on behalf of the Compensation Committee, as needed, in connection with advising the Compensation Committee and Pay Governance is included in discussions with management. With respect to fiscal year 2015 compensation determinations, Pay Governance specifically assisted in the following:

        Pay Governance is directly accountable to the Compensation Committee, which has sole authority to engage, dismiss, and approve the terms of engagement of the compensation consultant. During 2015, Pay Governance did not provide any other services to the Company.

        Only two of the named executives of the Company are regularly involved in assisting the Committee in setting compensation parameters. In his role as our Corporate Executive Vice President, Human Resources, General Counsel and Chief Administrative Officer, Mr. Johst assists the Committee by providing data to the Committee's consultants, developing or modifying compensation plans and programs based on the Committee's input, and otherwise supporting the Committee's efforts to obtain the information and data required to make well-reasoned decisions regarding the compensation elements which comprise the Program. In his capacity as Chairman, President and Chief Executive Officer, Mr. Foster regularly participates in strategic discussions with the Committee regarding the

48


design and scope of the Program to help ensure that the compensation elements, policies, and practices underlying the Program are properly aligned with the Company's short-term financial and long-term strategic objectives. Mr. Foster also provides recommendations to the Committee regarding modifications that would allow the Program to function more effectively in the context of our evolving business organization, and assists the Committee in evaluating the individual performance of each executive officer (other than himself) to ensure that their respective levels of compensation take such performance into account. As a matter of process, Mr. Foster and Mr. Johst frequently collaborate to analyze internal and externally-provided compensation data and information, and provide preliminary recommendations to the Compensation Committee during the course of the Committee's determination of annual compensation levels. Other than Messrs. Foster and Johst, none of our executive officers plays a significant, ongoing role in assisting the Committee to set compensation parameters.

        The Committee strives in its methodology to provide total core compensation to our named executives that reflects an appropriate market benchmark and a select peer group of companies which are similar to the Company (the peer group). The peer group is primarily comprised of companies operating in the area of life sciences and drug discovery and development, with a particular focus on ensuring that the peer group takes into account the presence of companies, both in the greater Boston area and globally, who compete directly with the Company for scientific and management talent. We draw upon data for comparable companies from public disclosures for the companies in the peer group and from reputable ongoing compensation surveys of similarly sized companies in the industries listed above. Each year the Committee reviews and approves the peer group as well as a target Total Compensation Strategy. The Committee does not target a specific competitive percentile for the named executives, but rather relies on a variety of factors in making pay decisions beyond market data, such as each executive's experience, performance ratings, internal equity, and strategic value of the executive's position to the Company.

        For fiscal year 2015, in conjunction with the changes to the peer group described below, the Committee (with the assistance of Pay Governance) utilized a regression model to analyze the competitiveness of current executive compensation. Accordingly, our target Total Compensation Strategy utilizes a methodology whereby target Total Direct Compensation is evaluated against the size-appropriate benchmark data that factors in our Company's relative size compared to the size of peer group companies and that is established for each position by reference to the peer group. Total Direct Compensation in 2015 for our named executives generally approximated the executive's associated market benchmark.

        The peer group identified by Pay Governance consists of industry comparators both larger and smaller in revenue size than Charles River; accordingly, Pay Governance has developed a method of adjusting proxy compensation data for the peer group using common statistical regression methods to result in a good correlation between the proxy data and Charles River's corporate revenue, such that the regressed proxy revenue is commensurate to Charles River's revenue. This size-adjusted peer group proxy data is then blended with size-appropriate, custom compensation survey data (with proxy data weighted 75% and survey data weighted 25% for the named executive officer benchmarks) to derive a "market composite benchmark" for evaluating our executive compensation. The Committee originally adopted this "market composite benchmark" methodology and a peer group that is relatively large in quantity of component companies for evaluating and setting 2012 executive pay levels, in part due to industry consolidation presenting a challenge to maintaining a consistent group of peer companies year-over-year, and has continued with its use since.

49


        For evaluating 2015 compensation levels, the proxy peer group consisted of the following 39 companies:

  Abbott Laboratories      

C.R. Bard, Inc.

      Merck & Co., Inc.*    

  Actavis      

Celgene Corporation*

      Mettler-Toledo    

  Alexion Pharmaceuticals*      

Covance Inc.*

      Pall Corporation*    

  Albany Molecular Research      

Cubist Pharmaceuticals, Inc.*

      PAREXEL International Corporation*    

  Allergan, Inc.*      

Eli Lilly and Company

      PerkinElmer Inc.    

  Amgen Inc.      

Endo International

      Pfizer Inc.    

  Baxter International Inc.*      

Gilead Sciences, Inc.*

      Quest Diagnostics Incorporated*    

  Becton, Dickinson and Company      

Hologic Inc.

      Quintiles Transnational*    

  Bio-Rad Laboratories, Inc.      

IDEXX Laboratories Inc.*

      Regeneron*    

  Biogen Idec, Inc.*      

Illumina, Inc.

      Sigma-Aldrich Co. LLC*    

  Boston Scientific Corporation      

Laboratory Corporation of America

      Steris Corporation    

  Bristol-Myers Squibb Company*      

    Holdings

      Thermo Fisher Scientific Inc.    

  Bruker Corporation      

Medtronic, Inc.

      Vertex Pharmaceuticals Incorporated*    

                  Waters Corporation    

        Custom compensation survey data included information from 18 peer group companies (noted with *), as well as from Acorda Therapeutics, Alkermes, Auxilium Pharmaceuticals, BioMarin Pharmaceutical, Cepheid, Forest Laboratories (acquired by Actavis in July 2014), Impax Laboratories, Incyte, Luminex, Myriad Genetics, Pharmaceutical Product Development, PRA International, and The Medicines Company.

        For evaluating 2016 compensation levels, the proxy peer group will change to remove Actavis, which merged with Allergan, Inc. in March 2015 and the resulting company, Allergan plc will be included; Covance Inc., which was acquired by Laboratory Corporation of America in February 2015, and Cubist Pharmaceuticals, Inc., which was acquired by Merck & Co., Inc. in January 2015; and to add Alere Inc. and Teleflex Incorporated. Pall Corporation, which was acquired by Danaher Corporation in August 2015, and Sigma-Aldrich Co. LLC, which was acquired by Merck KGaA. in November 2015, both remain in the 2016 peer group because relevant information with respect to each of them was still available for this purpose.

        Our compensation philosophy embraces the premise that establishing base salaries at a reasonable level helps to promote retention and acts as an appropriate balance to other forms of variable or "at-risk" compensation. We pay base salaries within a range designed to approximate the market benchmark of executives with similar responsibilities in the peer group and surveys. Actual base salaries are determined after considering the competitive data, overall competitive position as compared to our compensation philosophy, prior base salary and other compensation, the performance of the individual and internal equity considerations. None of these considerations is given specific weights.

        In setting base salaries for our named executives, the Committee historically has taken into account the lengthy tenure of executive officers, as well as their continued long-time superior performance, which have resulted in base salaries generally gravitating towards the top of the range approximating the targeted market benchmark. Promotions and changes in responsibilities also impact the determination of salaries. For instance, Dr. Molho received a base salary increase in 2014 to reflect his expanded responsibilities as a Corporate Executive Vice President, and Mr. Smith received a base salary increase upon his promotion to Corporate Executive Vice President and Chief Financial Officer in 2015.

50


        Base salaries for our named executives for 2015 (effective as of April 2015) were as follows:

Name
  2015 Salary  

James C. Foster

  $ 1,115,463  

David R. Smith(1)

  $ 470,000  

Nancy A. Gillett

  $ 522,234  

David P. Johst

  $ 592,112  

Davide A. Molho

  $ 577,500  

Thomas F. Ackerman

  $ 534,465  

(1)
Reflects Mr. Smith's salary upon his promotion to Corporate Executive Vice President and Chief Financial Officer in August 2015. Prior to such time, Mr. Smith's annual salary was $425,000 in accordance with the agreement between Mr. Smith and the Company dated March 3, 2015.

        Our Compensation Program includes an annual cash bonus element which closely links a significant portion of executive pay to the achievement of short-term performance targets which are critical to meeting our stated financial objectives for the year. These targets are typically tied to specific financial metrics derived from our fiscal year operating plan. However, where appropriate, the Committee also approves non-financial goals that are designed to focus individuals on attaining objectives which include near-term, non-financial objectives that are also critical to the attainment of long-term strategic goals and ultimately promote positive long-term financial performance of the Company. Our annual cash incentive awards are structured to appropriately reduce or eliminate the amount of such awards if performance falls short of the established performance targets, and to appropriately increase the amount of such awards if performance exceeds established targets, subject to a maximum incentive award opportunity. It is intended that the target award, when aggregated with the base salary, will provide a competitive level of cash compensation when each named executive achieves the performance objectives established for him or her by the Committee. Actual bonus awards are determined according to each named executive's performance in relation to his or her approved objectives, which are primarily based upon corporate and/or business unit performance.

        To implement our annual cash incentive awards, the Committee administers the Executive Incentive Compensation Plan (EICP) which applies to executive officers and other key employees of the Company. We have designed the EICP to reward executives for their contributions to the success of the Company based on predetermined corporate/business unit, functional, and/or individual objectives. The Committee annually establishes performance objectives and corresponding performance ranges for the named executives. These performance objectives and ranges are generally developed through our annual financial planning process, whereby we assess the future operating environment and build projections of anticipated results to align the performance expectations of this plan with the overall business objectives of the Company.

        Target award percentages for the named executives are 70% of base salary for Corporate Executive Vice Presidents and 100% of base salary for the Chief Executive Officer. The participant's total target award opportunity percentage is divided among a variety of weighted performance objectives which may change from year to year, but historically have included non-GAAP operating income (OI), revenue, non-GAAP earnings per share (EPS), non-GAAP free cash flow (FCF), return on net operating assets (RNOA), and other key Company performance metrics. The Committee believes that these financial metrics are very good measurements for assessing how the Company is performing from a financial standpoint. In particular, EPS is generally accepted as a key driver of shareholder return. The OI and FCF metrics measure how efficiently and effectively management deploys its capital and generates capital liquidity for corporate usage in pursuing opportunities that enhance shareholder value.

51


Minimum and maximum performance levels for each performance objective are incorporated into the plan. For the performance objectives assigned to each of the named executives, minimum performance levels for 2015 were set at 90% of the target performance objective, and maximum performance levels were set at 108% of the target performance objective, with the exception of Mr. Smith's OI and FCF goals related to the operating business over which he had responsibility prior to his promotion to CFO, which had minimum and maximum performance levels set at 85% and 115% of the target performance objective, respectively. The maximum payout achievable in 2015 was 250% of target. At the end of each fiscal year, we compare the Company's (and applicable business units') final performance for the fiscal year against the Company's (or business units') targeted performance established at the beginning of such fiscal year, except where an adjustment to the targeted performance is warranted due to an unanticipated intervening event which would have an unintended and significant impact to the payout (which occurred in 2015 and is described below). These measurements determine the EICP payout levels for each of the performance objectives tied to corporate (or business unit) performance. To determine a participant's actual award, each performance objective's payment level is multiplied by the relative weight of the performance objective, and the cumulative amounts are aggregated to determine the individual's total EICP award amount.

        On December 1, 2014, the Committee established the 2015 EICP performance criteria for the named executives as described in the table that follows below. The original EPS target of $3.65 was later adjusted upwards during fiscal 2015 to a revised target of $3.71 to take into account the short-term effect of the acquisition of Celsis. Overall, in 2015 we achieved corporate and financial results which exceeded (in some cases substantially) our original targets, with significant variances among our different operating metrics, as recognized in the variable EICP amounts awarded to our named executives. In particular, we achieved results for free cash flow that far exceeded expectations, results for operating income and EPS that moderately exceeded expectations, and performance for revenue that were slightly above our expectations. We believe that the variability in the magnitude of the EICP amounts awarded correlates closely with the relative performance of the officers' respective business units (as compared to the targeted performance goals), and reflects a proper use of bonus compensation to distinguish between levels of annual performance. Year-to-year, EICP awards reflect such changes as shown in the table on page 54 of this Proxy Statement.

        Mr. Smith's original performance objectives (set on December 1, 2014) were based primarily on the Discovery Services business unit for which he had responsibility. Following Mr. Smith's promotion to Corporate Executive Vice President and Chief Financial Officer in August 2015, the Committee re-evaluated these performance objectives, and decided that it was more appropriate to proportionally align his 2015 objectives to closer reflect the actual mix of his 2015 responsibilities, and accordingly adjusted his performance objectives to be two-thirds based on his original objectives and one-third based on the same objectives as Mr. Ackerman, our prior Chief Financial Officer. Ultimately, this resulted in Mr. Smith's overall EICP award being based upon seven different elements, as further detailed in the table below.

52


        The Committee has the discretion to employ its judgment in determining individual awards, and in fact approves the entire EICP award for each named executive. In addition to the quantitative factors, final individual EICP awards for the named executives incorporate both (1) other than for the Chief Executive Officer, the Chief Executive Officer's recommendations, and (2) the Committee's assessment of each named executive's overall individual performance and contribution. In addition, the Committee, in its sole discretion, may modify or change the EICP at any time. With respect to the 2015 fiscal year, the target amounts and objectives were not modified (with the exception of EPS, as discussed above) and the awards to the named executives were not modified upwards from the amounts they were eligible to receive under the EICP formula. The following table shows the fiscal 2015 target EICP cash bonus, performance goals, goal attainment levels, and cash bonuses actually paid (in February 2016) for each of our named executives:

Named Executive






Target
% (of
base
salary)








Target
EICP
Award
Amount








Actual
EICP
Award
Amount




Performance
Goal


Weighting

Target

Actual

James C. Foster

    100 % $ 1,115,463   $ 1,747,138   1.   EPS(1)   30%   $3.71   $3.76

                    2.   OI(1)   20%   $254.4 million   $264.7 million

                    3.   Revenue   30%   $1,354 million   $1,363 million

                    4.   FCF   20%   $201.2 million   $225.0 million

David R. Smith

    70 % $ 329,000   $ 267,719   1.   EPS(1)   16.8%   $3.71   $3.76

                    2.   OI(1)   8.5%   $254.4 million   $264.7 million

                    3.   Revenue   6.8%   $1,354 million   $1,363 million

                    4.   FCF   8.5%   $201.2 million   $225.0 million

                    5.   OI(1)(6)   26.4%   $31.1 million   $21.7 million

                    6.   Revenue(2)(6)   26.4%   $169.7 million   $151.2 million

                    7.   FCF(3)(6)   6.6%   $10.3 million   $17.4 million

Nancy A. Gillett

    70 % $ 365,564   $ 691,841   1.   EPS(1)   20%   $3.71   $3.76

                    2.   OI(1)   30%   $254.4 million   $264.7 million

                    3.   Revenue   10%   $1,354 million   $1,363 million

                    4.   Revenue(4)   40%   $423.1million   $459.6 million

David P. Johst

    70 % $ 414,479   $ 649,194   1.   EPS(1)   30%   $3.71   $3.76

                    2.   OI(1)   20%   $254.4 million   $264.7 million

                    3.   Revenue   30%   $1,354 million   $1,363 million

                    4.   FCF   20%   $201.2 million   $225.0 million

Davide A. Molho

    70 % $ 404,250   $ 797,646   1.   EPS(1)   20%   $3.71   $3.76

                    2.   OI(1)(5)   30%   $246.8 million   $277.9 million

                    3.   Revenue(5)   30%   $1,028 million   $1,060 million

                    4.   FCF   20%   $201.2 million   $225.0 million

Thomas F. Ackerman

    70 % $ 374,125   $ 623,517   1.   EPS(1)   30%   $3.71   $3.76

                    2.   OI(1)   25%   $254.4 million   $264.7 million

                    3.   Revenue   20%   $1,354 million   $1,363 million

                    4.   FCF   25%   $201.2 million   $225.0 million
(1)
For purposes of 2015 EICP performance goals, consistent with the way the Company reports its non-GAAP financial results in its earnings releases, EPS (and to the extent applicable, OI) excluded the following items (and, for EPS, their related tax effect): the amortization of intangible assets, inventory purchase accounting adjustments, and certain other charges related to our acquisitions; expenses associated with evaluating and integrating acquisitions, as well as fair value adjustments associated with contingent consideration; charges, gains, and losses attributable to businesses or properties we plan to close, consolidate or divest; the gain related to the bargain purchase of Sunrise Farms; severance and other costs associated with our efficiency initiatives; executive transition costs; site consolidation costs; a reversal of indemnification assets associated with acquisitions and corresponding interest; the write-off of deferred financing costs and fees related to debt refinancing; and costs related to a U.S. government billing adjustment and related expenses. The Committee determined that it was appropriate to exclude these items as they are outside our normal operations. In addition, for purposes of 2015 EICP performance goals applicable to our global Discovery Services business, we excluded income attributable to the Oncotest business we acquired because it was acquired late in the fiscal year.

(2)
For purposes of this 2015 EICP performance goal, revenue was based on the Company's net revenue excluding revenue attributable to the Oncotest business.

(3)
For purposes of this 2015 EICP performance goal, FCF was based on net cash provided by operating activities less capital expenditures excluding net cash attributable to the Oncotest business.

(4)
A portion of Dr. Gillett's EICP performance goals was directed at the revenue attributable to our Safety Assessment business.

53


(5)
For Dr. Molho, each of his performance goals other than EPS and free cash flow was determined on the basis of the operating businesses over which he had responsibility rather than on a Corporate basis.

(6)
For Mr. Smith, the majority of his performance goals was determined on the basis of the operating business over which he had responsibility prior to his promotion to Corporate Executive Vice President and Chief Financial Officer, with the balance determined on a Corporate basis.

        For historical comparative purposes, percentage of targeted vs. actual annual cash incentive awards for our named executives for fiscal years 2010 - 2015 are shown in the table below (including actual cash award magnitude for 2013-2015):

Name
  Actual %
of Cash
Incentive
Award vs.
Target -
2010
  Actual %
of Cash
Incentive
Award vs.
Target -
2011
  Actual %
of Cash
Incentive
Award vs.
Target -
2012
  2013
Cash
Incentive
Award
  Actual %
of Cash
Incentive
Award vs.
Target -
2013
  2014 Cash
Incentive
Award
  Actual %
of Cash
Incentive
Award vs.
Target -
2014
  2015 Cash
Incentive
Award
  Actual %
of Cash
Incentive
Award vs.
Target -
2015
 

James C. Foster

    0%     83.0%     59.0%     $883,463     81.6%     $1,717,813     154.0%     $1,747,138     156.6%  

David R. Smith

                                $267,719     81.4%  

Nancy A. Gillett

    0%     30.6%     63.7%     $298,094     84.0%     $555,292     151.9%     $691,841     189.3%  

David P. Johst

    0%     83.0%     59.0%     $328,273     81.6%     $638,297     154.0%     $649,194     156.6%  

Davide A. Molho

    15.3%     80.1%     41.9%     $341,883     106.9%     $539,193     140.1%     $797,646     197.3%  

Thomas F. Ackerman

    0%     82.2%     59.0%     $296,313     81.6%     $591,585     158.1%     $623,517     166.7%  

        Long-term incentive (LTI) compensation, in the form of performance share units (PSUs), stock options, and restricted stock grants or restricted stock units (RSUs), allows individuals to share in any appreciation in the value of our common stock. We design the amounts and types of long-term equity awards to reward performance and create incentives to meet long-term objectives. Because the Committee particularly values long-term shareholder value creation, we target long-term equity incentives to provide total compensation opportunities that, if achieved, would result in approximately market-competitive pay levels for our executives. The Committee reviews and approves long-term equity incentive awards to named executives on an annual basis. The Committee believes that PSU, stock option, and RSU awards align the recipient's interests with those of the shareholders.

        The Committee typically targets the first quarter of our fiscal year for granting annual stock awards to eligible recipients, absent an extraordinary event. We have made such grants in recent years, and in the future it is expected that the Committee will continue to target the first quarter of the fiscal year for making annual stock awards. The Committee seeks to structure equity grants so that they are awarded during an open-window period as designated by our Insider Trading Policy, or, if Committee approval is provided during a non-window period, then the grants are made effective on the second business day following our press release with respect to financial results for the prior quarter. This policy is intended to ensure that options are awarded at a time when the exercise price fully reflects all recently disclosed information. In the case of new hires eligible to receive equity grants, grants are generally made on the first business day of the month following the date the individual commences employment.

        On rare occasions, out-of-period grants are made, including in 2015 in connection with Mr. Smith's promotion. As set forth in his letter agreement, as amended, the Company committed to two grants in 2015: (1) an award to him in February 2015 with an approximate value of $700,000 provided in anticipation of his pending promotion; and (2) an award granted to him concurrently with his appointment to Chief Financial Officer with an approximate value of $300,000. For more information regarding Mr. Smith's agreement with the Company, see the section of this Proxy Statement entitled "Employment-Related Agreements and Arrangements" on page 65.

54


        In addition, in 2015 we entered into agreements with two of our named executives as part of their planned transitions from the Company, each of which addressed long term incentive compensation. Specifically:

        While the Compensation Committee's Charter permits delegation of the Committee's authority to grant equity in certain circumstances, all grants to executive officers are made by the Compensation Committee itself and not pursuant to delegated authority. We have never had any programs, policies or practices which are intended to time stock option grants with the release of material, non-public information in a manner which would provide advantageous option exercise prices to grant recipients. Option exercise prices are, in all cases, equal to the closing price of our common stock on the date of grant. At the beginning of fiscal year 2014, as requested by the Compensation Committee, Company management, in consultation with the outside consultants, recommended to the Committee target values of stock options, shares of restricted stock (units), and PSUs, based on then-current pricing models, which were utilized by the Committee to establish preliminary target values of long-term equity awards for the named executives. In February 2015, when the annual awards were actually granted, the Committee approved stock options, RSUs, and PSUs using this valuation model.

        In determining award levels for annual equity awards to named executives, the Committee takes into account the values of awards made to similarly situated individuals in the peer group, the individual market benchmark for each executive's position, our overall performance, the individual performance of the named executive in the immediately preceding year, and similar factors. An absolute target value of long-term equity awards (determined in dollars) is approved by the Committee. This value is then allocated between the types of LTI awards the Company is awarding during that particular year. These determinations are typically evaluated during the first month of the fiscal year and approved at the Committee's meeting in February. Once the intended value of the awards is determined, the numbers of long-term equity awards (in 2015 stock options, RSUs, and PSUs) are generally fixed utilizing an estimated stock price (the 30-trading-day average closing price as of the date of the grant). We use the estimated stock price methodology to guard against dramatic, short-term stock price movements that might artificially reduce or increase the number of shares granted. We believe this methodology represents the performance of stock in the market and is a better way to deliver the intended value of this form of compensation.

        The intended value of the February 2015 grant was apportioned as follows: approximately 20% in the form of time-vested RSUs, approximately 20% in the form of time-vested stock options, and

55


approximately 60% in the form of PSUs, a program developed with the assistance of the Committee's Compensation Consultant and implemented in 2013. For the grant awarded to Mr. Smith in August 2015 upon his promotion to CFO, the grant value was apportioned as follows: approximately 75% in the form of time-vested RSUs, and approximately 25% in the form of time-vested stock options utilizing grant date fair value to determine the number of awards.

        Commencing with our 2015 equity grants, we have generally included a full career retirement provision in equity awards that provides for the continued vesting of unvested equity grants for employees who retire after meeting the following specified criteria:

        The material features of the PSUs granted to our named executives in 2015 (except those granted to Mr. Ackerman) are as follows:

56


        For the 2015 grant, at the end of the fiscal year 2015, actual non-GAAP EPS was compared to target 2015 non-GAAP EPS and the Base Award was calculated. The table below shows this calculation, as well as the adjusted minimum and maximum Final Award amounts that may result based on rTSR at the end of the 3-year performance period.

             
Future Final Award Levels (as % of Target Award)
           

2015 PSU Grant
Base Award Calculation





rTSR
£10th percentile




rTSR =
50th percentile




rTSR
³90th percentile

Target
Non-GAAP
EPS

  Actual
Non-GAAP
EPS
    Actual Non-GAAP
EPS as %
of Target
    Base Award
(as % of Target
Award)
    Minimum
(Base Award × 65%)
    Target
(Base Award × 100%)
    Maximum
(Base Award × 135%)

$3.65*

  $3.76     103%     115.0%     74.75%     115.0%     155.25%
*
In contrast to our EICP award calculations, we did not adjust the Non-GAAP EPS target for the 2015 PSU grant as the PSUs are evaluated over a full three-year period which is designed to take into account all intervening events affecting the Company.

        In February 2016, the Committee finalized the adjustments for the initial PSUs we awarded in 2013 to our then-executive officers. The chart below shows this calculation, as well as the adjusted Final

57


Award Percentage amounts that resulted based on rTSR at the end of the three-year performance period.

             
Final Award Levels
         

2013 PSU Grant
Base Award Calculation





rTSR =
64th percentile

Target
Non-GAAP
EPS

  Actual
Non-GAAP
EPS
    Actual Non-GAAP
EPS as %
of Target
    Base Award
(as % of Target
Award)
    rTSR
Adjustment
    Final Award Percentage
(of Target Award)

$2.92

  $2.93     100.3%     101.5%     114.0%     115.7%

        The named executives are eligible for certain benefits, such as medical, dental, basic life insurance, and employer contributions to the Company's 401(k) plan, which are generally available to all of our employees. In addition, the Company utilizes leased aircraft for business purposes on infrequent occasions where it is determined that such use is a prudent, economical and efficient method of transportation. Mr. Foster is permitted to utilize the Company-leased aircraft for non-business purposes, including allowing family members to accompany him on business travel. Mr. Foster reimburses the Company for the full incremental costs and/or Standard Industry Fare Level (whichever is higher) of such usage. We believe this benefit increases the level of safety and security for Mr. Foster, enables him to make more efficient use of his travel time, and entails no incremental cost to us for any accompanying family members.

Supplemental Elements of the Compensation Program

        We have a number of supplemental elements in the Compensation Program which are considered by the Committee, but do not factor directly into the annual determination of executive compensation. These elements have unique features and roles in the Program which led to their initial implementation and they continue to be important to the Program generally.

        As described in more detail in this Proxy Statement under "Executive Compensation and Related Information—Potential Payments upon Termination or Change in Control," the Compensation Program includes both (1) an Officer Separation Plan and (2) Change-in-Control Agreements. Company policy historically has been to provide eligibility under both the Officer Separation Plan to officers with the position of corporate vice president or higher, and a Change-in-Control Agreement to officers with the position of corporate executive vice president or higher. Both of these compensatory elements operate similarly: upon specified events which result in either the termination of the officer and/or a change in control of the Company, particular benefits will accrue to the officer (although payments made under the Change-in-Control Agreements will generally reduce or offset payments and benefits to which the officer may be entitled under the Officer Separation Plan). Each of the named executives is eligible to receive benefits under the Officer Separation Plan and each has a Change-in-Control Agreement (with the exception of Mr. Smith, although it is expected that Mr. Smith and the Company will enter into a Change-in-Control Agreement in the near future).

        The Company views these compensatory elements as serving three important purposes:

58


The Committee periodically conducts formal and informal market checks and believes that both the levels of payment to be made under these programs and the applicable triggers are appropriate and consistent with current general market practices.

        As described in more detail in this Proxy Statement under "Executive Compensation and Related Information—Nonqualified Deferred Compensation," the named executives receive a compensatory element in connection with our Deferred Compensation Plan. For Messrs. Foster, Ackerman and Johst, who were participants in the Company's now-discontinued Executive Supplemental Life Insurance Retirement Plan (ESLIRP), the Company credits to their accounts the present value of the annual Company accrual as it would have been calculated under the ESLIRP. For Drs. Gillett and Molho, the Company provides an annual contribution to their Deferred Compensation Plan account equal to 10% of the sum of their base salary plus the lesser of (1) their target annual bonus or (2) actual annual bonus. Mr. Smith will be eligible for the same annual contribution starting in fiscal 2016.

        We provide a Deferred Compensation Plan because the Company wishes to permit our executive employees to defer the obligation to pay taxes on certain elements of their compensation while also potentially receiving earnings on deferred amounts. The Deferred Compensation Plan was implemented to motivate and ensure the retention of employees by providing them greater flexibility in structuring the timing of their compensation payments. The employer contributions to the Deferred Compensation Plan ultimately have their origins in the legacy ESLIRP program, which was a long-standing element of our executive compensation package.

        As described in more detail in this Proxy Statement under "Executive Compensation and Related Information—Pension Benefits," the Company historically provided a retirement benefit for certain U.S. employees, including certain of the named executives, until 2002, when the Company amended the existing U.S. defined benefit pension plan to exclude new participants. Effective April 30, 2008, we froze the U.S. pension plan, and no additional benefits will accrue to participants (and all participant's rights to benefits under the pension plan have fully vested).

Other Factors Underlying the Ongoing Implementation of the Compensation Program

        Our officer stock ownership guidelines operate as a related feature to the Compensation Program. The Board of Directors believes that senior management should have a meaningful economic stake in the Company in order to align the interests of management and our shareholders. Therefore, the Board has adopted stock ownership guidelines for senior management which are designed to satisfy an individual executive's need for portfolio diversification, while maintaining management stock ownership at levels high enough to assure our shareholders of management's commitment to creating corporate value.

59


        Under these guidelines, members of our senior management are required to maintain an ownership position, expressed as a multiple of salary, as follows:

CEO

  4X base salary

Corporate Executive VP

 

3X base salary

Corporate Senior VP

 

2X base salary

Corporate VP

 

1X base salary

        Officers have four years from the time they attain the executive level listed above to comply with the ownership requirements. Stock options are not counted toward the holding requirement; however approximately 60% of unvested restricted stock (units) and PSUs are generally counted toward the holding requirement. The Committee periodically reviews stock ownership levels of members of our executive management to ensure compliance. As of the date of this proxy statement, our named executives were in compliance with the holding requirements (and, as demonstrated in the Beneficial Ownership table on page 21 of this Proxy Statement, in many cases, far exceed the required holding).

        Our Corporate Governance Guidelines include a recoupment (also known as clawback) policy. This policy applies to all of our executive officers as determined under the Securities and Exchange Act of 1934, as amended. Under this Clawback Policy, in the event of a restatement of all or a significant portion of Charles River's financial statements that has been determined by the Board to be due to the gross negligence, intentional misconduct or fraud by an executive officer, the Board has the discretion to require repayment of a portion or all of any annual bonus (including under the Executive Incentive Compensation Plan), vested restricted stock, restricted stock units, performance awards, or other incentive-based compensation (incentive compensation) paid to such executive officer or former executive officer and/or effect the cancellation of any unvested incentive compensation, subject to specified criteria. The action permitted to be taken by the Board under the Clawback Policy is in addition to any and all other rights of the Board and/or the Company under applicable law and contract. The Board intends to revise the Clawback Policy, as necessary, to comply with the final SEC rules regarding recoupment policies of the Dodd-Frank Act.

        We grant equity incentives for the reasons discussed above, including aligning the interests of our employees with those of shareholders. Our Statement of Policy Concerning Trading Policies (Insider Trading Policy) prohibits employees (and directors) from trading in our derivative securities, such as puts or calls on our common stock, or to pledge our stock, since such activities may diminish the alignment we are trying to foster, as well as expose the Company to potential embarrassment. Our Insider Trading Policy also prohibits the purchase or sale of Charles River securities while in possession of material, non-public information, or otherwise using such information for their personal benefit. Our executives and directors are permitted to enter into trading plans that are intended to comply with the requirements of Rule 10b5-1 of the Securities Exchange Act of 1934 so that they can prudently diversify their asset portfolios and exercise their stock options prior to their scheduled expiration dates.

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REPORT OF COMPENSATION COMMITTEE

        The Compensation Committee, comprised of independent directors, has reviewed and discussed the above Compensation Discussion and Analysis (CD&A) with the Company's management and, based on the review and discussions, recommended to Board of Directors that the CD&A be included in this Proxy Statement.

        The foregoing report has been furnished by the Compensation Committee.

    THE COMPENSATION COMMITTEE
Mr. C. Richard Reese (Chair)
Dr. Deborah T. Kochevar
Mr. Richard F. Wallman

61



2015 Summary Compensation Table

        The following table sets forth all of the compensation awarded to, earned by or paid to our current named executives (our principal executive officer, our principal financial officer and our three other highest-paid executive officers) and former principal chief financial officer for the years ended December 26, 2015, December 27, 2014, and December 28, 2013.

Name and Principal Position
  Year   Salary
($)
  Stock
Awards
($)(1)
  Option
Awards
($)(2)
  Non-Equity
Incentive
Plan
Compensation
($)(3)
  Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
($)(4)
  All Other
Compensation
($)(5)(6)
  Total
($)
 

James C. Foster

    2015     1,115,462     6,020,131     1,502,622     1,747,138     0     371,827     10,757,180  

Chairman, Chief Executive

    2014     1,106,715     5,536,287     1,250,053     1,717,813     247,828     10,463     9,869,159  

Officer, President and

    2013     1,069,089     4,311,042     971,343     883,463     0     103,904     7,338,841  

Director

                                                 

David R. Smith(7)

   
2015
   
414,459
   
832,356
   
227,039
   
267,719
   
   
382,547

(8)
 
2,124,120
 

Corporate Executive

                                                 

Vice President and

                                                 

Chief Financial Officer

                                                 

Nancy A. Gillett(9)

   
2015
   
522,234
   
0
   
0
   
691,841
   
0
   
9,220
   
1,223,295
 

Corporate Executive

    2014     518,139     1,228,801     272,740     555,292     30,216     10,207     2,615,395  

Vice President and

    2013     500,523     1,093,180     245,389     298,094     0     119,979     2,257,165  

Chief Scientific Officer

                                                 

David P. Johst

   
2015
   
592,112
   
1,827,176
   
429,331
   
649,194
   
0
   
620,752
   
4,118,564
 

Corporate Executive

    2014     587,469     1,728,215     363,653     638,297     181,820     8,017     3,507,471  

Vice President, Human

    2013     567,496     1,329,496     276,063     328,273     0     48,049     2,549,377  

Resources, General

                                                 

Counsel and Chief

                                                 

Administrative Officer

                                                 

Davide A. Molho

   
2015
   
570,096
   
1,720,068
   
429,331
   
797,646
   
   
108,152
   
3,625,293
 

Corporate Executive

    2014     524,883     1,520,977     340,921     539,193         110,846     3,036,819  

Vice President and

    2013     450,853     1,093,948     245,389     341,883         149,861     2,281,934  

President, Global RMS

                                                 

Safety Assessment &

                                                 

Biologics

                                                 

Thomas F. Ackerman

   
2015
   
534,464
   
1,475,356
   
533,333
   
623,517
   
0
   
460,926
   
3,627,596
 

Former Corporate Executive

    2014     530,273     1,228,801     272,740     591,585     239,700     8,016     2,871,115  

Vice President and Chief

    2013     512,245     870,149     194,266     296,313     0     58,993     1,931,966  

Financial Officer

                                                 

(1)
These amounts represent the aggregate grant date fair value of restricted stock units and performance share units granted in fiscal 2015, fiscal 2014, and fiscal 2013, respectively, computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718. For Mr. Ackerman, the amounts for fiscal 2015 also include the incremental fair value of restricted stock awards and performance share units computed in accordance with FASB ASC Topic 718 resulting from the provision of his February 25, 2015 agreement with the Company in connection with his transition from the Company that provided that the vesting of his equity would continue through the conclusion of his consulting period. For a detailed description of the assumptions used for purposes of determining grant date fair value, see Note 11 to our Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-based Compensation," included in our Annual Report on Form 10-K for the fiscal year ended December 26, 2015. The maximum potential value of the performance share units awarded in 2015, based on the grant date fair value (assuming the highest level of performance achievement) is as follows: Mr. Foster, $9,041,544; Mr. Ackerman, $642,495; Dr. Gillett, $0; Mr. Johst, $2,583,273; Dr. Molho, $2,583,273; and Mr. Smith $904,101.

(2)
These amounts represent the aggregate grant date fair value of stock option awards granted in fiscal 2015, fiscal 2014 and fiscal 2013, respectively, computed in accordance with FASB ASC Topic 718. For Mr. Ackerman, the amounts for fiscal

62


(3)
Reflects payments under our EICP plan for the respective fiscal year, which are paid the following February.

(4)
Reflects the aggregate change in actuarial present value of the named executive officers' accumulated benefits under the Charles River Laboratories, Inc. Pension Plan for Messrs. Foster, Ackerman, and Johst and Dr. Gillett. The U.S. Pension Plan present values generally decreased in 2015 due to the increase in the discount rate in 2015 (4.57%) from 2014 (4.30%) and also for the change in the mortality improvement projection scale from the MP-2014 scale published by the Society of Actuaries in October 2014 to the MP-2015 scale, projected generationally from 2006, published by the Society of Actuaries in October 2015. The 2015 present value decreases were as follows: Mr. Foster, $64; Mr. Ackerman, $7,951; Dr. Gillett, $2,134 and Mr. Johst, $23,795. Above-market or preferential earnings are not available under our Deferred Compensation Plan, which is our only plan or arrangement pursuant to which compensation may be deferred on a basis that is not tax-qualified, or any of our other benefit plans.

(5)
For fiscal year 2015, the amounts in this column include the following: (a) 2015 employer contributions under our 401(k) Plan (Mr. Foster, $7,950; Mr. Ackerman, $7,950; Mr. Smith, $4,636; Dr. Gillett, $7,795; Mr. Johst, $7,950; and Dr. Molho, $7,950) and, for Mr. Smith, a defined contribution plan in the United Kingdom during the period of fiscal 2015 when he was directly employed by one of our U.K. subsidiaries ($34,815); and (b) miscellaneous personal benefits and perquisites, in each case in an aggregate amount less than $10,000. The amounts in this column also include amounts credited by us to the named executives' Deferred Compensation Plan accounts, as described further in footnote (6) below. On a limited number of occasions during 2015, some of the named executives used tickets purchased by us to attend certain events; however, there was no incremental cost to us attributable to the named executives' use of these tickets.

(6)
Includes amounts credited to the named executives' Deferred Compensation Plan account balances (net of FICA taxes). Additional amounts credited with respect to fiscal year 2015 are as follows: Mr. Foster, $360,047; Mr. Ackerman, $452,781; Dr. Gillett, $0; Mr. Johst, $612,607; and Dr. Molho, $96,537.

(7)
Where appropriate, the amounts for Mr. Smith are converted from British Pounds Sterling to U.S. Dollars based on the currency exchange rate as of December 26, 2015, the last trading day of our fiscal year. As we recognize stock option and stock award expenses in U.S. Dollars, there is no conversion for those amounts.

(8)
Includes amount for Mr. Smith related to relocation expenses in 2015 consisting of (1) reimbursement for temporary living expenses between June 1, 2015 through June 30, 2016 and other moving and related travel costs, (2) home start-up expenses, (3) international tax planning and preparation related to the relocation, (4) reasonable costs involved in obtaining visas and other documentation required in connection with the relocation of Mr. Smith and his family, (5) school and education tuition for one of Mr. Smith's children for up to two academic years (up to a maximum of $50,000 per year) and (6) a tax gross-up amount. The aggregate costs to the Company for these relocation benefits to Mr. Smith in 2015 were $312,468 including $153,168, of tax gross-up amounts. Also includes $27,474 of accrued vacation time required to be paid out to Mr. Smith following his formal transfer of employment from one of our U.K. subsidiaries to Charles River Laboratories International, Inc. at the time of his promotion to Corporate Executive Vice President and Chief Financial Officer.

(9)
Dr. Gillett retired from the Company on March 7, 2016.

63



2015 Grants of Plan-Based Awards

        The following table sets forth the information regarding grants of plan-based awards made to our named executives during 2015. There can be no assurance that the Grant Date Fair Value of Stock and Option Awards will ever be realized.

 
   
   
   
   
   
   
  Date of
Board or
Compensation
Committee
Action to
Approve

   
  Estimated Possible
Payouts Under
Non-Equity Incentive
Plan Awards(2)

   
  Estimated Possible
Payouts Under
Equity Incentive
Plan Awards(3)

   
  All
Other
Stock
Awards:
Number
of Shares
of Stock

   
  All
Other
Option
Awards:
Number of
Securities
Underlying

   
  Exercise
or Base
Price of
Option

   
  Grant
Date
Fair
Value of
Stock
and
Option

   
 
  Name
   
  Type of
Award(*)

   
  Grant
Date

   
  Grant
(1)

   
  Threshold
($)

   
  Target
($)

   
  Maximum
($)

   
  Threshold
(#)

   
  Target
(#)

   
  Maximum
(#)

   
  or Units
(#)(4)

   
  Options
(#)(5)

   
  Awards
($/Sh)

   
  Awards
($)(6)

   

 

James C. Foster

        EICP         12/01/2014         12/01/2014         11,155         1,115,463         2,788,657                                                                          

            SO         02/27/2015         02/26/2015                                                                               86,308         76.67         1,502,622    

            RSU         02/27/2015         02/26/2015                                                                     19,556                             1,499,359    

            PSU         02/27/2015         02/26/2015                                       5,101         51,013         102,026                                       4,520,722    

 

David R. Smith

        EICP         12/01/2014         12/01/2014         1,086         329,000         822,500                                                                          

            SO         02/27/2015         02/26/2015                                                                               8,631         76.67         150,266    

            RSU         02/27/2015         02/26/2015                                                                     1,956                             149,967    

            PSU         02/27/2015         02/26/2015                                       510         5,101         10,202                                       452,051    

            SO         08/12/2015         02/26/2015                                                                               4,995         76.12         76,773    

            RSU         08/12/2015         02/26/2015                                                                     3,026                             230,339    

 

Nancy A. Gillett

        EICP         12/01/2014         12/01/2014         1,828         365,564         913,910                                                                          

            SO         02/27/2015         02/26/2015                                                                                                        

            RSU         02/27/2015         02/26/2015                                                                                                        

            PSU         02/27/2015         02/26/2015                                                                                                        

 

David P. Johst

        EICP         12/01/2014         12/01/2014         4,145         414,479         1,036,196                                                                          

            SO         02/27/2015         02/26/2015                                                                               24,660         76.67         429,331    

            RSU         02/27/2015         02/26/2015                                                                     6,985                             535,540    

            PSU         02/27/2015         02/26/2015                                       1,457         14,575         29,150                                       1,291,637    

 

Davide A. Molho

        EICP         12/01/2014         12/01/2014         4,043         404,250         1,010,625                                                                          

            SO         02/27/2015         02/26/2015                                                                               24,660         76.67         429,331    

            RSU         02/27/2015         02/26/2015                                                                     5,588                             428,432    

            PSU         02/27/2015         02/26/2015                                       1,457         14,575         29,150                                       1,291,637    

 

Thomas F. Ackerman

        EICP         12/01/2014         12/01/2014         3,741         374,125         935,313                                                                          

            SO (7)       02/25/2015         2/26/2015                                                                               N/A         N/A         318,668    

            RS/PSU (7)       02/25/2015         2/26/2015                                                                               N/A         N/A         618,645    

            SO         02/27/2015         02/26/2015                                                                               12,330         76.67         214,665    

            RSU         02/27/2015         02/26/2015                                                                     2,794                             214,216    

            PSU         02/27/2015         02/26/2015                                                 8,380                                                 642,495    
(*)
Types of Award:
(1)
See the section of the Proxy Statement entitled "Compensation Discussion and Analysis" for a discussion regarding our equity award grant date practices.

(2)
Reflects the threshold amount payable (5% of target for the least weighted goal), the target amount payable (100% of target for all goals), and maximum amount payable (250% of target for all goals) under the EICP plan for fiscal year 2015. Threshold amounts reflect minimum award opportunity under the EICP plan for the smallest weighted EICP goal for the respective named executive, although if minimum performance levels (90% of performance target) are not achieved, there may be no payout. Under certain discretionary circumstances, additional amounts can be paid under the EICP plan. The potential payouts are performance-driven and therefore completely variable. Actual amounts paid to the named executives under the EICP plan with respect to fiscal year 2015 are set forth in the Summary Compensation Table above.

(3)
Reflects the number of PSUs payable at threshold (10%), target (100%), and maximum (200%) levels, with fractional shares rounded down. For purposes of this chart, threshold payout is considered to be the smallest non-zero payout possible given both EPS and relative TSR performance over the course of the plan. See the description of how the threshold, target, and maximum amounts payable are determined under "Compensation Discussion and Analysis—Compensation Elements—Long Term Equity Incentive Awards" set forth on pages 54-58 of this Proxy Statement.

(4)
Reflects restricted stock units granted on February 27, 2015 and, with respect solely to Mr. Smith, August 12, 2015.

(5)
Reflects stock options granted on February 27, 2015 and, with respect solely to Mr. Smith, August 12, 2015.

64


(6)
The grant date fair market value of options granted on February 27, 2015 has been calculated using the Black-Scholes pricing model, based on the following assumptions: an expected volatility of 28.19%, a weighted average expected life of 3.6 years, and a risk-free interest rate of 1.12%. The grant date fair market value of options granted to Mr. Smith on August 12, 2015 has been calculated using the Black-Scholes pricing model, based on the following assumptions: an expected volatility of 24.15% a weighted average expected life of 3.6 years, and a risk-free interest rate of 1.2%.The grant date fair value of restricted stock is determined from the market value of the stock on the date of grant. The grant date fair value of performance share units is determined consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date, based on the probable outcome of the performance conditions, computed in accordance with FASB ASC Topic 718.

(7)
For Mr. Ackerman, the amounts for fiscal 2015 also include the incremental fair value of previously granted stock options, restricted stock awards, and performance share units computed in accordance with FASB ASC Topic 718 resulting from the provision of his February 25, 2015 agreement with the Company in connection with his transition from the Company that provided that the vesting of his equity would continue through the conclusion of his consulting period.

        All awards of stock options, restricted stock/units and performance share units were granted pursuant to our 2007 Incentive Plan, as amended. The vesting provisions of our PSUs are set forth above on pages 56-57 of this Proxy Statement. Options vest and become exercisable in equal installments on or about the anniversary date in each of the four years following the date of grant, subject to continued employment. Restricted shares (whether in the form of restricted stock or restricted stock units) generally vest in installments on or about the anniversary date in each of the four years following the date of grant, subject to continued employment. The installments are generally equivalent in amount. Furthermore, 1,397 shares of restricted stock were granted to Mr. Johst on February 27, 2015 which vest in equal installments on or about the anniversary date in each of the two years following the date of grant, subject to continued employment. The exercise price of stock options is equal to the closing price of our common stock on the date of grant. All grants of non-equity incentive plan awards have been made pursuant to our EICP plan.

        As described in the Compensation Discussion and Analysis, we generally and historically have not entered into employment agreements with any of our U.S.-based corporate executive officers. The named executives, however, are beneficiaries of certain separation and change-in-control agreements, as well as defined benefit and deferred compensation arrangements, as further described below in this Proxy Statement.

        We entered into a letter agreement dated March 3, 2015 in connection with Mr. Smith's 2015 promotion to Corporate Executive Vice President and Chief Financial Officer and his commitment to relocate from Europe to our corporate headquarters in Massachusetts. This agreement provides for the following material compensation terms:

65


        In addition, as described below, during the past year we entered into agreements with two of our named executives as part of their planned transitions from the Company:

66



Outstanding Equity Awards at Fiscal 2015 Year-End

        The following table sets forth the information regarding each outstanding unexercised or unvested equity award held by our named executive officers as of December 26, 2015.

      Option Awards     Stock Awards
 
Name     Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
    Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Number of
Shares or
Units
of Stock
That Have
Not Vested
(#)
    Market
Value
of Shares
or Units
of Stock
That Have
Not Vested
($)(1)
    Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)(2)
    Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other rights
That Have
Not Vested
($)(1)
 
James C. Foster     0     24,388 (3)   36.25     02/24/2019                          
      0     43,558 (4)   40.40     02/22/2020                          
      0     60,215 (5)   59.41     02/28/2021                          
      0     86,308 (6)   76.67     02/27/2020     69,252 (10)   5,545,700     201,418     16,129,553  
David R. Smith     945     19,652 (8)   51.45     05/01/2021                          
      0     8,631 (6)   76.67     02/27/2020                          
      0     4,995 (9)   76.12     08/12/2020     7,172 (11)   574,334     7,919     634,154  
Nancy A. Gillett     0     5,538 (3)   36.25     02/24/2019                          
      0     11,004 (4)   40.40     02/22/2020                          
      0     13,138 (5)   59.41     02/28/2021                          
                              11,460 (12)   917,717     26,666     2,135,413  
David P. Johst     34,075     0     24.80     02/27/2016                          
      13,950     0     37.92     02/26/2017                          
      19,750     0     37.03     02/25/2018                          
      16,612     5,538 (3)   36.25     02/24/2019                          
      12,739     12,380 (4)   40.40     02/22/2020