•Non-discretionary items - The election of directors (Proposal 1), approvalthe Amendment to the Company’s Amended and Restated By-laws to limit the personal liability of the adoption of the 2017 Equity Incentive PlanCompany’s officers for monetary damages (Proposal 2) and the advisory resolution to approve executive compensation (Proposal 4) are non-discretionary items and may not be voted on by brokers, banks or other nominees who have not received voting instructions from beneficial owners (referred to as “broker non-votes”).
GENERAL INFORMATION REGARDING CORPORATE GOVERNANCE
Board of Directors
The Board of Directors (sometimes referred to throughout the remainder of this Proxy Statement as the “Board”) is the ultimate governing body of the Company. As such, it functions within a framework of duties and requirements established by Pennsylvania statute, government regulations, court decisions and the Company’s organizational documents. Generally, the Board of Directors reviews and confirms the basic objectives and broad policies of the Company, approves various important transactions, appoints the officers of the Company and monitors Companythe Company’s performance in key results areas. The Board also has oversight responsibility of the processes established to report and monitor systems for material risks applicable to the Company. The full Board regularly reviews enterprise-wide risk management, which includes relationships with significant customers, volatility of commodity costs, changesrisks in the markets in which the Company operatesareas of compliance, operations, strategy, reporting, treasury, enterprise value, and existing and potential competitors.insurable risks. In addition, each Board committee plays a significant role in carrying out the risk oversight function. The Executive Committeeexecutive committee of the Board (the “Executive Committee”) assists in monitoring and assessing relevant risks between the times at which the full Board convenes. The Nominatinggovernance and Corporate Governance Committeesustainability committee of the Board (the “Governance and Sustainability Committee”) oversees risks related to corporate governance, ethics and ethics. environmental, social, and governance (“ESG”) considerations.The Audit Committeeaudit committee of the Board (the “Audit Committee”) oversees risks related to financial reporting and control; environmental health and sustainabilityhealth matters; management policies and guidelines; legal claims and issues; anti-corruption and regulatory compliance; cybersecurity; and information technology. The Finance Committeefinance committee of the Board (the “Finance Committee”) oversees the Company’s financial policies, strategies and capital structure. The Compensation Committeecompensation committee of the Board (the “Compensation Committee”) oversees risks related to human resources, succession planning and compensation. The SpecialMergers and Acquisitions Review Committee of the Board (the “M&A Review Committee”) provides oversight of integration planning and implementation of the Company'sCompany’s significant acquisitions.acquisitions on an as-needed basis.
Board Composition and Corporate Governance
The Restated Articles of Incorporation of the Company provide that the Board of Directors has the powerauthority to set the number of directors constituting the full Board, provided that such number shall not be less than five or more than fifteen. Until further action, the Board of Directors has fixed the number of directors constituting the full Board at ten,ten. From time to time, the Board reassesses the number of directors constituting the full Board and, in anticipation of future retirements, may consider expanding the Board beyond ten. Pursuant to the Company’s Restated Articles of Incorporation, the Board is divided into three classes. The terms of office of the three classes of directors end in successive years.
After reviewing the independence standards contained in the NASDAQ listing requirements for the Nasdaq Global Select Market (“Nasdaq”), the Board of Directors has determined that each of its directors is independent under these standards, other than Joseph C. Bartolacci, the Company’s President and Chief Executive Officer; David A. Schawk, President of the Company’s SGK Brand Solutions segment;Officer and Gregory S. Babe, the Company’s Chief Technology Officer.Officer and Group President, Industrial Technologies.
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Company’s Amended and Restated By-laws and Corporate Governance Guidelines provide that no person may be eligible for nomination, nor elected to fill a vacancy on the Board of Directors, after attaining 75 years of age, and any director that, if nominated, would attain 75 years of age during such term as a director, shall retire from the Board of Directors immediately prior to the next annual meeting of the shareholders following such director attaining 75 years of age.
The Board of Directors has also implemented a director resignation policy under the Company’s Corporate Governance Guidelines. The director resignation policy requires each nominee to the Board of Directors, prior to any election of directors, to submit a conditional resignation to the Board of Directors in connection with such nominee’s nomination. In the event a nominee fails to receive the vote of at least a majority of the votes cast in an uncontested election, such director is required under the Company’s Corporate Governance Guidelines to conditionally resign from the Board, and the Governance and Sustainability Committee will make a recommendation to the Board whether to accept or reject the tendered conditional resignation. The Board of Directors must act on the tendered resignation, taking into account the Governance and Sustainability Committee’s recommendation, within ninety (90) days from the date of the certification of the election results. The Board shall promptly disclose its decision regarding the tendered resignation by furnishing a Current Report on Form 8-K to the U.S. Securities and Exchange Commission (the “SEC”), including its rationale for accepting or rejecting the tendered resignation. In making their recommendation and decision, the Governance and Sustainability Committee and Board may consider the following factors or other information that it considers appropriate and relevant: (i) the stated reasons, if any, why shareholders withheld their votes; (ii) possible alternatives for curing the underlying cause of the withheld votes; (iii) the director’s qualifications in light of the overall composition of the Board; (iv) the director’s past and expected future contributions to the Board and Company as a whole; (v) potential adverse consequences of accepting the resignation, including failure to comply with any applicable rule or regulation; and (vi) the best interests of the Company and its shareholders. If the Board accepts a director’s tendered resignation, the Board, in its sole discretion, may fill any resulting vacancy or decrease the size of the Board, pursuant to the Amended and Restated By-laws of the Company. If a director’s resignation is not accepted by the Board, such director will continue to serve in accordance with existing Company regulations. Any director whose tendered resignation is being considered shall not participate in the deliberations conducted by the Governance and Sustainability Committee or the Board.
The Board has currently determined that an independent, non-employee member should be appointed to serve as ChairmanChairperson of the Board. The Board believes that separation of the positions of ChairmanChairperson of the Board and Chief Executive Officer, with the appointment of an independent, non-employee director as ChairmanChairperson of the Board, strengthens the Company’s corporate governance. John D. Turnergovernance and enhances the Board’s ability to fulfill its oversight responsibilities. Alvaro Garcia-Tunon is the Company’s current independent, non-employee ChairmanChairperson of the Board.
During fiscal 2017,2023, there were six (6) regularly scheduled meetings and two (2) special Board meetings.
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Board Committees
There are six (6) standing committees appointed by the Board of Directors --Board: the Executive Committee, the NominatingGovernance and Corporate GovernanceSustainability Committee, the Audit Committee, the Finance Committee, the Compensation Committee and the SpecialM&A Review Committee.
Each Committee has the same power as the Board of Directors to employ the services of outside consultants and to have discussions and interviews with personnel of the Company and others.
The principal functions and respective memberships of the six standing Committees are summarized as follows:
Executive Committee
The Executive Committee is appointed by the Board of Directors to have and exercise during periods between Board meetings all of the powers of the Board of Directors,during periods between Board meetings, except that the Executive Committee may not elect directors, change the membership of or fill vacancies on the Executive Committee, change the By‑laws of the Company or exercise any authority specifically reserved by the Board of Directors.Board. Among the functions customarily performed by the Executive Committee during periods between Board meetings are the approval, within limitations previously established by the Board, of Directors, of the principal terms involved in sales of securities of the Company, and such reviews as may be necessary of significant developments in major events and litigation involving the Company. In addition, the Executive Committee is called upon periodically to provide advice and counsel in the formulation of corporate policy changes and, where it deems advisable, make recommendations to the Board of Directors.Board.
The members of the Executive Committee are John D. Turnercurrently Alvaro Garcia-Tunon (Chairperson), Katherine E. Dietze, Alvaro Garcia-Tunon,Lillian D. Etzkorn, Morgan K. O’Brien, and Jerry R. Whitaker. The Executive Committee holds meetings at such times as are required. The Executive Committee did not meet in fiscal 2017.2023.
Governance and Corporate GovernanceSustainability Committee
The principal functions of the NominatingGovernance and Corporate GovernanceSustainability Committee are, toamong other things, to: (1) identify individuals qualified to become members of the Board of Directors; (2) review the qualifications of directors and the composition of the Board of Directors, (2)and recommend to the Board of Directors the director nominees for the next annual meeting of shareholders,the shareholders; (3) maintain, monitor and recommend to the Board of Directors changes as necessary, to the Company’s Corporate Governance Guidelines, as necessary; (4) lead the Board of Directors in complying with its Corporate Governance GuidelinesGuidelines; (5) review and make recommendations to the Board of Directors concerning director compensationcompensation; and (6) review any related matters required by the federal securities laws or Nasdaq. The Governance and approve related person transactions pursuant to the Company’s Code of Conduct. The Nominating and Corporate GovernanceSustainability Committee is also responsible for the annual evaluations of the performance of the Board of Directors and the Committees of the Board, including individual directors. The Committee is committed to ensuring thatthat: (i) the nominees for membership on the Board of Directors are of the highest possible caliber and are able to provide insightful, intelligent and effective guidance to the management of the Company, and (ii) the governance of the Company is in full compliance with applicable law, reflects generally accepted principles of good corporate governance, encourages flexible and dynamic management without undue burdens and effectively manages the risks of the business and operations of the Company. In addition, the Governance and Sustainability Committee oversees, in conjunction with the Audit Committee and the Compensation Committee as determined by the Board, the Company’s sustainability and ESG-related engagement efforts with shareholders, other key stakeholders and proxy advisory firms. From time to time, the NominatingGovernance and Corporate GovernanceSustainability Committee has retained the services of a third-party search firm to assist in the identification and evaluation of potential nominees for the Board of Directors. The NominatingGovernance and Corporate GovernanceSustainability Committee operates pursuant to a Chartercharter and the Company’s Corporate Governance
Guidelines, which are available for viewing on the Company’s investor relations website at www.matw.comwww.matw.com/investors under the “Corporate”“Governance Documents” tab in the section entitled “Corporate Governance”.“Governance.” The Board has determined that all members of the NominatingGovernance and Corporate GovernanceSustainability Committee are independent in accordance with the listing standards of NASDAQ.Nasdaq. The NominatingGovernance and Corporate GovernanceSustainability Committee met fournine (9) times during fiscal 2017.2023. The current members of the NominatingGovernance and Corporate GovernanceSustainability Committee are Jerry R. Whitaker (Chairperson), Katherine E. Dietze and Terry L. Dunlap.
Audit Committee
The principal functions of the Audit Committee are to provide oversight ofof: (1) the integrity of the Company'sCompany’s financial statements, reports on internal controls and other of the Company’s financial information provided by the Company,information; (2) the Company'sCompany’s compliance with legal and regulatory requirements,requirements; (3) the qualifications and independence of the Company'sCompany’s independent registered public accounting firmfirm; (4) enterprise risk, including cybersecurity programs; and (4)(5) the performance of the Company'sCompany’s internal audit function (including disclosure controls and procedures for internal controls over financial reporting) and independent registered public accounting firm. The Committee is also responsible for the oversight of the Company's environmental, health, and safety programs. The Audit Committee serves as a vehicle to provide an open avenue of communication between the full Board of Directors and the Company’s financial management team and internal audit department, and the independent registered public accounting firm. The Audit Committee is also responsible for appointing the Company'sCompany’s independent registered public accounting firm.firm and oversees, in conjunction with the Governance and Sustainability Committee and the Compensation Committee as determined by the Board, the Company’s sustainability and ESG-related engagement efforts with shareholders, other key stakeholders and proxy advisory firms. The Audit Committee operates pursuant to a Charter,charter, which is available for viewing on the Company’s investor relations website at www.matw.comwww.matw.com/investors under the “Governance Documents” tab in the section entitled “Corporate Governance”.“Governance.”
All of the Audit Committee members, Alvaro Garcia-TunonLillian D. Etzkorn (Chairperson), Terry L. Dunlap and Morgan K. O’Brien, Aleta W. Richards and Jerry R. Whitaker, have been determined in the Board’s business judgment to be independent from the Company and its management within the meaning of SEC regulations of the U.S. Securities and Exchange Commission (the “SEC”) relating to audit committee independence, NASDAQ regulationNasdaq regulations and the Company’s Corporate Governance Guidelines. All of the Audit Committee members aremeet the qualifications of “audit committee financial experts,expert,” as determined by the Board pursuant to SEC regulations, and, as such Mr. Garcia-Tunon, Mr. Dunlap and Mr. O'Brien areregulations; however, Ms. Etzkorn has been designated as the ranking Audit Committee financial experts.expert. During fiscal 2017,2023, the Audit Committee met six (6) times.
Finance Committee
The Finance Committee provides oversight of the Company’s financial policies, strategies and capital structure. The Committee’s principal responsibilities include, reviewamong others, reviewing and monitoring of the Company’sCompany’s: (1) significant capital expenditures,expenditures; (2) mergers, acquisitions, divestitures, and divestitures,investments; (3) capital structure, debt and equity offerings,offerings; (4) the dividend policy and share repurchase program,program; (5) risk management programsstrategies for commodity, interest rate, foreign exchange and other financial exposures; and (6) investor relations program. The Committee also provides oversight to the Pension Board on employee retirement benefit plan matters and related plan investment management. MembersMs. Katherine E. Dietze is Chairperson of the Finance Committee. The other members of the Finance Committee are Katherine E. Dietze (Chairperson), Gregory S. Babe, Don W. Quigley, Jr., David A. Schawk and Jerry R. Whitaker.Lillian D. Etzkorn. The Finance Committee met five (5) times in fiscal 2017.2023.
Compensation Committee
The principal functions of the Compensation Committee, the members of which are Morgan K. O’Brien (Chairperson), Alvaro Garcia-TunonTerry L. Dunlap, Aleta W. Richards and Don W. Quigley, Jr.,David A. Schawk, are to review periodically the suitability of the remuneration arrangements (including benefits) for the principal executivesCompany’s Chief Executive Officer and other members of management of the Company, and to prepare an annual report on executive compensation for inclusion in the Company’s Proxy Statement. The Compensation Committee also reviews, at least annually, succession plans for the position of Chief Executive Officer and other senior executive positions of the Company. The Committee also addresses matters related to the Company's human capital management. In addition, the Compensation Committee oversees, in conjunction with the Audit Committee and the Governance and Sustainability Committee as determined by the Board, the Company’s sustainability and ESG-related engagement efforts with shareholders, other key stakeholders and proxy advisory firms. The Compensation Committee operates pursuant to a Charter,charter, which is available for viewing on the Company’s investor relations website at www.matw.comwww.matw.com/investors under the “Governance Documents” tab in the section entitled “Corporate Governance”. “Governance.” Pursuant to its charter, the Compensation Committee may delegate any of its responsibilities to a subcommittee comprised of one or more of its members. In addition, the Compensation Committee may delegate to Company officers or a committee of employees any of its responsibilities with respect to non-equity based plans.
The Board has determined that all members of the Compensation Committee are independent in accordance with the listing standards of NASDAQ.Nasdaq. During fiscal 2017,2023, the Compensation Committee met three (3) times.
The SpecialM&A Review Committee was established in 2014 to provideprovides oversight, on an as-needed basis, of integration planning and implementation for the Company’s significant acquisitions, including Schawk, Inc. (“Schawk”) that was completed on July 29, 2014 and Aurora Casket Products Group, LLC (“Aurora”) that was completed on August 19, 2015.acquisitions. The members of the SpecialM&A Review Committee are Alvaro Garcia-TunonTerry L. Dunlap (Chairperson), Gregory S. Babe, Joseph C. Bartolacci, and Terry L. Dunlap.David A. Schawk. The Committee met fourtimes (4) time in fiscal 2017.2023.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Mr.Morgan K. O’Brien Mr. Garcia-Tunon(Chairperson), Terry L. Dunlap, Aleta W. Richards and Mr. Quigley.David A. Schawk. None of thesethe members of the Compensation Committee members hashave ever been an officer or employee of the Company or any of its subsidiaries.subsidiaries, other than David A. Schawk, who served as Group President of SGK Brand Solutions from July 2014 to November 2019. None of our executive officers serves or has served as a member of the board of directors, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.
Board Diversity Matrix
The Board believes it is important to consider diversity of race, ethnicity, gender, sexual orientation, age, education, cultural background and professional experience in evaluating board candidates in order to provide practical insights and diverse perspective.
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Immediately following the Annual Meeting, if all of the nominees to the Board of Directors are elected, the following table would show an overview of the diversity of the Company’s ten directors following the Annual Meeting:
| Part I: Gender Identity | Female | Male | ||||||||||||
| Directors | 3 | 7 | ||||||||||||
| Part II: Demographic Background | ||||||||||||||
| African American or Black | 1 | |||||||||||||
| Hispanic or Latin | 1 | |||||||||||||
| White | 2 | 6 | ||||||||||||
The following table provides an overview of the diversity of the Company’s ten directors as of the mailing of this proxy statement, on or about January 16, 2024.
| Part I: Gender Identity | Female | Male | ||||||||||||
| Directors | 3 | 7 | ||||||||||||
| Part II: Demographic Background | ||||||||||||||
| African American or Black | 1 | |||||||||||||
| Hispanic or Latin | 1 | |||||||||||||
| White | 2 | 6 | ||||||||||||
Meeting Attendance
During fiscal 2017,2023, all directors attended at least 75% of Board and respective Committee meetings.
Although the Company does not have a formal policy with regard to Board members attending the Annual Meeting of the Shareholders, it is customary for the Board members to do so, and, in general, all or most of the Board members have attended annual meetings in the recent past.
Compensation of Directors
Director compensation is determined and administered by the NominatingGovernance and Corporate GovernanceSustainability Committee. In performing its duties, the Governance and Sustainability Committee consults with various independent third-party advisors. In fiscal 2017,2023, the Governance and Sustainability Committee consulted with Pay Governance, LLC, (“Pay Governance”), an independent human resourcesexecutive compensation consulting firm.
Under the Company’s Amended and Restated 20142019 Director Fee Plan, ("2014 Director Plan"), for fiscal 20172023, each eligible independentnon-employee director received an annual retainer valued at $85,000,$90,000, which was payable either in cash or in shares of the Company’s Common Stock, as determined by the NominatingGovernance and Corporate GovernanceSustainability Committee. If payable in cash, a director may elect to receive the annual retainer in (a) shares of Company Common Stock or (b) Common Stock credited to a deferred stock account as phantom stock. If the annual retainer is paid in shares of Company Common Stock, a director may defer the receipt of such Common Stock into a deferred stock account as phantom stock.
Each independentnon-employee director is also receiveseligible to receive an annual stock-based grant (non-statutoryin the form of either non-statutory stock options, stock appreciation rights, and/restricted shares or restricted shares)share units (“RSUs”). The form and value of the awards are determined by the NominatingGovernance and Corporate GovernanceSustainability Committee. The
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value of the annual grants awarded for fiscal 20172023 was $125,000,$140,000, issued in the form of restricted stock,RSUs, which vestsvest on the second anniversary of the date of the grant. At December 31, 2017, there were 85,343 shares available for future grant under the Amended and Restated 2014 Director Fee Plan.
The non-employee Chairman of the Board received an additional annual retainer fee of $100,000$120,000 in fiscal 2017,2023, which was paid in cash. In fiscal 20172023, each Committee chairperson of a committee of the Board received an additional $10,000 retainer fee for their services as a Committee chairperson ($15,00017,500 in the case of the Audit Committee chairperson; $12,500 in the case of the Compensation Committee chairperson). for their services as a committee chairperson. In addition, in fiscal 2017,2023, Mr. Garcia-TunonDunlap and Mr. Dunlap,Schawk, the non-employee members of the SpecialM&A Review Committee, received $1,500 per day of service on the M&A Review Committee. Other than this daily fee with respect to the SpecialM&A Review Committee, directors receive no other meeting fees.
The Company does not provide any retirement benefits or perquisites to any of its non-employee directors.
The following table summarizes the director compensation earned by the non-employee directors of the Company for fiscal 2017.2023.
Non-Employee Director Compensation Table
| Name | Fees Earned or Paid in Cash | Stock Awards (1) | Total | ||||||||
| A. Garcia-Tunon | $ | 210,000 | $ | 140,000 | $ | 350,000 | |||||
| K.E. Dietze | 100,000 | 140,000 | 240,000 | ||||||||
| T.L. Dunlap | 106,000 | 140,000 | 246,000 | ||||||||
| L.D. Etzkorn | 107,500 | 140,000 | 247,500 | ||||||||
| M.K. O’Brien | 102,500 | 140,000 | 242,500 | ||||||||
| A.W. Richards | 90,000 | 140,000 | 230,000 | ||||||||
| D.A. Schawk | 96,000 | 140,000 | 236,000 | ||||||||
| J.R. Whitaker | 100,000 | 140,000 | 240,000 | ||||||||
| Name | Fees Earned or Paid in Cash (2) | Stock Awards (1) (3) | Total | ||||||
| J.D. Turner | $ | 185,000 | $ | 125,000 | $ | 310,000 | |||
| K.E. Dietze | 95,000 | 125,000 | 220,000 | ||||||
| T.L. Dunlap | 89,500 | 125,000 | 214,500 | ||||||
| A. Garcia-Tunon | 117,500 | 158,700 | 276,200 | ||||||
| M.K. O’Brien | 95,000 | 125,000 | 220,000 | ||||||
| D.W. Quigley, Jr. | 85,000 | 125,000 | 210,000 | ||||||
| J.R. Whitaker | 95,000 | 125,000 | 220,000 | ||||||
(1)Amounts in this column reflect the grant date fair value of awards of restricted share units of Common Stock granted during fiscal 2023 computed in accordance with Financial Accounting Standards Board ASC Topic 718; however, the estimates of forfeitures related to service-based vesting conditions are disregarded for purposes of this valuation. There were no forfeitures of restricted awards by any of the directors during fiscal 2023. On March 9, 2023, each of the non-employee directors were awarded 3,777 restricted share units with a grant date fair value of $140,000.
Access to Directors
The security holders of the Company may communicate in writing to the Board of Directors by sending such communication to the Board or a particular director in care of Steven F. Nicola, Chief Financial Officer and Secretary, at the Company’s principleprincipal executive offices. At present, such communications will be directly forwarded to the Board or such particular director, as applicable.The Board has authorized Mr. Nicola, in his discretion, to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the Board.
Board and Committee Oversight of ESG Matters
Matthews has invested in ESG efforts not only to evaluate and improve ESG performance across all business sectors, but also to positively impact the culture of the Company. Part of these efforts include building awareness, knowledge and skills through learning opportunities, focused on health and safety, and diversity and inclusion, along with sponsorship of community engagement activities. Supporting this work is a newly established management-led ESG global steering committee charged with strategic oversight
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and prioritizing related initiatives, and for reporting progress to the Governance and Sustainability Committee quarterly and the Board of Directors twice annually.
Matthews' ESG initiatives focus on the following areas:
Environmental:
–Usage of electricity and natural gas
–Water usage
–Hazardous and non-hazardous waste generation
–Investment in renewable energies
–Management of fleet fuel efficiency
–Innovation in technologies to improve business and environmental performance
–Investment in management systems to externally validate our performance
Social:
–Training and upskilling of employees on environmental sustainability, health and safety, and diversity and inclusion (“D&I”).
–Execution of a comprehensive, global Environmental, Health and Safety ("EHS") management system that addresses risks and hazards, and works to mitigate them for employees, those working on behalf of the Company, and those living in the communities in which we work.
–Investment in and deployment of a global D&I program guided by eight strategic priorities known as Elev8te.
–Investment in community engagement programs and projects through manpower, financial support, and/or charitable giving.
Governance:
–Timely and thorough external reporting through third party certifications on governance issues.
–Regular communication with stakeholders on company activities such as capital investments, Board meetings and processes, and acquisitions.
–Regular validation and communication that the Company is in compliance with all local, state, and federal laws in the areas in which they work.
The Audit Committee of the Board is responsible for the oversight of policies and processes pertaining to the Company’s enterprise risk management (“ERM”) program and specifically ensure that notable risk exposures and applicable mitigating controls are reported to the Board of Directors. Management briefs the Audit Committee on information security risk matters as a part of regular ERM reports. The Board of Directors, either directly or through the Audit Committee, also meets with staff from the Company's EHS, D&I, and Sustainability groups from time to time to discuss our policy and practices with respect to employee health and safety programs and to determine the adequacy of our compliance with governmental, environment, safety, health, and sustainability regulations. The Audit Committee also has the opportunity to review the results of external certification system evaluations to compare the company’s ESG performance against those of our competitors within a chosen cohort. The Governance and Sustainability Committee is responsible for the oversight of the Company's governance, policies and processes.
ESG Highlights
As a company serving customers and clients around the world, Matthews takes seriously its role as a global citizen. Certifying its activities consistent with ISS's ESG ratings and Ecovadis business sustainability ratings provides Matthews with an externally verified position in the marketplace with regards to ESG. For more information on the Company's ESG initiatives, please refer to the ESG resources available on the Company's website at https://www.matw.com/investors/esg/resources. The contents of our website are not incorporated by reference into this Proxy Statement.
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PROPOSAL 1
ELECTION OF DIRECTORS
Board Composition and Director Nominations
The Restated Articles of Incorporation of the Company provide that the Board of Directors has authority to set the number of directors constituting the full Board, provided that such number shall not be less than five or more than fifteen. Until further action, the Board has fixed the number of directors constituting the full Board at ten. From time to time, the Board reassesses the number of directors constituting the full Board and, in anticipation of future retirements, may consider expanding the Board beyond ten. Pursuant to the Company’s Restated Articles of Incorporation, the Board of Directors is divided into three classes. The terms of office of the three classes of directors end in successive years.
Nominations for election to the Board of Directors may be made by the NominatingGovernance and Corporate GovernanceSustainability Committee or by the shareholders.shareholders pursuant to the provisions set forth in the Company’s Restated Articles of Incorporation and Amended and Restated By-laws.
Nominees for Director
Joseph C. Bartolacci, Katherine E. Dietze, Lillian D. Etzkorn and Morgan K. O’Brien,O'Brien, whose terms of office are expiring, have been nominated by the NominatingBoard of Directors upon the recommendation of the Governance and Corporate GovernanceSustainability Committee to serve for three-year terms that will end in 2021.2027 or until their successors are elected and qualified.
The Company’s process for identifying and evaluating director nominees and filling director vacancies includes determination of the professional skills and background desired to serve the best interests and current needs of the Company and its shareholders, possible retention of a third-party search firm to assist in the identification and evaluation of director candidates, consideration of candidates nominated by shareholders (if any), evaluation of a candidate’s credentials and experience by the NominatingGovernance and Corporate GovernanceSustainability Committee (including personal interviews with selected candidates), and a formal recommendation by the NominatingGovernance and Corporate GovernanceSustainability Committee to the Board of Directors regarding the candidate considered to be the most qualified to be nominated for election to the Board or to fill the director vacancy.
The Governance and Sustainability Committee assesses a candidate’s background, skills, diversity, personal characteristics and business experience and applies the following criteria and qualifications: candidates are to be of the highest ethical character, share the values of the Company, have reputations, both personal and professional, consistent with the image and reputation of the Company, be highly accomplished in their respective field, with superior credentials and recognition, and provide the relevant expertise and experience necessary to assist the Board and the Company to increase shareholder value. The Board may prioritize the foregoing criteria depending on the current needs of the Board and the Company. The Board does not have a formal diversity policy for selecting directors but considers diversity of race, gender and national origin to be relevant factors that are weighed with other criteria in recommending and nominating directors for election to the Board of Directors of Matthews.
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Information About Current Directors Standing for Re-Election and Board Nominees
The table below sets forth, as of the Company’s Corporate Governance Guidelines, anydate of this Proxy Statement, certain information that has been furnished to us by each current director standing for re-election and each other individual who experiences a change in principal occupation or primary business affiliation while servinghas been nominated by the Board to serve as a director must promptly offer to submit a letter of resignationour Company:
| Name | Age | Director Since | ||||||
Joseph C. Bartolacci M | 63 | 2005 | ||||||
Katherine E. Dietze E, G, F | 66 | 2008 | ||||||
Lillian D. Etzkorn E, A, F | 54 | 2020 | ||||||
Morgan K. O'Brien E, A, C | 63 | 2011 | ||||||
A – Member of the Audit Committee as a director toof the Chiefdate of this Proxy Statement
C – Member of the Compensation Committee as of the date of this Proxy Statement
E – Member of the Executive OfficerCommittee as of the date of this Proxy Statement
F – Member of the Finance Committee as of the date of this Proxy Statement
G – Member of the Governance and toSustainability Committee as of the Nominatingdate of this Proxy Statement
M – Member of the M&A Review Committee as of the date of this Proxy Statement
Additional Information About Current Directors and Corporate Governance Committee. The Board with input from the Nominating and Corporate Governance Committee and the Chief Executive Officer, will consider whether to accept such offer.Nominees
The paragraphs below provide further information about each Board Nominee, each of Directorswhom has no reason to believe that any of the current nominees for director will become unavailable for election. However, if any nominee should become unavailable prior to the Annual Meeting, the accompanying proxy will be voted for the election in the nominee's place of such other person as the Board of Directors may recommend in the nominee’s place.
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Nominees
Joseph C. Bartolacci, age 57,63, was appointed President and Chief Executive Officer of the Company in 2006, and has served on the Board of Directors since 2005. Prior to his appointment as Chief Executive Officer, he was President and Chief Operating Officer of the Company since 2005. Prior thereto, he held various positions within Matthews, including President, Casket Division; Executive Vice President of Matthews; President, Matthews Europe; President, Caggiati, S.p.A. (a wholly-owned subsidiary of Matthews) and General Counsel of Matthews. Mr. Bartolacci provides management’s perspectivereceived a Bachelor of Science degree in Board decisions aboutAccounting from Saint Vincent College and a Juris Doctor from the business and strategic directionUniversity of Pittsburgh. Mr. Bartolacci serves on the M&A Review Committee of the Company.Board. He has first-handalso serves on the boards of various subsidiaries of Matthews. Other than the Company, Mr. Bartolacci serves on the board of Federated Hermes, a global investment management company and publicly-traded company.
The Board believes that Mr. Bartolacci is well-qualified to serve on the Company’s Board of Directors based on his firsthand operating experience in many of the Company’s diverse global businesses and brings a well-developed understanding of the industries in which the Company operates, as well as the opportunities within those industries to drive shareholder value. Mr. Bartolacci received a Bachelor of Science degreeIn addition, he provides management’s perspective in Accounting from Saint Vincent CollegeBoard decisions about the business and a Juris Doctor from the University of Pittsburgh. Mr. Bartolacci serves on the Special Committeestrategic direction of the Board. He also serves on the Company’s Pension Board, the Board of the Jas. H. Matthews & Co. Educational and Charitable Trust, and on the boards of various subsidiaries of Matthews. Mr. Bartolacci is a member of the Board of Directors of Federated Investors, a global investment management company. He is also a member of the Board of Directors of Saint Vincent College and the Carnegie Science Center.Company.
Katherine E. Dietze, age 60,66, has served on the Board of Directors of the Company since July 2008. Ms. Dietze was Global Chief Operating Officer, Investment Banking Division of Credit Suisse First Boston, a financial services company, until her retirement in 2005. She had also held the position of Managing Director, Investment Banking. Prior to joining Credit Suisse First Boston, Ms. Dietze was a Managing Director for Salomon Brothers Inc., a financial services company. Ms. Dietze brings a strong background in global investment and financial matters. With her background in investment banking, Ms. Dietze provides a unique and valuable perspective on global financial markets, investments and financial transactions. Ms. Dietze received a Bachelor of Arts degree from Brown University and graduated from Columbia University with a Masters in Business Administration in Finance and Marketing. Ms. Dietze serves as Chairperson of the Finance Committee and is a member of the Executive Committee. She is alsoMs. Dietze was a corporate director and Chairpersonchair of the Audit Committee and a member ofaudit committee for Cowen Group, Inc from October 2009 until the Governance Committeesale of Cowen Group, Inc., a financial services firm.in March 2023 to Toronto-Dominion Bank. She previously served as Chairpersonchairperson of the Audit Committeeaudit committee and member of both the Governancegovernance and Compensation Committeescompensation committees for LaBranche, LLC, a financial services firm purchased by the Cowen Group in June 2011. InMs. Dietze served as a trustee on the Liberty Property Trust board from January 2011 to March, 2020.
The Board believes that Ms. Dietze is well-qualified to serve on the Company’s Board of Directors in light of her background in investment banking, which allows Ms. Dietze to provide a unique and valuable perspective on global financial markets, investments and financial transactions.
Lillian D. Etzkorn, age 54, was electedappointed to the Board of TrusteesDirectors on October 1, 2020. Since April 2023, Ms. Etzkorn has served as the Executive Vice President & Chief Financial Officer of Liberty Property Trust,LCI Industries (NYSE: LCII) ("Lippert"). Lippert supplies highly engineered components for leading original equipment manufacturers in the recreation and transportation product markets, and the related aftermarkets of those industries. Prior to joining Lippert, she was the Chief Financial Officer at Covia, a real estate investment trust,$1+ billion industrial minerals mining and processing company from October 2021 to August 2022. She also served as CFO at Shiloh Industries from July 2018 to October 2021. Prior to that, she served as CFO at CPI Card Group and was the Vice President, Treasurer at Dana Holding Company from September 2011 to January 2017. Ms. Etzkorn began her career at Ford Motor Company where she currentlyhad increasing levels of responsibility over 19 years, including leading Investor Relations. She holds a Bachelor of Arts degree in Business Administration and Marketing from Eastern Michigan University and an MBA from the University of Michigan. Ms. Etzkorn is a member of the AuditFinance Committee and is the Chairperson of the Governance Committees.Audit Committee.
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The Board believes that Ms. Etzkorn is well-qualified to serve on the Company’s Board of Directors due to her strong leadership skills and financial acumen.
Morgan K. O’Brien, age 57,63, has served on the Board of Directors of the Company since July 2011. Mr. O’Brien currently serves as President and CEO of Hearthstone Utilities, Inc., a position he has held since December 2021. Mr. O’Brien served as the President and Chief Executive Officer of Peoples Natural Gas Company LLC, a utility serving the southwestern Pennsylvania market, sincefrom February 2010.2010 until March 2020. Prior thereto, Mr. O’Brien served as President and Chief Executive Officer of Duquesne Light Holdings, an electric utility company serving western Pennsylvania, since 2001. He held various senior executive positions at Duquesne Light Holdings since 1991. Prior to joining Duquesne Light Holdings, Mr. O’Brien served in various management positions at PNC Bank and at major accounting firms. AsMr. O’Brien is also Chairperson of the Compensation Committee and is a currentmember of the Executive Committee. Mr. O’Brien received a Bachelor’s degree in Business Administration and a Masters degree in taxation from Robert Morris University. Mr. O’Brien serves on the board of trustees of Robert Morris University. He also serves on the boards of several civic and charitable organizations in Western Pennsylvania.
The Board believes that Mr. O’Brien is well-qualified to serve on the Company’s Board of Directors due to having served as a Chief Executive Officer with more than 10 yearsyears’ experience in that role, Mr. O’Brienrole. As such, he brings significant leadership skills to the Board of Directors. With his experience in the areas of accounting and taxation, he also provides the Board and the Audit Committee, of which he is a member, with strong financial skills. Mr. O’Brien is also Chairman of the Compensation Committee and is a member of the Executive Committee. Mr. O’Brien received a Bachelor’s degree in Business Administration and a Masters degree in taxation from Robert Morris University. Mr. O’Brien serves on the Board of Directors of Peoples Natural Gas Company LLC, HFF, Inc. and on the Board of Trustees of Robert Morris University. He also serves on the boards of several civic and charitable organizations in western Pennsylvania.
Continuing Directors
Gregory S. Babe, age 60,66, has served on the Board of Directors since November 2010. Mr. Babe has served as the Company’s Chief Technology Officer and Group President, Industrial Technologies since October 2022. He served as the Company's Chief Technology Officer from November 2015 to September 2022 and prior to that served as the Company’s Executive Vice President, Global Information Technology and Integration starting in November 2014. Mr. Babe also serves as President and Chief Executive Officer of Liquid X Printed Metals, Inc., a Carnegie Mellon University spin out. From July 2012 to June 2013, Mr. Babe served as Chief Executive Officer of Orbital Engineering, Inc., a privately held engineering services company. Mr. Babe retired as President and Chief Executive Officer of Bayer Corporation and Bayer MaterialScience LLC in June 2012. Mr. Babe was appointed President and Chief Executive Officer of Bayer Corporation and Senior Bayer Representative for the United States and Canada in October 2008. Mr. Babe was responsible for the North American activities of the worldwide Bayer Group, an international health care, nutrition and high-tech materials group based in Leverkusen, Germany. In addition, he held the position of President and Chief Executive Officer of Bayer MaterialScience LLC, a producer of polymers and high-performance plastics in North America, from July 2004 until June 2012. He possesses a strong background in manufacturing and regulatory and government affairs. Mr. Babe is considereda member of the Finance Committee. He serves on the board of the Benedum Foundation, where he is a member of the investment committee. Mr. Babe holds a Bachelor of Science degree in mechanical engineering from West Virginia University.
The Board believes that Mr. Babe is well-qualified to serve on the Company’s Board of Directors based on his experience as a Chief Executive Officer of a multinational manufacturing company. He possesses a strong background in manufacturing and regulatory and government affairs. Mr. Babe is a member of the Finance and Special Committees. He serves on the Board of the Benedum Foundation, where he is a member of the Audit Committee. Mr. Babe holds a Bachelor of Science degree in mechanical engineering from West Virginia University.
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Terry L. Dunlap, age 58,64, has served on the Board of Directors since February 2015. Mr. Dunlap currently serves as the principal of Sweetwater LLC, a consulting and investing firm with a focus on manufacturingmanufacturing. Mr. Dunlap served as the Interim Chief Executive Officer and technology.President of TimkenSteel Corporation, a specialty steel producer, from October 2019 to December 2020. Prior thereto, Mr. Dunlap spent 31 years with Allegheny Technologies, where he served as Executive Vice President, Flat-Rolled Products from May 2011 until his retirement in December 2014, President, ATI Allegheny Ludlum from 2002 to 2014, and Group President, ATI Flat-Rolled Products from 2008 to May 2011. Mr. Dunlap’s experience and knowledge in the global manufacturing industry are valuable resources to the Board of Directors. Mr. Dunlap received a Bachelor of Science degree in Marketing from Indiana University of Pennsylvania and attended the Loyola University of Chicago MBA program. Mr. Dunlap is a member of the Audit, Nominating and CorporateCompensation, Governance and SpecialSustainability, and M&A Review Committees of the Board. Mr. Dunlap also serves on the Boardboard of Directors, Compensationdirectors of United States Steel Corporation, a global integrated mining and Audit Committees of TimkenSteel Corp., a specialtycarbon steel producer, and isserved as a director of TimkenSteel Corporation from August 2015 to December 2021, and Chairmanas a director of the Compensation Committee of Elliot Group/EBARA Corp.,Ampco-Pittsburgh Corporation, a global producer of turbomachinery, compressorsforged and turbines. He also serves ascast engineered products, from May 2019 to May 2022.
The Board believes that Mr. Dunlap is well-qualified to serve on the Vice PresidentCompany’s Board of Directors due to his experience and knowledge in the Indiana University of Pennsylvania Foundation Board.global manufacturing industry.
Alvaro Garcia-Tunon, age 65,71, has served on the Board of Directors since October 2009. Mr. Garcia-Tunon retired as the Chief Financial Officer of Wabtec Corporation, (“Wabtec”), a provider of products and services for the global rail industry, effective January 1, 2014. He continued to work with Wabtec as a strategic advisor through December 2017. Mr. Garcia-Tunon was named Executive Vice President and Chief Financial Officer for Wabtec in February 2012. Prior to that, he was Executive Vice President, Chief Financial Officer and Secretary of Wabtec since December 2010. Prior thereto, he served as Senior Vice President, Chief Financial Officer and Secretary of Wabtec since 2003. Having served as the Chief Financial Officer of a public company with global operations, Mr. Garcia-Tunon has leadership skills in international business, corporate governance and risk management. As a Certified Public Accountant, he also provides the Board and the Audit Committee, of which he is a Chairman, the strong financial and accounting skills required to be considered a financial expert. Mr. Garcia-Tunon is alsocurrently the Chairman of the Special Committee and is a member of the Executive and Compensation Committees. Mr. Garcia-Tunon currently is serving on the Board of Directors of MSA Safety, Inc., a global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures, since 2012, and serves on the Audit, Legal and Finance Committees of that Board. He also serves as a member of the Board of Directors at Matthews, and Audit Committeehe previously served as a director of Allison Transmission Holdings, Inc. (NYSE: ALSN), a global provider of commercial-dutycommercial duty automatic transmissions and hybrid propulsion systems. Mr.
The Board believes that Mr. Garcia-Tunon is well-qualified to serve on the Company’s Board of Directors due to his having served as the Chief Financial Officer of a public company with global operations, he has leadership skills in international business, corporate governance and risk management. As a Certified Public Accountant, he also provides the Board with strong financial and accounting skills.
Aleta W. Quigley, Jr.Richards, age 62,58, is the Executive Vice President of Specialty Films for Covestro Deutschland AG located in Dormagen, Germany since July 2021. In this position, she leads the specialty films business globally, directing all business functions and has responsibility for the full income statement of the business unit. Prior to this Dr. Richards was Senior Vice President sales and marketing – North America from February 2018 to June 2021; Coatings, Adhesives and Specialties, Vice President Regional Product Management for APAC, polycarbonates (located in Shanghai, China) and Vice President Regional Product Management for NAFTA, polycarbonates from July 2014 to January 2018. She also held a number of executive positions with Bayer Corporation including; Vice President of Human Resources and Services, Vice President of Global Key Accounts and Strategic Marketing for Coatings as well as a number of key management and professional positions. She currently serves as a director on the board of Crime Science Technology, a European company that develops and markets security features for identity documents and banknotes, as well as designs processes that assist in the identification of criminals. Dr. Richards has a Bachelor of Science degree in Business (Communications and Human Resources) from the University of Pittsburgh, a Masters in Business Administration from the Katz School University of Pittsburgh in
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Marketing and International Business and a Doctor of Business Administration from the Ross School of Business, Georgia State University.
The Board believes that Dr. Richards is well-qualified to serve on the Company’s Board of Directors with her strong background and expertise in international business, marketing, sales, strategy as well as human resources and people management.
David A. Schawk, age 68, has served on the Board of Directors of the Company since September 2015.the Company's acquisition of Schawk Inc. (“Schawk”) on July 29, 2014. Effective November 1, 2019, Mr. Quigley is currently a Senior Advisor for the Boston ConsultingSchawk retired from his role as Group a global management consulting firm. Mr. Quigley served as President of U.S. Sales of Mondelez International, Inc., a global provider of snack food and beverage products to consumers from 2012 until his retirement in March 2015. Prior thereto, he served as President, Global Consumer Sales of Kimberley-Clark Corporation from 2004 to 2012, and Vice President of Sales for PepsiCo from 1998 to 2004. Mr. Quigley’s experience and knowledge as a senior sales and marketing executive at consumer products companies is a valuable resource to the Company. Mr. Quigley is a member of the Compensation and Finance Committees. Mr. Quigley received a Bachelor of Science degree in Business from the Kelley School at Indiana University, where he serves on the Dean’s Advisory Council. He currently serves on the Board of Directors of Gold Eagle Company, a family-owned provider of automotive fluids and additives.
The Board believes that Mr. Schawk is well-qualified to serve on the Company’s Board of Directors based on his experience as a Chief Executive Officer and director of a multinational brand development and brand management company.
Jerry R. Whitaker, age 67,73, has served on the Board of Directors of the Company since July 2011. Mr. Whitaker was President of Electrical Sector-Americas, Eaton Corporation, a global manufacturer of highly engineered products, until his retirement in June 2011. Prior thereto, he served in various management positions at Eaton Corporation since 1994. Prior to joining Eaton Corporation, Mr. Whitaker spent 22 years with Westinghouse Electric Corporation. Mr. Whitaker’s experience and knowledge as an executive in global manufacturing industries and acquisition integration are valuable resources to the Company. Mr. Whitaker is the ChairmanChairperson of the NominatingGovernance and Corporate GovernanceSustainability Committee and a member of the FinanceAudit and Executive Committees.Committees of the Company. Mr. Whitaker received a Bachelor of Science degree from Syracuse University and a Masters in Business Administration from George Washington University. He currently serves as a director on the boardsboard of Crescent Electric Company, an independent distributor of electrical hardware and supplies, where he is a member of the Audit Committee and Chairman of the Compensation Committee, The Milliken Company, a privately-held diversified industrial company, where he is a member of the Compensation Committeecompensation committee and serves as Chairmanchairperson of the Audit Committee, and Sealed Air Corporation, a global leader in packaging, food safety and hygiene, where he serves on the Nominating and Governance Committee and is Chairman of the Audit Committee. He is also on the advisory board for Universal Electric Company, a
The Board believes that Mr. Whitaker is well-qualified to serve on the Company’s Board of Directors due to his experience and knowledge as an executive in global manufacturing industries and acquisition integration.
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The term for each nomineeof the Board’s nominees and directorthe continuing directors is listed below:
Nominees: | Term to expire at Annual Meeting of Shareholders in: | ||||
| Joseph C. Bartolacci | |||||
| Katherine E. Dietze | |||||
| Lillian D. Etzkorn | 2027 | ||||
| Morgan K. O’Brien | |||||
Continuing Directors: | |||||
| Terry L. Dunlap | |||||
| Alvaro Garcia-Tunon | |||||
| Jerry R. Whitaker | |||||
| Gregory S. Babe | |||||
| David A. Schawk | |||||
Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF ALL FOUR OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT. The proxy holders will vote your proxy FOR each of the nominees set forth above unless you give instructions to the contrary on the proxy card.
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PROPOSAL 2
On November 16, 2017September 26, 2023 (the “Adoption“Amendment Date”), the Boardapproved an amendment and restatement of the Company’s Amended and Restated By-laws, which included, among other things, an amendment to provide for a limit on the personal liability of the Company’s officers for monetary damages (the “Officer Exculpation Amendment”), pursuant to Section 1735 of the Pennsylvania Business Corporation Law (as amended, the “BCL”). As such, the Board is submitting the Officer Exculpation Amendment for approval by shareholders of the Company.
Background
In accordance with Section 1713 of the BCL, prior to the Amendment Date, the Company’s Amended and Restated By-laws provided that, to the fullest extent of the law, the directors of the Company shall not be personally liable for monetary damages for any action taken, or any failure to take any action, unless the director has breached or failed to perform the duties of his or her office under the Company’s Restated Articles of Incorporation, Amended and Restated By-laws or applicable provisions of law and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. Historically, the BCL has not authorized the limitation of liability of officers in a comparable manner.
Changes to the BCL that became effective on January 2, 2023 included the addition of a new Section 1735, which authorizes shareholders to adopt an exculpation provision similar to the limitation of liability that has historically been available for directors. When the liability of directors has been permitted to be limited and the liability of officers has not, shareholder plaintiffs have employed a tactic of bringing certain claims (that would otherwise be unable to be pursued against directors) against individual officers to avoid dismissal of such claims. The addition of Section 1735 addresses this inconsistent treatment between officers and directors and addresses rising litigation and insurance costs for shareholders.
The Board believes that adopting the Officer Exculpation Amendment is in the best interests of the Company and its shareholders. Accordingly, the Board has unanimously approved, subject to shareholder approval, an amendment to Section 6.01 of the adoptionAmended and Restated By-laws that would provide for exculpation of the Company’s 2017 Equity Incentive Plan (the “2017 Equity Plan”). officers as permitted by Section 1735 of the BCL. The Board has also adopted resolutions recommending that the amendment be submitted to shareholders and recommending that shareholders approve the amendment.
The amended Section 6.01 of the Amended and Restated By-laws is set forth as Appendix A to this Proxy Statement. As permitted by Section 1735 of the BCL, the proposed amendment also clarifies the effect of any amendment, repeal, adoption or modification of such exculpation on the rights or protections of a current or former director existing at the time of such amendment, repeal, adoption or modification.
The affirmative vote of a majority of the votesshares cast in person or by proxy at a meeting held prior to the anniversary of the Adoption Date in which the holders of at least a majority of the outstanding shares of the Company’s Common Stock are present (in person or by proxy) and voting is required for approval of adoption of the 2017 Equity Plan. If the shareholders of the Company do not approve the 2017 Equity Plan as proposed in this proxy statement, the 2017 Equity Plan will not be used by the Company. Upon approval of the 2017 Equity Plan, there will be no further grants under the existing 2012 Equity Incentive Plan, as amended (the “2012 Equity Plan”).
| Year | Number of Full-Value Shares Granted to Employees (A) | Number of Full-Value Shares Granted to Non-Employee Directors (B) | Total Number of Full-Value Shares Granted (A+B) | Total Number of Stock Options Granted (C) | ||||
| 2017 | 216,655 | 9,434 | 226,089 | — | ||||
| 2016 | 227,125 | 15,722 | 242,847 | — | ||||
| 2015 | 215,370 | 16,065 | 231,435 | — | ||||
If approved, the Officer Exculpation Amendment would become effective immediately, and the amendment of Section 162(m)6.01 of the Internal Revenue Code of 1986,Amended and Restated By-laws attached as amended. Section 162(m) generally provides that the Company may not take a federal income tax deduction for compensation in excess of $1,000,000 paid to certain executive officers in any one year. Performance based compensation may be exempt from this limit where compensation satisfies a number of technical tax related requirements. Among other requirements, Section 162(m) requires that shareholders re-approve certain executive compensation plans every five years for compensation awarded under such plans to be eligible to qualify as exempt performance-based compensation. The Company is asking shareholders to approve the 2017 Equity Plan to satisfy this requirement so that future awards under the 2017 Equity Plan may qualify as exempt performance-based compensation under Section 162(m).
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| Equity Compensation Plan Information | |||||||||
| 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) | |||||||
| Plan category | (a) | (b) | (c) | ||||||
| Equity compensation plans approved by security holders | 27,504 | (1) | — | 2,206,197 | (2) | ||||
| Equity compensation plans not approved by security holders | None | None | None | ||||||
| Total | 27,504 | (1) | $ | — | 2,206,197 | (2) | |||
| (1) - Includes 10,105 deferred stock units (issuable as full value shares upon settlement of such deferred stock units) granted under the 1994 Director Fee Plan, 6,034 deferred stock units (issuable as full value shares upon settlement of such deferred stock units) granted under the Amended and Restated 2014 Director Fee Plan, and 11,365 restricted stock units (issuable as full value shares upon settlement of such restricted stock units) granted under the 2012 Equity Plan. As of December 29, 2017, deferred stock units under the Amended and Restated 2014 Director Fee Plan were 6,034, deferred stock units under the 1994 Director Fee Plan were 10,105, and restricted stock units under the 2012 Equity Plan were 21,494 representing a total number of securities to be issued upon exercise of outstanding options, warrants and rights of 37,633. | |||||||||
| (2) - Includes 1,531,567 shares authorized for issuance under the Employee Stock Purchase Plan, 85,392 shares authorized for issuance under the Amended and Restated 2014 Director Fee Plan, and 589,238 shares authorized for issuance under the 2012 Equity Plan. As of December 29, 2017, approximately 121,038 shares remain available for future grant under the 2012 Equity Plan. If the 2017 Equity Plan is approved, no further grants will be made under the 2012 Equity Plan and the 121,038 shares will no longer be available for future awards. | |||||||||
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PROPOSAL 3
SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Company's Board of Directors has appointed Ernst & Young LLP as the independent registered public accounting firm to audit the records of the Company for the year ending September 30, 2018.2024.
The Audit Committee has determined that it would be desirable as a matter of good corporate practice to request an expression of opinion from the shareholders on the appointment. Ratification of the appointment of Ernst & Young LLP requires the affirmative vote of a majority of the shares representedcast at the meeting and entitled to vote, a quorum being present. Abstentions and non-broker votes will have the effect of a vote cast “against” the proposal.
If the shareholders do not ratify the selection of Ernst & Young LLP, the selection of an alternative independent registered public accounting firm will be considered by the Audit Committee; provided, further, however, even if the shareholders do ratify the selection of Ernst & Young LLP, as requested in this Proxy Statement, the Audit Committee reserves the right, at any time, to re-designate and retain a different independent registered public accounting firm to audit the records of the Company for the year ending September 30, 2018.2024.
It is not expected that any representative of Ernst & Young LLP will be present at the Annual Meeting of the Shareholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING SEPTEMBER 30, 2024. The Board of Directors recommends thatproxy holders will vote your proxy FOR this item unless you vote FOR Proposal 3.give instructions to the contrary on the proxy card.
PROPOSAL 4
ADVISORY (NON-BINDING) VOTE ON THE EXECUTIVE COMPENSATION
OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
As described in the Compensation Discussion and Analysis in this Proxy Statement, and summarized in the “Executive Summary” thereto, the Compensation Committee of the Board has developed an executive compensation program designed to pay for performance and to align the long-term interests of our named executive officers with the long-term interests of our shareholders. The Company presents a proposal for an advisory (non-binding) vote on the executive compensation of the Company’s named executive officers on an annual basis. Accordingly, the Company is presenting the following proposal, which gives our shareholders the opportunity to endorse or not endorse our pay program for named executive officers by voting for or against the resolution set forth below. This resolution is required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Approval of the compensation paid to our named executive officers, as disclosed in this Proxy Statement, will be approved (on a non-binding basis) if the proposal receives the affirmative vote of at least a majority of the shares represented, in person or by proxy,cast at the meeting and entitled to vote, a quorum being present. Abstentions and broker non-votes will have the effect of a vote cast “against” the proposal. Because the vote is advisory, it will not be binding on the Board. However, the Board and the Compensation Committee will review the voting results and take into account the outcome when considering future executive compensation arrangements. The Board and management are committed to our shareholders and understand that it is useful and appropriate to obtain the views of our shareholders when considering the design and implementation of executive compensation programs.
RESOLVED, that the shareholders approve (on a non-binding basis) the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related disclosure contained in the Proxy Statement set forth under the caption “Executive Compensation and Retirement Benefits.”
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THIS PROXY STATEMENT. The Board of Directors recommends thatproxy holders will vote your proxy FOR this item unless you vote FOR approval ofgive instructions to the compensation of our named executive officers as disclosed incontrary on the Compensation Discussion and Analysis, the compensation tables, and the related disclosure contained in this Proxy Statement set forth under the caption “Executive Compensation and Retirement Benefits” of this Proxy Statement. Proxies will be voted FOR approval of the proposal unless otherwise specified.proxy card.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company'sCompany’s Restated Articles of Incorporation divide its voting stock into three (3) classes: Preferred Stock, and Class A and Class B Common Stock. At the present time, no shares of Preferred Stock or Class B Common Stock isare issued or outstanding. The following information is furnished with respect to persons who the Company believes, based on its records and filings made with the Securities and Exchange Commission,SEC, beneficially own five percent or more of the outstanding shares of Common Stock of the Company, and with respect to directors, officers and executive management. Those individuals with more than five percent of the Company's Common Stock could be deemed to be "control persons"“control persons” of the Company.
This information presented is as of November 30, 2017,2023, except as otherwise noted. The percentage ownership calculation is based on 30,751,662 shares of Common Stock outstanding.
Name of Beneficial Owner (1) | Number of Shares Beneficially Owned (1)(2) | Percent (%) of Class | Deferred Stock Compensation Shares (8) | ||||||||||||||
| Directors, Officers and Executive Management: | |||||||||||||||||
| J.C. Bartolacci | 458,322 | 1.5 | — | ||||||||||||||
| G.S. Babe | 66,098 | * | 5,798 | ||||||||||||||
| K.E. Dietze | 36,395 | * | — | ||||||||||||||
| T.L. Dunlap | 20,647 | * | — | ||||||||||||||
| L.D. Etzkorn | 5,623 | * | — | ||||||||||||||
| S.D. Gackenbach | 82,499 | * | — | ||||||||||||||
| A. Garcia-Tunon | 27,259 | (3) | * | 30,715 | |||||||||||||
| G.R. Kohl | 46,639 | * | — | ||||||||||||||
| S.F. Nicola | 163,112 | * | — | ||||||||||||||
| M.K. O’Brien | 28,587 | * | — | ||||||||||||||
| A.W. Richards | 1,090 | * | — | ||||||||||||||
| D.A. Schawk | 207,596 | (4) | * | — | |||||||||||||
| B.D. Walters | 59,470 | * | — | ||||||||||||||
| J.R. Whitaker | 21,958 | * | 8,705 | ||||||||||||||
All directors, officers and executive management as a group (18 persons) | 1,251,330 | 4.1 | 45,218 | ||||||||||||||
| Others: | |||||||||||||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10005 | 5,068,867 | (5)** | 16.5 | ||||||||||||||
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355-2331 | 3,575,945 | (6)** | 11.6 | ||||||||||||||
Phoenix Holdings, Ltd. Dereh Hashalom 53 Givatayim, 53454 Israel | 1,767,778 | (7)** | 5.7 | ||||||||||||||
| * Less than 1%. | |||||||||||||||||
| ** Information as of September 30, 2023, derived from Schedule 13D or 13G filings filed by the beneficial owner. | |||||||||||||||||
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| Name of Beneficial Owner (1) | Number of Class A Shares Beneficially Owned (1)(2) | Percent of Class | Deferred Stock Compensation Shares (7) | ||||
| Directors, Officers and Executive Management: | |||||||
| J.C. Bartolacci | 385,211 | (3) | 1.2 | — | |||
| G.S. Babe | 40,808 | (3) | 0.1 | 5,798 | |||
| K.E. Dietze | 22,176 | (4) | 0.1 | — | |||
| T.L. Dunlap | 6,428 | (4) | * | — | |||
| S.D. Gackenbach | 62,268 | (3) | 0.2 | — | |||
| A. Garcia-Tunon | 21,759 | (4) | 0.1 | 4,132 | |||
| S.F. Nicola | 151,704 | (3) | 0.5 | — | |||
| M.K. O’Brien | 14,368 | (4) | * | — | |||
| D.W. Quigley, Jr. | 4,133 | (4) | * | — | |||
| D.A. Schawk | 208,088 | (3)(5) | 0.6 | — | |||
| J.D. Turner | 30,176 | (4) | 0.1 | 4,307 | |||
| B.D. Walters | 43,314 | (3) | 0.1 | — | |||
| J.R. Whitaker | 13,331 | (4) | * | 1,902 | |||
All directors, officers and executive management as a group (19 persons) | 1,220,028 | (6) | 3.8 | 16,139 | |||
| Others: | |||||||
BlackRock Institutional Trust Company, N.A. 525 Washington Boulevard, Suite 1405 Jersey, NJ 07310 | 3,864,137 | ** | 12.0 | ||||
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355-2331 | 3,162,328 | ** | 9.8 | ||||
Franklin Advisory Services LLC 55 Challenger Road, Suite 501 Ridgefield Park, NJ 07660 | 2,955,117 | ** | 9.2 | ||||
| * Less than 0.1%. | |||||||
| ** Information as of September 30, 2017, derived from Schedule 13D or 13G filings filed by the beneficial owner. | |||||||
(2)To the best of the Company’s knowledge, the nature of the beneficial ownership for all shares is sole voting and investment power, except as otherwise noted in the footnotes to the table.
(3)Includes 12,109 shares of Common Stock held in the SGT 2021 Family Trust for the benefit of members of Mr. Garcia-Tunon's family for which Mr. Garcia-Tunon serves as trustee.
(4)Includes 35,548 shares of Common Stock held in the Teryl Alyson Schawk 1998 Trust; 51,514 shares of Common Stock held in trusts for the benefit of Mr. Schawk’s children for which Mr. Schawk or his spouse serves as trustee; 120,436 shares of Common Stock held in the David A. Schawk 1998 Trust for which Mr. Schawk serves as trustee with voting and investment power over such shares; 77,395 shares of Common Stock held in trust for the benefit of Mr. Schawk’s niece for which Mr. Schawk serves as custodian with voting and investment power but no pecuniary interest; and 97 shares of Common Stock held as custodian.
(5)Pursuant to that certain Amendment No. 3 to Schedule 13G filed January 26, 2023 by BlackRock, Inc., as parent holding company or control person for certain of its subsidiaries (collectively, the “BlackRock Entities”), the BlackRock Entities have (i) sole voting power with respect to 5,008,245 shares of Common Stock and (ii) sole dispositive power with respect to 5,068,867 shares of Common Stock.
(6)Pursuant to that certain Amendment No. 12 to Schedule 13G filed February 9, 2023 by The Vanguard Group, Inc., as beneficial owner and parent holding company or control person for certain of its subsidiaries (collectively, the “Vanguard Entities”), the Vanguard Entities have (i) shared voting power with respect to 38,697 shares of Common Stock, (ii) sole dispositive power with respect to 3,508,955 shares of Common Stock, and (iii) shared dispositive power with respect to 66,990 shares of Common Stock.
(7)Pursuant to that certain Amendment No. 1 to Schedule 13G filed February 14, 2023 by The Phoenix Holdings Ltd., as parent holding company or control person for certain of its subsidiaries (collectively, the “Phoenix Entities”), the Phoenix Entities have (i) shared voting power with respect to 1,767,778 shares of Common Stock and (ii) shared dispositive power with respect to 1,767,778 shares of Common Stock.
(8)Represents shares of Common Stock held in a deferred stock compensation account for the benefit of the director under the Company’s Director Fee Plans, which are excluded from the Number of Shares Beneficially Owned. See the information provided under “General Information Regarding Corporate Governance--Compensation of Directors” in this Proxy Statement.
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Stock Ownership Guidelines
The Company has established guidelines for stock ownership by management, which are intended to promote the alignment of the interests of management with the Company’s shareholders. As more fully described under “Compensation Discussion and Analysis” of this Proxy Statement, the guidelines provide for ownership by management of shares of the Company’s Common Stock with a minimum market value ranging up to fivesix times base salary depending upon the individual’s position with the Company. Individuals are expected to achieve compliance with these guidelines within a reasonable period of time after appointment to their respective positions.
For purposes of these guidelines, stock ownership includes all shares directly owned (including shares held under the Employee Stock Purchase Plan and time-vesting restricted share units or shares), but does not include outstanding stock options or unvested performance-based restricted share units or shares. Immediate compliance with these guidelines is not mandatory; however, individuals are expected to undertake a program to achieve compliance within five years of their hire date or promotion to their respective position. The ownership policy mandates that at least 50% of the after-tax shares realized upon an option exercise or vesting of restricted stock or restricted share units must be retained until the ownership guideline is met. Compliance with these ownership guidelines is one of the factors considered by the Compensation Committee in determining eligibility for participation in the Company’s equity compensation programs. As of November 30, 2017,2023, all of the Named Executive Officers hadNEOs (as defined below) exceeded, and were therefore in compliance with, the Company’s stock ownership guidelines.
The Company has also adopted guidelines for stock ownership by non-employee directors, which require that each director maintain ownership of shares of the Company’s Common Stock (either directly, through restricted shares or restricted share units issued under the Company’s Director Fee Plan or through shares held in a deferred stock compensation account for the benefit of the director under the Company’s Director Fee Plan) with a market value approximating five times the current annual retainer ($85,000)90,000). Directors are expected to achieve compliance with these guidelines within a reasonable period of time after becoming a director. As of November 30, 2017,2023, all of the directors had met or exceeded, and were therefore in compliance with, the Company’s stock ownership guidelines or are within the reasonable time period for compliance.
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EXECUTIVE COMPENSATION AND RETIREMENT BENEFITS
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with the Company’s management. Based upon such review and discussion, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s 20182024 Proxy Statement, and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended September 30, 2017.2023.
Submitted by:
The Compensation Committee of the Board of
Directors of Matthews International Corporation
M.K. O’Brien, Chairperson
D.A. Schawk
COMPENSATION DISCUSSION AND ANALYSIS
Matthews International Corporation’s Named Executive Officers in Fiscal 2023
| Joseph C. Bartolacci | President & Chief Executive Officer | ||||
| Steven D. Gackenbach | Group President, Memorialization | ||||
| Gary R. Kohl | President, SGK Brand Solutions | ||||
| Steven F. Nicola | Chief Financial Officer and Secretary | ||||
| Brian D. Walters | Executive Vice President and General Counsel | ||||
The Company's executive compensation policies are administered by the Compensation DiscussionCommittee of the Board of Directors. The Compensation Committee consists of four independent directors: Mr. O’Brien (Chairperson), Mr. Dunlap, Dr. Richards and AnalysisMr. Schawk. Compensation for the Company's Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated executives is presented in the Summary Compensation Table and the other tables that follow.
Executive Summary
| Compensation Philosophy and Objectives | ||
Continuous improvement in operating results and the creation of shareholder value are key elements of the compensation philosophy of Matthews International Corporation.Matthews. This philosophy serves as the framework for the Company’s executive compensation program. Our program is designed to provide incentive arrangements that reward executives for improvement in the Company’s operating results and appreciation in our stock value.
To underscore the importance of “pay-for-performance” in our compensation philosophy and our Company’s culture, our Compensation Committee (referred to throughout this section as the Committee)"Committee") has developed incentive arrangements based on rigorous performance standards. Our annual incentive compensation plan rewards executives for the achievementattainment of operating profitadjusted earnings before interest, income taxes, depreciation and amortization ("EBITDA"), economic value added, targets set by the Committee at the beginningand adjusted operating cash
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flow targets. Adjusted net income is utilized instead of the fiscal year. These targets are based upon the Company’s business plan. Accordingly,adjusted EBITDA for Corporate participants. For purposes of our annual incentive compensation plan, is designed to motivate management to maintain and, more importantly, achieve higher levels of profits and economic value added for the Company and its shareholders. “Economic“economic value added” is the measure of operating profitadjusted EBITDA (or adjusted net income for Corporate participants) compared to the cost of the capital utilized to generate this profit.
income. Adjusted operating cash flow is defined as adjusted EBITDA less capital expenditures plus/minus changes in working capital of the Company's business units. Our long-term incentive program providesplan awards in fiscal 2023 rewards participants for grants of shares of restricted stock, with one-half of the shares vesting based on the achievement of performance targets and the remaining one-half based on the continued employment of a named executive officer (“NEO”) over a three-year period. For the fiscal 2017 grant, the Company established two criteria for the performance-vesting shares, with each criteria further containing three separate, pro-rated performance requirements:
The principal objectives of the dateCompany’s executive compensation program for the Company’s named executive officers (“NEOs”) and other executive officers, are to:
•Attract, retain and motivate highly qualified executives;
•Reward continuous improvement in operating results and the creation of grant orshareholder value; and
•Align the stock price appreciation hurdles within five yearsinterests of the dateCompany’s executives with our shareholders.
The Company seeks to accomplish these objectives by maintaining a compensation philosophy that emphasizes rigorous performance-based programs. The foundation of grant will resultour philosophy is to:
•Emphasize rigorous performance-based compensation elements in forfeitureour pay mix while providing total compensation opportunities commensurate with market levels;
•Provide retirement and health benefits that are competitive with market levels; and
•De-emphasize the use of perquisites, except for business purposes.
Our compensation philosophy targets the market median for all elements of compensation.
| Response to 2023 Say on Pay Vote and Investor Engagement Efforts | ||
At the Company’s annual meeting held in February 2023, approximately 90% of votes cast were in support of the applicable portionscompensation of our NEOs. Given this level of support, the Committee believes that the Company’s executive compensation programs appropriately link our executive compensation to the performance of the respective awards. Vested shares are subjectCompany and reflect contemporary practices. The Committee remains committed to routinely reviewing and updating our executive compensation program as appropriate.
In addition, the Committee routinely evaluates responses from the Company’s stock ownership guidelines which require eachannual outreach efforts with its largest shareholders and deemed that the current executive compensation design aligns with the expectations of our shareholders. No critical feedback was received from shareholders that suggested the Committee needs to own sharesrevise the valuedesign of which equals a multipleparticular compensation policy or practice. Therefore, based on the results of our latest Say-on-Pay vote and feedback from investors, the executive’s base salary.
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| Executive Compensation Elements for Fiscal 2023 | ||
Our executive compensation program is comprised of the incentivefollowing key elements. Each is designed to meet the objectives of our executive compensation planprogram as established by the Committee:
| Compensation Element | Form and Key Characteristics | Description and Performance Metrics | ||||||
| Base Salary | - Fixed cash component - Reviewed annually and adjusted as appropriate | - Positioned competitively to attract and retain executive talent - Considers scope and complexity of the role as well as individual performance and experience | ||||||
| Annual Incentive Compensation | - Variable cash compensation component - Performance-based opportunity | Executives other than SGK Brand Solutions: - 40% weighting assigned to adjusted net income (corporate executives) or adjusted EBITDA (business unit executives) - 40% weighting assigned to economic value added (defined above) - 20% weighting assigned to adjusted operating cash flow SGK Brand Solutions executives: 80% weighting assigned to adjusted EBITDA and 20% weighting assigned to adjusted operating cash flow | ||||||
| Long-Term Incentive Compensation | - Variable equity-based compensation component - 60% performance units - 40% time-based units | - Performance units earned at the end of the three-year performance period: - Upon the attainment of pre-established adjusted earnings per share - Upon the attainment of ROIC Goals - Time-based units vest 100% on the third anniversary of the grant | ||||||
| Change in Control Severance Policy | - Compensation and benefit continuation in the event of involuntary or good reason termination and a change in control of the Company (“double trigger”) | - Cash severance equal to two times the annual base salary and target bonus - Acceleration of unvested or unearned equity awards - Health care benefit continuation over the severance period (two years) | ||||||
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| Executive Compensation Governance Practices | ||
The following executive compensation practices and long-term incentive program providepolicies have been adopted by the Committee with discretion to adjust forensure sound corporate governance and alignment of the recoveryinterests of previously paid awards in the event of a restatement of financial statements, or to cancel, suspend, or require repayment to the Company of outstanding awards for violation of non-compete, non-solicitation or disparagement provisions.
| ü | Designate a non-executive board chair to provide effective independent board leadership and oversight of management | ||||
| ü | Review risks associated with our compensation arrangements and adopt mitigating features, practices, and policies | ||||
| ü | Engage in a rigorous CEO performance evaluation process | ||||
| ü | Employ shareholder-value creating metrics and challenging targets such as adjusted EBITDA, adjusted net income, economic value added and operating cash flow in our annual incentive plan, and earnings per share and return on invested capital within our long-term incentive plan | ||||
| ü | Cap annual and long-term incentive payouts | ||||
| ü | Maintain significant stock ownership guidelines for both executives and directors | ||||
| ü | Require both a qualified change in control and termination of employment (“Double Trigger”) in order to receive cash severance benefits and for unvested equity awards to accelerate | ||||
| ü | Maintain a “clawback” policy that provides for the recoupment from the Company's executive officers of certain incentive awards in the event of a financial restatement and that also includes a broader group of employees that provides for the recoupment of incentive awards under certain conditions in the event of a financial restatement | ||||
| ü | Retain an independent compensation consultant who regularly provides advice to the compensation committee on matters pertaining to executive compensation | ||||
What We Don’t Do:
| û | Enter into individual employment contracts with our executives, except in an instance where an agreement is assumed, or is necessary, as part of an acquisition | ||||
| û | Allow hedging or pledging of the Company's securities | ||||
| û | Provide excise tax gross-ups related to change in control terminations | ||||
| û | Allow repricing or exchanging of stock options or other equity awards without shareholder approval | ||||
| û | Provide excessive perquisites and tax gross-up perquisites | ||||
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| CEO Compensation Decisions for Fiscal 2023 | ||
Despite the annual shareholders’ meeting in February 2017,challenging conditions over the fiscal 2016past several years, including the pandemic and the global economy, the Committee emphasized the importance of remaining consistent with the Company’s executive compensation philosophies, which target base salaries at market median levels and reward executives for performance against pre-established targets and creation of shareholder value. As noted in the pie chart on page 30, variable, at-risk compensation accounted for 83% of our CEO’s target compensation.
Key performance indicators considered by the Committee in November 2022 in determining Mr. Bartolacci’s compensation for fiscal 2023 were as follows:
•The Company reported another record for consolidated sales in fiscal year 2022, representing growth of 5.5% over fiscal year 2021 (8.8% on a constant currency basis);
•The Industrial Technologies segment generated increased sales and adjusted EBITDA of 18% and 63%, respectively, for fiscal year 2022, primarily reflecting significant growth of the energy storage solutions business;
•The Company’s NEO’sreturn on invested capital (adjusted EBITDA relative to average outstanding debt and shareholders’ equity) was approved by our shareholders, with approximately 94%16.4% for fiscal year 2022, well above the Company’s estimated cost of capital.
In consideration of the votes cast voting in favor of the proposal.
•Base Salary - CEO: Mr. Bartolacci’s base salary for 2017calendar 2023 was established at the Committee’s meeting in November 2016. Based on the competitive market assessment prepared by Pay Governance LLC, our independent executive compensation consultant, the Company’s CEO base salary was determinedincreased 3% to be approximately 97% ofapproximate the market median. As Mr. Bartolacci has held the CEO position since 2006 and his fiscal 2016 individual performance was rated Distinguished (highest), the Committee agreed that his
•Annual Incentive Compensation: Target annual base salary adjustments over the next several years should be determined with a goal of attaining market median, provided his individual performance remains at or above the current level. As a result, the base salaryincentive compensation for Mr. Bartolacci was increased 4.5% for calendar 2017. After this adjustment, Mr. Bartolacci’s base salary approximatedset at the market median.
•Long-Term Incentive Compensation: Mr. Bartolacci received incentive compensation equivalent to 140% of target as described later in this report.
•Change in Pension Value and Non-Qualified Deferred Plan Compensation: The Company terminated its non-qualified Supplemental Retirement Plan ("SERP") and the Company’s principal defined benefit retirement plan ("DB Plan"), both of which Mr. Bartolacci was a participant. Upon termination of these plans, he became a participant in the Company’s non-qualified Management Deferred Compensation Plan.
In addition, as shown in the table on page 34, Mr. Bartolacci forfeited equity awards in November 2016. In determining equity compensation grants,2022 with an original grant date value of $1,567,399. As further emphasis on the Committee considers total shareholder return (“TSR”) as an important factor in the alignment of CEO performance-basedCommittee’s philosophy to align long-term incentive compensation with the interestsCompany’s performance, the actual realized portion of the Company’s shareholders. For the fiscal year ended September 30, 2016, the Company’s stock price appreciated approximately 24% and the Company’s earnings (on an adjusted non-GAAP basis) increased 11.6%performance-based long-term incentive compensation awards that were granted over fiscal 2015.
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| Fiscal 2023 Target Compensation Mix | ||
The pie charts below show the mix of 66.0% of the performance-based stock awards as included in the Summary Compensation Table have actually been earned bytarget compensation provided to our CEO (see table under “Pay-For-Performance Alignment”) as a resultand other NEOs in fiscal 2023. Variable, at-risk compensation accounted for 83% of the Company’s performance.our CEO’s target compensation and 66% of our other NEOs compensation on average.
Compensation Committee Administration
The principal function of the Compensation Committee is to review the Company’s compensation and benefit programs, including executive compensation and benefits, to ensure that total compensation is appropriate, competitive and consistent with the Company’s compensation philosophy. In performing its duties, the Compensation Committee consults with the Company’s CEO, the Company’s Vice President, Human Resourceshuman resources leadership and various independent external advisors. In fiscal 2017,2023, the Compensation Committee consulted principally with Pay Governance, LLC, an independent executive compensation consulting firm. Pay Governance, LLC does nonot perform any other workservices for the Company and reports directly to the Compensation Committee. The Compensation Committee has full authority to retain external advisors, consultants and agents, as necessary, in the fulfillment of its responsibilities. The Compensation Committee reviews the performance and the fees of the independent consultant each year and determines whether to retain such consultant for the upcoming year.
Among its other duties, the Compensation Committee has responsibility for setting executive base salary levels and administering the terms and policies of the following key executive benefit plans:
•2015 Incentive Compensation PlanPlan;
In general, the Compensation Committee’s desire to align ourthe Company's executive compensation program with the market levels drives the allocation between short-term and long-term compensation, as well as cash and equity components. The Compensation Committee believes that the level of compensation provided to an executive should be based on success against pre-established performance goals that drive the creation of shareholder value. To achieve this objective, the Company has built its current annual cash incentive plan based on achievement of adjusted EBITDA, economic value-added and adjusted operating profit and economic value added cash flow
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targets. OverFor the long-term plan, the Compensation Committee believes that stock price growth is one of the best indicators of the creation of shareholder value. Therefore, the Committee providesgenerally provided equity awards in fiscal 2023 (November 2022) and fiscal 2024 (November 2023) with a level of value and rate of vesting that areprovisions dependent on time and service (40%) and the achievement of adjusted earnings per share (stock price appreciation in fiscal 2024) (30%) and stock price hurdles.return on invested capital (30%) targets. The Company has no formal policy regarding the allocation of variable and fixed compensation for its NEOs.
The Compensation Committee has considered whether its executive compensation program promotes risk taking at levels that are unacceptable to the Company. The Compensation Committee considered the following factors related to risk:
•Compensation philosophy that targets salaries and incentives at the market median and incentives modestly above medianmedian;
•Annual incentive design that caps maximum awards for the achievement of operating profitadjusted EBITDA and economic value addedvalue-added targets reflective of the Company’s business planplan;
•Long-term incentives with financial performance and time-based vesting criteriacriteria;
•Stock ownership guidelinesguidelines; and
The Compensation Committee believes that the above factors as well as the overall executive compensation design, policies and mix of compensation serve to manage risk in a manner that is acceptable to the Company and its shareholders.
The Compensation Committee makes decisions regarding executive compensation with input from its independent consultant. When making decisions regarding compensation for the CEO, the Compensation Committee has a process in which it considers comparative market data provided by its independent consultant and the CEO’s performance assessment prepared by the Company’s Board of Directors. When making decisions regarding compensation for executives other than the CEO, the Compensation Committee considers comparative market data and seeks input and evaluates recommendations from the CEO. In order to obtain comparative market data for evaluating executive compensation, the Company, through its independent consultant, utilizes compensation data published by Willis Towers Watson. This survey contains hundreds of company participants, although the number of participants and the names of the companies that provided data for each position varies by position and is not provided by the survey publisher for confidentiality purposes. The Company targets industrial /and manufacturing companies of similar size, complexity, employment region and performance in developing this set of comparative data. Because data sample sizes for these types of companies may not be sufficient, the Company supplements such data with broader and more general industry data to develop its market data.
In evaluating compensation for 2017,fiscal 2023, the Compensation Committee’s independent consultant developed a group of peer companies to make assessments of market compensation and to determine the alignment of compensation earned relative to Company and peer performance. The peer group targeted industrial/manufacturing companies of similar size, complexity, employment region and performance. The peer group of companies used in evaluating compensation (“Peer Group”) for 20172023 was:
| Barnes Group Inc. | |||||||||
| Deluxe Corp. | EnPro Industries Inc. | Graco Inc. | |||||||
| Hillenbrand Inc. | ICF International, Inc. | John Wiley & Sons, Inc. | |||||||
| Kaman Corporation | |||||||||
| Minerals Technologies Inc. | |||||||||
| MSA Safety Incorporated | Moog, Inc. | ||||||||
| Service Corp. International | |||||||||
| Stagwell, Inc. | Standex International Corp. | TriMas Corporation | |||||||
| Woodward, Inc. | |||||||||
For calendar 2018,2024, the Committee approved the removal of CLARCOR Inc.Altra Industrial Motion Corp. (acquired).
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The Compensation Committee does not consider amounts from prior performance-based compensation, such as prior bonus awards or realized or unrealized equity compensation gains, in its decisions to increase or decrease compensation in the current year. The Compensation Committee believes that this would not be in the best interest of retaining and motivating the executive.
Clawback Policy
The Board adopted a clawback policy (the “Clawback Policy”) effective as of October 1, 2023.The Clawback Policy, which is administered by the Compensation Committee, applies to current and former executive officers of the Company as defined in Rule 10D-1 (each an “Affected Officer”), promulgated under the Exchange Act. Under the Clawback Policy, if the Company is required to prepare an accounting restatement to correct the Company’s material noncompliance with any financial reporting requirement under securities laws, including restatements that correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (collectively, a “Restatement”), the Company is obligated to recover erroneously awarded incentive-based compensation received from the Company by Affected Officers. Incentive-based compensation includes any compensation that is granted, earned or vested based in whole or in part on the attainment of a financial reporting measure. Erroneously awarded incentive-based compensation is the amount of incentive-based compensation received that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on an applicable Restatement.
Under the Clawback Policy, each employee of the Company and its subsidiaries are also subject to the clawback of incentive-based compensation if (a) a Restatement is required as a result of any fraud or intentional misconduct by such person, or (b) the Compensation Committee determines in its discretion that a lower amount of incentive-based compensation would have been paid to such person, but for the error giving rise to the restatement such person received erroneously awarded compensation as a result.
Pay-for-Performance Alignment
The Compensation Committee believes there are different ways of assessing whether compensation paid to executives aligns with the performance of the Company. For the Compensation Committee’s consideration in understanding the Company’s pay-for-performance alignment, the Compensation Committee’s compensation consultant examined the relationship of ourthe Company's CEO’s realizable compensation and the Company’s performance relative to the CEO compensation and performance of the Peer Group. Performance was defined as the relative ranking of the following four performance metrics:
•Net sales growthgrowth;
•Return on invested capitalcapital;
•Growth in earnings before interest, taxes, depreciation and amortization (EBITDA); and
•Total shareholder return (stock price appreciation plus dividends).
The consultant evaluated each performance metric independently relative to the Peer Group for the year 2016, the three-year period 20142020 through 2016,2022, and the five-year period 20122018 through 2016.2022. The relative ranking of each performance metric was averaged to form a composite ranking. The Company’s relative composite performance ranking was aligned with the Peer Group as follows:
•2020 through 2022: 37th percentile
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For the three-year period 20142020 through 2016,2022, the CEO’s three-year realizable compensation relative to the Peer Group ranked at the 6854th percentile while the Company’s performance composite ranked at the 73rd37th percentile of the Peer Group. Realizable compensation includes base salary, actual bonuses paid, the intrinsic value of equity awards at the fiscal year-end 20162022 stock price and performance shares earned or expected to be earned.
For the five-year period 20122018 through 2016,2022, the CEO’s five-year realizable compensation relative to Peer Group ranked at the 51st33rd percentile while the Company’s performance composite ranked at the 5725th percentile of the Peer Group.
The Compensation Committee evaluated this information and concluded that the Company’s relative performance was aligned with the relative realizable value of compensation paid to the CEO on a one-year, three-year and five-year basis.
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As further emphasis on the Compensation Committee’s philosophy to align long-term incentive compensation with the Company’s performance, below is a table which reflects, as of November 30, 2023, the actual realized portion as of September 30, 2017 of the performance-based long-term incentive compensation awards that were granted over the past five fiscal years for ourthe Company's CEO:
| Grant Date (Fiscal Year) | Performance Measure | Grant Value | Grant Date Stock Price | Vesting Thresholds | Percent of Shares Earned | Expiration (Fiscal Year) | Forfeited Share Value (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | Non-GAAP EPS | $ | 862,248 | $ | 42.205 | $ | 4.33 | $ | 4.72 | $ | 5.42 | — | % | 2022 | $862,248 | ||||||||||||||||||||||||||||||||||||||||||||
| 2019 | ROIC | $ | 862,248 | $ | 42.205 | 12 | % | 14 | % | 16 | % | 114.7 | % | 2022 | — | ||||||||||||||||||||||||||||||||||||||||||||
| 2020 | Non-GAAP EPS | $ | 925,586 | $ | 35.290 | $ | 3.62 | $ | 3.94 | $ | 4.53 | — | % | 2023 | $925,586 | ||||||||||||||||||||||||||||||||||||||||||||
| 2020 | ROIC | $ | 925,551 | $ | 35.290 | 12 | % | 14 | % | 16 | % | 172.2 | % | 2023 | — | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | Stock Price | $ | 909,883 | $ | 26.860 | 20 | % | 40 | % | 60 | % | 200.0 | % | 2024 | — | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | ROIC | $ | 909,883 | $ | 26.860 | 10 | % | 12 | % | 14 | % | 200.0 | % | 2024 | — | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | Non-GAAP EPS | $ | 1,145,850 | $ | 38.195 | $ | 3.28 | $ | 3.44 | $ | 3.63 | — | % | 2025 | — | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | ROIC | $ | 1,145,850 | $ | 38.195 | 10 | % | 12 | % | 14 | % | — | % | 2025 | — | ||||||||||||||||||||||||||||||||||||||||||||
| 2023 | Non-GAAP EPS | $ | 1,245,825 | $ | 27.685 | $ | 3.15 | $ | 3.43 | $ | 3.83 | — | % | 2026 | — | ||||||||||||||||||||||||||||||||||||||||||||
| 2023 | ROIC | $ | 1,245,825 | $ | 27.685 | 10 | % | 12 | % | 15 | % | — | % | 2026 | — | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 61.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant | Performance Measure | Grant Value | Grant Date Stock Price | Vesting Thresholds | Percent of Shares Earned | Forfeiture Date | |||||||||||||
| 2013 | Non-GAAP EPS | $ | 354,875 | $ | 28.39 | $ | 2.57 | $ | 2.83 | $ | 3.11 | 100.0 | % | 2016 | |||||
| 2013 | Stock Price | 439,875 | 28.39 | 29.81 | 32.65 | 35.49 | 100.0 | % | 2018 | ||||||||||
| 2014 | Non-GAAP EPS | 427,770 | 40.74 | 2.69 | 2.94 | 3.14 | 100.0 | % | 2017 | ||||||||||
| 2014 | Stock Price | 558,810 | 40.74 | 42.78 | 46.85 | 50.93 | 100.0 | % | 2019 | ||||||||||
| 2015 | Non-GAAP EPS | 499,200 | 46.08 | 2.88 | 3.11 | 3.36 | 100.0 | % | 2018 | ||||||||||
| 2015 | Stock Price | 591,012 | 46.08 | 48.39 | 53.00 | 57.60 | 100.0 | % | 2020 | ||||||||||
| 2016 | Non-GAAP EPS | 850,403 | 57.50 | 3.25 | 3.51 | 3.79 | 66.7 | % | 2019 | ||||||||||
| 2016 | Stock Price | 790,585 | 57.50 | 60.38 | 66.13 | 71.88 | 100.0 | % | 2021 | ||||||||||
| 2017 | Non-GAAP EPS | 985,295 | 66.61 | 3.65 | 3.94 | 4.26 | 0.0 | % | 2020 | ||||||||||
| 2017 | Stock Price | 912,594 | 66.61 | 60.38 | 76.61 | 83.27 | 0.0 | % | 2022 | ||||||||||
| Total | 66.0 | % | |||||||||||||||||
The unvested restricted shares/RSUs awarded in fiscal 2019 and fiscal 2020 subject to the non-GAAP EPS performance measure and the unvested restricted shares awarded in fiscal 2018 subject to the stock price performance measure expired and, accordingly, were forfeited.
Base Salaries
The Compensation Committee determines and approves the base salaries of the Company’s executives, including the CEO, and considers recommendations from the CEO with respect to the other executives. The Compensation Committee employs the same principles that are applied in developing the base salaries of all employees. Base salary ranges are determined for each executive position based on their level, responsibilities and complexity using the 50th percentile survey data for similar positions at comparable companies. A base salary market median amount is determined for each position based on this competitive data and ranges are established to provide that the Company’s salary levels are managed between 80% and 120% of such market median.
In determining base salary adjustments for each executive, the Compensation Committee considers the individual’s performance evaluation, the level of responsibility for the position, an individual’s current base salary in relation to market median and industry competition for executive talent. As discussed earlier, the Compensation Committee’s philosophy is to target fixed base salaries at the median of the market.market levels. On this basis, base salaries were increased for calendar 20172023 as follows:
shown in the following table. As a result of these adjustments, the calendar 20172023 base salaries of each named executive officerNEO approximated market median.
| NEO | Percent Increase | ||||
| Mr. Bartolacci | 3.0% | ||||
| Mr. Gackenbach | 5.0% | ||||
| Mr. Kohl | 4.0% | ||||
| Mr. Nicola | 5.0% | ||||
| Mr. Walters | 5.0% | ||||
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Executives are also subject to an annual individual performance evaluation. The evaluations are designed to rate each executive on various criteria, both objective and subjective, including the areas of leadership, technical expertise, initiative, judgment and personal development. An overall rating is assessed to each individual from these evaluations and is an important element in determining annual adjustments to base salaries. The rating levels include: DistinguishedSurpassed (highest rating), Commendable, Competent, AdequateAchieved, and ProvisionalProgressed/Missed (lowest rating). The Compensation Committee conducts an evaluation of the CEO’s performance and the CEO conducts an evaluation of each executive officer’s performance. Each of the NEOs was rated at either the CommendableSurpassed or Distinguished levels.Achieved level.
Annual Incentive Compensation
The Company’s 2015 Incentive Compensation Plan (the “2015 Incentive Plan”) covers the annual incentive compensation to be paid to key managers of the Company, including the NEOs. The 2015 Incentive Plan provides an incentive arrangement based on the establishment and achievement of annual goals reflective of the Company’s business plan. The objective of the program is to promote the Company’s goal of increasing shareholder value. The Company believes that twothree of the key elements in the creation of shareholder value are:
•growth in operating profit (or EBITDA); andadjusted EBITDA;
•improvement in operating profitadjusted EBITDA greater than the cost of the capital utilized to generate this profitadjusted EBITDA (referred to as “economic value added”).; and
•strong operating cash flow generation.
Accordingly, the 2015 Incentive Planannual incentive plan for fiscal 2023 was designed to motivate management to achieve levels of operating profit (or EBITDA) andadjusted EBITDA, economic value added, and adjusted operating cash flow reflective of the Company’s business plan.
Designated managers within each of the Company’s business segments participate in the incentive program for their respective business unit. IncentiveFor fiscal 2023, incentive compensation for these participants (except the SGK Brand Solutions segment) iswas calculated based on the achievement of operating profit andadjusted EBITDA, economic value added, and adjusted operating cash flow targets established for their individual business unit. Economic value added for business units is defined as the unit’s operating profitadjusted EBITDA less its cost of capital (cost of capital is determined based on a pre-tax rate of 12% timesmultiplied by net controllable assets, which is estimated to beexceed the Company’sCompany's weighted average pre-tax cost of capital). Adjusted operating cash flow for business units for the purposes of incentive compensation is defined as adjusted EBITDA less capital expenditures plus/minus changes in working capital. Incentive compensation for SGK Brand Solutions participants iswas calculated based on the achievement of adjusted EBITDA and adjusted operating cash flow targets established for this business unit.
Incentive compensation for corporate executives iswas calculated based on the achievement of pre-established targets for adjusted net income, and economic value added, and adjusted operating cash flow performance of the Company on a consolidated basis. Corporate economic value added is defined as the Company’s adjusted net income less its after-tax cost of capital (with cost of capital based on an after-tax rate of 8%, which is estimated to beapproximate the Company’s weighted average after-tax cost of capital).
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Fiscal 20172023 performance targets established for the respective business units of the NEO’sNEOs were as follows:
| (Amounts in thousands) | Adjusted Net Income/EBITDA | Economic Value Added | Operating Cash Flow | |||||||||||||||||||||||
| Corporate | $ | 82,600 | $ | 43,400 | $ | 150,000 | ||||||||||||||||||||
| Memorialization (excl. Environmental Solutions) | 140,696 | 65,708 | 110,944 | |||||||||||||||||||||||
| SGK Brand Solutions (excl. Saueressig packaging) | 64,746 | n/a | 59,356 | |||||||||||||||||||||||
Corporate amounts (Mr. Bartolacci, Mr. Babe, Mr. Nicola and Mr. Walters)
| Net Income | Economic Value Added | Relative Incentive % | ||||||
| Target | $ | 74,890 | $ | 16,100 | 100 | % | ||
| Minimum | 67,401 | 12,075 | 50 | % | ||||
| Maximum | 82,379 | 20,125 | 200 | % | ||||
| Operating Profit | Economic Value Added | Relative Incentive % | ||||||
| Target | $ | 104,503 | $ | 25,094 | 100 | % | ||
| Minimum | 94,053 | 18,821 | 50 | % | ||||
| Maximum | 114,953 | 31,368 | 200 | % | ||||
The attainment of target performance levels resultresults in an earned incentive equivalent to the participant’s target incentive amount (discussed below). No incentive amounts are earned for operating results that do not achieve the defined minimum performance levels. Incentive amounts cannot exceed the defined maximum percentage of the participant’s target incentive amount. Earned incentive percentages are interpolated within the ranges.
For the NEOs for fiscal 2017, one-half2023 (except for Mr. Kohl), 40% of the participant’s target annual incentive compensation opportunity was based on the achievement of operating profitadjusted EBITDA targets (net(adjusted net income in the case offor Corporate participants), with the remaining portion40% was based on the achievement of economic value added targets, and the remaining 20% was based on the achievement of adjusted operating cash flow targets. For Mr. Kohl for fiscal 2023, 80% of his target annual incentive compensation opportunity was based on the achievement of adjusted EBITDA targets and the remaining 20% was based on the achievement of adjusted operating cash flow targets. To better align business unit performance with the Company’s consolidated objectives, 25% of the annual incentive compensation opportunityopportunities for Mr. Gackenbach wasand Mr. Kohl were based on the achievement of the Company’s consolidated results.
The target incentive amount is expressed as a percentage of the participant’s base salary and based upon the executive’s position and the industry recommended percentage target for the position as provided to the Company by Pay Governance, LLC. Target, minimum and maximum incentive award opportunities for the CEO and other NEOs are included in the table below.
| Named Executive Officer | Target Incentive Award as a Percent of Base Salary | Minimum Incentive Award as a Percent of Base Salary | Maximum Incentive Award as a Percent of Base Salary | ||||||||
| J.C. Bartolacci | 100% | 50% | 200% | ||||||||
| Mr. Gackenbach | 60% | 30% | 120% | ||||||||
| Mr. Kohl | 55% | 27.5% | 110% | ||||||||
| Mr. Nicola | 70% | 35% | 140% | ||||||||
| Mr. Walters | 60% | 30% | 120% | ||||||||
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| Named Executive Officer | Target Incentive Award as a Percent of Base Salary | Minimum Incentive Award as a Percent of Base Salary | Maximum Incentive Award as a Percent of Base Salary |
| J.C. Bartolacci | 100% | 50% | 200% |
| G.S. Babe | 50% | 25% | 100% |
| S.D. Gackenbach | 55% | 27.5% | 110% |
| S.F. Nicola | 70% | 35% | 140% |
| B.D. Walters | 45% | 22.5% | 90% |
Actual results for fiscal 20172023 compared to target levels were as follows. ActualAdjusted EBITDA and adjusted net income amounts reflectreflected the following adjustments as pre-approved by the Compensation Committee: acquisition-related costs, restructuring costs, asset impairments, ERP implementation costs, specified research and development costs,intangible amortization expense, and certain other non-GAAP adjustments as presented in the Company’s quarterly and annual earnings reports.
Corporate
| Actual | Target | Relative Incentive % | Allocation | Incentive Earned | ||||||||||||||||||||||||||||||||||
| Adjusted net income | $ | 90,077 | $ | 82,600 | 145 | % | 40 | % | 58 | % | ||||||||||||||||||||||||||||
| Economic value added | 49,253 | 43,400 | 127 | % | 40 | % | 51 | % | ||||||||||||||||||||||||||||||
| Operating cash flow | 124,551 | 150,000 | 15 | % | 20 | % | 3 | % | ||||||||||||||||||||||||||||||
| Total | 112 | % | ||||||||||||||||||||||||||||||||||||
Actual | Target | Relative Incentive % | Allocation | Incentive Earned | ||||||||
| Net income | $ | 76,800 | $ | 74,890 | 126 | % | 50 | % | 63 | % | ||
| Economic value added | 18,331 | 16,100 | 155 | % | 50 | % | 77 | % | ||||
| Total | 140 | % | ||||||||||
Memorialization (excluding Environmental Solutions)
| Actual | Target | Relative Incentive % | Allocation | Incentive Earned | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 161,585 | $ | 140,696 | 174 | % | 40 | % | 70 | % | ||||||||||||||||||||||||||||
| Economic value added | 86,130 | 65,708 | 162 | % | 40 | % | 65 | % | ||||||||||||||||||||||||||||||
| Operating cash flow | 128,334 | 110,944 | 178 | % | 20 | % | 35 | % | ||||||||||||||||||||||||||||||
| Total | 170 | % | ||||||||||||||||||||||||||||||||||||
Actual | Target | Relative Incentive % | Allocation | Incentive Earned | ||||||||
| Operating profit | $ | 105,352 | $ | 104,503 | 108 | % | 50 | % | 54 | % | ||
| Economic value added | 26,756 | 25,094 | 126 | % | 50 | % | 63 | % | ||||
| Total | 117 | % | ||||||||||
SGK Brand Solutions (excluding Saueressig)
| Actual | Target | Relative Incentive % | Allocation | Incentive Earned | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 56,929 | $ | 64,746 | 40 | % | 80 | % | 32 | % | ||||||||||||||||||||||||||||
| Operating cash flow | 70,083 | 59,356 | 190 | % | 20 | % | 38 | % | ||||||||||||||||||||||||||||||
| Total | 70 | % | ||||||||||||||||||||||||||||||||||||
Based on actual results, the calculationcalculations of the earned incentive amounts were as follows:
| Named Executive Officer | Base Salary | Target Incentive | Target Incentive Amount | Earned Incentive | Earned Incentive Amount | ||||||||||||||||||||||||||||||||||||
| J.C. Bartolacci | $ | 1,045,730 | 100 | % | $ | 1,045,730 | 112 | % | $ | 1,170,486 | |||||||||||||||||||||||||||||||
| Mr. Gackenbach | 509,620 | 60 | % | 305,772 | 170 | % | 475,950 | ||||||||||||||||||||||||||||||||||
| Mr. Kohl | 493,700 | 55 | % | 271,535 | 70 | % | 218,090 | ||||||||||||||||||||||||||||||||||
| Mr. Nicola | 640,660 | 70 | % | 448,462 | 112 | % | 501,964 | ||||||||||||||||||||||||||||||||||
| Mr. Walters | 450,200 | 60 | % | 270,120 | 112 | % | 302,345 | ||||||||||||||||||||||||||||||||||
Note: 25% of the target incentive amounts for Mr. Gackenbach and Mr. Kohl were based on the achievement of the Corporate results.
| Named Executive Officer | Base Salary | Target Incentive | Target Incentive Amount | Earned Incentive | Earned Incentive Amount | ||||||||
| J.C. Bartolacci | $ | 846,450 | 100 | % | $ | 846,450 | 140 | % | $ | 1,189,008 | |||
| G.S. Babe | 406,000 | 50 | % | 203,000 | 140 | % | 285,154 | ||||||
| S.D. Gackenbach | 399,000 | 55 | % | 219,450 | 123 | % | 270,143 | ||||||
| S.F. Nicola | 502,000 | 70 | % | 351,400 | 140 | % | 493,612 | ||||||
| B.D. Walters | 355,000 | 45 | % | 159,750 | 140 | % | 224,401 | ||||||
Incentive amounts are subject to reduction at the discretion of the Compensation Committee based on the performance of the NEO relative to pre-established, quantifiable personal goals. Each incentive compensation plan participant develops personal goals, which are subject to review and approval by the business unit President or CEO, as appropriate. The personal goals of the CEO are reviewed and approved by the Compensation Committee. The Compensation Committee may use discretion to decrease calculated awards based on the participant’s performance relative to the quantifiable individual goals. No such adjustments were made in fiscal 2017.2023.
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Long-Term Incentive Compensation
Plan. The 2012 Equity Plan is an equity compensation plan designed to directly align the interests of employees with the Company’s shareholders. The 2012 Equity Planplan is intended to encourage eligible employees to increase their efforts to make the Company more successful, to provide an additional inducement for such employees to remain with the Company, to reward such employees by providing an opportunity to acquire shares of the Company’s common stock on favorable terms and to provide a means through which the Company may attract able persons to enter the employ of the Company. The eligible employees are those employees of the Company or any subsidiary who share responsibility for the management, growth or protection of the business of the Company.
Under the 2012 Equity Plan, equity grants can be made in the form of:
•Stock options;
•Restricted share awards;
•Restricted stock units;share units (including performance-based share units);
•Stock appreciation rights; and
•Other stock-based awards.
The Committee considers growth in stock price as the best means of measuring shareholder value creation over the long-term. For this reason, theCompensation Committee believes that the use of stock-based compensation has providedprovides a strong link to meeting this objective.in aligning the interests of management with the Company’s shareholders by incentivizing shareholder value creation. In keeping with the Compensation Committee’s philosophy of providing performance-based incentives, the restricted sharesshare units awarded in fiscal 2017November 2022 generally contained performance-vesting provisions for one-half60% of the sharesunits granted. Further, in order to enhance the Company’s retention objectives, the remaining one-half40% of the sharesunits granted contain a time-vesting feature in which such sharesunits vest three years from the grant date subject to continued employment of the executive by the Company.
For the fiscal 2017November 2022 grant, the Company established the following two criteria for the performance-vesting shares, with each criteria further containingunits, to be measured three separate, pro-rated performance requirements:years following the grant of the award:
•One-half (50%) of the performance-vesting sharesunits (i.e., 25%30% of the overall award) vestare based upon the attainment of non-GAAP annualadjusted earnings per share targets of $3.65, $3.94$3.43, $3.15, and $4.26;$3.83, respectively, to earn 100%, 50% and 200% of the award; and
•One-half (50%) of the performance-vesting sharesunits (i.e., 25%30% of the overall award) vestare based upon the attainment of 5%return on invested capital of 12%, 15%10%, and 25% appreciation14%, respectively, to earn 100%, 50% and 200% of the award. For this measurement, return on invested capital is determined based on consolidated adjusted EBITDA divided by average invested capital (net debt plus shareholders' equity) of the Company. The Committee established the minimum threshold ROIC goal of 10% to exceed the Company’s estimated cost of capital.
For the November 2023 grant, the Company established the following two criteria for the performance-vesting units, to be measured three years following the grant of the award:
•One-half (50%) of the performance-vesting units (i.e., 30% of the overall award) are based upon the attainment of growth in the Company’s stock price.
•One-half (50%) of the date of grant will result in forfeitureperformance-vesting units (i.e., 30% of the applicable portionoverall award) are based upon the attainment of return on invested capital of 14%, 12%, and 16%, respectively, to earn 100%, 50% and 200% of the respective awards.award. For the November 2023 grant, the Committee raised the minimum
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threshold ROIC goal to 12% to reflect an increase in the Company’s estimated cost of capital due to the recent higher interest rate levels.
Every year, the Compensation Committee determines individual grant levels through consultation with the independent compensation advisor. The Compensation Committee is provided grant guidelines by Pay Governance, LLC, which provide recommended grant award ranges based on current market thresholds.
For the November 2022 awards, the target level of grants represented the market median (50th percentile). The relative recommended ranges provide a minimum, maximum and target grant award for each position / salary level. The grant ranges arehave been developed such that the minimum of the range aligns withis set at 20% below the market 50th percentile,median and the maximum of the range aligns withis set at 20% above the market 75th percentile and the target level in the range represents the average of the market 50th and 75th percentile opportunity. The Committee has chosen this approach since a portion of the grants contain performance-vesting criteria and to align with its philosophy of providing modestly above market variable compensation opportunities. Additionally, the design of our performance-based awards requires the achievement of all six performance targets to fully vest in the target number of shares. Our performance-vesting share design caps award payouts at the target level and does not provide for awards to vest in an amount above the target number of shares granted. Actual grants within this range are determined based on the individual performance assessments of each executive during the past fiscal year. Grants made to the NEOs in November 2016 were within the above range.median.
Grant recommendations are developed using a valuation model consistent with accounting policies for stock-based compensation and is based on the fair market value of the Company’s common stock on the dates of grant. Grants to executive officers are generally made only once a year in the Company’s first fiscal quarter (usually at the November meeting of the Compensation Committee), except for new hires and promotions. The Company does not time the release of material non-public information around the granting of equity compensation awards.
The minimum vesting period, in general, for all restricted share units (time and performance-based) is three years. Restricted sharesshare units may also vest under certain change-in-control circumstances, subject to double-trigger change-in-control provisions which require a change in control circumstances. Performance-based restricted shares cannot vest earlier than one year from the date of grant and expire on the earlier of threeinvoluntary or five years (depending on the vesting criteria) from the date of grant, upongood reason employment termination or within specified time limits following voluntary employment termination (with consent of the Company), retirement or death. (see “Employment and Severance Agreements” below).
The minimum holding periods for vested restricted share awards are governed by the Company’s stock ownership guidelines, which provides that at least 50% of the after-tax shares realized upon vesting of restricted stock must be retained until the ownership guideline is met.
Dividends are not paid on unvested restricted shares. Dividends associated with unvested restricted shares only become payable if and upon the vesting of the restricted shares. Accordingly, dividends will not be paid if the restricted shares do not become vested and are instead forfeited.
Adjustments or Recovery of Prior Compensation
The Sarbanes-Oxley Act of 2002 requires the CEO and Chief Financial Officer to reimburse the Company for any awards received following the release of financial results that subsequently require an accounting restatement due to noncompliance with a material financial reporting requirement as a result of misconduct.
Effective as of October 1, 2023, the Board adopted the Clawback Policy. See "Clawback Policy" on page 32.
Additionally, the Company's equity- and cash-based compensation plans permit it to clawback compensation paid by the Company to participants, including executive officers and directors, if they engage in specified activities. For example, our 2015 Incentive Plan has a recoupment provision under which the Compensation Committee has the discretion to adjust for the recovery of previously paid awards from any participant, where appropriate, in the event of restatement of prior financial statements. No such adjustments have been necessary under these provisions.
The 2015 Incentive Plan and the 2012 Equity Plan also provide the Compensation Committee with the discretion over the three-year period following the grant of awards to cancel, suspend or require repayment to the Company of outstanding awards if the participant (i) competes with the Company or its subsidiaries, (ii) violates solicitation provisions with customers or employees, or (iii) defames or disparages the Company, its subsidiaries or certain related persons.
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Stock Ownership Guidelines
The Company has established stock ownership guidelines for executive officers and business unit management in order to support a culture of ownership among the management team. The Compensation Committee believes significant ownership levels will provide additional motivation to executives to perform in accordance with the interests of the Company’s shareholders. The ownership guidelines are expressed as a multiple of base salary and are as follows:
| Position | Minimum Equivalent Stock Value | ||||
| Chief Executive Officer | 6 times base salary | ||||
| Chief Financial Officer | 5 times base salary | ||||
| Group Presidents | 4 times base salary | ||||
| 3 times base salary | |||||
| 2 times base salary | |||||
For purposes of these guidelines, stock ownership includes all shares directly owned (including shares held under the Company's Employee Stock Purchase PlanPlan) and time-vesting restricted shares),share units, but does not include outstanding stock options or unvested performance-based restricted shares.share units. Immediate compliance with these guidelines is not mandatory; however, individuals are expected to undertake a program to achieve compliance within five years of their hire date or promotion to their respective position. The ownership policy mandatesguidelines mandate that at least 50% of the after-tax shares realized upon an option exercise or vesting of restricted stock or restricted share units must be retained until the ownership guidelineguidelines requirement is met. Compliance with these ownership guidelines is one of the factors considered by the Compensation Committee in determining eligibility for participation in the Company’s equity compensation programs.
As of November 30, 2017,2023, all NEOs exceeded the Company’s stock ownership guidelines.
Anti-Hedging Policy
The Company has a policy that prohibits its directors, executive officers and employees from hedging its ownership of the Company’s stock.stock, including the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds related to Company stock or debt. Directors, executive officers, and employees are prohibited from purchasing the Company’s stock on margin, borrowing against the Company’s stock held in a margin account, or pledging the Company’s stock as collateral for a loan.
Retirement Benefits
Retirement benefits arewere previously generally provided to executives under the Company’s principal retirement planDB Plan and in some cases, a supplemental retirement plan. The purpose of both these plans is to provide post-retirement compensation and stability to executives. The Committee’s goal is to provide a benefit that is competitive with plans which would be available to executives of similar companies. The Committee believes this philosophy will allowthe SERP or Officers Retirement Restoration Plan (“ORRP”). In fiscal 2021, the Company to effectively attractterminated the DB Plan, SERP, and retain talented executives.
ORRP. Of the NEOs, Mr. Bartolacci and Mr. Nicola participateparticipated in the SERP. Unlike the principal retirement plan, the SERP is an unsecured obligation of the CompanyCompany's DB Plan and is not a tax-qualified plan. Funding for the SERP is provided through a non-revocable trust arrangement. The SERP is intended to make-up the tax-related limitation of benefits under the principal retirement plan and to provide retirement benefits at competitive market rates. In addition, the SERP serves as a retention vehicle as benefits generally do not fully vest until the completion of a minimum of 15 years of service.
Beginning October 1, 2021, in addition to participation in the ORRPCompany’s 401(k) plan, all executives are eligible to participate in the Management Deferred Compensation Plan ("MDCP”). The MDCP provides participants an opportunity to defer compensation. The MDCP is an unfunded plan and participant
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account balances are unsecured obligations of the Company. Under the MDCP, participants may defer up to 75% of their base salary and 100% of their commissions and bonuses. The MDCP also provides for any new designated executive going forward, which limits the benefit availableCompany to make discretionary contributions to the restoration of amounts lost to tax-related limitations under the Company's other retirement and 401(k) plans.participants.
Other Compensation
The Company generally provides all domestic employees with the following:
•401(k) plan;
•Employee stock purchase plan;
•Health and dental coverage;
•Company-paid term life insurance;
•Disability insurance;
•Educational assistance; and
•Paid time off (vacations and holidays).
These benefits are designed to be competitive with overall market practices. Educational assistance for dependent children is also provided to any employee of the Company whose child meets the scholastic eligibility criteria and is attending an eligible college or university. Educational assistance is limited to $1,200 for each semester and $2,400 annually.
The Company provides executives with other benefits, reflected in the “All Other Compensation” column in the Summary Compensation Table, which the Committee considers reasonable, competitive and consistent with the Company’s compensation philosophy. These benefits include financial advisory services, supplemental life and disability insurance coverage, costs associated with personal use of a vehicle and, in certain circumstances, club dues. Effective October 1, 2022, the Committee eliminated personal use of a vehicle and club dues and financial counseling and tax preparation services.benefits for executives.
Employment and Severance Agreements
None of the NEOs have employment severance or change-of-controlseverance agreements.
Tax Policy
Section 162(m) of the Internal Revenue Code of 1986, as amended, (“Section 162(m)”) disallows federal income tax deductions for compensation paid to the Chief Executive Officer, andChief Financial Officer, any of the other four highestthree most highly compensated executives and certain former NEOs in excess of $1 million in any taxable year, subject to certain exceptions. One exception involves compensation paid pursuant to shareholder-approved compensation plans that are performance-based. Certain of the provisions in the 2015 Incentive Plan are intended to cause awards earned under such plan to be eligible for this exception (so that compensation related to such awards should be deductible under the Internal Revenue Code). In addition, certain of the provisions in the 2012 Equity Plan are intended to cause grants of performance-based stock compensation under such plan to be eligible for this exception (so that compensation related to the vesting or exercise of such shares should be deductible under the Internal Revenue Code). Payments of cash compensation to executives (except annual incentive compensation awards earned under the 2015 Incentive Plan) and time-based grants of restricted shares under the 2012 Equity Plan are not at present eligible for this performance-based exception. The Committee has taken and intends to continue to take actions, as appropriate, to attempt to minimize, if not eliminate, the Company's non-deductible compensation expense within the context of maintaining the flexibility which the Committee believes to be an important element of the Company's executive compensation program.
Section 162(m) of the Internal Revenue Code was amended on December 22, 2017 by an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (the “Tax Cuts and Jobs Act”). Under the Tax Cuts and Jobs Act, Section 162(m) would apply to each employee who serves as the Company’s principal executive officer or principal financial officer during the taxable year, each other employee for the Company who is among the three most highly compensated officers during such taxable year, and any other employee who was a covered employee of the Company for any preceding taxable year beginning after December 31, 2016. In addition, the exception under Section 162(m) for performance-based compensation wouldis no longer be available. The amendment to Section 162(m) applies to remuneration paid by the Company in taxable years beginning after December 31, 2017, except for remuneration which is provided pursuant to a written binding contract that was in effect on November 2, 2017 and which was not modified in any material respect on or after such date. The Committee is taking actions to assess the impact of the amendment to Section 162(m) and other changes contained in the Tax Cuts and Jobs Act on the Company’s executive compensation program.
Annual Compensation of the Named Executive Officers
The table below summarizes the compensation for fiscal 2017, 20162023, 2022 and 20152021 earned by the Company’s Chief Executive Officer, Chief Financial Officer, and each of the three other most highly paid executive officers who were serving as executive officers atas of September 30, 2017. These individuals are sometimes referred to in this Proxy Statement as the “named executive officers”, or the “NEOs”.2023.
Summary Compensation Table
Name and Principal Position | Year (1) | Salary | Bonus | Stock Awards (2) | Option Awards | Non-Equity Incentive Plan Compensation (3) | Change in Pension Value and Nonqualified Deferred Plan Compensation (4) | All Other Compensation (5) | Total | ||||||||||||||||
Joseph C. Bartolacci Director, President and Chief Executive Officer | 2017 | $ | 836,637 | $ | — | $ | 4,262,545 | $ | — | $ | 1,189,008 | $ | 633,643 | $ | 114,175 | $ | 7,036,008 | ||||||||
| 2016 | 800,267 | — | 3,682,263 | — | 1,243,755 | 1,836,921 | 127,315 | 7,690,521 | |||||||||||||||||
| 2015 | 765,346 | — | 2,837,417 | — | 1,547,700 | 886,052 | 80,584 | 6,117,099 | |||||||||||||||||
Gregory S. Babe Director and Chief Technology Officer | 2017 | 401,692 | — | 522,308 | — | 285,154 | — | 31,350 | 1,240,504 | ||||||||||||||||
Steven D. Gackenbach Group President, Memorialization | 2017 | 395,231 | — | 666,393 | — | 270,143 | 248,465 | 46,517 | 1,626,749 | ||||||||||||||||
| 2016 | 380,827 | — | 648,307 | — | 302,623 | 53,268 | 42,602 | 1,427,627 | |||||||||||||||||
| 2015 | 366,615 | — | 436,520 | — | 369,500 | 28,643 | 29,507 | 1,230,785 | |||||||||||||||||
| Steven F. Nicola Chief Financial Officer and Secretary | 2017 | 496,077 | — | 1,116,659 | — | 493,612 | 338,156 | 48,525 | 2,493,029 | ||||||||||||||||
| 2016 | 475,692 | — | 898,233 | — | 515,928 | 1,059,040 | 50,896 | 2,999,789 | |||||||||||||||||
| 2015 | 459,385 | — | 984,800 | — | 649,600 | 570,508 | 35,480 | 2,699,773 | |||||||||||||||||
Brian D. Walters Vice President and General Counsel | 2017 | 350,692 | — | 540,319 | — | 224,401 | 60,956 | 24,977 | 1,201,345 | ||||||||||||||||
| 2016 | 334,692 | — | 472,986 | — | 208,214 | 178,546 | 27,413 | 1,221,851 | |||||||||||||||||
| 2015 | 319,377 | — | 528,190 | — | 258,400 | 80,827 | 21,867 | 1,208,661 | |||||||||||||||||
| Name and Principal Position | Year (1) | Salary | Bonus | Stock Awards (2) | Non-Equity Incentive Plan Compensation (3) | Change in Pension Value and Non-qualified Deferred Plan Compensation (4) | All Other Compensation (5) | Total | ||||||||||||||||||
| Joseph C. Bartolacci Director, President and Chief Executive Officer | 2023 | $ | 1,037,838 | $ | — | $ | 4,152,750 | $ | 1,170,486 | $ | 76,768 | $ | 36,122 | $ | 6,473,964 | |||||||||||
| 2022 | 1,006,975 | — | 3,819,500 | 1,161,820 | — | 62,076 | 6,050,371 | |||||||||||||||||||
| 2021 | 943,592 | — | 3,639,530 | 1,815,715 | 284,123 | 49,344 | 6,732,304 | |||||||||||||||||||
| Steven D. Gackenbach Group President, Memorialization | 2023 | 503,428 | — | 636,755 | 475,950 | 25,555 | 37,780 | 1,679,468 | ||||||||||||||||||
| 2022 | 469,615 | — | 1,111,475 | 382,989 | — | 39,254 | 2,003,333 | |||||||||||||||||||
| 2021 | 437,712 | — | 577,490 | 478,803 | 49,290 | 31,231 | 1,574,526 | |||||||||||||||||||
| Gary R. Kohl President, SGK Brand Solutions | 2023 | 487,385 | — | 512,173 | 218,090 | 16,049 | 29,765 | 1,263,462 | ||||||||||||||||||
| 2022 | 455,365 | — | 1,119,114 | 120,393 | — | 22,370 | 1,717,242 | |||||||||||||||||||
| 2021 | 443,212 | — | 797,742 | 294,845 | — | 22,628 | 1,558,427 | |||||||||||||||||||
| Steven F. Nicola Chief Financial Officer and Secretary | 2023 | 632,852 | — | 1,052,030 | 501,964 | 30,571 | 54,020 | 2,271,437 | ||||||||||||||||||
| 2022 | 597,212 | — | 1,680,580 | 482,358 | — | 42,800 | 2,802,950 | |||||||||||||||||||
| 2021 | 559,539 | — | 1,017,994 | 753,677 | 179,650 | 34,652 | 2,545,512 | |||||||||||||||||||
| Brian D. Walters Executive Vice President and General Counsel | 2023 | 444,681 | — | 553,700 | 302,345 | 17,248 | 26,261 | 1,344,235 | ||||||||||||||||||
| 2022 | 426,173 | — | 1,073,280 | 270,431 | — | 30,671 | 1,800,555 | |||||||||||||||||||
| 2021 | 399,346 | — | 577,490 | 422,703 | — | 19,323 | 1,418,862 | |||||||||||||||||||
(1) For the fiscal years ended September 30, 2023, 2022 and 2021.
(2) Amounts in this column reflect the grant date fair value of awards of restricted shares/units of Common Stock granted during fiscal 2023, 2022 and 2021 computed in accordance with Financial Accounting Standards Board ASC Topic 718; however, the estimate of forfeiture related to service-based vesting conditions is disregarded for purposes of this valuation. For details of individual grants of restricted share units during fiscal 2023, see the Grants of Plan-Based Awards table below. Performance-based shares that were forfeited in fiscal 2023 were as follows: 11,250 for Mr. Bartolacci, 1,700 for Mr. Gackenbach, 600 for Mr. Kohl, 3,100 for Mr. Nicola and 1,600 for Mr. Walters. Performance-based shares that were forfeited in fiscal 2022 were as follows: 11,833 for Mr. Bartolacci, 1,850 for Mr. Gackenbach, 505 for Mr. Kohl, 3,100 for Mr. Nicola and 1,500 for Mr. Walters. Performance-based shares that were forfeited in fiscal 2021 were as follows: 11,250 for Mr. Bartolacci, 1,700 for Mr. Gackenbach, 600 for Mr. Kohl, 3,100 for Mr. Nicola and 1,600 for Mr. Walters. The assumptions on which this valuation is based are set forth in Note 13 to the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 17, 2023.
(3)The amounts shown in this column reflect amounts earned under the 2015 Incentive Plan in fiscal 2023, 2022 and 2021. For a full explanation of the operation of the Incentive Compensation Plan, refer to the narrative disclosure above and the Annual Incentive Compensation section of the Compensation Discussion and Analysis beginning on page 35 of this Proxy Statement.
(4) The amount shown in this column for the year ended September 30, 2023 for each of the named executive officers are discretionary contributions, if any, to a non-qualified deferred compensation plan. The amount shown in this column for the year ended September 30, 2021 for each of the named executive officers is the increase, if any, in the actuarial present value of the accumulated benefits under all defined benefit plans. For additional information regarding retirement benefits, see the “Retirement Benefits” section below.
(5) Amounts for fiscal 2023 represent one or more of the following: premiums for officer’s life insurance, incremental premiums for long-term disability insurance, matching contributions to the Company’s 401(k) Plan, financial services and educational assistance. The fiscal 2023 amounts for Mr. Bartolacci include matching contributions to the Company’s 401(k) Plan of $15,130. The fiscal 2023 amounts for Mr. Gackenbach include matching contributions to the Company’s 401(k) Plan of $11,608 and financial services of $11,429. The fiscal 2023 amounts for Mr. Kohl include matching contributions to the Company’s 401(k) Plan of $8,976 and financial services of $13,658. The fiscal 2023 amounts for Mr. Nicola include matching contributions to the Company’s 401(k) Plan of $22,578 and financial services of $14,495. The fiscal 2023 amounts for Mr. Walters include matching contributions to the Company’s 401(k) Plan of $13,888.
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The following table provides information on grants of plan-based awards held by the named executive officers during fiscal 2017.2023.
Grants of Plan-Based Awards Table
| Name | Grant Date (1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | Grant Date Fair Value of Stock Awards ($) | |||||||||||||||||||||||||||
| Threshold ($) | Target ($) (2) | Maximum ($) | Threshold (#) | Target (# ) (3) | Maximum (#) | |||||||||||||||||||||||||||
| J.C. Bartolacci | 11/14/22 | 45,000 | $ | 1,245,825 | (5) | |||||||||||||||||||||||||||
| 11/14/22 | 45,000 | 1,245,825 | (5) | |||||||||||||||||||||||||||||
| 11/14/22 | 60,000 | 1,661,100 | (6) | |||||||||||||||||||||||||||||
| 11/14/22 | $ | 522,865 | $ | 1,045,730 | $ | 2,091,460 | ||||||||||||||||||||||||||
| S.D. Gackenbach | 11/14/22 | 6,900 | 191,027 | (5) | ||||||||||||||||||||||||||||
| 11/14/22 | 6,900 | 191,027 | (5) | |||||||||||||||||||||||||||||
| 11/14/22 | 9,200 | 254,702 | (6) | |||||||||||||||||||||||||||||
| 11/14/22 | 152,886 | 305,772 | 611,544 | |||||||||||||||||||||||||||||
| G.R. Kohl | 11/14/22 | 5,550 | 153,652 | (5) | ||||||||||||||||||||||||||||
| 11/14/22 | 5,550 | 153,652 | (5) | |||||||||||||||||||||||||||||
| 11/14/22 | 7,400 | 204,869 | (6) | |||||||||||||||||||||||||||||
| 11/14/22 | 135,768 | 271,535 | 543,070 | |||||||||||||||||||||||||||||
| S.F. Nicola | 11/14/22 | 11,400 | 315,609 | (5) | ||||||||||||||||||||||||||||
| 11/14/22 | 11,400 | 315,609 | (5) | |||||||||||||||||||||||||||||
| 11/14/22 | 15,200 | 420,812 | (6) | |||||||||||||||||||||||||||||
| 11/14/22 | 224,231 | 448,462 | 896,924 | |||||||||||||||||||||||||||||
| B.D. Walters | 11/14/22 | 6,000 | 166,110 | (5) | ||||||||||||||||||||||||||||
| 11/14/22 | 6,000 | 166,110 | (5) | |||||||||||||||||||||||||||||
| 11/14/22 | 8,000 | 221,480 | (6) | |||||||||||||||||||||||||||||
| 11/14/22 | 135,060 | 270,120 | 540,240 | |||||||||||||||||||||||||||||
(1)All grants were effective as of the date on which the Compensation Committee of the Board of Directors met to approve them.
(2)Amounts represent target payouts under the Company’s 2015 Incentive Plan. The target represents the named executive officer’s annual salary multiplied by his respective target incentive award percentage. The target incentive award percentages, expressed as a percentage of annual base salary are 100% for Mr. Bartolacci, 70% for Mr. Nicola, 60% for Mr. Gackenbach and Mr. Walters and 55% for Mr. Kohl. For a full explanation refer to the Annual Incentive Compensation section of the Compensation Discussion and Analysis beginning on page 35 of this Proxy Statement.
(3) Amounts represent the number of restricted share units granted pursuant to the Equity Plan that vest upon certain performance criteria. Performance-based restricted share units granted in November 2022 were awarded such that, in general, 30% of the grant vests at target based upon the Company achieving certain metrics based on Return on Invested Capital ("ROIC"); and 30% of the grant vests at target based upon the Company achieving certain metrics based on adjusted earnings per share. Vesting of all units are generally subject to continuing employment through November 14, 2025. Upon vesting, performance based units will be converted to Common Stock using a factor ranging from 50% to 200% based upon the level of achievement of the performance thresholds related to the above targets. Performance related units that do not achieve the ROIC or adjusted earnings per share thresholds by the end of the performance period will be forfeited. Performance related units may also be forfeited within specified time limits following voluntary employment termination (with consent of the Company), retirement or death. For a full explanation of the operation of the Equity Plan, refer to the Long-Term Incentive Compensation section of the Compensation Discussion and Analysis beginning on page 38 of this Proxy Statement.
(4) Amounts represent the number of shares of restricted share units granted pursuant to the Equity Plan that fully vest on the third anniversary of the grant date. Upon vesting, time-based units will be converted to an equal number of shares of Common Stock. Restricted share units may also vest under certain change-in-control circumstances, subject to double-trigger change-in-control provisions which require a change in control and involuntary or good reason employment termination. The restricted share units are forfeited upon employment termination, except in the case of voluntary employment termination (with consent of the Company), retirement or death. For a full explanation of the operation of the Equity Plan, refer to the Long-Term Incentive Compensation section of the Compensation Discussion and Analysis beginning on page 38 of this Proxy Statement.
(5) Values are calculated based on the grant date fair value of Common Stock and the expected probability that the shares will ultimately vest at target (see footnote 3 above).
(6) Values are calculated based on the grant date fair value of Common Stock. The vesting period for retirement-eligible employees is accelerated.
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| Name | Grant Date (1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | Grant Date Fair Value of Stock Awards ($) | |||||||||||||||
| Threshold ($) | Target ($) (2) | Maximum ($) | Threshold (#) | Target (# ) (3) | Maximum (#) | |||||||||||||||
| J.C. Bartolacci | 11/16/16 | 5,917 | $ | 351,056 | (5) | |||||||||||||||
| 11/16/16 | 5,917 | 303,069 | (5) | |||||||||||||||||
| 11/16/16 | 5,916 | 258,470 | (5) | |||||||||||||||||
| 11/16/16 | 5,917 | 394,131 | (6) | |||||||||||||||||
| 11/16/16 | 5,917 | 394,131 | (6) | |||||||||||||||||
| 11/16/16 | 5,916 | 197,033 | (6) | |||||||||||||||||
| 11/16/16 | 35,500 | 2,364,655 | (7) | |||||||||||||||||
| 11/16/16 | $ | 423,225 | $ | 846,450 | $ | 1,692,900 | ||||||||||||||
| G.S. Babe | 11/16/16 | 725 | 43,014 | (5) | ||||||||||||||||
| 11/16/16 | 725 | 37,135 | (5) | |||||||||||||||||
| 11/16/16 | 725 | 31,675 | (5) | |||||||||||||||||
| 11/16/16 | 725 | 48,292 | (6) | |||||||||||||||||
| 11/16/16 | 725 | 48,292 | (6) | |||||||||||||||||
| 11/16/16 | 725 | 24,146 | (6) | |||||||||||||||||
| 11/16/16 | 4,350 | 289,754 | (7) | |||||||||||||||||
| 11/16/16 | 101,500 | 203,000 | 406,000 | |||||||||||||||||
| S.D. Gackenbach | 11/16/16 | 925 | 54,880 | (5) | ||||||||||||||||
| 11/16/16 | 925 | 47,379 | (5) | |||||||||||||||||
| 11/16/16 | 925 | 40,413 | (5) | |||||||||||||||||
| 11/16/16 | 925 | 61,614 | (6) | |||||||||||||||||
| 11/16/16 | 925 | 61,614 | (6) | |||||||||||||||||
| 11/16/16 | 925 | 30,807 | (6) | |||||||||||||||||
| 11/16/16 | 5,550 | 369,686 | (7) | |||||||||||||||||
| 11/16/16 | 109,725 | 219,450 | 438,900 | |||||||||||||||||
| S.F. Nicola | 11/16/16 | 1,550 | 91,962 | (5) | ||||||||||||||||
| 11/16/16 | 1,550 | 79,391 | (5) | |||||||||||||||||
| 11/16/16 | 1,550 | 67,719 | (5) | |||||||||||||||||
| 11/16/16 | 1,550 | 103,246 | (6) | |||||||||||||||||
| 11/16/16 | 1,550 | 103,246 | (6) | |||||||||||||||||
| 11/16/16 | 1,550 | 51,622 | (6) | |||||||||||||||||
| 11/16/16 | 9,300 | 619,473 | (7) | |||||||||||||||||
| 11/16/16 | 175,700 | 351,400 | 702,800 | |||||||||||||||||
| B.D. Walters | 11/16/16 | 750 | 44,498 | (5) | ||||||||||||||||
| 11/16/16 | 750 | 38,415 | (5) | |||||||||||||||||
| 11/16/16 | 750 | 32,767 | (5) | |||||||||||||||||
| 11/16/16 | 750 | 49,958 | (6) | |||||||||||||||||
| 11/16/16 | 750 | 49,958 | (6) | |||||||||||||||||
| 11/16/16 | 750 | 24,978 | (6) | |||||||||||||||||
| 11/16/16 | 4,500 | 299,745 | (7) | |||||||||||||||||
| 11/16/16 | 79,875 | 159,750 | 319,500 | |||||||||||||||||
The following table sets forth information concerning the fiscal 20172023 year-end value of unearned restricted sharesshares/share units for each of the named executive officers.
Outstanding Equity Awards at Fiscal Year-End Table
| Stock Awards | ||||||||||||||||||||
| No. of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | |||||||||||||||||
| J.C. Bartolacci | 67,750 | (1) | $ | 2,636,153 | 67,750 | (5) | $ | 2,636,153 | ||||||||||||
| 40,000 | (2) | 1,556,400 | 60,000 | (6) | 2,334,600 | |||||||||||||||
| 60,000 | (3) | 2,334,600 | 90,000 | (7) | 3,501,900 | |||||||||||||||
| S.D. Gackenbach | 10,750 | (1) | 418,283 | 10,750 | (5) | 418,283 | ||||||||||||||
| 18,900 | (2) | 735,399 | 10,200 | (6) | 396,882 | |||||||||||||||
| 9,200 | (3) | 357,972 | 13,800 | (7) | 536,958 | |||||||||||||||
| G.R. Kohl | 14,850 | (1) | 577,814 | 14,850 | (5) | 577,814 | ||||||||||||||
| 19,100 | (2) | 743,181 | 10,200 | (6) | 396,882 | |||||||||||||||
| 7,400 | (3) | 287,934 | 11,100 | (7) | 431,901 | |||||||||||||||
| S.F. Nicola | 18,950 | (1) | 737,345 | 18,950 | (5) | 737,345 | ||||||||||||||
| 26,900 | (2) | 1,046,679 | 17,100 | (6) | 665,361 | |||||||||||||||
| 15,200 | (3) | 591,432 | 22,800 | (7) | 887,148 | |||||||||||||||
| B.D. Walters | 10,750 | (1) | 418,283 | 10,750 | (5) | 418,283 | ||||||||||||||
| 17,900 | (2) | 696,489 | 10,200 | (6) | 396,882 | |||||||||||||||
| 8,000 | (3) | 311,280 | 12,000 | (7) | 466,920 | |||||||||||||||
(1)Represents restricted share units that were fully vested on November 16, 2023 and converted to an equal number of shares of Common Stock.
(2)Represents restricted share units that will be earned and fully vested on November 17, 2024. Upon vesting, these restricted share units will be converted to an equal number of shares of Common Stock.
(3)Represents restricted share units that will be earned and fully vested on November 14, 2025. Upon vesting, these restricted share units will be converted to an equal number of shares of Common Stock.
(4)Represents the value of all unvested restricted shares/share units as of September 30, 2023. The value is computed by multiplying all unvested restricted shares/share units by $38.91, the closing price of Common Stock on September 29, 2023. The value calculated for restricted share units is based on vesting at target for performance related shares (see footnotes 6 and 7 below).
(5)Represents restricted share units that will be earned and vested as follows: one-half upon achieving certain metrics based on stock price appreciation and one-half upon achieving certain metrics based on ROIC. Upon vesting, these performance based units will be converted to Common Stock using a factor ranging from 50% to 200% based upon the level of achievement of the performance thresholds related to the above targets. On November 16, 2023, the stock price appreciation and ROIC portions vested and converted into shares of Common Stock at a rate of 200%.
(6)Represents restricted share units that will be earned and vested as follows: one-half upon achieving certain metrics based on adjusted earnings per share and one-half upon achieving certain metrics based on ROIC. Upon vesting, these performance based units will be converted to Common Stock using a factor ranging from 50% to 200% based upon the level of achievement of the performance thresholds related to the above targets.
(7)Represents restricted share units that will be earned and vested as follows: one-half upon achieving certain metrics based on adjusted earnings per share and one-half upon achieving certain metrics based on ROIC. Upon vesting, these performance based units will be converted to Common Stock using a factor ranging from 50% to 200% based upon the level of achievement of the performance thresholds related to the above targets.
43
| Stock Awards | ||||||||||||
| No. of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | |||||||||
| J.C. Bartolacci | 32,500 | (1) | $ | 2,023,125 | — | (5) | $ | — | ||||
| 35,500 | (2) | 2,209,875 | 11,834 | (6) | 736,667 | |||||||
| 35,500 | (3) | 2,209,875 | 35,500 | (7) | 2,209,875 | |||||||
| G.S. Babe | 3,000 | (8) | 186,750 | — | (9) | — | ||||||
| 3,660 | (2) | 227,835 | 1,220 | (6) | 75,945 | |||||||
| 4,350 | (3) | 270,788 | 4,350 | (7) | 270,788 | |||||||
| S.D. Gackenbach | 5,000 | (1) | 311,250 | — | (5) | — | ||||||
| 6,250 | (2) | 389,063 | 2,083 | (6) | 129,667 | |||||||
| 5,550 | (3) | 345,488 | 5,550 | (7) | 345,488 | |||||||
| S.F. Nicola | 11,280 | (1) | 702,180 | — | (5) | — | ||||||
| 8,660 | (2) | 539,085 | 2,887 | (6) | 179,716 | |||||||
| 9,300 | (3) | 578,925 | 9,300 | (7) | 578,925 | |||||||
| B.D. Walters | 6,050 | (1) | 376,613 | — | (5) | — | ||||||
| 4,560 | (2) | 283,860 | 1,520 | (6) | 94,620 | |||||||
| 4,500 | (3) | 280,125 | 4,500 | (7) | 280,125 | |||||||
The following table provides information on the vesting of restricted shares for each of the named executive officers during fiscal 2017.2023.
Stock Vested
| Stock Awards | ||||||||
| Name | Number of Shares Acquired on Vesting | Value Realized on Vesting ($) | ||||||
| J.C. Bartolacci | 73,394 | $ | 2,022,895 | |||||
| S.D. Gackenbach | 11,823 | 325,867 | ||||||
| G.R. Kohl | 14,551 | 401,057 | ||||||
| S.F. Nicola | 22,373 | 616,647 | ||||||
| B.D. Walters | 11,823 | 325,867 | ||||||
| Stock Awards | ||||
| Name | Number of Shares Acquired on Vesting | Value Realized on Vesting | ||
| J.C. Bartolacci | 65,833 | $ | 3,107,617 | |
| G.S. Babe | 2,940 | 162,815 | ||
| S.D. Gackenbach | 11,651 | 548,954 | ||
| S.F. Nicola | 19,378 | 896,254 | ||
| B.D. Walters | 7,899 | 378,144 | ||
Retirement Benefits
Retirement benefits were provided under the SERP or ORRP for certain executives. The Company's domestic retirement plan is noncontributory and provides benefits based upon length of service and final average earnings. Generally, employees age 21 with one year of continuous service are eligible to participate in the retirement plan. The benefit formula is 3/4 of 1% of the first $550 of final average monthly earnings plus 1‑1/4% of the excess times years of credited service (maximum 35 years). The plan is a defined benefit plan and covered compensation is limited generally to base salary or wages. Benefits are not subject to any deduction or offset for Social Security.
The table below sets forth the number of years of credited service and the present value at September 30, 2017defined benefit portion of the accumulated benefits underORRP was frozen as of April 30, 2021, and plan participants subsequently received lump sum payments in October 2022 to fully settle the each ofORRP obligations. Of the retirement plans for each ofNEOs, Mr. Bartolacci and Mr. Nicola participated in the named executive officers.SERP. Mr. Gackenbach and Mr. Walters were participants in the ORRP.
| Name | Plan Name | Number of Years Credited Service (#) (1) | Present Value of Accumulated Benefit ($) (2) | Payments During Last Fiscal Year ($) | ||||
| J.C. Bartolacci | Matthews International Corporation Employees Retirement Plan | 19 | $ | 648,577 | $ | — | ||
| Matthews International Corporation SERP | 20 | 5,499,603 | — | |||||
| S.D. Gackenbach | Matthews International Corporation Employees Retirement Plan | 5 | 169,213 | — | ||||
| Matthews International Corporation ORRP | 6 | 217,589 | — | |||||
| S.F. Nicola | Matthews International Corporation Employees Retirement Plan | 23 | 792,725 | — | ||||
| Matthews International Corporation SERP | 24 | 2,818,840 | — | |||||
| B.D. Walters | Matthews International Corporation Employees Retirement Plan | 11 | 282,111 | — | ||||
| Matthews International Corporation ORRP | 12 | 230,300 | — | |||||
The Company provides a 401(k) Plan covering substantially all domestic employees of the Company. Participants may make pre-tax contributions to their account of 1% up to 75% of their annual compensation. For employees covered under the Matthews International Corporation Employees Retirement Plan, which includes the named executive officers, theThe Company makeswill make matching contributions to each participant at a rate of 100% for the first 3% deferred and 50% of participants’ deferralsfor the next 2% deferred up to 1%4% of their annual compensation. Participants are fully vested immediately in the value of their contributions and fully vested in the value of Company matching contributions after three years of service, provided they are a participant of the plan.
Beginning October 1, 2021, in addition to participation in the Company’s 401(k) Plan, all executives are eligible to participate in the MDCP, which is a non-qualified deferred compensation plan. The MDCP provides participants an opportunity to defer compensation. The MDCP is an unfunded plan and participant account balances are unsecured obligations of the Company. Under the MDCP, participants may defer up to 75% of their annual base salary and 100% of their commissions and bonuses. The MDCP also provides for the Company to make discretionary contributions to the participants. All of the NEOs participate in the MDCP.
The table below sets forth the discretionary contributions, if any, to a non-qualified deferred compensation plan for the year ended September 30, 2023 for each of the participating named executive officers.
| Name | Discretionary Contributions ($) | ||||
| J.C. Bartolacci | $ | 76,768 | |||
| S.D. Gackenbach | 25,555 | ||||
| G.R. Kohl | 16,049 | ||||
| S.F. Nicola | 30,571 | ||||
| B.D. Walters | 17,248 | ||||
44
CEO Pay Ratio
Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires most companies with publicly traded stock in the United States to identify the median total compensation of their worldwide employee population (other than the chief executive officer) and to compare that amount with the total compensation of their chief executive officer. Total compensation amounts are required to be calculated using the SEC’s compensation disclosure rules applicable to reporting compensation in the Summary Compensation Table of the proxy statement. Median employee compensation used to calculate the pay ratio is required to be the total compensation paid to an actual employee of the company.
To identify our median employee, we reviewed the annual base salary of all our employees other than the CEO as of September 30, 2023. As permitted by SEC rules, we excluded from our review employees based in Brazil, China, Costa Rica, Indonesia, Ireland, Republic of Korea, Philippines, Russian Federation, and Thailand because those individuals, in the aggregate, make up less than 5% of our total employee base, representing approximately 536 employees. Contingent workers who provide services to Matthews International but whose compensation is determined by an unaffiliated third party were also excluded from our determination of the median employee. We used an annual base salary as our consistently applied compensation measure as it represents the primary compensation component paid to all of our employees. As a result, annual base salary provides a reasonable depiction of total earnings for the purpose of identifying our median employee. We then calculated the median employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table. We did not use any material estimates, assumptions, adjustments or statistical sampling to determine the worldwide median employee.
Our median employee’s 2023 compensation was $56,846. Our Chief Executive Officer’s total 2023 compensation was $6,473,964 as reported in the Summary Compensation Table on page 41. Accordingly, our 2023 CEO to Median Employee Pay Ratio was 114:1.
Potential Payments upon Termination or Change in Control
The following discussion describes and quantifies the payments that would be made to each of the NEOs underat, following, or in connection with a variety of circumstances, assuming that each had taken place on September 30, 2017:2023: (1) the executive resigns voluntarily without the consent of the Company; (2) the executive resigns voluntarily with the consent of the Company; (3) the executive is involuntarily terminated without cause; (4) the executive is involuntarily terminated with cause; (5) the executive dies or becomes permanently disabled while employed; (6) the executive retires; or (7) a change in control of the Company takes place.
The Company’s executive management, including the NEOs, are subject to change-in-control agreements. These agreements provide certain benefits upon a change-in-control of the Company provided that, upon a change-in-control, the executive’s employment is terminated involuntarily or for good reason (“double-trigger”). Upon such double-trigger, the executive (including the CEO) is generally entitled to two times his or her annual base salary and target bonus, and accelerated vesting of awards under the long-term incentive plan. The change-in-control agreements also provide that any payments or benefits are subject to customary confidentiality, non-solicitation and non-competition provisions and delivery to the Company of a general release of claims.
Restricted Stock. Under the terms of the existing restricted stock grants,and restricted share unit awards, in the event of voluntary termination of employment without the Company’s consent or any involuntary terminations, any unvested restricted sharesshares/share units are forfeited at the time of termination. In the event of death or termination due to permanent disability, retirement or voluntary termination with the Company’s consent, unvested performance-based restricted shares continue to performance vest for a period of two
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years following termination.termination and unvested performance-based restricted share units continue to vest over the term of the award, notwithstanding such death, termination due to permanent disability, retirement, or voluntary termination with the Company's consent. In the event of death or termination due to permanent disability, retirement or voluntary termination with the Company’s consent, unvested time-based restricted sharesshares/share units become immediately vested. In the event of a change in control of the Company, as definedall unvested time-based restricted shares/share units immediately vest in full. In addition, in the Company’s 2007, 2012 and 2017 Equity Incentive Plans, all unvested restricted shares immediately vest.
double-trigger conditions.
The following table provides information on the potential incremental value of executive benefits upon terminationoccurring at, following, or in connection with each of employment prior to and after a change of control,the events described below, assuming terminationsuch event would have occurred as of September 30, 2017.2023.
| Named Executive | Executive Benefit and Payment upon Separation | Voluntary Termination Without Consent | Voluntary Termination With Consent(1) (2) | Involuntary Termination Without Cause | Involuntary Termination With Cause | Death or Disability (1) (2) | Retirement (1) (2) | Change in Control (3) | ||||||||||||||||||
| J.C. Bartolacci | Performance-based Restricted Shares/Share Units | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Time-based Restricted Shares/Share Units | — | 6,527,153 | — | — | 6,527,153 | 6,527,153 | — | |||||||||||||||||||
| Total | — | 6,527,153 | — | — | 6,527,153 | 6,527,153 | — | |||||||||||||||||||
| S.D. Gackenbach | Performance-based Restricted Shares/Share Units | — | — | — | — | — | — | — | ||||||||||||||||||
| Time-based Restricted Shares/Share Units | — | 1,511,654 | — | — | 1,511,654 | 1,511,654 | — | |||||||||||||||||||
| Total | — | 1,511,654 | — | — | 1,511,654 | 1,511,654 | — | |||||||||||||||||||
| G.R. Kohl | Performance-based Restricted Shares/Share Units | — | — | — | — | — | — | — | ||||||||||||||||||
| Time-based Restricted Shares/Share Units | — | 1,608,929 | — | — | — | — | — | |||||||||||||||||||
| Total | — | 1,608,929 | — | — | — | — | — | |||||||||||||||||||
| S.F. Nicola | Performance-based Restricted Shares/Share Units | — | — | — | — | — | — | — | ||||||||||||||||||
| Time-based Restricted Shares/Share Units | — | 2,375,456 | — | — | 2,375,456 | 2,375,456 | — | |||||||||||||||||||
| Total | — | 2,375,456 | — | — | 2,375,456 | 2,375,456 | — | |||||||||||||||||||
| B.D. Walters | Performance-based Restricted Shares/Share Units | — | — | — | — | — | — | — | ||||||||||||||||||
| Time-based Restricted Shares/Share Units | — | 1,426,052 | — | — | 1,426,052 | 1,426,052 | — | |||||||||||||||||||
| Total | — | 1,426,052 | — | — | 1,426,052 | 1,426,052 | — | |||||||||||||||||||
(1)The vesting of performance-based restricted share units is determined based on achievement of certain performance conditions described in the underlying award agreements. Such agreements provide that vesting will not occur unless and until the applicable performance conditions are satisfied. As such, there is no value attributed to performance-based restricted share units under this column. For a quantification of the performance-based restricted share units that vest at target level performance based on the closing price of the Company's common stock on September 30, 2023, and for a description of the performance conditions thereof, see the "Outstanding Equity Awards at Fiscal Year End Table" above.
(2)The time-based restricted share unit value represents the value of unvested restricted share units as of September 30, 2023 that would vest upon termination as of September 30, 2023 (the “assumed time vested shares”). The value of the restricted share units is computed by multiplying the number of assumed time vested share units by $38.91, the closing price of Common Stock on the last trading day of fiscal 2023.
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| Named Executive | Executive Benefit and Payment upon Separation | Voluntary Termination Without Consent | Voluntary Termination With Consent (1) (2) | Involuntary Termination Without Cause | Involuntary Termination With Cause | Death or Disability (1) (2) | Retirement (1) (2) | Change in Control (3) (4) | |||||||
| J.C. Bartolacci | Performance-based Restricted Shares | — | — | — | — | — | — | 2,946,479 | |||||||
Time-based Restricted Shares | — | 6,442,875 | — | — | 6,442,875 | 6,442,875 | 6,442,875 | ||||||||
| SERP | — | — | — | — | — | — | 10,870,364 | ||||||||
| Total | — | 6,442,875 | — | — | 6,442,875 | 6,442,875 | 20,259,718 | ||||||||
| G.S. Babe | Performance-based Restricted Shares | — | — | — | — | — | — | 346,733 | |||||||
Time-based Restricted Shares | — | 685,373 | — | — | 685,373 | 685,373 | 685,373 | ||||||||
| Total | — | 685,373 | — | — | 685,373 | 685,373 | 1,032,106 | ||||||||
| S.D .Gackenbach | Performance-based Restricted Shares | — | — | — | — | — | — | 475,154 | |||||||
Time-based Restricted Shares | — | 1,045,800 | — | — | 1,045,800 | 1,045,800 | 1,045,800 | ||||||||
| Total | — | 1,045,800 | — | — | 1,045,800 | 1,045,800 | 1,520,954 | ||||||||
| S.F. Nicola | Performance-based Restricted Shares | — | — | — | — | — | — | 758,641 | |||||||
| Time-based Restricted Shares | — | 1,820,190 | — | — | 1,820,190 | 1,820,190 | 1,820,190 | ||||||||
| SERP | — | — | — | — | — | — | 5,866,217 | ||||||||
| Total | — | 1,820,190 | — | — | 1,820,190 | 1,820,190 | 8,445,048 | ||||||||
| B.D. Walters | Performance-based Restricted Shares | — | — | — | — | — | — | 374,745 | |||||||
Time-based Restricted Shares | — | 940,598 | — | — | 940,598 | 940,598 | 940,598 | ||||||||
| Total | — | 940,598 | — | — | 940,598 | 940,598 | 1,315,343 | ||||||||
Pay Versus Performance ("PVP")
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between compensation actually paid to our NEOs and certain financial performance metrics of the Company using a methodology that has been prescribed by the SEC.
| Value of Initial Fixed $100 Investment Based on: | ||||||||||||||||||||||||||
| Fiscal Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(1)(2) | Average Summary Compensation Table Total for non-PEO NEOs(1) | Average Compensation Actually Paid to non-PEO NEOs(1)(2) | Total Shareholder Return | Peer Group Total Shareholder Returns(3) | Net Income (Loss) ($ millions) | Adjusted EPS(4) | ||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||
| 2023 | $ | 6,473,964 | $ | 12,912,659 | $ | 1,639,651 | $ | 3,093,694 | $ | 188.13 | $ | 138.24 | $ | 37.8 | $ | 2.88 | ||||||||||
| 2022 | 6,050,371 | 2,137,083 | 2,487,573 | 1,569,045 | 105.71 | 113.15 | (99.8) | 2.88 | ||||||||||||||||||
| 2021 | 6,732,304 | 10,230,853 | 1,892,820 | 2,697,931 | 159.12 | 137.26 | 2.9 | 3.28 | ||||||||||||||||||
(1) Mr. Bartolacci served as our principal executive officer ("PEO") for the full fiscal year in each of 2023, 2022, and 2021. Our non-PEO named executive officers (NEOs) included: (a) for fiscal year 2023, Messrs. Gackenbach, Kohl, Nicola, and Walters; (b) for fiscal year 2022, Messrs. Babe, Gackenbach, Nicola, and Walters; and (c) for fiscal year 2021, Messrs. Dunn, Gackenbach, Kohl, and Nicola.
(2)The following amounts were deducted from / added to the Summary Compensation Table ("SCT") total compensation in accordance with the SEC-mandated adjustments to calculate Compensation Actually Paid ("CAP") to our principal executive officer ("PEO") and average CAP to our non-PEO named executive officers. The fair value of equity awards was determined using methodologies and assumptions developed in a manner substantively consistent with those used to determine the grant date fair value of such awards.
PEO SCT Total to CAP Reconciliation
| Fiscal Year | 2023 | 2022 | 2021 | ||||||||
| SCT Total | $ | 6,473,964 | $ | 6,050,371 | $ | 6,732,304 | |||||
| - Change in Actuarial Present Value of Pension Plans Reported in Fiscal Year | (76,768) | — | (284,123) | ||||||||
| + Service Cost of Pension in Fiscal Year | — | — | 36,141 | ||||||||
| + Prior Service Cost of Pension in Fiscal Year | — | — | (577,796) | ||||||||
| - Grant Date Fair Value of Stock Awards Granted in Fiscal Year | (4,152,750) | (3,819,500) | (3,639,530) | ||||||||
| ± Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | 5,836,500 | 2,577,150 | 5,875,619 | ||||||||
| ± Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | 4,108,538 | (3,263,603) | 1,703,786 | ||||||||
| ± Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | — | — | — | ||||||||
| ± Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | 370,057 | 282,746 | 107,662 | ||||||||
| - Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | — | — | ||||||||
| + Dividends or Other Earnings Paid on Stock Awards in the Fiscal Year Prior to the Vesting Date that are not otherwise included in the Total Compensation for the Fiscal Year | 353,118 | 309,919 | 276,790 | ||||||||
| Compensation Actually Paid | $ | 12,912,659 | $ | 2,137,083 | $ | 10,230,853 | |||||
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Non-PEO NEO Average SCT Total to Average CAP Reconciliation
| Fiscal Year | 2023 | 2022 | 2021 | ||||||||
| Average SCT Total | $ | 1,639,651 | $ | 2,487,573 | $ | 1,892,820 | |||||
| - Change in Actuarial Present Value of Pension Plans Reported in Fiscal Year | (22,356) | — | (76,313) | ||||||||
| + Service Cost of Pension in Fiscal Year | — | — | 76,083 | ||||||||
| + Prior Service Cost of Pension in Fiscal Year | — | — | (125,590) | ||||||||
| - Grant Date Fair Value of Stock Awards Granted in Fiscal Year | (688,665) | (1,610,875) | (797,742) | ||||||||
| ± Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Awards Granted in Fiscal Year | 967,886 | 1,179,746 | 1,287,866 | ||||||||
| ± Change in Fair Value of Outstanding and Unvested Stock Awards Granted in Prior Fiscal Years | 1,041,784 | (625,793) | 365,060 | ||||||||
| ± Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | — | — | — | ||||||||
| ± Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | 76,351 | 52,003 | 17,226 | ||||||||
| - Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | — | — | — | ||||||||
| + Dividends or Other Earnings Paid on Stock Awards in the Fiscal Year Prior to the Vesting Date that are not otherwise included in the Total Compensation for the Fiscal Year | 79,043 | 86,391 | 58,521 | ||||||||
| Compensation Actually Paid | $ | 3,093,694 | $ | 1,569,045 | $ | 2,697,931 | |||||
(3) The Peer Group for which Total Shareholder Return is provided in column (g) is our compensation benchmarking peer group, comprised of the following companies:
| FY2022 | FY2021 | ||||||||||
| Altra Industrial Motion Corp. | Y | ||||||||||
| Y | Y |
| Columbus McKinnon Corporation | Y | ||||||||||
| Y | Y | ||||||||||
| EnPro Industries, Inc. | Y | Y | Y | ||||||||
| Graco Inc. | Y | Y | Y | ||||||||
| Hillenbrand, Inc. | Y | Y | Y | ||||||||
| ICF International, Inc. | Y | Y | Y | ||||||||
| InnerWorkings, Inc. | Y | ||||||||||
| John Wiley & Sons, Inc. | Y | Y | Y | ||||||||
| Kaman Corporation | Y | Y | Y | ||||||||
| Mativ Holdings, Inc. | Y | Y | Y | ||||||||
| MDC Partners Inc. | Y | ||||||||||
| Meredith Corporation | Y | ||||||||||
| Minerals Technologies Inc. | Y | Y | Y | ||||||||
| Moog Inc. | Y | Y | Y | ||||||||
| MSA Safety Incorporated | Y | Y | Y | ||||||||
| Service Corporation International | Y | Y | Y | ||||||||
| Stagwell Inc. | Y | Y | |||||||||
| Standex International Corporation | Y | Y | Y | ||||||||
| Teledyne Technologies Incorporated | Y | Y | |||||||||
| TriMas Corporation | Y | Y | Y | ||||||||
| Viad Corp | Y | ||||||||||
| Woodward, Inc. | Y | Y | Y |
(4) Adjusted earnings per share ("Adjusted EPS") is a Non-GAAP financial measure. Adjusted EPS provides the Company with an understanding of the results from the primary operations of the business by excluding the effects of certain acquisition, divestiture, and system-integration costs, and items that do not reflect the ordinary earnings of its operations. Fiscal year 2023 Adjusted EPS reflects GAAP EPS adjusted for acquisition and divestiture items, strategic initiatives and other charges, highly inflationary accounting impacts (primarily non-cash), defined benefit plan termination related items, non-service pension and postretirement expense, and intangible amortization expense. Fiscal year 2022 Adjusted EPS reflects GAAP EPS adjusted for acquisition and divestiture items, strategic initiatives and other charges, highly inflationary accounting impacts (primarily non-cash), defined benefit plan termination related items, asset write-downs, net, goodwill write-downs, non-service pension and postretirement expense, and intangible amortization expense. Fiscal year 2021 Adjusted EPS reflects GAAP EPS adjusted for acquisition and divestiture items, strategic initiatives and other charges, non-service pension and postretirement expense, intangible amortization expense, and tax-related items. Adjusted EPS provides management with insight into the earning value for shareholders excluding certain costs, not related to the Company’s primary operations. Likewise, this measure may be useful to an investor in evaluating the underlying operating performance of the Company’s business overall, as well as performance trends, on a consistent basis.
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Charts of CAP Versus Performance Metrics
The chart below illustrates the relationship between the PEO and average Non-PEO CAP amounts and the Company’s and Peer Group’s TSR during fiscal years 2021-2023.
The charts below illustrate the relationship between the PEO and Non-PEO CAP amounts and the Company’s Net Income and Adjusted EPS during fiscal years 2021-2023.
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Tabular List of Most Important Performance Measures
The six items listed below represent the most important performance metrics we used to determine CAP for fiscal year 2023 as further described in our Compensation Discussion and Analysis ("CD&A").
•Adjusted Net Income | ||
•Adjusted EBITDA | ||
•Economic Value Added | ||
•Adjusted Operating Cash Flow | ||
•Adjusted EPS | ||
•Return on Invested Capital | ||
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AUDIT COMMITTEE MATTERS
Report of the Audit Committee
The Audit Committee of Matthews International Corporation (the “Company”) is composed of threefour directors who the Board has determined to be independent under the Securities and Exchange Commission (“SEC”)SEC regulations related to audit committee independence, the NASDAQNasdaq listing requirements and the Company’s Corporate Governance Guidelines. The Audit Committee operates under a written charter adopted by the Company’s Board of Directors.
Management of the Company has the primary responsibility for preparing the financial statements, establishing the system of internal controls, and assessing the effectiveness of the Company’s internal control over financial reporting. The Audit Committee is responsible for reviewing the Company’s financial reporting process on behalf of the Board of Directors.
In this context, the Audit Committee has met and held discussions with management, internal audit and the independent registered public accounting firm. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has discussed the consolidated financial statements with management, internal audit and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm matters required to be discussed by Auditing Standard No. 1301, "Communications with Audit Committees", and such other matters as are required to be discussed under the standards applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
The Company’s independent registered public accounting firm also provided to the Audit Committee the written disclosures required by Public Company Accounting Oversight Board Rule 3526, “Communicationapplicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with Audit Committees Concerning Independence”,the audit committee concerning independence, and the Audit Committee discussed with the independent registered public accounting firm that firm’s independence.
The Committee discussed with the Company'sCompany’s independent registered public accounting firm and internal auditors the overall scope and plan for their respective audits. The Audit Committee meets with the independent registered public accounting firm and internal auditors to discuss the results of their examinations, their evaluations of the Company'sCompany’s internal controls, and the overall quality of the Company's financial reporting.
Based on the Audit Committee’s discussions referred to above and the Audit Committee’s review of the report of the independent registered public accounting firm on the consolidated financial statements of the Company for the year ended September 30, 2017,2023, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended September 30, 20172023 for filing with the SEC.
| Audit Committee: | |||||
| L.D. Etzkorn, Chairperson | |||||
| M.K. O’Brien | |||||
| A.W. Richards | |||||
| J.R. Whitaker | |||||
December 5, 2023
Relationship with Independent Registered Public Accounting Firm
Ernst & Young LLP (“EY”) has been the independent registered public accounting firm performing the audits of the consolidated financial statementstatements of the Company since December 28, 2015. In addition to performing the audit of the Company'sCompany’s consolidated financial statements, EY provided fees for services related to the Company’s compliance with Section 404 of the Sarbanes-Oxley Act and various other services during fiscal 20172023 and 2016,2022, respectively. The aggregate fees (including out-of-pocket expenses) billed for fiscal 20172023 and 20162022 for each of the following categories of services are set forth below.
| 2023 | 2022 | |||||||||||||
| 2017 | 2016 | |||||||||||||
| Audit fees (includes audits and reviews of the Company’s fiscal 2017 and 2016 financial statements) | $ | 1,396,324 | $ | 1,363,735 | ||||||||||
| Audit-related fees (primarily due diligence and regulatory compliance work) | 358,477 | 167,886 | ||||||||||||
| Audit fees (includes audits and reviews of the Company’s fiscal 2023 and 2022 financial statements) | Audit fees (includes audits and reviews of the Company’s fiscal 2023 and 2022 financial statements) | $ | 1,941,100 | $ | 1,867,398 | |||||||||
| Audit-related fees (primarily regulatory compliance work) | Audit-related fees (primarily regulatory compliance work) | 27,360 | 107,000 | |||||||||||
| Tax fees (primarily tax compliance and advisory work) | 570,550 | 176,285 | Tax fees (primarily tax compliance and advisory work) | 381,000 | 251,000 | |||||||||
| All other fees | - | - | All other fees | - | ||||||||||
Fiscal 20172023 and 20162022 tax fees include tax compliance and planning fees. All services provided by EY for significant audit, audit-related, tax and other services are approved in advance by the Audit Committee. Fees for the annual audit, including quarterly reviews, are approved by the Audit Committee upon appointment of the Company’s independent registered public accounting firm. Other services are approved in advance on a specific project basis during the year. Examples of such projects include acquisition due diligence and tax assistance engagements. Where approval in advance by the Audit Committee is not practical due to time constraints, management provides a written description of the engagement to the ChairmanChairperson of the Audit Committee and obtains the Chairman’sChairperson’s approval prior to proceeding with the engagement. Ratification of such services by the full Audit Committee is obtained at the next scheduled Audit Committee meeting. The Company’s independent registered public accounting firm provides a summary of audit and other services and related fees to the Audit Committee at each of its regularly scheduled Committee meetings. The summary includes total estimated fees for each individual project. The Audit Committee also considered whether the provision of non-audit services by EY is compatible with maintaining the independence of EY.
EY’s reports on the Company’s consolidated financial statements as of and for the fiscal years ended September 30, 20172023 and 20162022 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principle. The report of EY on internal control over financial reporting as of September 30, 2022 did not contain an adverse opinion, nor was it qualified or modified, except that it excluded Olbrich GmbH and R+S Automotive GmbH from the assessment as of September 30, 2022, because they were acquired by the Company in a purchase business combination in August 2022 and were excluded from management’s report on internal control over financial reporting.
During the fiscal years ended September 30, 20172023 and 2016,2022, the Company had not consulted with EY regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company'sCompany’s financial statements, or (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.
During the two most recent fiscal years ended September 30, 20172023 and 2016,2022, there were no disagreements between Matthews and EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of EY, would have caused EY to make reference to the subject matter of the disagreement in connection with its reports on the consolidated financial statements for such years.
CERTAIN TRANSACTIONS WITH RELATED PERSONS
Transactions with related persons are subject to review and approval by the NominatingGovernance and Corporate GovernanceSustainability Committee of the Board of Directors. Written policies and procedures relative to the identification of related party transactions are contained in the Company’s Code of Business Conduct and Ethics (the “Code of Conduct”) and the Committee reviews and evaluates each such transaction based on the specific facts and circumstances involved. Each of the following transactions were reviewed and evaluated by the Governance and Sustainability Committee pursuant to the Company’s Code of Conduct and to the Company’s knowledge, there were no other transactions with related persons required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The Company made additional investments of $201,000 during fiscal 2023 in the Graphics IV lease). The base rent was established based uponLiquid X Printed Metals Inc. (“LiquidX”), a market-rent appraisal performed byprivate company, in which Matthews participates as a third-party appraisal firm. The total amount paidstrategic investor. Greg S. Babe, one of our Executive Officers and member of our Board of Directors, serves as President and CEO of LiquidX. Mr. Babe received no direct benefit in fiscal 2017 under the Graphics IV lease was approximately $522,030.connection with these transactions.
The Company’s directors and executive officers are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership of the company’s common stockCommon Stock with the SEC. Based solely upon a review of Forms 3 and 4 and amendments thereto, if any, furnished to the Company during its most recent year and filed with the SEC, and representations from reporting persons that no Forms 5 were required; we believe that all of our directors and executive officers complied during fiscal 20172023 with the reporting requirements of Section 16(a) of the Exchange Act, with the exception of Brian D. Walters, ViceAleta W. Richards, director of Matthews International Corporation, who filed a Form 3 on February 28, 2023 reporting her appointment as a director and a Form 4 on August 15, 2023 reporting her purchase of shares of Common Stock, and Lee Lane, Group President, Matthews Industrial Automation and General Counsel,Matthews Environmental Solutions, who filed a Form 4 on August 4, 2017July 10, 2023 reporting the salevesting of restricted stock units and the forfeiture of shares of restricted stock to cover tax withholding on the vesting of such restricted stock units. Such Section 16(a) Reports were delinquent due to administrative oversight.
SHAREHOLDERS SHARING THE SAME ADDRESS
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple shareholders who reside at the same address may receive a single copy of our annual report and proxy materials, unless the affected shareholder has provided contrary instructions. This procedure reduces printing costs and postage fees.
A number of brokers with account holders who beneficially own our Common Stock will be “householding” our annual report and proxy materials. A single set of annual report and other proxy materials will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Shareholders may revoke their consent at any time by
53
contacting the Company at Matthews International Corporation, Two NorthShore Center, Pittsburgh, Pennsylvania 15212-5851, Attention: Investor Relations, telephone (412) 442-8200.
Upon written or oral request, the Company will promptly deliver a separate copy of the annual report and other proxy materials to any beneficial owner at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the annual report and other proxy materials, you may write or call the Company’s Common StockInvestor Relations Department at Matthews International Corporation, Two NorthShore Center, Pittsburgh, Pennsylvania 15212-5851, Attention: Investor Relations, telephone (412) 442-8200. The annual report and proxy materials are also available on the Company’s website at www.matw.com/investors/sec-filings.
Shareholders who share the same address and currently receive multiple copies of our annual report and other proxy materials, who wish to receive only one set in the Company that occurred on July 31, 2017.future, can contact their bank, broker or other holder of record to request information about householding.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 20192025 ANNUAL MEETING
Shareholders may make proposals for inclusion in the proxy statement and proxy form for the 20192025 Annual Meeting of the Shareholders. To be considered for inclusion, any such proposal should be written and mailed to the Secretary of the Company at the corporate office for receipt by September 18, 20182024 (120 days prior to the anniversary date of the Company's fiscal 2017Company’s 2024 Proxy Statement).
Section 2.09 of the Amended and Restated By-laws of the Company requires that any shareholder intending to present a proposal for action at an Annual Meeting must give written notice of the proposal, containing the information specified in such Section 2.09, so that it is received by the Company notno later than and no earlier than the notice deadline determined under such Section 2.09. This notice deadlineperiod will generally be 75 to 120 days prior to the anniversary of the Company's Annual Meeting for the previous year, or October 18, 2024 to December 2, 20182024 for the Company's Annual Meeting in 2019.2025. Any shareholder proposal received by the Secretary of the Company before October 17, 2024 and after December 2, 20181, 2024 will be considered untimely under Rule 14a-8(c)14a-8(e)(2) promulgated by the SEC under the Exchange Act.
Shareholder nominations for directors to be elected at the 2025 Annual Meeting must be submitted to the Company in writing at least 75 days prior to the anniversary of the Company’s Annual Meeting for the previous year, or December 2, 2024, to our Secretary at Two NorthShore Center, Pittsburgh, PA 15212-5851, Attention: Steven F. Nicola, Chief Financial Officer and Secretary. Such nominations must be in writing in accordance with Section 6.1 of the Company’s Restated Articles of Incorporation and Section 2.09 of the Company’s Amended and Restated By-laws, and must include, as to each prospective nominee and each shareholder giving notice, as applicable, (1) the name and address of the shareholder who intends to make the nomination and of the person(s) to be nominated; (2) a representation that the shareholder is a holder of record of Common Stock of the Company entitled to vote at such meeting and intends to appear “in person” or by proxy at the meeting to nominate the person(s) specified in the notice; (3) a description of all arrangements or understandings between the shareholder and each nominee and any other person(s) (naming such person(s)) pursuant to which the nomination or nominations are to be made by the shareholder; (4) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated by the Board of Directors; (5) the consent of each nominee to serve as a director of the Company if so elected; and (6) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such shareholder and beneficial owner on whose behalf the nomination is being made, and their respective affiliates and
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associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and such nominees’ respective affiliates and associates, or others acting in concert therewith, on the other hand. To be eligible to be a nominee for election as a director, the prospective nominee, or someone acting on such prospective nominee’s behalf, must deliver a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request). Upon request, the prospective nominee must also provide a written representation and agreement that such prospective nominee: (a) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such prospective nominee, if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Company or (2) any Voting Commitment that could limit or interfere with such prospective nominee’s ability to comply, if elected as a director of the Company, with such prospective nominee’s fiduciary duties under applicable laws; (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Securities Exchange ActCompany with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein; and (c) would be in compliance if elected as a director of 1934.the Company, and will comply with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Company.
The Governance and Sustainability Committee and Board will consider any candidate for nominee as a director that is properly submitted by a shareholder in accordance with the Company’s Restated Articles of Incorporation and Amended and Restated By-laws and does not maintain a policy with regard to such nominations distinct from such requirements. No such nominations were received with respect to the 2024 Annual Meeting.
OTHER MATTERS
The cost of soliciting proxies in the accompanying form will be paid by the Company. Shareholder votes at the Annual Meeting will be tabulated by the Company's transfer agent, Computershare Trust Company, N.A. A copy of the Company'sCompany’s Annual Report for 20172023 has previously been mailed to each shareholder of record, or will be mailed with this Proxy Statement.
By Order of The Board of Directors
Steven F. Nicola
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Appendix A
b.This Section 6.01 shall apply to any breach of laws.performance of duty or any failure of performance of duty by any Director of the Company occurring after January 27, 1987 and the performance of duty by any Officer of the Company occurring after the Section 1735 Shareholder Approval is obtained. The captionsprovisions of this Plan are not partSection shall be deemed to be a contract with each Director and Officer (in the case of Officers once Section 1735 Shareholder Approval is obtained) of the Company who serves as such at any time while this Section is in effect and each such Director or Officer (in the case of Officers once Section 1735 Shareholder Approval is obtained) shall be deemed to be so serving in reliance on the provisions hereofof this Section. Any amendment or repeal of this Section or adoption of any other By‑Law or provision of the Articles of the Company which has the effect of increasing Director or Officer liability shall operate prospectively only and shall not have no force or effect.
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Appendix B
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