UNITED STATES
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WASHINGTON, D.C. 20549
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SEC 1913 (3–99)
WHIRLPOOL CORPORATION Global Headquarters 2000 North M-63 Benton Harbor, Michigan 49022-2692 |
Dear Fellow Shareholder:
First and foremost, we would like to express our sincere appreciation for your continued support as a Whirlpool shareholder. Whirlpool is committed to operating sustainably and to creating shareholder value over the long-term, and we have a high functioning Board and sound corporate governance structure in place to oversee this commitment. We are proud to tell our corporate governance story in the following pages, which includes these highlights.
Strategic Objectives
During 2019, Whirlpool accomplished a number of significant strategic objectives. We completed the divestiture of our Embraco compressor business, took decisive actions to return our EMEA business to profitability in the fourth quarter, and made significant progress in meeting our long-term gross debt-to-EBITDA goal. Our Stockholders:
Board Refreshment and Diversity
Whirlpool is committed to a Board composition that reflects an effective mix of business expertise, company knowledge, and diverse perspectives, and our goal is to strike the right balance between board refreshment and continuity. Last year, we appointed Patricia K. Poppe, who is President and Chief Executive Officer of CMS Energy Corporation, to our Board of Directors. She brings extensive leadership experience in consumer-facing industries and environmental stewardship to our Board. We are also pleased to nominate to our Board Jennifer A. LaClair, who is Chief Financial Officer of Ally Financial Inc. She will bring significant finance, accounting and capital markets expertise to our Board. With these additions, we will have added five new directors to our Board in the past four years.
Sustainability and Corporate Responsibility
Our Board is committed to overseeing Whirlpool Corporation’s integration of environmental, social, and governance principles throughout Whirlpool. In December 2019, we became a signatory to the UN Global Compact. In 2019, we set new science-based targets for GHG emissions reductions, celebrated our 20th year of collaboration withHabitat for Humanity, continued to collaborate with theUnited Way to fund hundreds of non-profit campaigns for our communities, and sponsored our first-ever Global Inclusion Week with events for employees at company offices around the world.
Shareholder Engagement
Whirlpool values the feedback of our shareholders and seeks opportunities to engage on company performance, strategy, and governance, among other topics. In May 2019, we held an Investor Day at the New York Stock Exchange where senior leadership presented on our long-term shareholder value creation goals and key strategic initiatives.
It is myour pleasure to invite you to attend the 20192020 Whirlpool Corporation annual meeting of stockholders to be held on Tuesday, April 16, 2019,21, 2020, at 8:00 a.m., Chicago time, at 325331 North LaSalle, Chicago, Illinois.
Your vote is important and much appreciated!
MARC R. BITZER Chairman of the Board and Chief Executive Officer | ||||||
SAMUEL R. ALLEN Presiding Director |
March 6, 2020
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
The 20192020 annual meeting of stockholders ofWHIRLPOOL CORPORATION will be held at 325 North LaSalle, Chicago, Illinois, on Tuesday, April 16, 2019,21, 2020, at 8:00 a.m., Chicago time, at 331 North LaSalle, Chicago, Illinois, for the following purposes:
1. | To elect 13 persons to |
2. | To approve, on an advisory basis, |
3. | To ratify the appointment of Ernst & Young LLP as |
4. | To transact such other business as may properly come before the meeting. |
A list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose relevant to the meeting during ordinary business hours for at least ten days prior to April 16, 2019,21, 2020, at Whirlpool'sWhirlpool Corporation’s Global Headquarters, 2000 NorthM-63, Benton Harbor, Michigan 49022-2692.
By Order of the Board of Directors,
BRIDGET K. QUINN
Assistant General Counsel and Corporate Secretary
March 1, 20196, 2020
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Stockholders to be Held on April 21, 2020
This Proxy Statement and the Accompanying Annual Report are Available at:
https://investors.whirlpoolcorp.com/financial-information/annual-reports-and-proxy-statements/
PROXY SUMMARY |
This summary highlights information contained elsewhere in the proxy statement. This summary provides an overview and is not intended to contain all the information that you should consider before voting. We encourage you to read the entire proxy statement for more detailed information on each topic prior to casting your vote. General Information uMeeting:Annual Meeting of Stockholders uDate: Tuesday, April 21, 2020 uTime: 8:00 a.m., Chicago time uLocation: 331 N. LaSalle, Chicago, Illinois uRecord uStock Symbol: WHR uExchange: NYSE & CHX uCommon Stock Outstanding as of the Record Date: 62,677,753 shares uRegistrar & Transfer Agent:Computershare Trust Company, N.A. uCorporate Website: www.whirlpoolcorp.com 2019 Company Performance Highlights * In 2019, Whirlpool delivered record full-year GAAP earnings per share of $18.45, and ongoing (non-GAAP) earnings per share of $16.00. Our GAAP net earnings margin expanded 6.7 points to 5.8% and our ongoing EBIT margin expanded by 60 basis points to 6.9%. We generated $1.2 billion of cash from operating activities, flat compared to prior year, and $912 million of free cash flow, a 6.9% improvement compared to 2018. We also closed the sale of our Embraco compressor business and made significant progress towards our long-term gross debt/EBITDA target of 2x. Record earnings per share of $18.45 (GAAP) and $16.00 (Ongoing) Free cash flow of $912 million Significant progress toward long-term Gross Debt/ EBITDA target of 2x See page 20 for details of the Company’s results for the 2019 fiscal year. Please also see Annex A for a reconciliation of The proxy statement and annual report are available atwww.proxyvote.com.GENERAL INFORMATIONMeeting: Annual Meeting of StockholdersDate: Tuesday, April 16, 2019Time: 8:00 a.m., Chicago timeLocation: 325 N. LaSalle, Chicago, IllinoisRecord Date: February 19, 2019Stock Symbol: WHRExchange: NYSE & CHXCommon Stock Outstanding asof the Record Date: 63,621,219 sharesRegistrar & Transfer Agent: Computershare Trust Company, N.A.Corporate Website:www.whirlpoolcorp.com2018 COMPANY PERFORMANCE HIGHLIGHTS *GAAP net earnings per share were $(2.72) and ongoing (non-GAAP) earnings per share were a record $15.16 in 2018, as we overcame 200 bps in significant cost and currency challenges. We reported cash provided by operating activities of $1.2 billion and free cash flow of $853 million for full-year 2018, with free cash flow improving compared to prior year. And we returned a record $1.5 billion in cash to stockholders.ongoingDate: February 24, 2020 $15.16 Free cash flow of $853 million, an improvement compared to prior year Returned $1.5 billion in to stockholders*See page 24 for details of the Company's results for the 2018* non-GAAP financial measures.Notice of Annual Meeting of Stockholders and 2020 Proxy Statement ç i
| PROXY SUMMARY |
Overview of Voting Matters
Board recommendation | |||
Item 1: Election of Directors (page: | |||
1) You are being asked to vote on the election of 13 Directors. The Corporate Governance and Nominating Committee believes that these nominees possess the experience and qualifications to provide sound guidance and oversight to | FOR each nominee | ||
Item 2: Advisory Vote to Approve Whirlpool Corporation’s Executive Compensation (page: | |||
50) You are being asked to approve, on an advisory basis, the compensation of | FOR | ||
Item 3: Ratification of the Appointment of Ernst & Young LLP as Whirlpool Corporation’s Independent Registered Public Accounting Firm for fiscal 2020 (page: | |||
54) You are being asked to ratify the Audit Whirlpool Corporation’s Independent Registered Public Accounting Firm for fiscal 2020. | FOR |
Corporate Governance Highlights
For more information about the Company'sCompany’s corporate governance policies, please refer to the Board of Directors and Corporate Governance section beginning on page 116 of the proxy statement.
uProxy Access | ||||
uMajority Voting in Director Elections | ||||
uBoard Refreshment | ||||
uAnnual Director Elections | ||||
uIndependent Presiding Director u Shareholder Engagement u Our Integrity Manual (Global Code of Ethics) |
ç | Notice of |
PROXY SUMMARY |
Director Nominees
Additional details about each of the director nominees can be found beginning on page 6.
Name * indicates Independent Director | Samuel Allen * | Marc Bitzer | Greg Creed * | Gary DiCamillo * | Diane Dietz * | Gerri Elliott * | Michael Johnston * | John Liu * | James Loree * | Harish Manwani * | William Perez * | Larry Spencer * | Michael White * |
Age | 65 | 54 | 61 | 68 | 53 | 62 | 71 | 50 | 60 | 65 | 71 | 65 | 67 |
Director since | 2010 | 2015 | 2017 | 1997 | 2013 | 2014 | 2003 | 2010 | 2017 | 2011 | 2009 | 2016 | 2004 |
Committee Membership (# of meetings in 2018) | |||||||||||||
Audit Committee (8) | X | X | X | X | X | Chair | |||||||
Human Resources Committee (5) | X | X | X | Chair | X | X | |||||||
Finance Committee (2) | X | X | X | X | Chair | X | |||||||
CG&N Committee (3) | Chair | X | X | X | X | X |
Committee Membership | ||||||||||||||
Name | Age | Director since | Independent | Audit | Human Resources | Finance | Corporate Governance & Nominating | |||||||
Samuel Allen | 66 | 2010 | * | ✓ | ✓ | |||||||||
Marc Bitzer | 55 | 2015 | ||||||||||||
Greg Creed | 62 | 2017 | * | ✓ | ✓ | |||||||||
Gary DiCamillo | 69 | 1997 | * | ✓ | ✓ | |||||||||
Diane Dietz | 54 | 2013 | * | ✓ | ✓ | |||||||||
Gerri Elliott | 63 | 2014 | * | ✓ | ✓ | |||||||||
Jennifer LaClair | 48 | — | * | |||||||||||
John Liu | 51 | 2010 | * | ✓ | ✓ | |||||||||
James Loree | 61 | 2017 | * | ✓ | ✓ | |||||||||
Harish Manwani | 66 | 2011 | * | ✓ | ✓ | |||||||||
Patricia Poppe | 51 | 2019 | * | ✓ | ✓ | |||||||||
Larry Spencer | 66 | 2016 | * | ✓ | ✓ | |||||||||
Michael White | 68 | 2004 | * | ✓ | ✓ |
Tenure, Experience, and Diversity
Our Board of Directors reflects an effective mix of business expertise,
Board Tenure of Independent Director Nominees | Board Diversity and Experience of Independent Director Nominees |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | iii |
PROXY SUMMARY | ||||
Compensation Highlights
The Compensation Discussion & Analysis (CD&A)(“CD&A”) section beginning on page 2420 includes the following highlights:
Named Executive Officer | 2018 Base Salary ($) | 2018 Short-Term Incentive Award ($) | 2018 Long-Term Incentive Award Value(1) ($) | 2018 TOTAL DIRECT COMPENSATION (2) ($) | |
Marc R. Bitzer | 1,250,000 | 1,462,500 | 8,749,813 | 11,462,313 | |
James W. Peters | 641,667 | 446,405 | 1,700,694 | 2,788,766 | |
Jeff M. Fettig | 1,050,000 | 1,146,600 | 6,299,851 | 8,496,451 | |
Joseph T. Liotine | 641,667 | 625,625 | 1,455,855 | 2,723,147 | |
João C. Brega | 589,295 | 463,042 | 756,149 | 1,808,486 |
What We Do | What We Don’t Do | |||||||
✓ | Pay for performance | Allow hedging or pledging | ||||||
✓ | Robust executive stock ownership guidelines | Gross up for excise taxes | ||||||
✓ | “Double trigger” change in control | Reprice stock options | ||||||
✓ | Claw-back policies for all variable pay | Enter into employment contracts withU.S.-based NEOs |
Our Compensation Philosophy: Pay for Performance
Whirlpool employs a pay-for-performance philosophy under which a significant portion of pay is performance-based and tied to the Annual Meetingdrivers of long-term stockholder value, including both business results and Voting
Executive Compensation Pay Mix
CEO Total Target Compensation | Other NEOs’ Average Total Target Compensation | |
iv | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
Notice of Annual Meeting of Stockholders and 2019 Proxy Statement l 1
ITEM 1 – DirectorsDIRECTORS AND NOMINEES
FOR ELECTION AS DIRECTORS
Whirlpool is committed to delivering significant, long-term value to our consumers and Nominees for Election as Directors
Global Strategic Imperatives | Deliver Product Leadership | Redefine What Product is | Win the Digital Consumer Journey | Reinvent Our Value Chain |
Skills and Experience | Relevance to | |
Leadership of Large/
| •Whirlpool is a large, complex, global company, and directors who have successfully held leadership positions in such organizations possess experience and the ability to drive strong results. | |
Directors with expertise: | Allen, Bitzer, Creed, DiCamillo, Dietz, Elliott, Johnston, LaClair, Loree, Manwani, Perez, Poppe, Spencer, White | |
Global Business Operations
| • Our continued profitable growth depends on strong operational execution in emerging markets and other countries beyond the United States, and global experience aids directors in oversight of our global business and strategy. | |
Directors with expertise: | Allen, Bitzer, Creed, DiCamillo, Dietz, Elliott, Johnston, | |
International Work Experience
| •Whirlpool sells products in nearly every country throughout the world, and directors with international experience possess unique perspectives on the countries in which we operate. | |
Directors with expertise: | Allen, Bitzer, Creed, DiCamillo, | |
Corporate Strategy/M&A
| •Whirlpool evaluates M&A opportunities to determine if there is a strategic fit, strong value creation potential, and clear execution capacity. Directors with strategy and M&A expertise provide critical insights in evaluating such opportunities. | |
Directors with expertise: | Allen, Bitzer, Creed, DiCamillo, Dietz, Johnston, LaClair, Liu, Loree, Manwani, Perez, Spencer, White | |
Sales and Trade Management
| •A strong distribution strategy, maintaining excellent relationships, and delivering on our promises to trade customers are key drivers of our profitable growth, and such skills enable directors to provide effective oversight of this aspect of our business. | |
Directors with expertise: | Allen, Bitzer, Creed, DiCamillo, Dietz, Elliott, Loree, Manwani, Perez, | |
Product Development
| •Product leadership is key to our growth and success, and directors with this expertise provide development strategy and process insights. | |
Directors with expertise: | Allen, Bitzer, Creed, DiCamillo, Dietz, Johnston, Loree, Manwani, Spencer, White | |
Innovation, Technology and Engineering
| •Whirlpool is committed to industry-leading and consumer-relevant innovation, and directors with this experience provide unique perspectives on our innovation strategy and execution. | |
Directors with expertise: | Allen, Bitzer, DiCamillo, Dietz, Elliott, Johnston, Loree, Poppe, Spencer, White | |
Global Supply Chain, Manufacturing, Logistics
| •Whirlpool is focused on maintaining the best cost structure in the industry, and directors with this experience provide oversight of our manufacturing and logistics strategies. | |
Directors with expertise: | Allen, Bitzer, DiCamillo, Dietz, Johnston, Loree, Manwani, Poppe, Spencer, White | |
Marketing/Digital Marketing/Branded Consumer Products
| •Brand leadership and enhancing the consumer experience for our branded products are key Whirlpool strategies, and directors with this expertise provide valuable insights. | |
Directors with expertise: | Bitzer, Creed, DiCamillo, Dietz, Elliott, Loree, Manwani, Perez, Poppe, Spencer, White | |
Accounting, Finance and Capital Structure
| •Whirlpool conducts business throughout the world and engages in complex financial transactions in numerous countries and currencies, and such skills assist our directors in evaluating our capital structure and overseeing our financial reporting. | |
Directors with expertise: | Allen, Bitzer, DiCamillo, | |
Board Practices of Other Major Corporations
| •Whirlpool believes that effective corporate governance is a key to achieving strong results, and that experience on other boards provides our directors with valuable insights on emerging trends and effective governance and oversight. | |
Directors with expertise: | Allen, Creed, DiCamillo, Dietz, Elliott, Johnston, Liu, Loree, Manwani, Perez, Spencer, White | |
Legal/Regulatory and Government Affairs
| •Whirlpool regularly faces legal and regulatory issues around the world. Such experience aids directors in overseeing | |
Directors with expertise: Dietz, LaClair, Loree, Poppe, Spencer, White | ||
Human Resources and Development Practices
| ||
• | Thoughtful succession planning and talent management are key to ensuring our continued success, and directors with HR and development expertise are adept at assessing our talent pipeline. | |
Directors with expertise: | Allen, Bitzer, Creed, Dietz, Johnston, LaClair, Loree, Manwani, Perez, Poppe, Spencer, White |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 1 |
We currently have 1314 directors on the Board. Directors who are elected will serve until our next annual meeting of stockholders and stand forre-election annually. Each of the nominees below has consented to be a nominee named in this proxy statement and to serve if elected. Messrs. Johnston and Perez will not be standing forre-election at the annual meeting of stockholders. The Board recommends a vote
SAMUEL R. ALLEN | ||
| Mr. Allen, | |
Mr. Allen also has served as a director of Dow Inc. since August 2019. •Committees:Corporate Governance and Nominating (chair) |
MARC R. BITZER | |||
| Mr. Bitzer, |
GREG CREED | ||
| ||
Mr. Creed, •Committees:Human Resources, Finance |
GARY T. DICAMILLO | |||
| Mr. DiCamillo, •Committees:Audit, Finance |
ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
DIANE M. DIETZ | ||
| Ms. Dietz, | |
•Committees:Corporate Governance and |
GERRI T. ELLIOTT | |||
| Ms. Elliott, •Committees:Audit,Finance |
JENNIFER A. LACLAIR | ||
| ||
Ms. LaClair, 48, has served as Chief Financial Officer of Ally Financial Inc., a • Director Nominee |
JOHN D. LIU | |||
| Mr. Liu, •Committees:Audit, Finance |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | | 3 |
JAMES M. LOREE | ||
| Mr. Loree, | |
• |
HARISH MANWANI | ||
| ||
Mr. Manwani, | ||
2018. • |
PATRICIA K. POPPE | ||
| ||
Ms. Poppe, 51, has served as a director since | ||
Nominating Committee and Board by a third-party search firm. •Committees: | ||
Audit, Corporate Governance and Nominating |
LARRY O. SPENCER | ||
| ||
General Spencer, | |
since 2018 and Haynes International, Inc. since January 2020. •Committees:Corporate Governance and |
4 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
ITEM 1 - ELECTION OF DIRECTORS |
MICHAEL D. WHITE | ||
| Mr. White, | |
since 2016. • |
The Board of Directors recommends that stockholders vote FOR the election of each of these nominees as a director. |
The following directors are not standing for re-election
MICHAEL F. JOHNSTON | ||
| Mr. Johnston, 72, has served as a director since 2003. Mr. Johnston retired from Visteon Corporation, •Committees:Audit; Human Resources (chair) |
WILLIAM D. PEREZ | ||
| Mr. Perez, 72, has served as a director since 2009. Mr. Perez was a Senior Advisor to Greenhill & Co., •Committees:Finance (chair), Human Resources |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 5 |
I. Board of Directors and Committees |
Board of Directors
During 2018,2019, our Board met sevensix times and had four committees. The committees consisted of an Audit Committee, a Corporate Governance and Nominating Committee, a Human Resources Committee, and a Finance Committee. Each committee may form subcommittees and delegate certain actions to those subcommittees. Each director attended at least 75% of the total number of meetings of the Board and the Board committees on which he or she served.
The table below lists the number of times each committee met in 2018,2019, the major responsibilities and 2019 accomplishments of each committee, and the current membership for each committee.
Committee | Key Responsibilities and Accomplishments | |
Audit | •Oversee accounting functions, internal controls, and the integrity of financial statements and related reports | |
• | Oversee compliance with legal and regulatory requirements, and monitor risk management and assessment processes | |
• | Retain the independent registered public accounting firm; monitor the | |
• | Oversee the performance of our internal audit function | |
8 meetings | • In 2019, oversaw selection of new lead audit partner and Embraco sale accounting | |
Committee Members: | White (Chair), DiCamillo, Elliott, Johnston, Liu, Loree, and | |
Corporate Governance and Nominating | •Identify potential Board members and recommend director nominees | |
• | Annually review Board and committee effectiveness | |
• | Recommend changes to director compensation and committee rotation | |
• | Recommend the corporate governance principles adopted by Whirlpool | |
3 meetings | • In 2019, evaluated and recommended Patricia K. Poppe as new director to Board | |
Committee members: | Allen (Chair), Dietz, Loree, Manwani, Poppe, Spencer, and White | |
Human Resources | •Determine and approve compensation for CEO and other executive officers | |
• | Approve goals/objectives for CEO compensation and evaluate CEO performance | |
• | Determine and approve equity grants for executive officers and each employee subject to Section 16 of the Securities Exchange Act of 1934 | |
• | Make recommendations to the Board on | |
3 meetings | • For 2019, oversaw the development of new long-term incentive plan structure | |
Committee members: | Johnston (Chair), Allen, Creed, Dietz, Manwani, and Perez | |
Finance | •Review capital policies and strategies to set an acceptable capital structure, including debt issuance and share repurchases | |
• | Review policies regarding dividends, derivatives, liquidity management, interest rates, and foreign exchange rates | |
• | Reviewtax-planning strategy and initiatives | |
• | Oversee the establishment and implementation of guidelines relating to the management of significant financial structure risks | |
2 meetings | • For 2019, oversaw actions facilitating corporate deleveraging goals | |
Committee members: | Perez (Chair), Creed, DiCamillo, Elliott, Liu, and Spencer |
6 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | ||||
Director Independence
The Corporate Governance and Nominating Committee conducts an annual review of the independence of the members of the Board and its committees, and reports its findings to the full Board. TwelveThirteen of our 1314 directors arenon-employee directors (all except Mr. Bitzer). Our new director nominee, Ms. LaClair, also has no employment relationship with Whirlpool. The Board has adopted the NYSENew York Stock Exchange (“NYSE”) listing standards for evaluating director independence, but has not adopted any other categorical standards of materiality for independence purposes. When assessing director independence, the Board considers the various transactions and relationships known to the Board (including those identified through annual director questionnaires) that exist between the CompanyWhirlpool and the entities with which our directors or members of their immediate families are, or have been, affiliated. For 2018,2019, the Committee evaluated certain transactions that arose in the ordinary course of business between the CompanyWhirlpool Corporation and such entities and which did not exceed the thresholds provided under the NYSE listing standards. Information provided by the directors, new director nominee, and Whirlpool did not indicate any relationships (e.g., commercial, industrial, banking, consulting, legal, accounting, charitable, or familial) whichthat would impair the independence of any of thenon-employee directors. directors or new director nominee. Based on the report and recommendation of the Corporate Governance and Nominating Committee, the Board has determined that each of its non‑employeenon-employee directors satisfiesand new director nominee satisfy the independence standards set forth in the listing standards of the NYSE.
Committee Member Independence and Expertise
Each Board committee is comprised solely of independent directors who meet the independence standards under the NYSE listing standards.
In addition, the Audit Committee members all meet the enhanced independence standards for audit committee members set forth in the NYSE listing standards (which incorporates the standards set forth in the rules of the Securities and Exchange Commission)Commission (“SEC”)). The Board has determined that each member of the Audit Committee satisfies the financial literacy qualifications of the NYSE listing standards, and that Mr. White, satisfies the "auditAudit Committee Chair, and Mr. DiCamillo, the prior Audit Committee Chair, qualify under the “audit committee financial expert"expert” criteria established by the SecuritiesSEC and Exchange Commission and hashave accounting and financial management expertise as required under the NYSE listing rules.
Similarly, the Human Resources Committee members all meet the enhanced independence standards for compensation committee members under the NYSE listing standards (which incorporates the standards set forth in the rules of the Securities and Exchange Commission)SEC), and qualify as "outside directors"“outside directors” for purposes of compensation intended to be grandfathered under Section 162(m) of the Internal Revenue Code, and as "non-employee directors"“non-employee directors” for purposes of Rule16b-3 under the Securities Exchange Act of 1934. For information about the Human Resources Committee'sCommittee’s processes for establishing and overseeing executive compensation, refer to "Compensation“Compensation Discussion and Analysis – Role of the Human Resources Committee."
II. Corporate Governance |
Board Leadership Structure
As noted above, our Board is currently comprised of twelvethirteen independent directors and one employee director. Mr. Fettig, our Chief Executive Officer until October 2017, served as Chairman of the Board from July 2004 to December 31, 2018. In October 2017, Mr. Bitzer became the Chief Executive Officer of the Company.
The Board regularly evaluates our boardBoard leadership structure to ensure that it serves the interests of our stockholders. In connection with Mr. Fettig's retirement as Executive Chairman, the Board assessed its leadership structure. After review and discussion, the Board concluded that the critical oversight provided by independent directors and a strong independent Presiding Director, combined with the organizational leadership
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 7 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Since 2003, the Board has designated one of the independent directors as Presiding Director. We believe that the number of independent, experienced directors that make up our Board, along with the independent oversight of our Presiding Director, benefits Whirlpool and its stockholders. Mr. Allen is currently serving as the Presiding Director.
Presiding Director Responsibilities | |||||||
• Preside at executive sessions ofnon-employee directors; | |||||||
• | |||||||
Coordinate with the Chairman of the Board and Chief Executive Officer in establishing the annual agenda and topic items for Board meetings; | |||||||
• | Serve as a focal point for managing stockholder communication with independent directors; | ||||||
• | Retain independent advisors on behalf of the Board as the Board may determine is necessary or appropriate; | ||||||
• | Assist the Human Resources Committee with the annual evaluation of the performance of the Chairman of the Board and Chief Executive | ||||||
• | Perform such other functions as the independent directors may designate from time to time. | ||||||
Our Board conducts an annual evaluation in order to determine whether it and its committees are functioning effectively. As part of this annual self evaluation,self-evaluation, the Board evaluates whether the current leadership structure continues to be optimal for Whirlpool and its stockholders. Our Corporate Governance Guidelines provide the flexibility for our Board to modify or continue our leadership structure in the future, as it deems appropriate.
Strategy Oversight
Our Board is actively involved in overseeing, reviewing, and guiding our corporate strategy, and the Board’s skills and experiences align to our strategic objectives. The Board formally reviews strategy, including risks and opportunities facing Whirlpool, at an annual strategic planning meeting. In addition, long-range strategic issues, including business performance and strategic fit, are discussed regularly at Board meetings. The Board regularly discusses strategy throughout the year with management and during executive sessions of the Board, as appropriate.
Risk Oversight
Our Board is responsible for overseeing Whirlpool's risk management. The Board focuses on Whirlpool'sour general risk management strategy and the most significant risks facing Whirlpool, including cybersecurity risk, and ensures that appropriate risk mitigation policies and procedures are implemented by management. The Board receives risk management updates from management in connection with its general oversight and approval of corporate matters.
The Board has delegated to the Audit Committee oversight of Whirlpool'sour risk management process. Among its duties, the Audit Committee reviews with management:
Company guidelines with respect to risk assessment and management of risks that may be material to Whirlpool;
Our system of disclosure controls and system of internal controls over financial reporting;
Our compliance with legal and regulatory requirements; and
Situations where new activities, major changes in operations, or other developments that could materially impact Whirlpool's contingent liabilities and risks.may create financial risk.
Our other Board committees also consider and address risk as they perform their respective committee responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk.
Our Board is responsible for overseeing and holding senior management accountable for our global information security programs. This includes understanding our business needs and associated risks, and reviewing management’s strategy and recommendations for managing cyber risk. In line with this oversight responsibility, the Audit Committee receives reports on cyber program effectiveness periodically, and the Board receives a full presentation annually from the chief information officer.
8 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Our management is responsible forday-to-day risk management. Our risk management, internal audit, and compliance areas serve as the primary monitoring and testing functions for Company-wide policies and procedures and manage theday-to-day oversight of the risk management strategy for the ongoing business of Whirlpool. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, operational, and compliance and financial reporting levels.
We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing Whirlpool, and that our Board leadership structure supports this approach.
Compensation Risk Assessment
Whirlpool regularly reviews its employee compensation programs based on several criteria, including the extent to which they may result in risk to the Company.Whirlpool. Our compensation function, with assistance from the risk management and internal audit functions, annually assesses whether our compensation programs create incentives or disincentives that materially affect risk taking or are reasonably likely to have a material adverse effect on the Company.Whirlpool. The Human Resources Committee, with the assistance of its independent compensation consultant, Frederic W. Cook & Co., Inc. ("(“FW Cook"Cook”), evaluates the results of this assessment. As part of this assessment, management and the Human Resources Committee considered the followingrisk-mitigating features of our compensation programs.
Risk-Mitigating Features of Whirlpool Corporation’s Compensation Programs | |||||||
• | Annual and long-term performance metrics used in our global compensation programs are multiple, different, balanced, and more heavily weighted toward corporate-wide, audited metrics; | ||||||
• | Long-term incentive compensation represents a significant portion of our compensation mix; | ||||||
• | Metrics used in the executive compensation programs are approved by the Human Resources Committee, which is composed solely of independent directors; | ||||||
• | The Human Resources Committee retains an independent | ||||||
• | Significant stock ownership guidelines are in place for executives; | ||||||
• | Claw-back provisions for variable compensation programs are in place in the event of misconduct; | ||||||
• | Our incentive designs avoid objectives that might maximize short-term payouts at the expense of long-term sustainable performance; and | ||||||
• | We have limited commission incentive programs which are designed to pay out based on profitability and are subject to multiple layers of management review, including an annual review of plan design and results by regional senior management. | ||||||
Based on this assessment, the Human Resources Committee has concluded that our compensation programs do not create risks that would be reasonably likely to have a material adverse effect on Whirlpool Corporation.
Succession Planning
Our Board is responsible for executive succession planning. Under the Company.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 9 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | ||||
Communications Between Stockholders and the Board
The Board has adopted procedures for communications by stockholders and other interested parties with the Board, the Presiding Director, the independent directors as a group, and individual directors. The Board has designated the Corporate Secretary as its agent for the receipt and processing of such communications.
Interested parties may send communications to the Board as a whole, the Chairman of the Board, the Presiding Director, the independent directors as a group, a committee of the Board, a committee chair, or individual directors:
Electronically by email to: corporate_secretary@whirlpool.com; or
In writing by letter to:
[Name of Director or Group]
c/o Corporate Secretary
Whirlpool Corporation
2000 NorthM-63, MD 3602
Benton Harbor, MI 49022
Such communications should clearly identify the intended recipient.
Investor Engagement
We value the input and insights of our stockholders and are committed to continued engagement with investors, which we undertook in 2019. Key topics of focus included environmental, social and governance matters, Whirlpool strategy and results, board composition, and executive compensation performance metrics. The Board considers investor feedback on these issues in its decision making and direction to management.
Majority Voting for Directors; Director Resignation Policy
Ourby-laws require directors to be elected by the majority of the votes cast with respect to such director in uncontested elections (number of shares voted "for"“for” a director must exceed the number of votes cast "against"“against” that director). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), directors will be elected by a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. If a nominee who is serving as a director is not elected at the annual meeting, under Delaware law the director would continue to serve on the Board as a "holdover“holdover director."” However, under our Board'sBoard’s policy, any director who fails to be elected must offer to tender his or her resignation to the Board. The Board will nominate for election orre-election as director only candidates who agree to tender, promptly following the annual meeting at which they are elected orre-elected as director, irrevocable resignations that will be effective upon (1) the failure to receive the required vote at the next annual meeting at which they facere-election, and (2) Board acceptance of such resignation. In addition, the Board will fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors in accordance with this Board policy.
If an incumbent director fails to receive the required vote forre-election, the Corporate Governance and Nominating Committee will act on an expedited basis to determine whether to accept the director'sdirector’s resignation and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. The Corporate Governance and Nominating Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director'sdirector’s resignation.
Our Integrity Manual (Global Code of Ethics
All of Whirlpool'sour directors and employees, including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, are required to abide by our global code of ethics to ensure that our business is conducted in a consistently legal and ethical manner. The recently refreshedOur global code of ethics, ortitled “Our Integrity Manual,” defines Whirlpool'sour principles for ethical business conduct, and requires strict adherence to all laws and regulations applicable to our business. We believe ourOur Integrity Manual will provideprovides a strong foundation for continued
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Director Nominations by Stockholders
Our proxy accessby-law allows a stockholder, or a group of up to 20 stockholders, who have held 3% or more of our outstanding shares continuously for at least three years to nominate, and include in the Company'sour proxy materials, director nominees constituting up to the greater of two individuals or 20% of our Board, provided that the stockholder(s) and nominee(s) satisfy the requirements specified in Article II, Section 13 of ourby-laws.
To be included in the proxy materials for our 2020 Annual Meeting2021 annual meeting of stockholders, we must receive a stockholder'sstockholder’s notice to nominate a director under our proxy accessby-law between October 8, 201912, 2020 and November 7, 2019.11, 2020. Such notice must be delivered to, or mailed to and received by, the Corporate Secretary of Whirlpool.Whirlpool at the mailing or email address under “Communications Between Stockholders and the Board.” The notice must contain the information required by ourby-laws, and the stockholder(s) and nominee(s) must comply with the information and other requirements in ourby-laws relating to the inclusion of stockholder nominees in our proxy materials.
Nomination of a director to be submitted for consideration at the 20202021 annual meeting of stockholders, but not intended to be included as a "proxy access"“proxy access” nominee, must be received by the Corporate Secretary of Whirlpool personally or by registered or certified mail at the mailing address under “Communications Between Stockholders and the Board” by January 22, 2020,20, 2021, and must satisfy the procedures set forth in Whirlpool's the Whirlpoolby-laws to be considered at the meeting. Ourby-laws are posted for your convenience on the Whirlpool website:
Board Composition
Refreshment
The Board, with the assistance of the Corporate Governance and Nominating Committee, selects potential new Board members using criteria and priorities established from time to time. We believe it is valuable to have directors with varying lengths of service in order to strike the right balance between renewalcontinuity and continuity.renewal. The introduction of three newfour independent directors who joined the Board in the past threefour years has broughtand our new director nominee bring fresh perspectives to our Board.and critical skill sets. Our experienced directors have deep knowledge of our operations and the evolution of our strategy. In addition, longer service on our Board has provided several directors with significant exposure during various economic cycles to both our business and our industry. The Corporate Governance and Nominating Committee leads the Board's annual self-evaluation process and regularly reviews the relevant skill sets for director candidates. Our Corporate Governance Guidelines provide for retirement at age 72. Currently, our average tenure of independent directorsdirector nominees is 8.67.4 years.We believe that our current practices are sufficient to provide for Board refreshment.
To assist the Corporate Governance and Nominating Committee in identifying potential director nominees who meet the established criteria and priorities established from time to time and to facilitate the screening and nomination process for such nominees, the Corporate Governance and Nominating Committee has retained third-party search firms. The Corporate Governance and Nominating Committee retains the sole authority to retain and terminate any search firm to be used to identify director candidates, including sole authority to approve the search firm'sfirm’s fees and other retention terms.
Desired personal qualifications for director nomineescandidates include: intelligence,a reputation for personal and professional integrity, strength of character, sound business judgment, and commitment. Nomineesthe availability and commitment to devote sufficient time to the duties of the Board. Candidates should also have the sense of timing requiredstrong interpersonal and communication skills in order to assess and challenge the way things are done and recommend alternative solutions to problems; the independence necessary to make an unbiased evaluation of management performance and effectively carry out responsibilities of oversight; an awareness of both the business and social environment in which today's corporation operates; and a sense of urgency and spirit of cooperation that will enable them to interact with other Board members in directing the future, profitable growth of Whirlpool. Desired experience for director nominees includes: at least ten years of experienceproblems in a senior executive roleconstructive manner. Candidates should be independent with a major business organization, preferably as either Chief Executive Officer or Chairman (equivalent relevant experience from other backgrounds such as academics or government may also be considered); a proven record of accomplishment and line operating (or equivalent) experience; first-hand experience with international operations; a working knowledge of corporate governance issues and the changing role ofability to represent the Board; and exposure to corporate programs designed to create stockholder value, while balancing the needslong-term interests of all stakeholders. Director nomineesstockholders. Candidates should not be employed by or affiliated with any organization that has significantly competitive lines of business or that may otherwise present a conflict of interest. The Corporate Governance and Nominating Committee has determined that the skills and experiences appearing in the table under “Item 1—Directors and Nominees for Election as Directors” are most important to our Company’s strategy and governance, and the Committee seeks candidates with these skill sets.
We believe that our current practices are sufficient to provide for thoughtful and timely Board refreshment.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 11 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Evaluation
The Corporate Governance and Nominating Committee leads our Board’s annual self-evaluation process. The evaluation process is conducted by soliciting an assessment from each director about the effectiveness of the Board and the committees on which he or she serves. Directors provide feedback about numerous topics including the Board and applicable committee’s structure and composition, interaction with management, and areas of focus, as well as the quality of meetings and materials. Each committee and the full Board then conduct separate discussions regarding the evaluation and assessment topics.Follow-up items are then addressed at subsequent Board and committee meetings.
Diversity
The composition, skills, and needs of the Board change over time and will be considered in establishing the profile of desirable candidates for any specific opening on the Board. The Corporate Governance and Nominating Committee has determined that it is desirable forrecognizes the benefits of a diverse Board to have a variety ofmembership reflecting differences in viewpoints, professional experiences, educational background, skills, race, gender, age, andethnicity, national origin, and considersage. The Committee is committed to seeking qualified diverse candidates, including diversity of race, gender, and ethnicity, in each independent director search, and instructs any search firm that it engages accordingly. The Committee believes that this process is effective in maintaining the diversity of the Board’s composition.
Environmental, Social, and Governance Oversight and Practices
Sound ESG Oversight
Our Board is committed to overseeing the integration of environmental, social, and governance (“ESG”) principles throughout Whirlpool. Regional business leaders and senior leaders in our product, sourcing, manufacturing, legal, communications, government relations, and technology functions comprise our Sustainability Steering Committee. The committee establishes and oversees our strategic priorities on relevant ESG issues based on results of our ESG Materiality Assessment. In line with our commitment to sound ESG practices, we became a signatory to the UN Global Compact in December 2019. Our approach to sound ESG practices focuses on three core elements: our people, our communities, and our environment.
Our People
At Whirlpool, inclusion and diversity is one of our long-standing enduring values. We strive to create an inclusive culture that celebrates and values diversity, and backgroundto provide high-quality tools and training for our employees. Some of the highlights of our focus on our people include:
∎ | Gender Equality. In 2018, our Chairman and CEO, Marc Bitzer, made an organizational and personal commitment to the Catalyst® CEO Champions for Change to increase female representation in leadership positions. In 2019, female representation on our Executive Committee, an internal committee comprised of Whirlpool Corporation’s most senior leaders, increased to 30%; in addition, 33% of ournon-employee director nominees are women. |
∎ | Inclusion and Diversity. In 2019, our focus was on Inclusion, through which we helped employees understand that workplace inclusion results in workforce diversity and better Company performance. As part of this focus, we conducted a workshop for executives on inclusive leadership, launched our new “Inclusion Behaviors” tenets (Welcomed, Respected, Valued, and Heard), implemented employee storytelling on inclusion, and sponsored our first-ever Global Inclusion Week, during which employees engaged in over 25 inclusion-focused events globally. Over 63% of employees attended at least one activity. |
∎ | Our Integrity Manual (Global Code of Ethics). We were proud to roll out our refreshed global code of ethics in 2019. Our Integrity Manual defines Whirlpool Corporation’s principles for ethical business conduct, which form the moral compass for everything we do at Whirlpool, and provides a strong foundation for continued enhancement of our culture of integrity. During our roll out, more than 56,000, or 73%, of all employees participated in commitment sessions and identified specific actions consistent with the principles in Our Integrity Manual. |
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
∎ | Performance Management and Engagement. In 2019, Whirlpool implemented a new performance management process titled “Every Day Performance Excellence,” which focuses on both the “what” and the “how” of performance. Employees align objectives with their leaders in each of four performance categories: business performance, strategic/project impact, organization and talent, and Whirlpool leadership and values. Based on their objectives, employees receive formal reviews along with continuous coaching and feedback from people leaders and cross-functional partners. Whirlpool Corporation’s employee engagement scores are consistently in line with“best-in-class” companies. We had record-high results in 2019, with over 95% salaried employee participation and 86% favorable salaried employee engagement. |
∎ | Awards. In 2019, our commitment to being an employer of choice earned recognition and awards, including: |
∎ | Forbes, “America’s Best Employers for Diversity 2019” |
∎ | 100% Score — “Disability Equality Index” (3rd consecutive year) |
∎ | 100% Score — “2019 Corporate Equality Index” (16th consecutive year) |
Our Communities
Whirlpool is committed to maintaining strong, lasting connections in its selection process.the communities in which we do business. We utilize a global collective impact model that centers around improving life at home. Our giving focuses in the areas of house and home to create thriving communities.
∎ | House. Our House initiatives focus on shelter and security for individuals and families as the first step in the journey toward a better life in the home. In 2019, we were proud to celebrate our 20th year of collaboration withHabitat for Humanity International. During this period, Whirlpool has committed $107 million, supportedHabitat programs in 45 countries, donated and installed approximately 200,000 refrigerators and ranges, served more than 104,000 families in the U.S. and Canada, and sponsored 190 homes globally. |
∎ | Home. Our Home initiatives focus on developing resilient, vibrant communities through education and community development. We collaborate withUnited Way to fund hundreds ofnon-profit campaigns within our communities that focus on education, income, health and basic needs. The Whirlpool Foundation offers adollar-for-dollar match on employee contributions to these campaigns. Our Chairman and CEO, Marc Bitzer, is a member ofUnited Way’s Worldwide Board of Trustees, and several employees serve on our localUnited Way chapter’s Board of Directors. |
Since 2002, our Consul brand in Brazil has sponsoredInstituto Consulado da Mulher, which supports small business cooperatives designed to develop the entrepreneurial and employment skills oflow-income women. To date, more than 35,000 women have benefited from the program.
Whirlpool brand’sCare Counts Laundry Program installs washers and dryers for use in schools to help remove an important barrier to student attendance — access to clean clothes. TheCare Counts Laundry Program has grown to support students in need across 18 cities and 82 schools in the United States — providing access to clean clothes for more than 38,000 students.
Whirlpool Europe, Middle East, and Africa (“EMEA”) sponsors an edutainment project designed to raise awareness of the problem of food waste, most recently rolled out to more than one million students, teachers and families in Italy, Poland, and Slovakia. The program previously earned Slovakia’s CSR Practice of the Year, the nation’s most importantCSR-related award.
∎ | Awards. In 2019, our community engagement efforts earned recognition and awards, including: |
∎ | CR Magazine, “Top Corporate Citizen” |
∎ | FORTUNE, “World’s Most Admired Companies” (10th consecutive year) |
∎ | Reputation Institute, “Global CR RepTrak 100” ranking (7th consecutive year) |
∎ | Forbes and Just Capital, “Just 100 List for 2020” |
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Our Environment
We know that an environmentally sustainable Whirlpool is a more competitive Whirlpool — a company better positioned for long-term success. Three elements form the core of our environmental sustainability priorities: sustainable plants, sustainable products, and sustainable practices. We committed in 2019 to the Science-Based Targets Initiative and have set emissions reduction targets in line with the goals of the Paris Agreement. We are fully on track to meet or exceed the reduction targets of the original U.S. commitments to the Paris Agreement. Some of the highlights of our focus on our environment include:
∎ | Sustainable Plants. We strive to reduce water and energy consumption at our plants and are maximizing our renewable energy deployedon-site. Whirlpool is one of the largest producers ofon-site wind energy in the U.S. among Fortune 500 companies. We have achieved zerowaste-to-landfill status at eight of our global manufacturing sites and we will keep focusing our efforts towards our goal of all manufacturing sites by 2022. |
∎ | Sustainable Products. We look at products from a complete lifecycle perspective, and have developed “Design for Environment” tools to deliver energy and water efficient products with more recycled content. Our EMEA region has made the industry’s largest commitment for recycled plastic usage in products by 2025. We also launched a new full materials transparency system in 2019 that will offer insight into substances of concern. |
∎ | Sustainable Practices. We recognize that our environmental commitment must be embedded in our business practices everywhere we operate, including how we design, source, manufacture, distribute, market, and manageend-of-life for our products. We have restructured our approach to improve connections within our key internal teams, assigning senior leader owners for each of our key sustainability initiatives. |
∎ | Awards. In 2019, our commitment to the environment earned recognition and awards, including: |
∎ | “2019 Dow Jones Sustainability North America Index” |
∎ | “EPA SmartWay® Excellence Award” (5th consecutive year); “High Performer” in Shippers Category (3rd consecutive year) |
∎ | Newsweek, “America’s Most Responsible Companies — Top 100” |
Corporate Governance Guidelines and Other Available Information
Whirlpool is committed to the highest standards of corporate governance. On the recommendation of the Corporate Governance and Nominating Committee, the Board adopted a set of Corporate Governance Guidelines for Operation of the Board of Directors.
Our current Corporate Governance Guidelines, Code of Ethics, Our Integrity Manual,by-laws, and written charters for itsthe Board’s Audit, Corporate Governance and Nominating, Human Resources, and Finance committees are posted on the Whirlpool website: www.whirlpoolcorp.com/policies. Our publicly disclosed financial andnon-financialwww.whirlpoolcorp.com/policies. information, including our annual report, quarterly reports, current reports, and Sustainability Report, is located on our website at investors.whirlpoolcorp.com. Stockholders may also request a free copy of these documents from:by calling or writing: Investor Relations, Whirlpool Corporation, 2000 NorthM-63, Mail Drop MD 2609, Benton Harbor, Michigan, 49022; (269)923-2641.
14 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
The Board has adopted written procedures relating to the Corporate Governance and Nominating Committee'sCommittee’s review and approval of transactions with related persons that are required to be disclosed in proxy statements by Securities and Exchange CommissionSEC regulations ("(“related person transactions"transactions”). A "related person"“related person” is defined under the applicable Securities and Exchange CommissionSEC regulation and includes our directors, executive officers, and owners of 5% or more of our common stock. The Corporate Secretary administers procedures adopted by the Board with respect to related person transactions and the Corporate Governance and Nominating Committee reviews and approves all such transactions. At times, it may be advisable to initiate a transaction before the Corporate Governance and Nominating Committee has evaluated it, or a transaction may begin before discovery of a related person'sperson’s participation. In such instances, management consults with the Chairman of the Corporate Governance and Nominating Committee to determine the appropriate course of action. Approval of a related person transaction requires the affirmative vote of the majority of disinterested directors on the Corporate Governance and Nominating Committee. In approving any related person transaction, the Corporate Governance and Nominating Committee must determine that the transaction is fair and reasonable to Whirlpool. The Corporate Governance and Nominating Committee periodically reports on its activities to the Board. The written procedures relating to the Corporate Governance and Nominating Committee'sCommittee’s review and approval of related person transactions is available on our website:
During fiscal 2018,2019, Messrs. Allen, Creed, Johnston, Manwani, and Perez, and Ms. Dietz served as members of the Human Resources Committee. No member of the Human Resources Committee was at any time during 20182019 an officer or employee of Whirlpool and no member of the Human Resources Committee has formerly been an officer of Whirlpool. In addition, no "compensation“compensation committee interlocks"interlocks” existed during fiscal year 2018.2019.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 15 |
The following table presents the ownership on December 31, 20182019 of the only persons known by us as of February 15, 201914, 2020 to beneficially own more than 5% of our common stock, based upon statements on Schedule 13G filed by such persons with the Securities and Exchange Commission.
Schedule 13G Filed On | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class |
2/8/2019 | PRIMECAP Management Company (1) 177 E. Colorado Blvd., 11th Floor Pasadena, CA 91105 | 7,759,410 | 12.21% |
2/11/2019 | The Vanguard Group Inc. (2) 100 Vanguard Blvd. Malvern, PA 19355 | 6,880,079 | 10.82% |
2/7/2019 | BlackRock, Inc. (3) 55 East 52nd Street New York, NY 10055 | 4,406,765 | 6.93% |
1/31/2019 | Vanguard Chester Funds - Vanguard Primecap Fund (4) 100 Vanguard Blvd. Malvern, PA 19355 | 4,169,572 | 6.56% |
Schedule 13G | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | |||||||
2/11/2020 |
The Vanguard Group Inc.(1)
| 8,271,449 | 13.20 | % | ||||||
2/12/2020 |
PRIMECAP Management Company(2)
| 7,751,410 | 12.37 | % | ||||||
2/6/2020 |
BlackRock, Inc.(3)
| 4,595,615 | 7.33 | % | ||||||
2/14/2020 |
State Street Corporation(4)
| 3,169,633 | 5.06 | % |
(1) | |
Based solely on a Schedule 13G/A filed with the SEC by The Vanguard Group Inc. |
(2) | Based solely on a Schedule 13G/A filed with the SEC by PRIMECAP Management Company (“PRIMECAP”), a registered investment advisor. PRIMECAP has sole voting power with respect to 7,460,560 shares and sole dispositive power with respect to 7,751,410 shares. |
(3) | Based solely on a Schedule 13G/A filed with the SEC by BlackRock, Inc. |
(4) | |
Based solely on a Schedule 13G filed with the SEC by |
Section 16(a) of the Securities Exchange Act of 1934 requires Whirlpool'sWhirlpool Corporation’s directors and executive officers and persons who own more than 10% of Whirlpool'sWhirlpool’s common stock (each, a "reporting person"“reporting person”) to file with the SEC initial reports of ownership and reports of changes in ownership of Whirlpool'sWhirlpool’s common stock. Based solely on Whirlpool'sour review of the copies of such reports furnished to or prepared by Whirlpool and written representations that no other reports were required, Whirlpool believes that all Section 16(a) filing requirements applicable to reporting persons were complied with during the fiscal year ended December 31, 2018.
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BENEFICIAL OWNERSHIP | ||||
Beneficial Ownership
The following table reports beneficial ownership of common stock by each director, nominee for director, and the Named Executive Officers (as defined elsewhere in this proxy statement), and all directors and executive officers of Whirlpool as a group, as of February 1, 2019.3, 2020. Beneficial ownership includes, unless otherwise indicated, all shares with respect to which each director or executive officer, directly or indirectly, has or shares the power to vote or to direct the voting of such shares, or to dispose or direct the disposition of such shares. The address of all directors and executive officers named below is c/o Whirlpool Corporation, 2000 NorthM-63, MD 3602, Benton Harbor, Michigan, 49022.
Name | Shares Beneficially Owned (1) | Deferred Stock Units (2) | Shares Under Exercisable Options (3) | Total (4) | Percentage (* Less than 1%) |
Samuel R. Allen | 13,633 | — | — | 13,633 | * |
Marc R. Bitzer | 83,100 | 51,681 | 165,549 | 300,330 | * |
João C. Brega | 26,728 | 1,894 | 17,931 | 46,553 | * |
Greg Creed | 2,000 | 1,684 | — | 3,684 | * |
Gary T. DiCamillo | 9,853 | 18,873 | 7,034 | 35,760 | * |
Diane M. Dietz | 8,339 | — | — | 8,339 | * |
Gerri T. Elliott | 4,712 | — | — | 4,712 | * |
Jeff M. Fettig | 377,376 | 231,356 | 1,041,935 | 1,650,667 | 2.55% |
Michael F. Johnston | 3,705 | 15,332 | 5,834 | 24,871 | * |
Joseph T. Liotine | 22,202 | 2,784 | 20,226 | 45,212 | * |
John D. Liu | 1,000 | 8,600 | — | 9,600 | * |
James M. Loree | 10 | 1,904 | — | 1,914 | * |
Harish Manwani | 5,584 | — | — | 5,584 | * |
William D. Perez | 8,085 | 3,122 | 1,357 | 12,564 | * |
James W. Peters | 17,772 | 468 | 22,330 | 40,570 | * |
Larry O. Spencer | 1,000 | 1,684 | — | 2,684 | * |
Michael D. White | 2,700 | 14,757 | — | 17,457 | * |
All directors and executive officers as a group (17 persons)(5) | 213,908 | 122,783 | 243,191 | 579,882 | * |
Name | Shares Beneficially Owned(1) | Deferred Stock Units(2) | Shares Under Exercisable Options(3) | Total (4) | Percentage (* Less than 1%) | ||||||||||||||||||||
Samuel R. Allen | 14,688 | — | — | 14,688 | * | ||||||||||||||||||||
Marc R. Bitzer | 85,895 | 53,714 | 251,346 | 390,955 | * | ||||||||||||||||||||
João C. Brega | 27,022 | 1,959 | 24,613 | 53,594 | * | ||||||||||||||||||||
Greg Creed | 2,000 | 2,822 | — | 4,822 | * | ||||||||||||||||||||
Gary T. DiCamillo | 7,405 | 20,593 | 5,077 | 33,075 | * | ||||||||||||||||||||
Diane M. Dietz | 9,394 | — | — | 9,394 | * | ||||||||||||||||||||
Gerri T. Elliott | 5,767 | — | — | 5,767 | * | ||||||||||||||||||||
Michael F. Johnston | 3,705 | 16,933 | 2,888 | 23,526 | * | ||||||||||||||||||||
Jennifer A. LaClair | — | — | — | — | * | ||||||||||||||||||||
Joseph T. Liotine | 30,597 | 3,441 | 34,734 | 68,772 | * | ||||||||||||||||||||
John D. Liu | 1,000 | 9,972 | — | 10,972 | * | ||||||||||||||||||||
James M. Loree | 1,065 | 1,969 | — | 3,034 | * | ||||||||||||||||||||
Harish Manwani | 6,481 | — | — | 6,481 | * | ||||||||||||||||||||
Gilles Morel | 190 | — | 2,106 | 2,296 | * | ||||||||||||||||||||
William D. Perez | 9,140 | 3,228 | 1,357 | 13,725 | * | ||||||||||||||||||||
James W. Peters | 23,505 | 544 | 42,242 | 66,291 | * | ||||||||||||||||||||
Patricia K. Poppe | — | — | — | — | * | ||||||||||||||||||||
Larry O. Spencer | 1,000 | 2,822 | — | 3,822 | * | ||||||||||||||||||||
Michael D. White | 2,700 | 16,338 | — | 19,038 | * | ||||||||||||||||||||
All directors and executive officers as a group (19 persons) (5) | 238,170 | 134,488 | 371,588 | 744,246 | 1.2 | % |
(1) | |
Does not include |
(2) | |
Represents the number of shares of common stock, based on deferrals made into the Deferred Compensation Plan II forNon-employee Directors, one of the executive deferred savings plans, or the terms of deferred stock awards, that we are required to pay to anon-employee director when the director leaves the Board or to an executive officer when the executive officer is no longer an employee. None of these deferred stock units have voting rights. |
(3) | |
Includes shares subject to options that will become exercisable within 60 days of February |
(4) | |
May include RSUs and option shares which cannot be voted until vesting or exercise, as applicable. |
(5) | |
Total amounts reflect only those directors and officers of Whirlpool as of the date of this proxy |
Notice of Annual Meeting of Stockholders and | ç | 17 |
NON-EMPLOYEE DIRECTOR COMPENSATION | ||||
Non-Employee Director Compensation
We provide a comprehensivecompetitive compensation program in order to attract and retain qualified directors and support stockholder alignment objectives. TheOur director compensation program consists of cash and stock retainers. For 2018,2019, each director receives a one-time grant of 1,000 shares of common stock at the time a director first joinswho served on the Board and one-halffor the full year received one half of the annual director compensation is paidretainer in cash and one half in stock. In December 2018, management evaluated competitive market data on non-employee director compensation with FW Cook. Based on that review, ourFor 2020, the Corporate Governance and Nominating Committee recommended, anddetermined to keep director compensation at the Board approved, the changes reflectedsame level as for 2019.Non-employee director compensation is summarized in the table below, effective for 2019.
Non-employee Director Compensation | 2018 | 2019 |
Type of Compensation | Amount | Amount |
One-Time Stock Award Upon New Director Joining Board | 1,000 | None |
Annual Cash Retainer | $130,000 | $145,000 |
Annual Stock Awards Retainer | 846 | * |
Annual Retainer for Committee Chair (in addition to other retainers): | ||
Audit Committee | $20,000 | $20,000 |
Human Resources Committee | $20,000 | $20,000 |
All Other Committees | $15,000 | $15,000 |
Annual Retainer for Presiding Director (in addition to other retainers): | $25,000 | $30,000 |
Non-employee Director Compensation Element | 2019 | 2020 | ||||||
Annual Cash Retainer | $145,000 | $145,000 | ||||||
Annual Stock Retainer | $145,000 | (1) | $145,000 | (1) | ||||
Additional Annual Cash Retainer for Committee Chairs: | ||||||||
Audit Committee | $ 20,000 | $ 20,000 | ||||||
Human Resources Committee | $ 20,000 | $ 20,000 | ||||||
All Other Committees | $ 15,000 | $ 15,000 | ||||||
Additional Annual Cash Retainer for Presiding Director | $ 30,000 | $ 30,000 |
(1) | Reflects stock retainer granted on the date of the annual meeting of stockholders, with the number of shares determined by dividing the annual cash retainer by our closing stock price on the annual meeting date. |
Deferral of Annual Retainer and Stock Grants
Anon-employee director may elect to defer any portion of the annual cash retainer and annual stock award retainer until he or she ceases to be a director. Under this policy, when the director'sdirector’s term ends, any deferred annual cash retainer will be paid in a lump sum or in monthly or quarterly installments. In addition, payment of any deferred annual stock grant will be made as soon as is administratively feasible. Annual cash retainers deferred on or before December 31, 2004 accrue interest quarterly at a rate equal to the prime rate in effect from time to time. Annual cashCash retainers deferred after December 31, 2004 may be allocated to notional investments that mirror those available to participants in our U.S. 401(k) plan, with the exception of the Whirlpool stock fund.
Stock Ownership Guidelines
The Board has established a guideline fornon-employee directors to own Whirlpool stock equal in value to five times the annual cash retainer, with a five-year timetablefive years to obtain this objective.achieve the guideline. Eachnon-employee director's director’s progress toward achievingmeeting the requisite level of ownershiprequirement is reviewed annually. As of the end of 2018,2019, all non‑employeenon-employee directors had met, or were on track to meet, this requirement. These ownership guidelines are based on a review of competitive market practice conducted by FW Cook, ourthe Human Resources Committee’s independent compensation consultant.
Notice of Annual Meeting of Stockholders and 2019 Proxy Statement l 21
For evaluative purposes, Whirlpool permitsnon-employee directors to test Whirlpool products for home use. Directors are not reimbursed for any income tax they incur as a result of this policy. Directors are reimbursed for business expenses related to attendance at Board and committee meetings and for attendance at qualified third-party director education programs. On rare occasions for personal convenience, a director'sdirector’s spouse or other family member may accompany a director on a Whirlpool aircraft flight. No additional operating cost is incurred by Whirlpool in such situations and the director is taxed on the value of the benefit. A director'sdirector’s qualifying charitable contribution of up to $10,000 will be matched by the Whirlpool Foundation annually. Whirlpool also pays the premiums to provide eachnon-employee director who served on the Board as of January 1, 2011 with (1) term life insurance while serving as a director, equal toone-tenth of the director'sdirector’s basic annual cash retainer times the director'sdirector’s months of service, unless the director has opted out of coverage, and (2) travel accident insurance of $1 million when traveling on Whirlpool business.
Name | Fees Earned or Paid in Cash (1) ($) | Stock Awards (2) ($) | All Other Compensation (3) ($) | Total ($) |
Samuel R. Allen | 170,000 | 129,886 | 39,754 | 339,640 |
Greg Creed | 130,000 | 129,886 | 3,972 | 263,858 |
Gary T. DiCamillo | 130,000 | 129,886 | 4,777 | 264,663 |
Diane M. Dietz | 130,000 | 129,886 | 16,667 | 276,553 |
Gerri T. Elliott | 130,000 | 129,886 | 6,376 | 266,262 |
Michael F. Johnston | 150,000 | 129,886 | 11,589 | 291,475 |
John D. Liu | 130,000 | 129,886 | 4,699 | 264,585 |
James M. Loree | 130,000 | 129,886 | 1,809 | 261,695 |
Harish Manwani | 130,000 | 129,886 | 1,589 | 261,475 |
William D. Perez | 145,000 | 129,886 | 11,736 | 286,622 |
Larry O. Spencer | 130,000 | 129,886 | 30,071 | 289,957 |
Michael D. White | 150,000 | 129,886 | 42,017 | 321,903 |
ç | Notice of |
NON-EMPLOYEE DIRECTOR COMPENSATION |
2019Non-employee Director Compensation Table
Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) ($) | All Other Compensation (3) | Total ($) | ||||||||||||||||
Samuel R. Allen | 190,000 | 144,904 | 1,545 | 336,449 | ||||||||||||||||
Greg Creed | 145,000 | 144,904 | 3,532 | 293,436 | ||||||||||||||||
Gary T. DiCamillo | 145,000 | 144,904 | 14,935 | 304,839 | ||||||||||||||||
Diane M. Dietz | 145,000 | 144,904 | 4,562 | 294,466 | ||||||||||||||||
Gerri T. Elliott | 145,000 | 144,904 | 1,545 | 291,449 | ||||||||||||||||
Michael F. Johnston | 165,000 | 144,904 | 23,532 | 333,436 | ||||||||||||||||
John D. Liu | 145,000 | 144,904 | 20,634 | 310,538 | ||||||||||||||||
James M. Loree | 145,000 | 144,904 | 1,545 | 291,449 | ||||||||||||||||
Harish Manwani | 145,000 | 144,904 | 1,659 | 291,563 | ||||||||||||||||
William D. Perez | 160,000 | 144,904 | 19,905 | 324,809 | ||||||||||||||||
Patricia K. Poppe | 5,910 | — | 3,667 | 9,577 | ||||||||||||||||
Larry O. Spencer | 145,000 | 144,904 | 1,791 | 291,695 | ||||||||||||||||
Michael D. White | 165,000 | 144,904 | 76,877 | 386,781 |
(1) | Represents all retainer fees for Board, Committee Chair, or Presiding Director service, before deferrals. |
(2) | Reflects |
(3) | |
The table below presents an itemized account of 2019non-employee |
Name | Life Insurance | Charitable |
Whirlpool Other Benefits | Total ($) | ||||||||||||||||
Samuel R. Allen | — | — | 1,545 | 1,545 | ||||||||||||||||
Greg Creed | — | — | 3,532 | 3,532 | ||||||||||||||||
Gary T. DiCamillo | — | 10,000 | 4,935 | 14,935 | ||||||||||||||||
Diane M. Dietz | — | — | 4,562 | 4,562 | ||||||||||||||||
Gerri T. Elliott | — | — | 1,545 | 1,545 | ||||||||||||||||
Michael F. Johnston | — | 10,000 | 13,532 | 23,532 | ||||||||||||||||
John D. Liu | 4,769 | 10,000 | 5,865 | 20,634 | ||||||||||||||||
James M. Loree | — | — | 1,545 | 1,545 | ||||||||||||||||
Harish Manwani | — | — | 1,659 | 1,659 | ||||||||||||||||
William D. Perez | — | 10,000 | 9,905 | 19,905 | ||||||||||||||||
Patricia K. Poppe | — | — | 3,667 | 3,667 | ||||||||||||||||
Larry O. Spencer | — | — | 1,791 | 1,791 | ||||||||||||||||
Michael D. White | 26,518 | 35,129 | 15,230 | 76,877 |
Name | Life Insurance Premiums ($) | Charitable Program (a) ($) | Whirlpool Appliances and Other Benefits ($) | Total ($) |
Samuel R. Allen | — | — | 39,754 | 39,754 |
Greg Creed | — | — | 3,972 | 3,972 |
Gary T. DiCamillo | — | — | 4,777 | 4,777 |
Diane M. Dietz | — | — | 16,667 | 16,667 |
Gerri T. Elliott | — | — | 6,376 | 6,376 |
Michael F. Johnston | — | 10,000 | 1,589 | 11,589 |
John D. Liu | 2,084 | — | 2,615 | 4,699 |
James M. Loree | — | — | 1,809 | 1,809 |
Harish Manwani | — | — | 1,589 | 1,589 |
William D. Perez | 347 | 10,000 | 1,389 | 11,736 |
Larry O. Spencer | — | — | 30,071 | 30,071 |
Michael D. White | 2,565 | 33,713 | 5,739 | 42,017 |
(a) | |
Reflects 2019 interest cost related to a charitable program eliminated by the Board, prospectively, as of January 1, 2008. Through 2007, eachnon-employee director could irrevocably choose to relinquish some or all of their annual cash retainer, which Whirlpool could then, in its discretion, award to as many as three charities upon the |
(b) | Includes the cost of Whirlpool products provided for personal use by directors. For Mr. Liu, also includes the cost of tickets to an industry event sponsored by Whirlpool. For Mr. Perez, also includes costs associated with certain family members accompanying Mr. Perez on Whirlpool aircraft for flights to and from one Board meeting. |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 19 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
In this section, we provide a detailed description of our executive compensation programs, including ourpay-for-performance philosophy, the business strategy-driven program design, the individual elements of the programs, the methodology and processes used by the Human Resources Committee (the "Committee"“Committee”) to make compensation decisions, and the relationship between Whirlpool performance and compensation delivered in fiscal 2018.
The discussion in | |||||
• | Marc R. Bitzer | Chairman, President and Chief Executive | |||
• | James W. Peters | Executive Vice President and Chief Financial Officer | |||
• | |||||
Joseph T. Liotine | Executive Vice President and President, Whirlpool North America | ||||
• | João C. Brega | Executive Vice President and President, Whirlpool Latin America | |||
• Gilles Morel(1) | Executive Vice President and President, Whirlpool Europe, Middle East and Africa (“EMEA”) | ||||
(1) Mr. Morel joined Whirlpool Corporation on April 1, 2019 |
I. Executive Summary |
2019 Company Results | |||||||
Whirlpool delivered strong financial results in 2019, including record earnings, strong cash flow, and significant improvements in our margins. Strong price/mix realization offset the negative impacts of tariff and raw material inflation. We continued our margin improvement in North America. Our EMEA business returned to profitability in the fourth quarter. And we achieved structural improvements to working capital. We continued to focus our business portfolio, as we completed the sale of our Embraco compressor business, and exited underperforming businesses in South Africa and Turkey. We achieved the following results in 2019: | |||||||
• Deliveredrevenue of $20.4 billion, down 2.9% year over year but up 1.6% after adjusting for currency and the divestiture of our Embraco compressors business.(1) | |||||||
• Delivered GAAP net earnings of $1.2 billion(5.8% net earnings margin),record earnings per share (“EPS”) of $18.45, and | |||||||
(non-GAAP) EPS(1)of $16.00. | |||||||
• | Deliveredongoing | ||||||
price/mix actions and strong cost discipline, which offset headwinds from raw material cost inflation and tariffs. | |||||||
• | |||||||
development. | |||||||
• | |||||||
Generatedcash provided by operating activities of $1.2 billion andfree cash flow | |||||||
• | Repaid the $1 billion term loan associated with the Embraco divestiture, strengthening our balance sheet and making strong progress towards our long-term gross | ||||||
approximately 2x. | |||||||
• | Continued | ||||||
companiesacross all industries. | |||||||
| |||||||
20 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
2019 Compensation Decisions
Our overall performance ourfor 2019 included strong financial results still fell short ofrelative to our internal expectations. Ourshort-term incentive metrics. Both our Ongoing EBIT and free cash flowFree Cash Flow (“FCF”) results were below theabove target, goals we established at the beginning of the year, leading to a below-targetan overall payout for our short-term incentive of 78%. Our 2016 - 2018120% of target. However, Cumulative Ongoing EPS and ROICReturn on Invested Capital (“ROIC”) improvement results were alsofor the2017 - 2019 performance period fell below the target goals we establishedset for our long-term incentive at the beginning of the performance period, leading to a below-target payout for our performance-based long-term incentive of 74%.88% of target. Key compensation actions for 20182019 are summarized in the table below:
Pay Element | 2019 Action | |
Base Salary | 2019 salary increases for Named Executive Officers ranged from | |
Short-term Incentive | 2019 Ongoing EBIT | |
Long-term Incentive | 2017-2019 Cumulative Ongoing EPS was below target; |
Pay-for-Performance Philosophy
Whirlpool is dedicated to achieving global leadership in all of our product categories and to delivering superior stockholder value. To achieve our objectives, we manage to apay-for-performance philosophy based on the following guiding principles:
Compensation should be incentive-driven with a focus on both short-term and long-term results;
A significant portion of pay should be performance-based, with the portion varying in direct relation to an executive'sexecutive’s level of responsibility;
Components of compensation should be linked to the drivers of sustainable stockholder value over the long term; and
Compensation should be tied to an evaluation of business results and individual performance.
Stockholder Engagement and 2019 Executive Compensation Programs Review
The Committee considers the results of the annual "Say“Say on Pay"Pay” vote, among other factors, in making decisions regarding executive compensation programs. We received strong support with approximately 92%91% of the votes cast for our "Say“Say on Pay"Pay” vote at our 20182019 annual meeting voting in favor of our 2017 NEO2018 executive compensation programs. The Committee recognizes that market practices and stockholder views on executive compensation practices continue to evolve. In recognition of this, we regularly engage in discussions with our stockholders regarding compensation matters (see “Investor Engagement” under “Board of Directors and Corporate Governance”) and believe that this ongoing stockholder outreachengagement process strengthens our understanding of stockholder concernsinvestor priorities and the issues on which they are focused. The Committee works closely with its independent advisorconsultant and the management team to evaluate and make changes to provide executive compensation programs that are designed to effectively link pay with performance, support the creation of sustainable stockholder value over the long term, and consistently apply good governance practices.
After considering the 2018 “Say on Pay” results and general support of the compensation philosophy and design received during the stockholder outreach process described above,earlier, the Committee determined that Whirlpool'sour executive compensation programs continued to be appropriateappropriate. For 2019, the Committee eliminated performance cash units from the long-term incentive program and did not make any significant changes to Whirlpool's executive compensation programs in response to the 2018 “Say on Pay” vote results. We have implemented modest changes to program design for 2019, such as a change in our mixgranted 30% of long-term incentive vehicles (describedawards in more detailstock options and the remaining 70% in "Long-term Incentives"), which we believe will furtherperformance stock units to enhance our pay-for-performance philosophy.executive and long-term stockholder alignment.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 21 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Executive Compensation Programs Highlights
The following table summarizes executive compensation practices that we have implemented to align pay with performance, as well as practices we avoid because we do not believe they serve the long-term interests of our stockholders.
What We Do | What We Don’t Do | |||||||||
✓ | Pay for performance | Allow hedging or pledging of Whirlpool stock by executive officers, employees or directors | ||||||||
Use an independent compensation consultant that is solely engaged to provide executive compensation services to Whirlpool | Provide excise taxgross-ups | |||||||||
✓ | Cap short-term and long-term incentive award payouts at market-competitive levels | |||||||||
Enter into employment contracts except as required by local law or prevailing local market practice | ||||||||||
✓ | Maintain robust stock ownership guidelines for our executives (7x salary multiple for CEO) | Pay dividends or dividend equivalents on grants of any Performance Stock Units | ||||||||
✓ | Subject all variable pay to a compensation recovery “claw-back” | Reprice or reload stock options | ||||||||
✓ | Have “double-trigger”change-in-control agreements | |||||||||
✓ | Carefully manage risk in our compensation programs to protect against unintended outcomes | |||||||||
✓ | Provide market-competitive perquisites deemed necessary to attract and retain top talent |
22 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Measure | Median of Comparator Group | Whirlpool |
Revenue (Trailing 12 Months (TTM)) | $17,062 | $21,253 |
Net Income (TTM) | $1,584 | $350 |
Assets (Most Recent Quarter) | $18,627 | $20,038 |
Market Capitalization (December 31, 2017) | $35,040 | $12,119 |
Employees (Fiscal Year End) | 61,300 | 92,000 (1) |
The Committee sets target compensation for each executive after careful consideration of several factors, including:
External competitive market pay levels and practices;
Internal business needs and strategic priorities;
Each executive’s role and responsibilities, experience, tenure, contributions, achievements, and past performance;
Future performance expectations and needs of the Company;Whirlpool;
Compensation history of each executive; and
Internal equity with other executives.
We have designed the elements of our compensation programs to reflect ourpay-for-performance philosophy. The Committee creates a compensation approach for each NEO that contains a mix of compensation elements that it believes best addresses each NEO'sNEO’s responsibilities and best achieves our overall compensation objectives.
Our compensation programs are designed so that an individual'sindividual’s target compensation opportunity rises as job responsibility increases, with thean increasing portion of performance-based compensation rising as a percentage of total target compensation. This design seeks to ensure that the most senior executives who are responsible for development and execution of our strategic plan are held most accountable for operational performance results and changes in stockholder value over time. As a result, actual total compensation for an executive is more dependent on performance than for employees at other levels, resulting in larger increases in realized pay when performance results exceed goals, and larger decreases when performance results fall short of expectations.
In addition, the Committee makes distinctions in the mix of cash and equity components in shaping each NEO'sNEO’s compensation package. Generally, the portion of equity compensation rises with increasing job responsibility to provide for further alignment in the interests of executives and our long-term stockholders.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 23 |
COMPENSATION DISCUSSION AND ANALYSIS |
Competitive Market Compensation Analysis
While the Committee considers relevant market pay practices when setting executive compensation, it does not believe it is appropriate to establish compensation levels based solely on market practices. Whirlpool performance and compensation levels relative to similar companies and other market-competitive data is just one of several factors the Committee considers in deciding executive compensation.
For 2019, the Committee utilized the comparator group of companies listed below to provide competitive reference points for executive compensation. This comparator group was recommended based upon advice from FW Cook, and remained the same as the comparator group used to evaluate executive compensation in 2018. The companies in our comparator group meet multiple screening criteria, including revenue, income, assets, market capitalization, number of employees, lines of business, similarity to Whirlpool in global operations, and required management skills. Additionally, companies in the comparator group are recognized for their excellence in the areas of consumer focus and trade customer relations and for possessing highly complex global supply chains and manufacturing footprints.
2019 Comparator Group | ||
3M Company Caterpillar, Inc. Colgate-Palmolive Company Cummins, Inc. Danaher Corporation Deere & Company Eaton Corporation plc Emerson Electric Co. The Goodyear Tire & Rubber Company Honeywell International, Inc. | Illinois Tool Works, Inc. Ingersoll-Rand plc Johnson Controls International plc Kellogg Company Kimberly-Clark Corporation Lear Corporation Newell Brands, Inc. Parker Hannifin Corporation Stanley Black & Decker, Inc. Textron, Inc. |
Based on information provided by FW Cook, the median statistics of our comparator group when the Committee determined NEO pay in February 2019 (dollar values in millions) were:
Measure | Median of Comparator Group | Whirlpool | ||||||||
Revenue (Trailing 12 Months (“TTM”)) | $ | 17,920 | $ | 21,079 | ||||||
Net Income (TTM) | $ | 1,866 | $ | (621 | ) | |||||
Assets (Most Recent Quarter) | $ | 19,691 | $ | 19,093 | ||||||
Market Capitalization (December 31, 2018) | $ | 30,085 | $ | 7,854 | ||||||
Employees (As of December 31, 2018) | 61,300 | 92,000 |
Note: Based on data available from S&P Capital IQ as of January 15, 2019, as analyzed by FW Cook.
We supplement the publicly disclosed compensation data from comparator companies with data from proprietary surveys purchased from third-party consulting firms and data vendors. These independently conducted surveys generally include data from numerous organizations across various industry groupings and specific international regions, and also allow for comparisons to be made on the basis of job scope and other measures relevant to Whirlpool. Our compensation analyses provide insight into prevailing market pay levels and leading practices in both compensation program design and governance.
24 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Overview of 2019 Executive Compensation Elements
Element | Form | |||||||
Base Salary (1) | Cash | Fixed component based on responsibility, experience, and individual performance | ||||||
N/A | ||||||||
Short-term (“PEP”)(1) | Annual Performance Cash Award | Performance-based variable cash incentive to reward for achieving annual financial and individual performance goals | ||||||
Ongoing EBIT— 50% FCF — 50% +/– 25% Modifier for Individual Performance Results | ||||||||
Long-term (“SEP”)(1) | PSUs | Motivate and reward employees for the achievement of | ||||||
Cumulative Ongoing EPS — 50% ROIC — 50% | ||||||||
Stock | Provide incentive for long-term stock price appreciation and promote retention | Stock price appreciation | ||||||
Other Benefits | RSUs | Provide incentive for long-term stock price appreciation and promote retention. As of 2019, only granted for special recognition and retention | ||||||
Stock price | ||||||||
Health and Welfare Benefits | NEOs generally participate in the same health and welfare benefit programs available to substantially all salaried employees | |||||||
N/A | ||||||||
Retirement Benefits(2) | ||||||||
U.S.-based NEOs participate intax-qualified andnon-qualified defined benefit and defined contribution retirement plans designed to provide a market-competitive level of income replacement upon achieving retirement eligibility and enable an orderly succession of talent | N/A | |||||||
Perquisites | ||||||||
Limited perquisites are designed to support a market-competitive compensation package | ||||||||
N/A |
(1) | Target is generally market median for similar positions in the comparator group and compensation survey data |
(2) | Target is median income replacement ratio for a broad-based group of companies based on survey data provided by outside consultant |
In supportMix of our pay-for-performance philosophy, short-termTarget Total Compensation
Short-term and long-term incentives constituted 90% of 20182019 total target compensation for our CEO, and, on average, over 80%75% of 20182019 total target compensation for our other NEOs.NEOs
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 25 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Compensation Programs - Design & Elements
Base Salary
To determine base salary levels for 2018,2019, the Committee considered the comparativecompetitive market data and recommendations provided by FW Cook and, with respect to the other NEOs, the CEO'sCEO’s recommendations and Whirlpool'sour practice for 20182019 salary increases. As discussed earlier, the Committee approved changes to salary for Mr. Bitzer, effective October 1, 2017, and Mr. Fettig, effective January 1, 2018, and did not further adjust these levels in 2018.
NEO | 2017 Year-End Salary | 2018 Adjustment | 2018 Year-End Salary | |
$ | % | |||
Marc R. Bitzer | $1,250,000 | $0 | 0.0% | $1,250,000 |
James W. Peters | $600,000 | $50,000 | 8.3% | $650,000 |
Jeff M. Fettig | $1,480,000 | -$430,000 | (29.0)% | $1,050,000 |
Joseph T. Liotine | $600,000 | $50,000 | 8.3% | $650,000 |
João C. Brega (1) | BRL 2,080,000 | BRL 104,000 | 5.0% | BRL 2,184,000 |
NEO
| 2018 Year-End
| 2019 Adjustment | 2019 Year-End
| |||||||||||||
$
|
%
| |||||||||||||||
Marc R. Bitzer | $ | 1,250,000 | $ | 35,000 | 2.8 | % | $ | 1,285,000 | ||||||||
James W. Peters | $ | 650,000 | $ | 30,000 | 4.6 | % | $ | 680,000 | ||||||||
Joseph T. Liotine | $ | 650,000 | $ | 65,000 | 10.0 | % | $ | 715,000 | ||||||||
João C. Brega(1) | BRL | 2,184,000 | BRL | 546,000 | 25.0 | % | BRL | 2,730,000 | ||||||||
Gilles Morel(2) | — | — | — | EUR | 625,000 |
(1) | |
Mr. |
(2) | Mr. Morel joined Whirlpool on April 1, 2019. His 2019 salary was determined by the Committee based upon competitive market data and his experience and expertise. His salary is noted in his home currency, Euros. Converting his 2019 salary into U.S. Dollars results in a salary of $699,888, using12-month average exchange rates for 2019. |
The Committee increased Mr. Liotine’s 2019 salary based upon competitive market data and his increasing scope of Annual Meetingresponsibility. The Committee increased Mr. Brega’s 2019 salary in consideration of Stockholderscompetitive market data, and 2019 Proxy Statement his leadership of ourdirect-to-consumer and digital priorities.
l 31
Annual awards of variable cash incentives are paid under the terms of the stockholder-approved Executive Performance Excellence Plan, which we commonly refer to as "PEP."“PEP.” Consistent with Whirlpool's ourpay-for-performance philosophy, our short-term cash incentive program is designed to focus attention on short-term drivers of stockholder value creation, reflect Company financial and individual performance, and complement the metrics used in our long-term incentive program to create a balanced focus on the key drivers of our multi-year financial and operational strategy. The program is designed so that a significant portion of our NEOs'NEOs’ short-term cash compensation is variable and directly tied to key performance results.
In 2018,2019, the Committee established short-term incentive target opportunities as a percentage of base salary for each NEO, taking into account comparativecompetitive market data. Mr. Morel’s initial short-term incentive target upon his hire was based upon external market data and internal equity with other executives. For our continuing NEOs, the Committee did not change 2019 short-term incentive targets (as a percentage of eligible base salary) relative to the targets for 2018. The target award levels are generally set at the median of the comparator group and are as follows for each NEO:
NEO | 2018 Short-term Incentive Target Award | |
(as a % of Eligible Base Salary) | ($) | |
Marc R. Bitzer | 150% | $1,875,000 |
James W. Peters | 90% | $572,314 |
Jeff M. Fettig | 140% | $1,470,000 |
Joseph T. Liotine | 100% | $641,667 |
João C. Brega | 100% | BRL 2,184,000 (1) |
NEO
| 2019 Short-term Incentive Target Award
| |||||||||
(as a % of Eligible Base Salary) |
($) | |||||||||
Marc R. Bitzer | 150 | % | $ | 1,918,750 | ||||||
James W. Peters | 90 | % | $ | 607,500 | ||||||
Joseph T. Liotine | 100 | % | $ | 704,167 | ||||||
João C. Brega (1) | 100 | % | BRL | 2,730,000 | ||||||
Gilles Morel(2) | 85 | % | EUR | 398,438 |
(1) | |
Mr. |
(2) | Mr. Morel joined Whirlpool on April 1, 2019. His 2019 short-term incentive target waspro-rated based upon his start date. Mr. Morel’s target is noted in his home currency, Euros. Converting into U.S. Dollars results in a target of $446,179, using12-month average exchange rates for 2019. |
26 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
The Committee determined each NEO'sNEO’s actual payout by reference to a Company Performance Factor ranging from 0% to 150%200% and based on performance metrics aligned with the Company'sour critical objectives for the year. For 2019,In the Company Performance Factor will range from 0% to 200%, consistent withevent of significant individual accomplishments or shortfalls, the Company Performance Factor for all other employees participating in the PEP incentive program.
* | ||
Ongoing EBIT measure excludes items that may not be indicative of, or are unrelated to, results from our ongoing business operations. Ongoing EBIT consists of GAAP net earnings available to Whirlpool before net earnings (loss) available tonon-controlling interests, income tax expense (benefit), and |
** | ||||||||||||||
Free Cash | ||||||||||||||
Flow consists of | ||||||||||||||
GAAP cash provided by operating activities after capital expenditures, proceeds from the sale of assets/businesses, and changes in restricted cash and repayment of outstanding term loan. |
Each NEO had responsibilities focused on the Global Corporate Enterprise in 2018.2019. The Global Corporate Enterprise objectives for 20182019 were Ongoing EBIT, weighted 50%, and Free Cash Flow, weighted 50%. These were the same metrics and same weightings as 2017,2018, and are designed to reflect the Company'sour balanced focus on optimizing cash flow in addition to earnings growth. These measuresimproving earnings. We chose Ongoing EBIT and Free Cash Flow because they are key drivers of stockholder value used by the Companyus to communicate with the investment community and reflect the operational contribution to the Company'sclosely tracked by our investors in measuring our financial performance. The goals and ranges established by the Committee and actual Company2019 performance, appear in the table below:
Performance Measure | Weighting | Threshold (0% payout) | Target (100% payout) | Maximum (150% payout) | 2018 Actual | Payout |
Ongoing EBIT | 50% | $1,100M | $1,500M | $1,600M | $1,319M | 55% |
Free Cash Flow | 50% | $150M | $850M | $1,050M | $853M | 101% |
Performance Measure | Weighting | Threshold (0% payout) | Target (100% payout) | Maximum (200% payout) | 2019 Actual Result | Payout | ||||||
Ongoing EBIT | 50% | $950M | $1,350M | $1,550M | $1,414M | 132% | ||||||
Free Cash Flow | 50% | $450M | $850M | $1,250M | $912M | 116% |
The Committee determined levels of achievement based on Whirlpool'sour financial results as follows:
Ongoing EBIT of $1.3$1.4 billion was belowabove the target goal of $1.5$1.35 billion; and
Free Cash Flow of $853$912 million was slightly above the established target goal of $850 million.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 27 |
COMPENSATION DISCUSSION AND ANALYSIS |
Whirlpool experienced significant raw material inflation, trade tariffs, increased freight costs and currency volatility during the year which unfavorably impacted Ongoing EBIT by $400 million in 2018. Ongoing EBIT was also impacted by worse than expected performance in EMEA.2019. However, we effectively implemented cost-based price increases, and successfully reduced operating costs and improved productivity to overcome the additional external costs. Free Cash Flow was driven by disciplinedstructural improvements to working capital management, including significant improvements in inventorymanagement.
Based on performance results relative to the goals, and the favorable timingafter consideration of certain payments.
The Committee determined the actual payout to each NEO by multiplying the NEO'sNEO’s target award by the applicable Company Performance Factor and using judgment to assess individual performance. Refer to pages 38-3931-32 for a description of individual performance factors considered for each NEO.
Notice of Annual Meeting of Stockholders and 2019 Proxy Statement l 33
The Committee makes annual grants of long-term incentives (LTI)(“LTI”) to focus executives on Whirlpool's longer-term financial and strategic objectives, to align management'smanagement’s interests with those of our stockholders, and to attract, retain, and motivate the executive talent the Companythat Whirlpool requires. These LTI awards, which we commonly refer to as Strategic Excellence Program awards, or "SEP,"“SEP,” were made under the termsstockholder-approved 2018 Omnibus Stock and conditionsIncentive Plan. Grants prior to 2018, including the payout of the stockholder-approved2017-2019 Performance Share Units and Performance Cash Units, were made under the Amended and Restated 2010 Omnibus Stock and Incentive Plan (2010 Plan). At the 2018 annual meeting, shareholders approved the 2018 Omnibus Stock and Incentive Plan (2018 Plan), which replaces the 2010 Plan. SEP awards granted after the 2018 annual meeting are made under the terms and conditions of the 2018 Plan.
The Committee, with the assistance of FW Cook, establishes the long-term incentiveLTI target opportunity for each NEO after reviewing competitive market practices, at peer companies, the executive'sexecutive’s level of responsibility, and the executive's relativeexecutive’s ability to contribute to theour long-term success of the Company.
LTI awards typically consist of a combination of PSUs and stock options. Depending on a NEO's responsibilities, thePrior to 2019, SEP awardawards may also includehave included performance cash units (PCUs)(“PCUs”) and RSUs, as was the case for Messrs. Liotine and Brega in 2017 and 2018. Beginning in 2019, 30% of SEP awardsaward value for NEOs will bewas granted in the form of stock options, with the remaining 70% granted in the form of PSUs.
Equity Award Grant Practices
Generally, the Committee grants annual equity awards to employees, including NEOs, on a single date at its regularly scheduled meeting in February. This meeting occurs after we release earnings for the prior fiscal year, which permits material information regarding our performance for the prior fiscal year to be disclosed to the public before equity-based grants are made. The actual number of stock units and stock options are awarded based on the closing stock price on the date of grant, and based on agrant. A Black-Scholes valuation methodology is used to determine the grant date value for stock options.
Performance Stock Units and Performance Cash Units
: PSUs and PCUs are tied directly toStock Options
: Stock options generally vest over a three-year period in equal annual installments and are exercisable over aten-year term, promoting a focus on long-term stock value creation, as well as executive retention derived from continued service vesting requirements. Stock options granted by the Committee have aone-year minimum vesting period.Time-vesting Restricted Stock Units:
RSUs provide potential appreciation opportunity as28 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
to increase the focus on performance. However, the Committee may still grant RSUs for retention, promotion or recruiting purposes.
2019 SEP Awards
For 2018,2019, the Committee selected a three-year performance period for the achievement of performance goals, with the number of PSUs and PCUs earned to be determined and vested in February 20212022 based on performance results for the period from 20182019 through 2020.
The Committee established 2018 long-term incentive2019 LTI target award levels and allocationsmix for the NEOs as follows:
NEO | 2018 SEP Target Award | Percentage of 2018 SEP Target Award comprised by: | |||
PSUs | Stock Options | PCUs | RSUs | ||
Marc R. Bitzer | $8,750,000 | 50% | 50% | — | — |
James W. Peters | $1,625,000 | 50% | 50% | — | — |
Jeff M. Fettig | $6,300,000 | 50% | 50% | — | — |
Joseph T. Liotine | $1,625,000 | 25% | 25% | 25% | 25% |
João C. Brega | BRL 2,730,000 (1) | 25% | 25% | 25% | 25% |
Named Executive Officer
| 2019 SEP Target Award
| Percentage of 2019 SEP Target Award comprised by: | |||||||||||||
PSUs | Stock Options | ||||||||||||||
Marc R. Bitzer | $ | 9,059,250 | 70 | % | 30 | % | |||||||||
James W. Peters | $ | 2,040,000 | 70 | % | 30 | % | |||||||||
Joseph T. Liotine | $ | 2,323,750 | 70 | % | 30 | % | |||||||||
João C. Brega | BRL | 3,412,500 | (1) | 70 | % | 30 | % | ||||||||
Gilles Morel | EUR | 625,000 | (2) | 70 | % | 30 | % |
(1) | |
Mr. |
(2) | Mr. Morel’s SEP Target is noted in his home currency, Euros. Converting into U.S. Dollars results in a full-year target of $699,888, using12-month average exchange rates for 2019. |
For 2018,the 2019-2021 performance period, the measures for the PSUs and PCUs were the same:are Cumulative Ongoing Earnings Per Share (EPS)EPS and Return on Invested Capital (ROIC),average ROIC, each equally weighted at 50%. These measures were chosen because they represent important indicators of Company growth, profitability and capital efficiency, which are considered key drivers of sustainable stockholder value creation. TheThese two measures, and the 50%/50% weighting of these measures, wasremained the same as those used for the 20172018 grants of PSUs and PCUs, reflecting the Company's balanced longer-term focus on both sustainable earnings growth and longer-term capital efficiency.
The Committee established that performance in line withresults meeting target goals would result in a payout equal to 100% of the target award, while stronger performance willwould result in increased award levels up to a maximum payout of 200% of the respective target award. Performance below thresholdtarget goals couldwill result in noa payout for the PSUs or PCUs.of less than 100%, and potentially 0%. The Committee established the performance goals for the PSUs and PCUs to encourage strong, focused performance. Given the economic and market conditions at the time the targets were set,of grant, the goals were designed to be challenging but achievable, while performance levels resulting in maximum payouts were designed to be aggressive, stretch goals.
Special Recognition and Retention Awards
The Committee periodically grants additional "off-cycle"“off-cycle” equity awards to key employees, including NEOs, in connection with promotions, recruitment and retention efforts, succession planning, or significant accomplishments or achievements. In 2018, the Committee did not grant any special awards to any named executive officer.
In February 2019, the Committee granted a special performance award of 15,000 PSUs to Mr. Brega to retain and motivate him during a critical time for the Latin America region. The award will vest in part or in full on March 1, 2023, subject toincentivize the achievement of two performance goalskey objectives (each worth 7,500 PSUs) based on:: (1) the successful completion of the strategic divestiture of our Embraco business, and (2) cumulative ongoing EBIT for the Latin America Region during the 2019 - 2021 performance period.
In April 2019, the Committee granted a special award of Stockholders6,000 RSUs to Mr. Morel, in connection with his employment as Executive Vice President and 2019 Proxy Statement
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 29 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Performance-based Award Payout FactorsPayouts for the 2016-20182017-2019 Performance Period
For PSUs and PCUs granted in 20162017 (with a 2017-2019 performance period from 2016 to 2018)period) the performance goals were Cumulative Ongoing EPS (75%(50% weighting) and average annual improvement in ROIC (25%(50% weighting). Average annual improvement in ROIC averages the payout percentage achieved for each year of the three-year performance cycle, based on a target of 0.5% improvement in ROIC each year relative to the prior year’s ROIC performance. The Committee established a payout rangesrange from 0% to 200% for performance against each of these measures. These metrics were selected because they represent important measures of profitability, growth and capital efficiency, which are considered key drivers of sustainable stockholder value creation.
* | ||||||||||
For purposes of | ||||||||||
the Company Performance Factor, | ||||||||||
the Cumulative Ongoing | ||||||||||
Use (“ROU”) assets related to lease accounting standards changes. ROIC calculation utilizes a constant 24% tax rate each year for consistency across the three-year period. |
When setting financial objectivesgoals and evaluating actual results, the Committee determined that the target financial objectives would exclude certain items which were not viewed as reflective of ongoing business performance.
Performance Measure | Weighting | Performance Goals (Payout % Target) | 2016-2018 Actual | Payout | ||
Threshold (0%) | Target (100%) | Maximum (200%) | ||||
Cumulative Ongoing EPS | 75% | $36.00 | $45.00 | $54.00 | $42.96 | 75% |
3-year Average Annual Improvement in ROIC | 25% | -0.2% | +0.5% | +1.5% | +0.33% | 74% |
Performance Goals (Payout % Target) | ||||||||||||
Performance Measure | Weighting | Threshold (0%) | Target (100%) | Maximum (200%) | 2017-2019 Actual | Payout | ||||||
Cumulative Ongoing EPS(1) | 50% | $38.00 | $48.00 | $56.00 | $44.90 | 74% | ||||||
3-year Average Annual Improvement in ROIC | 50% | -0.2% | +0.5% | +1.5% | (2) | 103% |
(1) | Performance goals and payouts for Cumulative Ongoing EPS do not follow a linear relationship; ongoing EPS for the 2017, 2018, and 2019 fiscal years were $13.74, $15.16, and $16.00, respectively. |
(2) | Improvement in ROIC reflects a three-year average improvement, with each year calculated separately, and the resulting annual payouts averaged. Annual Improvement of ROIC was-1.10% in 2017, resulting in a payout of 0% for that year; +1.00% in 2018, resulting in a payout of 158% for that year; and +0.90% in 2019, resulting in a payout of 150% for that year. The average of the 0%, 158% and 150% payouts was 103%. |
Over the three-year timeperformance period, Whirlpool delivered solid results with margin expansion in our North America region and took decisive actions to overcome significant challenges around the globe. We quickly adapted our plans andsuccessfully implemented cost-based price increases and global fixed cost reduction initiatives to fully offsetovercome significant raw material, tariff, and currency impacts. Additionally, we took a number of strongstrategic actions to refocus and right-sizefocus our business through
30 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
business and announcing a numberexiting of strategic actions to restoreunder-performing businesses in certain countries. We also were successful in returning our EMEA region to profitability.
With respect to the Company Performance Factor, the Committee determined that overall performance was below target, resulting in a Company Performance Factor of 74%88%.
Notice of Annual Meeting of Stockholders and 2019 Proxy Statement l 37
Marc R. Bitzer Chairman and CEO |
CEO Pay Mix | ||
Mr. | ||
Compensation Element | Value | Rationale | ||
Salary | $1,279,167 | Mr. Bitzer’s salary increased by 2.8% over 2018. | ||
Short-term incentive | $2,302,500 120% Company | Mr. Bitzer
corporate Executive Committee;
• Oversaw the successful turnaround of the EMEA business, including a return to profitability in the fourth quarter of 2019; and
the divestiture of our Embraco compressor business. $2,302,500.Using a Company | ||
Long-term incentive | $9,059,205 | Represents the grant date fair value of the target award, |
Notice of | ç | 31 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Other Named Executive Officers
The CEO'sCEO’s recommendations for Messrs. Peters, Liotine, Brega, and BregaMorel were based on Company performance and his review of individual performance. The following information provides highlights of specific individual and business performance considered in the pay recommendations for the other NEOs, and the resulting awards under the short-term incentive program.
James W. Peters, Executive Vice President and Chief Financial Officer | ||||
Mr. Peters is responsible for developing and implementing | ||||
• | ||||
• | ||||
Implemented a number of deleveraging actions, making significant progress toward long-term gross Debt/EBITDA goal Using a Company | ||||
Joseph T. Liotine, Executive Vice President and President, Whirlpool North America | ||||
Mr. Liotine | ||||
• | ||||
• | Executed cost-based price | |||
productivity initiatives; and • | ||||
Using a Company | ||||
João C. Brega, Executive Vice President and President, Whirlpool Latin America | ||||
Mr. Brega leads | ||||
• | ||||
• Led strong organic net sales growth of +9.3%, | ||||
strong growth in Direct to Consumer sales. Using a Company | ||||
Gilles Morel, Executive Vice President and President, Whirlpool Europe, Middle East and Africa (EMEA) | ||||
Mr. Morel leads our operations in EMEA. He joined Whirlpool in April 2019. His 2019 achievements included: • Successfully transitioned to leading the EMEA region and led development of the EMEA leadership team; and • Successfully implemented EMEA business turnaround actions, including execution of cost reduction actions, which returned the EMEA region to profitability in the fourth quarter of 2019. Using a Company Performance Factor of 120%, the Committee determined that Mr. Morel’s resulting short-term incentive award for 2019 performance(pro-rated for his April start date) was EUR 478,125 ($535,414 using12-month average exchange rates for 2019). | ||||
32 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Other Elements of Compensation
Benefits and Perquisites
We provide competitive perquisites to executives, including financial planning services (including tax preparation and estate planning), limited use of Whirlpool-owned and leased property, product exchanges and discounts, home security systems, relocation assistance, and comprehensive executive health evaluations. These perquisites are designed to support a market-based competitive total compensation package, which serves our overall attractionallows us to attract and retention objectivesretain key talent and enhances the efficiencyproductivity of our management team by enabling them to focus their efforts on Whirlpool business. Mr. Brega is eligible to receive Company-provided insurance premiums and the use of a Company-provided car and driver in Brazil for personal security reasons, consistent with prevailing market practices for executives in Latin America. Mr. Morel is eligible for a Company car and driver, consistent with market practice in EMEA. Mr. Morel also received certain relocation and other benefits when he joined Whirlpool, including temporary living, housing allowance, tuition reimbursement for children (through completion of primary school), and household goods moving expenses.
For purposes of personal security, productivity, and immediate availability, Mr. Fettig and Mr. Bitzer werewas entitled to use Company aircraft for personal use in 2018.2019. Other executives may be granted limited use of the aircraft with the permission of the CEO. The value of this benefit is treated as taxable income, and the executive is responsible for all associated taxes. In 2019, the Committee approved an aircraft timeshare arrangement with Mr. Brega is eligible to receive Company-provided insurance premiums and the use of a Company-provided car and driver in BrazilBitzer, under which Mr. Bitzer reimburses Whirlpool for personal security reasons, consistent with prevailing market practicesuse flights, once personal use cost exceeds $80,000 in one year.
Beginning in 2020, we have discontinued Company-paid financial planning, tax preparation and estate planning services for executives in Latin America.
Retirement
NEOs are eligible for retirement benefits designed to provide, in total, a market-competitive level of income replacement upon retirement through a combination of qualified andnon-qualified plans. These plans are designed to attract and retain high-quality executives by providing market-competitive benefit levels, and also support our leadership development objectives by providing senior executives with an opportunity to accumulate sufficient resources to retire from the CompanyWhirlpool at appropriate times, thereby enabling an orderly succession of talent throughout the organization.
We periodically assess retirement benefits for the Company'sour senior leaders, including each of the U.S.-based NEOs, against data provided to the Willis Towers Watson Employee Benefits Information Center (Willis(“Willis Towers Watson)Watson”) by other U.S. companies that provide survey data on executive benefits. In 2015, we last reviewed with Willis Towers Watson comparisons of data obtained from 54 companies with revenue between $10 billion and $45 billion. Accordingly, this survey tool includes data on a much broader base of companies than those included in the executive compensation comparator group.
This review is an important factor used in determining the median retirement income replacement ratio among similarly situated executives at such companies and in setting the target amount of total retirement benefits for our U.S.-based NEOs. As a result of the current mix of our retirement plans, we believe that total retirement benefits for the U.S.-based NEOs are currently at a competitive level when compared to the other companies in the survey.
Stock Ownership Guidelines
The Committee has established robust stock ownership guidelines, which support the objective of increasing the amount of Whirlpool stock owned by the Company's senior leaders. Theseguidelines. Our guidelines are designed to ensure that our NEOs and other senior leaders have a significant stake in Whirlpool'sour long-term success and they help to further alignsalign the interests of executives with those of our stockholders. These ownership guidelines take into accountconsider our use of long-term equity incentives as well as a review of competitive market practices. The guidelines are expressed as multiples of base salary and vary based on an individual'sindividual’s level in the organization. Ownership guidelines for the NEOs are as follows:
Position / Level | Ownership Guideline | |
Chairman and Chief Executive Officer | 7 x salary | |
Chief Financial Officer and Regional Presidents | 5 x salary | |
Other Executive Vice Presidents | 4 x salary |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 33 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
The guidelines require each executive to achieve their respective level of stock ownership within five years of their hire date or date of most recent promotion. For compliance with these guidelines, ownership includes shares purchased on the open market, shares owned jointly with spouses and children, shares held in the Whirlpool 401(k) Retirement Plan, shares obtained through stock option exercises (but not including unvested shares or unexercised stock options), and shares owned outright (including those in which the executive has deferred distribution).
The Committee annually reviews the progress of each of the NEOs' progress towardsNEO toward achieving the applicable level of ownership. During the Committee'sCommittee’s most recent annual review of executive stock ownership it was determined thatin October 2019, each NEO is on track or exceeds themet his applicable stock ownership guideline.
Compensation Recovery Policy (Clawback)
The short-term incentive and omnibus stock incentive plans include "clawback"“clawback” provisions under which the repayment of awards may be required under certain circumstances. Under these plans, the Committee may require repayment of an award if the participant is terminated or otherwise leaves employment with the CompanyWhirlpool within two years following the vesting date of the award and such termination of employment is in any way connected with any misconduct or violation of CompanyWhirlpool policy. The plans also contain provisions that includeallow the Committee to subject awards to the potential clawback of granted cash and equity in the event of a material financial restatement. Moreover, these plans provide that the Committee may require repayment of awards if a participant becomes employed with a competitor within thetwo-year period following termination of employment, or for any other reason considered by the Committee in its sole discretion to be detrimental to the CompanyWhirlpool or its interests.
Hedging and Pledging
The Committee has established trading guidelines for Whirlpool stock prohibiting hedgingCorporation Insider Trading Policy prohibits:
Hedging (or any transaction with similar effect) by any employee or director, and pledgingdirector.
Pledging or trading on margin (or any transaction with similar effect) by any executive officersofficer or director.
Non-Competition /Non-Solicitation Agreements
We maintainnon-competition and directors. Employees, directors, and executive officers are also prohibited from engaging in transactions that have the effect of any of the foregoing actions.
Post-Employment Provisions
Our U.S.-based NEOs are eligible to receive benefits under a severance policy generally available to U.S. salaried employees. We have also entered into Compensation Benefits and Assurance Agreements with each NEO, to provide benefits in the event of a qualifying termination following a change in control of Whirlpool. These agreements are intended to ensure that our NEOs are not deterred from exploring opportunities that will result in maximum value for stockholders, including actions that may result in a change in their position or standing within Whirlpool, and to promote orderly succession of talent and support our overall attraction and retention objectives. These agreements align Whirlpool'sour change in control severance program with current best practices in this area by requiring consummation of a merger
Employment Contracts
Generally, we have no employment contracts with our employees, unless required or customary based on local law or practice. We do not have employment contracts in place with any of the U.S.-based NEOs. Consistent with local practice, we have employment contracts in place with Mr. Brega and Mr. Morel.
34 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
IV. How Compensation Decisions Are Made |
Role of the Human Resources Committee
The Committee has overall responsibility for Whirlpool Corporation’s executive compensation programs. In February each year, the Committee:
Reviews Company performance and individual executive performance for the prior year and approves payouts under our short-term incentive plan for all Executive Committee members, including our CEO and other NEOs.
Reviews performance results for the prior performance period and approves payouts for our long-term incentive plan.
Establishes the performance measures, performance goals and payout levels for awards under our short-term and long-term incentive plans for the upcoming performance periods.
Considers and determines the principal elements and target compensation for each NEO, including our CEO.
At its other meetings throughout the year, the Committee also:
Evaluates the overall effectiveness of our compensation philosophy and programs in supporting our business strategy and human resources objectives.
Reviews and approves the Comparator Group used to understand competitive market practices.
Reviews management’s recommendations regarding hiring, promotion, retention, severance, and compensation for individual executives.
To determine target pay levels, the Committee relies on external competitive market data, internal equity among the executives, individual performance and contributions, and guidance from its independent compensation consultant, FW Cook. To determine the payout of incentive awards, the Committee considers Company performance and management’s assessment of individual performance. While the Committee requests and considers advice and recommendations from its consultant and from management, ultimately the Committee decides these matters in its sole discretion.
Role of the Independent Compensation Consultant
The Committee engages an independent compensation consultant to advise on our executive compensation programs and practices. The Committee has the sole authority and responsibility to select, retain, and terminate any consulting firm assisting in the evaluation of executive compensation, and to approve the compensation consultant’s fees and terms of engagement. The Committee continued to retain FW Cook in 2019 as its independent compensation consultant because of its extensive expertise and its independence from any other business relationship with Whirlpool.
FW Cook did not perform any services for Whirlpool in 2019 other than those requested by the Committee related to executive compensation and board of director compensation. In 2019, FW Cook assisted with and advised the Committee on a variety of ongoing items, including review of materials prepared by management in advance of Committee meetings, review of public disclosures (including this CD&A and the accompanying tables and narrative footnotes), review of the Comparator Group, CEO compensation and analysis and advice to the Committee on typical market practices, emerging trends and best practices.
As part of its ongoing role, FW Cook reviews compensation provided to the NEOs, based on an assessment of the compensation of executives in comparable positions within the Comparator Group (described under “Competitive Market Compensation Analysis”).
The Committee determined that the work of FW Cook did not raise any conflicts of interest in 2019. In making this assessment, the Committee considered the independence factors enumerated under SEC and NYSE rules, including the fact that FW Cook does not provide any other services to Whirlpool, the level of fees received from Whirlpool as a percentage of FW Cook’s total revenue, policies and procedures employed by FW Cook to prevent conflicts of interest, and whether FW Cook or the individual FW Cook advisors to the Committee own any Whirlpool stock or have any business or personal relationships with members of the Committee or our executive officers.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 35 |
COMPENSATION DISCUSSION AND ANALYSIS |
Role of Management
Each year, the CEO and Chief Human Resources Officer make recommendations to the Committee regarding the design of the compensation and benefit programs for all executive officers. In addition, the CEO makes recommendations with respect to base salary, target short-term incentive compensation, target LTI compensation, and total compensation levels for the NEOs other than himself, based on his assessment of individual performance and contributions to Whirlpool. The CEO and Chief Human Resources Officer recommend the performance measures and the performance goals for the short-term cash incentive and LTI programs for adoption by the Committee. The Committee has authority to adopt or modify these metrics in its sole discretion. In addition, the CEO assesses the individual performance of the other NEOs to assist the Committee in making determinations regarding incentive program award payouts.
The Human Resources Committee of Whirlpool'sthe Board of Directors reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement.
Based upon this review and discussion, the Human Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Whirlpool'sWhirlpool Corporation’s Proxy Statement and Annual Report onForm 10‑K10-K for the year ended December 31, 2018, as incorporated by reference from this proxy statement.
HUMAN RESOURCES COMMITTEE
Michael F. Johnston, Chair | Diane M. Dietz | |
Samuel R. Allen | William D. Perez | |
Harish Manwani | Greg Creed |
36 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
2019 EXECUTIVE COMPENSATION TABLES | ||||
The following table presents compensation information for our Named Executive OfficersNEOs during 20182019 and, to the extent required to comply with SEC executive compensation disclosure rules, 20172018 and 20162017 fiscal years.
The table may not reflect the actual compensation received by any NEO for the periods indicated. For example, amounts recorded in the Stock Awards and Option Awards columns reflect the grant date fair market value of the awards at the award date and the targeted compensation for certain performance-based equity awards. The actual value of compensation realized by a NEO may vary from the amount reported below due to Company performance relative to establishedpre-established incentive award criteria, the stock price on award distribution dates, and, in the case of stock options, differences between the stock price on the grant date and the stock price at exercise. As a second example, the amounts reported in the Change in Pension Value andNon-qualified Deferred Compensation Earnings column represent an actuarial present value which may significantly increase or decrease reportable compensation in any given year depending on interest rates and other factors.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | |
Marc R. Bitzer President and Chief Executive Officer | 2018 | 1,250,000 | — | 4,374,836 | 4,374,977 | 1,462,500 | 178,692 | 195,270 | 11,836,275 | |
2017 | 1,091,667 | — | 2,099,879 | 2,100,075 | 591,798 | 621,618 | 241,327 | 6,746,364 | ||
2016 | 1,000,000 | — | 1,874,983 | 1,874,782 | 1,062,500 | 438,772 | 170,000 | 6,421,037 | ||
James W. Peters Executive Vice President and Chief Financial Officer | 2018 | 641,667 | — | 812,381 | 812,463 | 522,255 | — | 102,820 | 2,891,586 | |
2017 | 588,333 | — | 749,868 | 750,002 | 230,606 | 301,653 | 69,500 | 2,689,962 | ||
2016 | 456,667 | — | 2,126,194 | 102,467 | 312,897 | 176,037 | 53,962 | 3,228,224 | ||
Jeff M. Fettig Chairman of the Board (1) | 2018 | 1,050,000 | — | 3,149,875 | 3,149,976 | 1,146,600 | — | 270,181 | 8,766,632 | |
2017 | 1,480,000 | — | 5,327,926 | 5,328,258 | 971,354 | 2,624,518 | 252,142 | 15,984,198 | ||
2016 | 1,480,000 | — | 5,105,971 | 5,105,425 | 1,991,833 | 2,234,266 | 230,647 | 16,148,142 | ||
Joseph T. Liotine Executive Vice President and President, Whirlpool North America | 2018 | 641,667 | — | 812,380 | 406,212 | 862,888 | 1,022 | 45,910 | 2,770,079 | |
2017 | 595,000 | — | 3,377,596 | 360,008 | 371,998 | 285,394 | 53,015 | 5,043,011 | ||
João C. Brega Executive Vice President and President, Whirlpool Latin America (2) | 2018 | 589,295 | — | 423,460 | 211,752 | 583,979 | — | 218,113 | 2,026,599 | |
2017 | 638,130 | — | 3,076,372 | 209,373 | 309,561 | — | 215,327 | 4,448,763 | ||
2016 | 546,271 | — | 302,186 | 151,138 | 583,807 | — | 184,890 | 1,768,292 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (3) | Option Awards ($) (4) | Non-Equity Incentive | Change in Pension Value | All Other Compensation ($) (7) | Total ($) | |||||||||||||||||||||||||||
Marc R. Bitzer | 2019 | 1,279,167 | — | 6,341,437 | 2,717,768 | 2,302,500 | 1,171,410 | 187,212 | 13,999,494 | |||||||||||||||||||||||||||
2018 | 1,250,000 | — | 4,374,836 | 4,374,977 | 1,462,500 | 178,692 | 195,270 | 11,836,275 | ||||||||||||||||||||||||||||
2017 | 1,091,667 | — | 2,099,879 | 2,100,075 | 591,798 | 621,618 | 241,327 | 6,746,364 | ||||||||||||||||||||||||||||
James W. Peters | 2019 | 675,000 | — | 1,427,883 | 612,072 | 729,000 | 482,013 | 81,218 | 4,007,186 | |||||||||||||||||||||||||||
2018 | 641,667 | — | 812,381 | 812,463 | 522,255 | — | 102,820 | 2,891,586 | ||||||||||||||||||||||||||||
2017 | 588,333 | — | 749,868 | 750,002 | 230,606 | 301,653 | 69,500 | 2,689,962 | ||||||||||||||||||||||||||||
Joseph T. Liotine | 2019 | 704,167 | — | 1,626,610 | 697,211 | 1,161,800 | 546,778 | 59,992 | 4,796,558 | |||||||||||||||||||||||||||
2018 | 641,667 | — | 812,380 | 406,212 | 862,888 | 1,022 | 45,910 | 2,770,079 | ||||||||||||||||||||||||||||
2017 | 595,000 | — | 3,377,596 | 360,008 | 371,998 | 285,394 | 53,015 | 5,043,011 | ||||||||||||||||||||||||||||
João C. Brega | 2019 | 670,892 | — | 2,734,104 | 275,937 | 975,659 | — | 198,173 | 4,854,765 | |||||||||||||||||||||||||||
2018 | 589,295 | — | 423,460 | 211,752 | 583,979 | — | 218,113 | 2,026,599 | ||||||||||||||||||||||||||||
2017 | 638,130 | — | 3,076,372 | 209,373 | 309,561 | — | 215,327 | 4,448,763 | ||||||||||||||||||||||||||||
Gilles Morel | 2019 | 524,916 | 111,982 | 1,177,823 | 158,999 | 535,414 | — | 198,892 | 2,708,026 | |||||||||||||||||||||||||||
(1) | ||
Compensation amounts for Mr. Brega paid in Brazilian Reais have been converted to U.S. Dollars using a monthly average currency conversion rate for the applicable year. |
(2) | Mr. Morel joined Whirlpool on April 1, 2019. As part of his compensation, Mr. Morel received asign-on bonus of 100,000 Euros. Compensation amounts for Mr. Morel paid in Euros have been converted to U.S. Dollars using a monthly average currency conversion rate for the applicable year. |
(3) | Reflects grant date fair value of target PSUs, which represents the probable attainment level of these awards at the time of grant, and RSUs. See our |
Name | 2019 ($) | |||
Marc R. Bitzer | 12,682,874 | |||
James W. Peters | 2,855,766 | |||
Joseph T. Liotine | 3,253,220 | |||
João C. Brega | 1,287,408 | |||
Gilles Morel | 742,005 |
For the actual number of PSUs earned for the 2016-20182017-2019 performance period as well as target awards for the 2017-20192018-2020 and 2018-20202019-2021 performance periods, see the "2018“2019 Outstanding Equity Awards at Fiscal Year-End"Year-End” table.
ç | 37 |
2019 EXECUTIVE COMPENSATION TABLES |
(4) | Reflects the grant date fair value of stock option awards. See our |
(5) | |
Represents the cash incentive awards earned in |
(6) | |
Reflects the change in actuarial present value of these benefits from December 31, |
(7) | |
The following table presents an itemized account of the amounts shown in the |
Name | Personal Use of Whirlpool Aircraft (a) ($) | Other Perquisites (b) ($) | Defined Contribution Plan Contributions (c) ($) | Car & Driver (d) ($) | Insurance Premiums (e) ($) | Total ($) |
Marc R. Bitzer | 74,406 | 33,364 | 87,500 | — | — | 195,270 |
James W. Peters | 39,621 | 18,282 | 44,917 | — | — | 102,820 |
Jeff M. Fettig | 43,366 | 153,315 | 73,500 | — | — | 270,181 |
Joseph T. Liotine | — | 17,660 | 28,250 | — | — | 45,910 |
João C. Brega | — | 7,437 | 89,363 | 65,845 | 55,468 | 218,113 |
Name | Personal Use of Whirlpool Aircraft (a) | Other Perquisites (b) | Defined Contribution Plan Contributions (c) | Car & Driver (d) | Insurance Premiums (e) | Relocation (f) ($) | Total ($) | ||||||||||||||||||||||||||||
Marc R. Bitzer | 80,500 | 17,170 | 89,542 | — | — | — | 187,212 | ||||||||||||||||||||||||||||
James W. Peters | 24,027 | 9,941 | 47,250 | — | — | — | 81,218 | ||||||||||||||||||||||||||||
Joseph T. Liotine | — | 10,700 | 49,292 | — | — | — | 59,992 | ||||||||||||||||||||||||||||
João C. Brega | — | 5,360 | 100,372 | 45,515 | 46,926 | — | 198,173 | ||||||||||||||||||||||||||||
Gilles Morel | — | 805 | — | 84,414 | — | 113,673 | 198,892 |
(a) | Our incremental cost for personal use of Whirlpool aircraft is calculated by multiplying the |
(b) | |
Represents the incremental cost to Whirlpool of: Whirlpool products offered at discounted |
(c) | Represents |
(d) | For Mr. Brega, this amount includes the incremental cost to Whirlpool for providing a car and driver for security reasons and is consistent with local prevailing market practices for company executives in Brazil. This amount reflects the car lease and driver compensation cost. For Mr. Morel, this amount includes the cost of the Company-provided car and driver, consistent with typical market practices for executives in Italy. This amount reflects the car lease and driver compensation cost. |
(e) | Represents |
Represents Company paid cost of temporary housing, household goods moving expenses, and other expenses associated with Mr. Morel’s relocation to Italy in conjunction with his joining Whirlpool. |
The following table provides additional information about plan-based compensation disclosed in the 20182019 Summary Compensation Table or, in the case of PCUs, granted during the year.Table. In February 2018,2019, we granted short-term cash incentives to our NEOs under PEP, and long-term incentives consisting of PSUs PCUs, RSUs, andnon-qualified stock options under the Whirlpool Corporation Amended and Restated 20102018 Omnibus Stock and Incentive Plan. Information regarding the treatment of these awards upon a qualifying termination following a change in control is set forth below and under the "Potential“2019 Potential Post-Termination Payments"Payments” section later in the proxy statement.
The Committee established both target and maximum award levels of PSUs and PCUs with actual awards to be determined based on the achievement of specified performance objectives over a three-year performance period (2018(2019 - 2020)2021). Upon completion of the performance period, the Committee will approve award amounts in February 2021, basing2022, determining the number of PSUs and the value of PCUs earned based on the level of achievement of the performance period objectives. These PSU awards once determined,are scheduled to vest three years from the date the terms of the award were established.
Generally, an executive must be employed by Whirlpool on the last day of the performance period in order to earn the short-term incentive award, and be employed by Whirlpool on the vesting date in order to earn the PSU or PCU awards. However, a retirement-eligible NEO who retires during the performance period may receive a prorated portion of the PSU or PCU award, once the vesting level of thefinal award amount is determined by the Committee after the end of the performance period.
38 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
2019 EXECUTIVE COMPENSATION TABLES |
With respect to PSU and PCU awards, if an executiveNEO dies or becomes disabled during the performance period, the award payout determined by the Committee at the end of the performance period is prorated based on the amountnumber of months of service completed over the three-year performance period. With respect to RSU awards, if an NEO dies, becomes disabled, or retires during the vesting period but prior to the vesting date of the award, vesting and distribution will be accelerated.
Stock option grants are issued with an exercise price equal to the closing price of Whirlpool common stock as reported on the NYSE on the award date. The option term is ten years and options vest in three substantially equal annual installments, subject to the NEO'sNEO’s continued employment through the applicable vesting date. If the executiveNEO dies or becomes disabled, the stock options immediately vest and expire three years from the date of the event or the original expiration date (whichever occurs first), provided that some options may allow for a post-termination exercise period of at least one year. If the NEO retires, the stock options immediately vest and expire five years from the retirement date or the original expiration date (whichever occurs first). Options cannot be exercised before the first anniversary of the grant.
Name | Grant Date | 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 (#) | All Other (#) | Exercise ($/Sh) | Grant Date Fair Value of Stock and Option Awards (1) ($) | ||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marc R. Bitzer | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
PEP - Cash(2) | — | 0 | 1,918,750 | 3,837,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
PSUs(3) | 2/18/2019 | — | — | — | 0 | 45,504 | 91,008 | — | — | — | 6,341,437 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Options(4) | 2/18/2019 | — | — | — | — | — | — | — | 97,202 | 139.36 | 2,717,768 | ||||||||||||||||||||||||||||||||||||||||||||
James W. Peters | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
PEP - Cash(2) | — | 0 | 607,500 | 1,215,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
PSUs(3) | 2/18/2019 | — | — | — | 0 | 10,246 | 20,492 | — | — | — | 1,427,883 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Options(4) | 2/18/2019 | — | — | — | — | — | — | — | 21,891 | 139.36 | 612,072 | ||||||||||||||||||||||||||||||||||||||||||||
Joseph T. Liotine | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
PEP - Cash(2) | — | 0 | 704,167 | 1,408,334 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
PSUs(3) | 2/18/2019 | — | — | — | 0 | 11,672 | 23,344 | — | — | — | 1,626,610 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Options(4) | 2/18/2019 | — | — | — | — | — | — | — | 24,936 | 139.36 | 697,211 | ||||||||||||||||||||||||||||||||||||||||||||
João C. Brega | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
PEP - Cash(2) | — | 0 | 692,191 | 1,384,382 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
PSUs(3) | 2/18/2019 | — | — | — | 0 | 4,619 | 9,238 | — | — | — | 643,704 | ||||||||||||||||||||||||||||||||||||||||||||
PSUs(5) | 2/18/2019 | — | — | — | — | 15,000 | 15,000 | — | — | — | 2,090,400 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Options(4) | 2/18/2019 | — | — | — | — | — | — | — | 9,869 | 139.36 | 275,937 | ||||||||||||||||||||||||||||||||||||||||||||
Gilles Morel | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
PEP - Cash(2) | — | 0 | 446,179 | 892,358 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
PSUs(3) | 4/1/2019 | — | — | — | 0 | 2,759 | 5,518 | — | — | — | 371,003 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Options(4) | 4/1/2019 | — | — | — | — | — | — | — | 6,312 | 134.47 | 158,999 | ||||||||||||||||||||||||||||||||||||||||||||
RSUs(6) | 4/1/2019 | — | — | — | — | — | — | 6,000 | — | — | 806,820 |
(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 (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards (1) ($) | ||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||
Marc R. Bitzer | |||||||||||
PEP - Cash (2) | — | 0 | 1,875,000 | 3,515,625 | — | — | — | — | — | — | — |
PSUs (3) | 2/19/2018 | — | — | — | 0 | 25,332 | 50,664 | — | — | — | 4,374,836 |
Stock Options (4) | 2/19/2018 | — | — | — | — | — | — | — | 114,110 | 172.70 | 4,374,977 |
James W. Peters | |||||||||||
PEP - Cash (2) | — | 0 | 572,314 | 1,073,089 | — | — | — | — | — | — | — |
PSUs (3) | 2/19/2018 | — | — | — | 0 | 4,704 | 9,408 | — | — | — | 812,381 |
Stock Options (4) | 2/19/2018 | — | — | — | — | — | — | — | 21,191 | 172.70 | 812,463 |
Jeff M. Fettig | |||||||||||
PEP - Cash (2) | — | 0 | 1,470,000 | 2,756,250 | — | — | — | — | — | — | — |
PSUs (3) | 2/19/2018 | — | — | — | 0 | 18,239 | 36,478 | — | — | — | 3,149,875 |
Stock Options (4) | 2/19/2018 | — | — | — | — | — | — | — | 82,159 | 172.70 | 3,149,976 |
Joseph T. Liotine | |||||||||||
PEP - Cash (2) | — | 0 | 641,667 | 1,203,126 | — | — | — | — | — | — | — |
PSUs (3) | 2/19/2018 | — | — | — | 0 | 2,352 | 4,704 | — | — | — | 406,190 |
Stock Options (4) | 2/19/2018 | — | — | — | — | — | — | — | 10,595 | 172.70 | 406,212 |
RSUs (5) | 2/19/2018 | — | — | — | — | — | — | 2,352 | — | — | 406,190 |
Performance Cash Units (6) | 2/19/2018 | 0 | 406,250 | 812,500 | — | — | — | — | — | — | — |
João C. Brega | |||||||||||
PEP - Cash (2) | — | 0 | 593,644 | 1,113,083 | — | — | — | — | — | — | — |
PSUs (3) | 2/19/2018 | — | — | — | 0 | 1,226 | 2,452 | — | — | — | 211,730 |
Stock Options (4) | 2/19/2018 | — | — | — | — | — | — | — | 5,523 | 172.70 | 211,752 |
RSUs (5) | 2/19/2018 | — | — | — | — | — | — | 1,226 | — | — | 211,730 |
Performance Cash Units (6) | 2/19/2018 | — | 211,281 | 422,561 | — | — | — | — | — | — | — |
Represents the grant date fair value for the equity awards reported in this table. For the PSUs for each NEO, the amount represents the grant date fair |
(2) | |
Represents estimated possible payouts of short-term incentive awards for |
(3) | |
Represents PSU grants made in |
(4) | |
These stock options were granted as part of the |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 39 |
2019 EXECUTIVE COMPENSATION TABLES | ||||
(5) | |
Represents a special award granted |
(6) | Represents a special award of 6,000 RSUs to Mr. Morel, in connection with the commencement of his employment as Executive Vice President and President, Whirlpool EMEA. The award is intended to partially offset compensation Mr. Morel forfeited upon his departure from his prior employer and will vest in equal installments on May 1, 2021 and May 1, 2022, subject to his continued employment through the applicable vesting date. |
48lNotice of Annual Meeting of Stockholders and 2019 Proxy Statement
The table below lists outstanding equity grants for each NEO as of December 31, 2018.2019. The table includes outstanding equity grants from past years, as well as the current year.
| OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (Exercisable) (#) | Number of Securities Underlying Unexercised Options (Unexercisable) (#) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) | |||||||||||||||||||||||||||
Marc R. Bitzer | ||||||||||||||||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||||||||||||||||
2014 | 32,615 | — | 138.56 | 2/17/2024 | ||||||||||||||||||||||||||||||||
2015 | 22,345 | — | 213.23 | 2/16/2025 | ||||||||||||||||||||||||||||||||
2016 | 39,836 | — | 132.19 | 2/15/2026 | ||||||||||||||||||||||||||||||||
2017 | 31,955 | 15,739 | 177.19 | 2/20/2027 | ||||||||||||||||||||||||||||||||
2018 | 38,798 | 75,312 | 172.70 | 2/19/2028 | ||||||||||||||||||||||||||||||||
2019 | — | 97,202 | 139.36 | 2/18/2029 | ||||||||||||||||||||||||||||||||
PSUs | ||||||||||||||||||||||||||||||||||||
2017 | 10,428 | (3) | 1,538,443 | |||||||||||||||||||||||||||||||||
2018 | 25,332 | (4) | 3,737,230 | |||||||||||||||||||||||||||||||||
2019 | 45,504 | (5) | 6,713,205 | |||||||||||||||||||||||||||||||||
RSUs | 30,348 | (6) | 4,477,240 | |||||||||||||||||||||||||||||||||
James W. Peters |
| |||||||||||||||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||||||||||||||||
2015 | 1,536 | — | 213.23 | 2/16/2025 | ||||||||||||||||||||||||||||||||
2016 | 2,176 | — | 132.19 | 2/15/2026 | ||||||||||||||||||||||||||||||||
2017 | 11,413 | 5,620 | 177.19 | 2/20/2027 | ||||||||||||||||||||||||||||||||
2018 | 7,205 | 13,986 | 172.70 | 2/19/2028 | ||||||||||||||||||||||||||||||||
2019 | — | 21,891 | 139.36 | 2/18/2029 | ||||||||||||||||||||||||||||||||
PSUs | ||||||||||||||||||||||||||||||||||||
2017 | 3,723 | (3) | 549,254 | |||||||||||||||||||||||||||||||||
2018 | 4,704 | (4) | 693,981 | |||||||||||||||||||||||||||||||||
2019 | 10,246 | (5) | 1,511,592 | |||||||||||||||||||||||||||||||||
RSUs | 5,000 | (7) | 737,650 | |||||||||||||||||||||||||||||||||
Joseph T. Liotine |
| |||||||||||||||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||||||||||||||||
2015 | 4,335 | — | 213.23 | 2/16/2025 | ||||||||||||||||||||||||||||||||
2016 | 6,810 | — | 132.19 | 2/15/2026 | ||||||||||||||||||||||||||||||||
2017 | 5,478 | 2,698 | 177.19 | 2/20/2027 | ||||||||||||||||||||||||||||||||
2018 | 3,603 | 6,992 | 172.70 | 2/19/2028 | ||||||||||||||||||||||||||||||||
2019 | — | 24,936 | 139.36 | 2/18/2029 | ||||||||||||||||||||||||||||||||
PSUs | ||||||||||||||||||||||||||||||||||||
2017 | 1,787 | (3) | 263,636 | |||||||||||||||||||||||||||||||||
2018 | 2,352 | (4) | 346,991 | |||||||||||||||||||||||||||||||||
2019 | 11,672 | (5) | 1,721,970 | |||||||||||||||||||||||||||||||||
RSUs | 17,221 | (8) | 2,540,614 |
40 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
OPTION AWARDS | STOCK AWARDS | ||||||||
Name | Number of Securities Underlying Unexercised Options (Exercisable) (#) | Number of Securities Underlying Unexercised Options (Unexercisable) (#) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | 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 ($) (2) |
Marc R. Bitzer | |||||||||
Stock Options | |||||||||
2014 | 32,615 | — | 138.56 | 2/17/2024 | |||||
2015 | 22,345 | — | 213.23 | 2/16/2025 | |||||
2016 | 19,918 | 19,918 | 132.19 | 2/15/2026 | |||||
2017 | 16,216 | 31,478 | 177.19 | 2/20/2027 | |||||
2018 | — | 114,110 | 172.70 | 2/19/2028 | |||||
PSUs | |||||||||
2016 | 10,496(3) | 1,121,708(4) | |||||||
2017 | 11,851(5) | 1,266,516 | |||||||
2018 | 25,332(6) | 2,707,231 | |||||||
RSUs | 29,679(7) | 3,171,795 | |||||||
James W. Peters | |||||||||
Stock Options | |||||||||
2015 | 1,536 | — | 213.23 | 2/16/2025 | |||||
2016 | 1,088 | 1,088 | 132.19 | 2/15/2026 | |||||
2017 | 5,793 | 11,240 | 177.19 | 2/20/2027 | |||||
2018 | — | 21,191 | 172.70 | 2/19/2028 | |||||
PSUs | |||||||||
2016 | 573(3) | 61,237(4) | |||||||
2017 | 4,232(5) | 452,274 | |||||||
2018 | 4,704(6) | 502,716 | |||||||
RSUs | 10,255(8) | 1,095,952 |
2019 EXECUTIVE COMPENSATION TABLES | ||||
OPTION AWARDS | STOCK AWARDS | ||||||||
Name | Number of Securities Underlying Unexercised Options (Exercisable) (#) | Number of Securities Underlying Unexercised Options (Unexercisable) (#) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) |
Jeff M. Fettig | |||||||||
Stock Options | |||||||||
2011 | 137,925 | — | 85.45 | 2/14/2021 | |||||
2012 | 211,332 | — | 71.03 | 2/20/2022 | |||||
2013 | 134,411 | — | 107.57 | 2/20/2023 | |||||
2014 | 111,987 | — | 138.56 | 12/31/2023 | |||||
2015 | 78,740 | — | 213.23 | 12/31/2023 | |||||
2016 | 164,373 | — | 132.19 | 12/31/2023 | |||||
2017 | 121,008 | — | 177.19 | 12/31/2023 | |||||
2018 | — | 82,159 | 172.70 | 12/31/2023 | |||||
PSUs | |||||||||
2016 | 28,583(3) | 3,054,665(4) | |||||||
2017 | 30,069(5) | 3,213,474 | |||||||
2018 | 18,239(6) | 1,949,202 | |||||||
RSUs | — | — | |||||||
Joseph T. Liotine | |||||||||
Stock Options | |||||||||
2015 | 4,335 | — | 213.23 | 2/16/2025 | |||||
2016 | 3,405 | 3,405 | 132.19 | 2/15/2026 | |||||
2017 | 2,780 | 5,396 | 177.19 | 2/20/2027 | |||||
2018 | — | 10,595 | 172.70 | 2/19/2028 | |||||
PSUs | |||||||||
2016 | 1,794(3) | 191,725(4) | |||||||
2017 | 2,031(5) | 217,053 | |||||||
2018 | 2,352(6) | 251,358 | |||||||
RSUs | 19,489(9) | 2,082,789 | |||||||
João C. Brega | |||||||||
Stock Options | |||||||||
2014 | 4,952 | — | 138.56 | 2/17/2024 | |||||
2015 | 3,048 | — | 213.23 | 2/16/2025 | |||||
2016 | 3,261 | 1,605 | 132.19 | 2/15/2026 | |||||
2017 | 1,617 | 3,138 | 177.19 | 2/20/2027 | |||||
2018 | — | 5,523 | 172.70 | 2/19/2028 | |||||
PSUs | |||||||||
2016 | 845(3) | 90,305(4) | |||||||
2017 | 1,181(5) | 126,213 | |||||||
2018 | 1,226(6) | 131,023 | |||||||
RSUs | 17,381(10) | 1,857,507 |
Name | OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (Exercisable) (#) | Number of Securities Underlying Unexercised Options (Unexercisable) (#) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | 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 ($) (2) | ||||||||||||||||||||||||||||
João C. Brega |
| |||||||||||||||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||||||||||||||||
2014 | 4,952 | — | 138.56 | 2/17/2024 | ||||||||||||||||||||||||||||||||
2015 | 3,048 | — | 213.23 | 2/16/2025 | ||||||||||||||||||||||||||||||||
2016 | 4,866 | — | 132.19 | 2/15/2026 | ||||||||||||||||||||||||||||||||
2017 | 3,186 | 1,569 | 177.19 | 2/20/2027 | ||||||||||||||||||||||||||||||||
2018 | 1,879 | 3,644 | 172.70 | 2/19/2028 | ||||||||||||||||||||||||||||||||
2019 | — | 9,869 | 139.36 | 2/18/2029 | ||||||||||||||||||||||||||||||||
PSUs | ||||||||||||||||||||||||||||||||||||
2017 | 1,039 | (3) | 153,284 | |||||||||||||||||||||||||||||||||
2018 | 1,226 | (4) | 180,872 | |||||||||||||||||||||||||||||||||
2019 | 19,619 | (5) | 2,894,391 | |||||||||||||||||||||||||||||||||
RSUs | 16,197 | (9) | 2,389,543 | |||||||||||||||||||||||||||||||||
Gilles Morel | ||||||||||||||||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||||||||||||||||
2019 | — | 6,312 | 134.47 | 4/1/2029 | ||||||||||||||||||||||||||||||||
PSUs | ||||||||||||||||||||||||||||||||||||
2019 | 2,759 | (5) | 407,035 | |||||||||||||||||||||||||||||||||
RSUs | 6,000 | (10) | 885,180 |
(1) | ||
As shown in the table above, Messrs. Bitzer, Peters, Liotine and Brega have three awards with remaining unvested stock options listed in this column. These awards represent grants from |
(2) | |
Represents unvested RSUs or PSUs multiplied by the closing price of our common stock ($ |
(3) | |
Represents earned but unvested |
(4) | |
Represents PSUs granted in 2018, with a performance period of 2018-2020, reported at the target level of performance. Final award determination will be made after the completion of the 2020 performance year. |
(5) | Represents PSUs granted in 2019, with a performance period of 2019-2021, reported at the target level of performance. Final award determination will be made after the completion of the 2021 performance year. For Mr. Brega, please see discussion of special PSUs granted in February 2019 under “Special Recognition and Retention Awards” in the Compensation Discussion and Analysis section. |
For Mr. Bitzer, represents |
(7) | |
For Mr. Peters, represents |
(8) | For Mr. Liotine, represents 17,221 unvested RSUs that will vest and be distributed in shares of common stock as follows: |
ç | 41 |
2019 EXECUTIVE COMPENSATION TABLES |
(9) | For Mr. Brega, represents |
(10) | ||
For Mr. Morel, represents 6,000 unvested RSUs that will vest and be distributed in shares of common stock equally on May 1, 2021 and May 1, 2022, respectively, subject to his continued employment through the applicable vesting date. |
The table below summarizes the value received from stock option exercisesPSUs and RSUs that vested in 2018.
Name | OPTION AWARDS | STOCK AWARDS | |||
Number of Shares Acquired on Exercise (1) (#) | Value Realized on Exercise (2) ($) | Number of Shares Acquired on Vesting (3) (#) | Value Realized on Vesting (4) ($) | ||
Marc R. Bitzer | — | — | 1,736 | 299,807 | |
James W. Peters | — | — | 5,524 | 869,625 | |
Jeff M. Fettig | 300,000 | 25,539,000 | 23,913 | 2,958,362 | |
Joseph T. Liotine | — | — | 7,253 | 1,252,910 | |
João C. Brega | — | — | 2,620 | 452,304 |
Name | OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (1) (#) | Value Realized on Vesting(2) ($) | |||||||||||||||||
Marc R. Bitzer | — | — | 10,496 | 1,462,723 | ||||||||||||||||
James W. Peters | — | — | 5,828 | 815,411 | ||||||||||||||||
Joseph T. Liotine | — | — | 4,062 | 570,067 | ||||||||||||||||
João C. Brega | — | — | 2,029 | 284,976 | ||||||||||||||||
Gilles Morel | — | — | — | — |
(1) |
Reflects vesting of PSU and RSU awards as shown below. |
Name | 2015 PSU Awards | RSU Awards | Total Shares Vested |
Marc R. Bitzer | 1,736 | — | 1,736 |
James W. Peters | 119 | 5,405 | 5,524 |
Jeff M. Fettig | 6,118 | 17,795 | 23,913 |
Joseph T. Liotine | 336 | 6,917 | 7,253 |
João C. Brega | 1,542 | 1,078 | 2,620 |
Name | Payout of 2016-2018 PSU Awards | RSU Awards | Total Shares Vested | ||||||||||||
Marc R. Bitzer | 10,496 | — | 10,496 | ||||||||||||
James W. Peters | 573 | 5,255 | 5,828 | ||||||||||||
Joseph T. Liotine | 1,794 | 2,268 | 4,062 | ||||||||||||
João C. Brega | 845 | 1,184 | 2,029 | ||||||||||||
Gilles Morel | — | — | — |
The dollar value realized represents thepre-tax value received by each NEO upon the vesting of the RSU awards. The value realized is based on the closing stock price of Whirlpool stock on the NYSE on the vesting date. |
42 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
2019 EXECUTIVE COMPENSATION TABLES | ||||
Defined Benefit Plans
Messrs. Fettig, Peters and Liotine accrued benefits under the Whirlpool Employees Pension Plan, and Mr. Fettig accrued benefits under the associated Whirlpool Retirement Benefits Restoration Plan (the "Pension Restoration Plan"), through December 31, 2006, when plan benefits were frozen. (EffectiveEffective January 1, 2018, the Whirlpool Employees Pension Plan and the four other qualified pension plans historically maintained by Whirlpool were consolidated into two new pension plans. Accrued benefits for Messrs. Fettig, Peters and Liotine were transferred to the Whirlpool Tammy Employees Pension Plan ("WTEPP"(“WTEPP”) in conjunction with the plan consolidation.) Messrs. Fettig, Bitzer, Peters and Liotine participate in the Supplemental Executive Retirement Plan ("SERP"(“SERP”). These plans provide a defined benefit upon retirement relative to salary and annual cash incentives earned during the employment period. The table presented in this section describes the estimated actuarial present value of accrued pension benefits through the end of our 20182019 fiscal year for each of the NEOs listed in the table. Mr. Fettig was eligible for retirement benefits as of the last day of our 2018 fiscal year. The number of years of service credited to each NEO equals the NEO'sNEO’s length of eligible service with Whirlpool. Whirlpool currently has a policy that prohibits crediting additional years of service under its pension plans.
What is the WTEPP? | |||||||
WTEPP is a qualified plan that, together with the other consolidated qualified pension plan, provides all eligible employees, which includes most of | |||||||
2% x years of credited service x average base salary | |||||||
In this formula: | |||||||
• | |||||||
• | |||||||
• the maximum number of years of credited service under the plan is 30 years. |
Retirement benefits under WTEPP are limited by the Internal Revenue Code. Benefits can be paid to plan participants in a variety of annuity forms or as a lump sum amount.
After reaching age 55 and completing five years of service with Whirlpool, salaried participants in this plan are eligible for early retirement benefits under the plan. Benefits paid prior to age 65 are reduced. The factors used to determine this reduction vary with the participant'sparticipant’s age. For example, salaried participants whose benefits have vested and who retire from active service at age 55 would have their retirement benefits reduced to 55% of the full retirement benefit payable at age 65.
What is SERP? | |||||||
SERP is anon-qualified plan that provides a benefit based on annual cash incentive compensation, which supplements the benefit calculated on base salary under | |||||||
2% x years of credited service x average of the highest 5 PEP awards earned over the last ten full years of employment | |||||||
In this formula: | |||||||
• | |||||||
• | the maximum number of years of service credited is 30 years. | ||||||
After completing five years of service, our NEOs are eligible for benefits under SERP upon termination of employment for any reason except a termination for cause, provided they have received one or more PEP awards within the last ten calendar years preceding their termination of employment. Participants in this plan generally may select among the same payment distribution options as in the Pension Restoration Plan, as described above.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 43 |
2019 EXECUTIVE COMPENSATION TABLES |
The actuarial present values of benefits under Whirlpool'sour pension plans are calculated in accordance with the following assumptions: (1) discount rate: 2019 of 3.30% and 2018 of 4.30% and 2017 of 3.70%; (2) assumed retirement age: 65; (3) nopre-retirement decrements; and (4) assumed form of payment: lump sum, determined as equal to the present value of the life annuity provided by the plans'plans’ formulas and calculated based on the plans'plans’ provisions, including an interest rate based on high-quality corporate bond yields (assumed to be 4.30%3.30%) and mortality assumption that is based on the Internal Revenue Service prescribed 417(e) mortality rates.
The actuarial increase during our 20182019 fiscal year of the projected retirement benefits can be found in the 20182019 Summary Compensation Table in the "Change“Change in Pension Value andNon-qualified Deferred Compensation Earnings"Earnings” column (all amounts reported under that heading represent actuarial increases in our plans).
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | |||
Marc R. Bitzer | WTEPP | — | — | — | |||
Pension Restoration | — | — | — | ||||
SERP | 10 | 2,324,633 | — | ||||
Total | 2,324,633 | ||||||
James W. Peters | WTEPP | 3 | 47,560 | — | |||
Pension Restoration | — | — | — | ||||
SERP | 15 | 816,735 | — | ||||
Total | 864,295 | ||||||
Jeff M. Fettig | WTEPP | 26 | 1,262,958 | — | |||
Pension Restoration | 26 | 3,961,738 | — | ||||
SERP | 30 | 19,386,214 | — | ||||
Total | 24,610,910 | ||||||
Joseph T. Liotine | WTEPP | 2 | 30,536 | — | |||
Pension Restoration | — | — | — | ||||
SERP | 14 | 654,641 | — | ||||
Total | 685,177 |
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||
Marc R. Bitzer | WTEPP | — | — | — | ||||||||||
SERP | 11 | 3,496,043
| — | |||||||||||
Total | 3,496,043 | |||||||||||||
James W. Peters | WTEPP | 3 | 62,847 | — | ||||||||||
SERP | 16 | 1,283,461
| — | |||||||||||
Total | 1,346,308 | |||||||||||||
Joseph T. Liotine | WTEPP | 2 | 41,529 | — | ||||||||||
SERP | 15 | 1,190,426
| — | |||||||||||
Total | 1,231,955 |
54lNotice of Annual Meeting of Stockholders and 2019 Proxy Statement
The Whirlpool 401(k) Retirement Plan provides a defined contribution retirement benefit qualified under Section 401(k) of the Internal Revenue Code. This plan offers participants apre-tax retirement savings vehicle, plus employer contributions that encourage participant retirement savings, and provide additional assets for employees'employees’ retirement. Most U.S.-based employees of Whirlpool, including the U.S.-based NEOs, are eligible to participate in this plan. This plan provides an automatic employer contribution of 3% of pay. The 401(k) plan provides for an employer match of up to 4% of pay, provided that participants contributed at least 5% of pay on apre-tax basis to the plan, and is subject to contribution and benefit limitations under the Internal Revenue Code.
The following table provides information about thenon-qualified defined contribution deferred compensation plans in which our U.S.-based NEOs participate. Some of ourOur U.S.-based NEOs participate in the Whirlpool Corporation Executive Deferred Savings Plan I ("II (“EDSP I") and/or the Whirlpool Corporation Executive Deferred Savings Plan II ("EDSP II"II”). EDSP I was designed to provide executives with pre-tax deferral opportunities beyond those offered by the Whirlpool 401(k) Retirement Plan. Participants may no longer make deferrals into EDSP I. EDSP II became effective January 1, 2005, to comply with the requirements of Section 409A of the Internal Revenue Code.
EDSP II includes two components: the traditional component is known as EDSP II and the added component is known as the Whirlpool Executive Restoration Plan (the "401(k)“401(k) Restoration Plan"Plan”). The traditional EDSP II is designed to provide executives withpre-tax deferral opportunities beyond those offered by the Whirlpool 401(k) Retirement Plan and the 401(k) Restoration Plan. Eligible executives may elect to contribute up to 75% of their short-term incentive payouts and long-term cash and RSU incentives under this component. For our NEOs, the 401(k) Restoration Plan treatsallows base salary as the only form of compensation eligible for deferral under the plan.
Once an executive'sexecutive’s deferrals under the Whirlpool 401(k) Retirement Plan become limited by one or more Internal Revenue Code limitations, the executive'sexecutive’s elected deferrals will continue at the same rate, with such overage credited to his account under the 401(k) Restoration Plan.
A participant in EDSP II generally may select among the following post-termination distribution options: as a lump sum payable seven months following termination; as a lump sum payable in April following the first anniversary of termination; or asin ten annual installments commencing seven months following termination. EDSP I and EDSP II (including both the traditional component and the 401(k) Restoration Plan component) areis an unfundednon-qualified plans plan that areis secured by our general assets. Amounts deferred are credited to record-keeping accounts for participants, and the record-keeping balances are credited with earnings
44 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
2019 EXECUTIVE COMPENSATION TABLES |
and losses measured by investments generally similar to those selected by executives and available in the Whirlpool 401(k) Retirement Plan. Participants may not make withdrawals during their employment, except in the event of hardship, as approved by the Committee.
Name | Executive Contributions in Last FY (1) ($) | Registrant Contributions in Last FY (2) ($) | Aggregate Earnings in Last FY (3) ($) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE (4) ($) | |||||||
Marc R. Bitzer | ||||||||||||
EDSP II | — | — | — | — | — | |||||||
401(k) Restoration | 37,479 | 69,942 | 109,635 | — | 1,149,360 | |||||||
Total | 37,479 | 69,942 | 109,635 | — | 1,149,360 | |||||||
James W. Peters | ||||||||||||
EDSP II | 8,108 | — | 24,670 | — | 95,565 | |||||||
401(k) Restoration | 8,750 | 27,650 | 20,548 | — | 173,887 | |||||||
Total | 16,858 | 27,650 | 45,218 | — | 269,452 | |||||||
Joseph T. Liotine | ||||||||||||
EDSP II | 76,841 | — | 133,292 | — | 507,644 | |||||||
401(k) Restoration | 16,208 | 29,692 | 12,655 | — | 457,074 | |||||||
Total | 93,049 | 29,692 | 145,947 | — | 964,718 |
(1) | ||
Name | Executive Contributions in Last FY (1) ($) | Registrant Contributions in Last FY (2) ($) | Aggregate Earnings in Last FY (3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE (4) ($) |
Marc R. Bitzer | |||||
EDSP I | — | — | — | — | — |
EDSP II | — | — | — | — | — |
401(k) Restoration | 38,000 | 68,250 | (30,186) | — | 932,305 |
Total | 38,000 | 68,250 | (30,186) | — | 932,305 |
James W. Peters | |||||
EDSP I | — | — | — | — | — |
EDSP II | 16,184 | — | (27,653) | — | 62,717 |
401(k) Restoration | 13,583 | 25,667 | (6,971) | — | 116,939 |
Total | 29,767 | 25,667 | (34,624) | — | 179,656 |
Jeff M. Fettig | |||||
EDSP I | — | — | (1,097,078) | — | 3,033,915 |
EDSP II | — | — | (7,067,198) | — | 13,452,483 |
401(k) Restoration | 28,000 | 54,250 | (288,965) | — | 2,291,310 |
Total | 28,000 | 54,250 | (8,453,241) | — | 18,777,708 |
Joseph T. Liotine | |||||
EDSP I | — | — | — | — | — |
EDSP II | 79,738 | — | (158,185) | — | 297,512 |
401(k) Restoration | — | 11,000 | (12,163) | — | 398,519 |
Total | 79,738 | 11,000 | (170,348) | — | 696,031 |
The amount of the contributions made by each NEO, as reported above, is also included in each |
(2) | |
Represents the amount of the contributions made by Whirlpool to each NEO under the 401(k) Restoration Plan. These amounts are also reflected in the |
(3) | |
The aggregate earnings (and losses) are not reported in the |
(4) | |
The aggregate balance at December 31, |
This section describes compensation and benefits payable to each of our NEOs in each of the following circumstances: involuntary termination by Whirlpool for cause; involuntary termination by Whirlpool without cause; resignation; retirement; death; disability; and change in control (with a qualifying termination). The amounts shown in the narrative disclosure and tables below assume that termination of employment or a change in control occurred as of December 31, 2018,2019, and estimate certain amounts which would be paid to our NEOs upon the specified event. The amounts shown in the narrative disclosure and tables below are calculated using the December 31, 20182019 closing stock price of $106.87.$147.53. Due to the number of factors that affect the nature and amounts of compensation and benefits provided upon the events discussed below, the actual amounts paid or distributed may be different from the amounts reported below. Factors that could greatly affect these amounts include the timing during the year of any such event, Whirlpool'sour stock price, and the NEO'sNEO’s age.
The following narrative disclosure and tables describe and quantify the compensation and benefits that are paid in addition to compensation and benefits generally available to salaried employees. Examples of compensation and benefits generally available to salaried employees, and thus not included, are distributions under the Whirlpool 401(k) Retirement Plan andnon-U.S. savings plans, amounts payable under the U.S. salaried employee severance plan and, in certain circumstances, vested equity.
Also, information previously disclosed under the "2018“2019 Pension Benefits"Benefits” and "2018 “2019Non-Qualified Deferred Compensation"Compensation” tables is not repeated, except to the extent that the amounts payable to the NEO would be enhanced by the termination event described.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 45 |
2019 EXECUTIVE COMPENSATION TABLES |
Involuntary Terminations and Resignation
Generally, we provide no additional benefits to any of our NEOs in the event that the NEO resigns from Whirlpool. We do not have employment agreements with any of our U.S.-based NEOs that would provide benefits inWhirlpool, or if Whirlpool terminates the event that we terminate the NEO'sNEO’s employment involuntarily for cause.
As is customary for executives in Brazil, Mr. Brega would be entitled to a special severance payment equal to 12 months of salary in case of termination by Whirlpool decision or his retirement, under the terms of his employment contract.
Under our long-term incentive programs, resignation and involuntary termination generally result in forfeiture of unvested PSUs, PCUs, RSUs other(other than certain legacy awards, as well as allawards), and unvested options. Vested but unexercised options must be exercised within 30 days of termination. Certain legacy RSUs accelerate upon an involuntary termination without cause. Generally, in the event that we terminate the employment of an NEO involuntarily without cause, the payment of the value of these unvested RSUs is the only benefit to which the NEO is entitled. Mr. Bitzer is the only NEO with these legacy awards, which had a value of $2,103,095$3,001,940 as of December 31, 2018.
The Committee may, in its discretion, approve severance benefits designed to mitigate economic injury to the NEO as a direct result of involuntary termination.
Retirement
As of the last day of our 20182019 fiscal year, Mr. Fettig and Mr. Brega werewas retirement eligible under the terms of our incentive plans. Mr. Fettig retired from Whirlpool effective December 31, 2018, and there are no potential payment amounts listed under Death and Disability and Change in Control. If anon-retirement eligible NEO chose to "retire"“retire” as of the last day of our 20182019 fiscal year, the effect of that "retirement"“retirement” would be the same as if the NEO had resigned, as described above.
A retirement-eligible NEO may be entitled to certain incentive awards upon separation from service.
With respect to PSUs and PCU awards, provided that the objective performance goal is met, a retirement-eligible NEO who retires during the performance period may receive a prorated portion of the award. The ratio used to determine the portion of the award to be received is the number of months worked by the NEO during the performance period over either 12 months or 36 months, depending on when the NEO became eligible to participate in the long-term incentive plan. Therefore, certain NEOs will receive a full award if they complete at least 12 months of service during the performance period. In either case, the amount of the award received is based on actual performance as determined by the Committee following completion of the performance period. The final amount of the 2017 - 2019 and 2018 - 2020 PSU and PCU awards, and the 2019 - 2021 PSU awards, which are earned upon retirement will be determined by the Committee following the end of the applicable performance period.
Notice of Annual Meeting of Stockholders and 2019 Proxy Statement l 57
In the event of death or disability, a NEO may receive a short-term incentive award at the discretion of the Committee, provided that the award shall be based on the actual amount the NEO would have received if the performance period had been completed.
Upon the death or disability of one of our NEOs, PSU and PCU awards granted in 2016, 2017 and 2018, and PSU awards granted in 2019 would be prorated based on the NEO'sNEO’s period of service during each applicable performance period. The amount of the award received is based on actual performance as determined by the Committee following the completion of each applicable performance period. RSUs vest in the event of death or disability prior to the applicable vesting date.
The vesting of stock options accelerates upon death or disability. In the event of disability, stock options must be exercised by the earlier ofwithin three years from the date of termination due to disability or the original expiration date.date, whichever is earlier. In the event of death, stock option awards provide for exercise of options by the earlier of the third anniversary of death or the expiration date. Options which are not exercised within the applicable period are canceled. In no event may an option be exercised within one year of the grant date.
46 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
2019 EXECUTIVE COMPENSATION TABLES |
The following table shows the possible payouts to each of our NEOs for the specified type of employment termination. The designated beneficiaries of our NEOs would receive the same life insurance benefits generally available to all salaried employees.
Employment Termination Type | Severance and Separation Payments ($) | Annual Incentives ($) | Performance Cash (1) ($) | Performance RSUs (1) ($) | Stock Options (2) ($) | RSUs ($) | Total ($) |
Retirement | |||||||
Marc R. Bitzer | — | — | — | — | — | — | — |
James W. Peters | — | — | — | — | — | — | — |
Jeff M. Fettig | — | 1,146,600 | — | 8,217,341 | — | — | 9,363,941 |
Joseph T. Liotine | — | — | — | — | — | — | — |
João C. Brega | 598,429 | 463,042 | 530,576 | 347,541 | — | 1,857,507 | 3,797,095 |
Death & Disability | |||||||
Marc R. Bitzer | — | 1,462,500 | — | 2,868,391 | — | 3,171,795 | 7,502,686 |
James W. Peters | — | 446,405 | 75,850 | 530,289 | — | 1,095,952 | 2,148,496 |
Jeff M. Fettig | — | — | — | — | — | — | — |
Joseph T. Liotine | — | 625,625 | 612,679 | 420,106 | — | 2,082,789 | 3,741,199 |
João C. Brega | 598,429 | 463,042 | 323,603 | 218,015 | — | 1,857,507 | 3,460,596 |
Employment Termination Type
Retirement | Severance and Separation Payments ($) | Annual Incentives ($) | Performance Cash (1) ($) | PSUs (1) ($) | Stock Options (2) ($) | RSUs ($) | Total ($) | |||||||||||||||||||||
Marc R. Bitzer | — | — | — | — | — | — | — | |||||||||||||||||||||
James W. Peters | — | — | — | — | — | — | — | |||||||||||||||||||||
Joseph T. Liotine | — | — | — | — | — | — | — | |||||||||||||||||||||
João C. Brega | 670,892 | 830,629 | 318,078 | 1,015,638 | 80,630 | 176,593 | 3,092,460 | |||||||||||||||||||||
Gilles Morel | — | — | — | — | — | — | — | |||||||||||||||||||||
Death & Disability | ||||||||||||||||||||||||||||
Marc R. Bitzer | — | 2,302,500 | — | 11,989,008 | 794,140 | 3,540,720 | 18,626,368 | |||||||||||||||||||||
James W. Peters | — | 729,000 | — | 1,515,944 | 178,849 | — | 2,423,793 | |||||||||||||||||||||
Joseph T. Liotine | — | 845,000 | 587,633 | 1,068,995 | 203,727 | 253,604 | 2,958,959 | |||||||||||||||||||||
João C. Brega | 670,892 | 830,629 | 318,078 | 1,015,638 | 80,630 | 176,593 | 3,092,460 | |||||||||||||||||||||
Gilles Morel | — | 535,414 | — | 135,678 | 82,435 | 885,180 | 1,638,707 |
(1) | |
These amounts assume that the |
(2) | |
The amounts do not include |
58lNotice of Annual Meeting of Stockholders and 2019 Proxy Statement
In the event of a qualifying termination following a change in control as described more fully below, our NEOs may receive accelerated vesting and payout of previously unvested PCUs, PSUs, stock options, and RSUs under the terms of those awards. In the event a successor corporation does not assume or provide a substitute for unvested equity awards, vesting of those awards may accelerate and become exercisable. Certain legacy RSU awards with extended vesting periods would accelerate and be paid out upon a change in control. Mr. Bitzer is the only NEO with these legacy awards, which had a value of $2,103,095$3,001,940 as of December 31, 2018.
As provided in the following table, additional equity awards become payable only upon a qualifying termination following a change in control. In addition, we have change in control agreements with the NEOs. A "change“change in control"control”, in accordance with these agreements, is generally defined to include: the acquisition by any person or group of 30% or more of Whirlpool'sWhirlpool voting securities; a change in the composition of the Board such that the existing Board or persons who were approved by a majority of directors or their successors on the existing Board no longer constitute a majority; and consummation of a merger or consolidation of Whirlpool. These agreements contain a "best net"“best net” approach to address the potential for any excise tax to be imposed for payments and benefits that would constitute an "excess“excess parachute payment"payment” under Section 4999 of the Internal Revenue Code. Under this provision, we will not provide agross-up payment and will instead reduce payments to the NEO such that the aggregate amount equals the maximum amount that can be paid without triggering the imposition of the excise tax, if the net amount received by the NEO on anafter-tax basis would be greater than it would be absent such a reduction.
Under these agreements, benefits are payable to our NEOs after a change in control, but only after a qualifying termination occurs. Qualifying terminations include: involuntary termination of the NEO by Whirlpool; voluntary termination by the NEO for good reason, as defined in the agreement; or a material breach of the change in control agreement by Whirlpool.
Cash severance resulting from these change in control agreements is paid out in a lump sum payment equal to the NEO'sNEO’s unpaid base salary; unreimbursed business expenses; and all other items earned by and owed to the NEO through and including the date of the termination.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 47 |
2019 EXECUTIVE COMPENSATION TABLES |
These agreements also provide for the lump sum cash payment of:
for Mr. Bitzer, the greater of three times the NEO'sNEO’s annual base salary on the date of the termination or the NEO'sNEO’s annual base salary at any time during the 12 months prior to the change in control; for Messrs. Peters, Liotine, Brega, and Brega,Morel, the greater of two times the NEO'sNEO’s annual base salary on the date of the termination or the NEO'sNEO’s annual base salary at any time during the 12 months prior to the change in control;
for Mr. Bitzer, the greater of three times the current target bonus under PEP or the NEO'sNEO’s highest target bonus at any time during the 12 months prior to the change in control; for Messrs. Peters, Liotine, Brega, and Brega,Morel, the greater of two times the current target bonus under PEP or the NEO'sNEO’s highest target bonus at any time during the 12 months prior to the change in control; and
the greater of the NEO'sNEO’s pro rata target bonus under PEP or the highest target bonus opportunity at any time during the 12 months prior to the change in control, or the actual bonus earned through the date of the termination under PEP based on the NEO'sNEO’s current level of goal achievement.
Our NEOs are also entitled to receive continued health and life insurance benefits for 18 months in connection with a qualifying termination after a change in control. The severance benefits provided include an amount, payable at the same time and in the same form as if paid from thenon-qualified defined benefit pension plans, equal to the additional benefits that the NEO would be entitled under ournon-qualified defined benefit pension plans if the NEO'sNEO’s benefits had fully vested.
The continuation of the NEO'sNEO’s benefits will be calculated at the same cost and at the same level of coverage as in effect on the date of termination.
The amount of cash severance and benefits will be offset by any other severance-type payments the NEO may be eligible or entitled to receive from any other sources. The following table shows possible payouts to our NEOs as of December 31, 2018,2019, triggered upon the occurrence of a change in control and a subsequent qualifying termination.
CHANGE IN CONTROL WITH QUALIFYING TERMINATION | ||||||||
Name | Severance Payments ($) | Annual Incentive ($) | Performance Cash ($) | Performance RSUs ($) | Stock Option ($) | RSUs ($) | Health, Welfare and Other Benefits ($) | Total ($) |
Marc R. Bitzer | 9,375,000 | 1,875,000 | — | 5,095,455 | — | 3,171,795 | 23,579 | 19,540,829 |
James W. Peters | 2,470,000 | 572,314 | 75,850 | 1,016,227 | — | 1,095,952 | 20,578 | 5,250,921 |
Jeff M. Fettig (1) | — | — | — | — | — | — | — | — |
Joseph T. Liotine | 2,600,000 | 641,667 | 1,003,513 | 660,136 | — | 2,082,789 | 22,106 | 7,010,211 |
João C. Brega | 2,393,716 | 593,644 | 530,576 | 347,541 | — | 1,857,507 | 83,203 | 5,806,187 |
Name | CHANGE IN CONTROL WITH QUALIFYING TERMINATION | |||||||||||||||||||||||||||||||
Severance Payments ($) | Annual Incentive ($) | Performance Cash Units ($) | PSUs ($) | Stock Options ($) | RSUs ($) | Health, Welfare and Other Benefits ($) | Total ($) | |||||||||||||||||||||||||
Marc R. Bitzer | 9,637,500 | 1,927,500 | — | 11,989,008 | 794,140 | 3,540,720 | 39,409 | 27,928,277 | ||||||||||||||||||||||||
James W. Peters | 2,584,000 | 612,000 | — | 2,754,999 | 178,849 | — | 36,428 | 6,166,276 | ||||||||||||||||||||||||
Joseph T. Liotine | 2,860,000 | 715,000 | 587,633 | 2,332,638 | 203,727 | 253,604 | 36,130 | 6,988,732 | ||||||||||||||||||||||||
João C. Brega | 2,555,781 | 638,945 | 318,078 | 3,228,588 | 80,630 | 176,593 | 70,389 | 7,069,004 | ||||||||||||||||||||||||
Gilles Morel | 2,589,586 | 594,905 | — | 407,035 | 82,435 | 885,180 | — | 4,559,141 |
ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
PAY RATIO DISCLOSURE | ||||
We are providing the following disclosure aboutdisclosing the relationship of the annual total compensation of our employees to the annual total compensation of Marc Bitzer, our Chairman and CEO.
The median of the annual total compensation of all of our employees, other than Mr. Bitzer, was $20,485.$20,765.
Mr. Bitzer'sBitzer’s annual total compensation was $11,847,762.$14,011,663. This amount is the same amount as reported in the Total column of the 20182019 Summary Compensation Table, except that this amount includes the company-paid portion of health insurance premiums, which are normally excluded for Summary Compensation Table purposes. Note that Mr. Bitzer's 2018 compensation includes a full year in his role as CEO, while his 2017 compensation reflected a partial year as President and COO, and a partial year as President and CEO.
Based on this information, the ratio of the annual total compensation of Mr. Bitzer to the median of the annual total compensation of all employees is estimated to be 578675 to 1.
Identification of Median Employee
The median employee used for purposes of disclosing our 20172018 pay ratio was located in Brazil. Due to the significant devaluation of Brazilian currency since the identificationMexico and was an employee of our 2017Embraco subsidiary. We completed the divestiture of our Embraco subsidiary in July 2019, and the median employee and corresponding changes to our median employee's compensation and employment circumstances, and as permitted under the SEC executive compensation disclosure rules, we have concluded that it iswas no longer appropriate to use the originally-identified 2017 median employee as we believe using such employee would not accurately reflect our median pay and would reduce the comparability of compensation year over year. As permitted under the SEC executive compensation disclosure rules, we are electing to use another employee, whose 2017 compensation was substantially similar to the original median employee’s 2017 compensation based on the same compensation measure used to select the original median employee. Since October 1, 2017 (the date used to select the 2017 median employee), there have been no changes in the Company’s employee population or employee compensation arrangementsemployed by Whirlpool at that we believe would significantly impact the pay ratio disclosure.
As of OctoberNovember 1, 2017,2019, we had 93,44777,755 employees, with 21,46220,430 employees based in the United States and 71,98557,325 employees located outside of the United States. The pay ratio disclosure rules provide an exemption for companies to excludenon-U.S. employees from the median employee calculation ifnon-U.S. employees in a particular jurisdiction account for five percent (5%) or less of the company'scompany’s total number of employees. Whirlpool applied this
To identify the median employee from our employee population base, we considered base salary and base wages, as compiled from our payroll records. We selected base salary and base wages assince base pay represents the principal form of compensation delivered to all of our employees, and this information is readily available in each country. In addition, we measured compensation for purposes of determining the median employee using theyear-to-date period ended September 30, 2017.October 31, 2019. Compensation paid in foreign currencies was converted to U.S. dollars based on exchange rates in effect on September 30, 2017.
Using this methodology, we determined that our median employee was a full-time, hourly employee located in Mexico. In determining the annual total compensation of the median employee, such employee'semployee’s compensation was calculated in accordance with Item 402(c)(2)(x) of RegulationS-K, as required pursuant to the SEC executive compensation disclosure rules, except that we elected to include the company-paid portion of health insurance premiums, which are normally excluded from the calculation of total compensation for purposes of the Summary Compensation Table. We converted such compensation to U.S. dollars according to exchange rates on December 31, 2018.2019. SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 49 |
The Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934 enable our stockholders to vote to approve, on an advisory(non-binding) basis, the compensation of our Named Executive Officers ("NEOs")NEOs as disclosed in this proxy statement.
As discussed in detail above under the heading "Compensation“Compensation Discussion and Analysis,"” we are dedicated to global leadership and tofocused on delivering superior stockholder value. To achieve our objectives, we employ apay-for-performance philosophy based on the following guiding principles:
Compensation should be incentive-driven with both a short-term and long-term focus;
A significant portion of pay should be performance-based, with the proportion varying in direct relation to an executive'sexecutive’s level of responsibility;
Components of compensation should be linked to the drivers of stockholder value over the long-term; and
Components of compensation should be tied to an evaluation of business results and individual performance.
In support of ourpay-for-performance philosophy, performance-based compensation in the form of short-term and long-term incentives constituted 90% of 20182019 total target compensation for our CEO and an average75% of 82% of 20182019 total target compensation for our other NEOs.
Our policies and provisions that are intended to support best practices in executive compensation include, among others:
No "golden parachute"“golden parachute” excise tax gross-ups and adoptiongross-ups;
Adoption of double-trigger change in control equity vesting;
Insider Trading Policy provisions prohibiting hedging by any employee or director and pledging or trading on margin for executive officers and directors;
Adoption of significantrobust stock ownership guideline levelsguidelines to reinforce the link between the interests of our NEOs (7x salary for our CEO) and those of stockholders;
Claw-back provisions in both our short-term and long-term incentive plans under which the repayment of awards may be required in certain circumstances; and
Decision-making by a fully independent compensation committee advised by an independent compensation consultant, FW Cook.
For the reasons discussed above, we are asking our stockholders to indicate their support for our NEO compensation as described in this proxy statement by voting "FOR"“FOR” the following resolution. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies, and practices described in this proxy statement.
RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in Whirlpool Corporation'sCorporation’s Proxy Statement for the 20192020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission,SEC, including the Compensation Discussion and Analysis, the 20182019 Summary Compensation Table, and the other related tables and disclosure.
This vote is advisory, and therefore not binding on Whirlpool, the Board, or the Human Resources Committee. The Board and the Human Resources Committee value the opinions of Whirlpool'sour stockholders and, to the extent there is any significant vote against the NEO compensation as disclosed in this proxy statement, we will consider such stockholders'stockholders’ concerns and the Human Resources Committee will evaluate whether any actions are necessary to address those concerns.
The Board of Directors recommends a voteFOR Item 2 for the approval of the compensation of |
50 | ç | Notice of Annual Meeting of Stockholders and |
EQUITY COMPENSATION PLAN INFORMATION | ||||
The following table presents information as of December 31, 2018,2019, with respect to Whirlpool'sWhirlpool Corporation compensation plans under which equity securities are authorized for issuance.
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (1) | |||
Equity compensation plans approved by security holders | 3,025,559 (2) | 144.23 (3) | 6,741,688 | |||
Equity compensation plans not approved by security holders | — | — | — | |||
Total | 3,025,559 | 144.23 | 6,741,688 |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (1) | |||||||||
Equity compensation plans approved by security holders | 3,200,385 | (2) | 144.34 | (3) | 6,182,260 | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 3,200,385 | 144.34 | 6,182,260 |
(1) | |
Excluding securities in the |
(2) | |
This amount includes |
(3) | |
The weighted-average exercise price information does not include any outstanding RSUs. |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 51 |
MATTERS RELATING TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
Fees
In the years indicated, Ernst & Young LLP billed Whirlpool the following fees (in millions):
Year ended December 31, | ||
2018 | 2017 | |
Audit Fees | $14 | $13 |
Audit-Related Fees | $2 | $1 |
Tax Fees | $6 | $7 |
All Other Fees | $1 | — |
Total | $23 | $21 |
Year ended December 31, | ||||||||||
2018 | 2019 | |||||||||
Audit Fees | $14 | $13 | ||||||||
Audit-Related Fees | $ 2 | $ 1 | ||||||||
Tax Fees | $ 6 | $ 6 | ||||||||
All Other Fees | $ 1 | — | ||||||||
Total | $23 | $20 |
Audit-related fees are principally comprised of fees for services provided in connection with employee benefit plan audits, audit services not required by statute or regulation, agreed-upon procedures required to comply with financial accounting or regulatory reporting matters, due diligence in connection with divestitures,carve-out audits associated with divestitures and other attest services. Tax fees are principally comprised of fees for services provided in connection with worldwide tax planning and compliance services, and assistance with tax audits and appeals. All otherApproximately $3.4 million of tax fees are principally comprised of feeswere related to divestiture advisory services.
Pre-Approval Policy for Independent Registered Public Accounting Firm Services
Pursuant to its written charter, the Audit Committee, or a subcommittee thereof, is responsible for approving in advance all audit and permittednon-audit services the independent registered public accounting firm performs for us. In recognition of this responsibility, the Audit Committee has established a policy to approve in advance all audit and permittednon-audit services the independent registered public accounting firm provides. Prior to engagement of the independent registered public accounting firm for the next year'syear’s audit, management submits to the Audit Committee a request for approval of services expected to be rendered during that year. This request outlines each of the four categories listed above, and the Audit Committee approves these services by category. The fees are budgeted and the Audit Committee requires the independent registered public accounting firm and management to report actual fees in comparison to the budget at least once per year (additionally if fees exceedpre-approved amounts) by category of service. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original advance approval. In those instances, the Audit Committee requires specific approval in advance before engaging the independent registered public accounting firm. The Audit Committee may delegate authority to make advance approval to one or more of its members. The member or members to whom such authority is delegated must report, for information purposes only, any such approval decisions to the Audit Committee at its next scheduled meeting. A copy of the Audit CommitteePre-Approval Policy appears on Whirlpool'sour website: www.whirlpoolcorp.com/policies.policies.
52 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
AUDIT COMMITTEE REPORT | ||||
The Audit Committee provides independent oversight of Whirlpool'sWhirlpool’s accounting functions and monitors the objectivity of the financial statements prepared under the direction of Whirlpool'sWhirlpool’s management. In addition, the Audit Committee retains our independent registered public accounting firm, reviews major accounting policy changes by Whirlpool, reviews and approves the scope of the annual internal and independent audit processes, reviews and monitors our assessment of internal controls, approves in advance audit and permittednon-audit services provided by the independent registered public accounting firm, approves all fees paid to the independent registered public accounting firm, and monitors our activities designed to assure compliance with legal and regulatory requirements as well as Whirlpool'sWhirlpool’s ethical standards. The Audit Committee is composed of directors who have been determined by the Board to be "independent"“independent” and "financially literate"“financially literate” pursuant to the NYSE listing requirements. The Audit Committee operates under a written charter adopted by our Board.
The Audit Committee has reviewed our audited consolidated financial statements for 20182019 with management, and management has represented to the Audit Committee that these financial statements were prepared in accordance with accounting principles generally accepted in the United States. The Audit Committee discussed with management the quality and the sufficiency of the accounting principles employed, including all critical accounting policies used in the preparation of the financial statements and related notes, the reasonableness of judgments made, and the clarity of the disclosures included in the statements.
The Audit Committee also reviewed our consolidated financial statements for 20182019 with Ernst & Young LLP ("EY"(“EY”), our independent registered public accounting firm for 2018,2019, which is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States. Further, the Audit Committee reviewed with EY its judgment as to the quality, not just the acceptability, of Whirlpool'sWhirlpool’s accounting principles. In addition, the Audit Committee met with EY, with and without management present, to discuss the results of its examinations, its evaluations of our internal controls, and the overall quality of our financial reporting. The Audit Committee met eight times during the fiscal year ended December 31, 2018.
The Audit Committee has received the written disclosures and the Rule 3526 letter from EY required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm'sfirm’s communications with the Audit Committee concerning independence, as modified or supplemented, and has discussed with EY its independence. The Audit Committee considered the compatibility ofnon-audit services EY provided to us with EY'sEY’s independence. Finally, the Audit Committee discussed with EY the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301,
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, the inclusion of the consolidated financial statements in the Annual Report on Form10-K for the year ended December 31, 2018,2019, for filing with the Securities and Exchange Commission.SEC. The Audit Committee has selected EY as our independent registered public accounting firm for 2019.
AUDIT COMMITTEE | ||
Michael D. White, Chair | Gerri T. Elliott | |
Michael F. Johnston | James M. Loree | |
John D. Liu | Gary T. DiCamillo |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 53 |
Item 3 – Ratification of the Appointment of Ernst & Young LLP as Whirlpool'sWhirlpool Corporation’s Independent Registered Public Accounting Firm
RESOLVED, that the appointment of Ernst & Young LLP to audit the Consolidated Financial Statements and related internal control over financial reporting of Whirlpool Corporation and its subsidiaries for fiscal 2019,2020, made by the Audit Committee with the concurrence of the Board, is hereby ratified.
The Audit Committee has appointed and the Board is asking shareholders to ratify the selection of Ernst & Young LLP (“EY”) to audit and report on the Consolidated Financial Statements and related internal control over financial reporting of Whirlpool Corporation and its subsidiaries for fiscal 2020. The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent auditor, and is involved in the selection of the firm'sfirm’s lead engagement partner. The Audit Committee has appointed, andwas engaged in the Board has concurred subject to stockholder ratification, Ernst & Young LLP ("EY") to audit and report on the Consolidated Financial Statements and related internal control over financial reportingselection of Whirlpool and its subsidiariesa new lead engagement partner for fiscal 2019. 2020.
EY served as Whirlpool'sWhirlpool Corporation’s independent registered public accounting firm for fiscal 2018,2019, and EY has served as Whirlpool'sWhirlpool Corporation’s independent registered public accounting firm since 1927. The members of the Audit Committee believe that the continued retention of EY to serve as Whirlpool'sour independent registered public accounting firm is in the best interests of Whirlpool Corporation and its stockholders.
Before making its determination on appointment, the Audit Committee carefully considers the qualifications and competence of the independent registered public accounting firm. For the selection of EY, this evaluation has included a review of its performance in prior years, its independence and processes for maintaining independence, the results of the most recent internal quality control review or Public Company Accounting Oversight Board inspection, the key members of the audit engagement team, the firm'sfirm’s approach to resolving significant accounting and auditing matters including consultation with the firm'sfirm’s national office, as well as its reputation for integrity and competence in the fields of accounting and auditing.
Representatives of EY will attend the annual meeting of stockholders and may make a statement if they wish. They will be available to answer appropriate questions at the annual meeting. To pass, this proposal requires the affirmative vote of a majority of the outstanding common stock present in person or by proxy at the annual meeting and entitled to vote. In the event that the selection of EY is not ratified by the stockholders, the Audit Committee will take that event into account in connection with any future decisions as to the selection of a firm to serve as Whirlpool'sWhirlpool Corporation’s independent registered public accounting firm, although by law the Audit Committee has final authority over the determination of whether to retain EY or another firm at any time.
The Board of Directors recommends that stockholders voteFOR Item 3, which ratifies the selection of Ernst & Young LLP as the independent registered public accounting firm for Whirlpool and its subsidiaries for fiscal |
54 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
Information about the Annual Meeting and Voting
Why am I receiving these materials?
You received these proxy materials because our Board is soliciting your proxy to vote your shares at our annual meeting of stockholders. By giving your proxy, you authorize persons selected by the Board to vote your shares at the annual meeting in the way that you instruct. All shares represented by valid proxies received before the annual meeting will be voted in accordance with the stockholder’s specific voting instructions.
Why did I receive a Notice Regarding the Availability of Proxy Materials?
As permitted by SEC rules, we are making this proxy statement and our annual report (the “Proxy Materials”) available to our stockholders electronically via the Internet. On or about March 11, 2020, we intend to mail to our stockholders a notice containing instructions on how to access the Proxy Materials and how to vote their shares online. If you receive a Notice Regarding the Availability of Proxy Materials (a “Notice”) by mail, you will not receive a printed copy of the Proxy Materials in the mail unless you specifically request them. Instead, the Notice provides instructions on how to review the Proxy Materials and submit your voting instructions over the Internet. If you receive a Notice by mail and would like to receive a printed copy of our Proxy Materials, you should follow the instructions contained in the Notice for requesting such materials.
What is “householding” and how does it affect me?
The SEC’s rules permit us to deliver a single Notice or set of Proxy Materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one Notice or set of Proxy Materials to multiple stockholders who share an address, unless we received contrary instructions prior to the mailing date. If you prefer to receive separate copies of the Notice or Proxy Materials, contact Broadridge Financial Solutions, Inc. at (866)540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY, 11717, and we will deliver a separate copy promptly. If you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future Notices or Proxy Materials for your household, please contact Broadridge at the above phone number or address.
What does it mean if I receive more than one Notice, proxy card, or instruction form?
This means that your shares are registered differently and are held in more than one account. To ensure that all shares are voted, please vote each account over the Internet or by telephone, or sign and return by mail all proxy cards and instruction forms. We encourage you to have all your accounts registered in the same name and address by contacting our transfer agent, Computershare Trust Company, N.A., Shareholder Services, at (877)453-1504; TDD/TTY for hearing impaired at (800)952-9245 or in writing at P.O. Box 505000, Louisville, KY, 40233-5000. If you hold your shares through a bank or broker, you can contact your bank or broker to request consolidation.
Who can vote on matters presented at the annual meeting?
Stockholders of record of Whirlpool common stock as of the record date, February 24, 2020, are entitled to vote on matters presented at the annual meeting. Each of the approximately 62,677,753 shares of Whirlpool common stock issued and outstanding as of that date is entitled to one vote.
What is the difference between holding stock as a stockholder of record and as a beneficial owner?
If your shares are registered in your name with Whirlpool Corporation’s transfer agent, Computershare Trust Company, N.A., you are the “stockholder of record” of those shares. If your shares are held in a stock brokerage account, bank, or other holder of record, you are considered the “beneficial owner” of those shares. As the beneficial owner, you have the right to direct your broker, bank, or other holder of record how to vote your shares by using the voting instruction card or by following their instructions for voting by telephone or on the Internet.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 55 |
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING |
How do I vote my shares?
You may attend the annual meeting and vote your shares in person if you are a record holder. If you are a beneficial owner, you may obtain a legal proxy from your broker, bank, or other holder of record, attend the annual meeting, and vote your shares in person. You may vote without attending the annual meetingby granting a proxy for shares of which you are the stockholder of record, or by submitting voting instructions to your broker or nominee for shares that you hold beneficially in street name. In most cases, you will be able to do this by Internet or telephone, or by mail if you received a printed set of Proxy Materials.
• | By Internet- If you have Internet access, you may submit your proxy by following the instructions provided in the Notice, or if you received a printed set of Proxy Materials by mail, by following the instructions provided with your Proxy Materials and on your proxy card or voting instruction card. |
• | By Telephone-If you have Internet access, you may obtain instructions on voting by telephone by following the Internet access instructions provided in the Notice. If you received a printed set of Proxy Materials, your proxy card or voting instruction card will provide instructions to vote by telephone. |
• | By Mail - If you received a printed set of Proxy Materials, you may submit your proxy by mail by signing your proxy card if your shares are registered in your name or by following the voting instructions provided by your broker, nominee, or trustee for shares held beneficially in street name, and mailing it in the enclosed envelope. |
A Notice cannot be used to vote your shares. The Notice does, however, provide instructions on how to vote by Internet, or by requesting and returning a paper proxy card or voting instruction card.
What if I submit my proxy or voting instructions, but do not specify how I want my shares to be voted?
If you are a stockholder of record and you do not specify how you want to vote your shares on your signed proxy card or by Internet or telephone, then the proxy holders will vote your shares in the manner recommended by the Board for all matters presented in this proxy statement and as they determine in their discretion with respect to other matters presented for a vote at the annual meeting. If you are a beneficial owner and you do not give specific voting instructions, the institution that holds your shares may generally vote your shares on routine matters, but may not vote your shares onnon-routine matters. If you do not give specific voting instructions to the institution that holds your shares with respect to anon-routine matter, the institution will inform the inspector of election that it does not have authority to vote on this matter with respect to your shares. This is called a brokernon-vote. The only routine matter included in this proxy statement is the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2020.
What if other business comes up at the annual meeting?
If any nominee named herein for election as a director is not available to serve, the accompanying proxy will be voted in favor of the remainder of those nominated and may be voted for a substitute nominee. Whirlpool expects all nominees to be available to serve and knows of no matter to be brought before the annual meeting other than those covered in this proxy statement. If, however, any other matter properly comes before the annual meeting, we intend that the accompanying proxy will be voted thereon in accordance with the judgment of the persons voting such proxy.
What if I want to revoke my proxy or change my vote?
If you are a stockholder of record, you may revoke your proxy at any time before it is exercised in any of three ways: (1) by submitting written notice of revocation to the Corporate Secretary at the address provided under “Communications Between Stockholders and the Board;” (2) by submitting another proxy via the Internet, telephone, or mail that is dated as of a later date and properly signed; or (3) by voting in person at the annual meeting. You may change your vote by submitting another timely vote by Internet, telephone, mail, or voting in person at the annual meeting. If you are a beneficial owner, you must contact the institution that holds your shares to revoke your voting instructions or change your vote.
56 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING |
What if I hold shares through the Whirlpool 401(k) Retirement Plan?
If you participate in the Whirlpool 401(k) Retirement Plan and hold shares of Whirlpool stock in your plan account as of the record date, you will receive a request for voting instructions from the plan custodian (“Vanguard”) with respect to your plan shares. If you hold Whirlpool shares outside of the plan, you will vote those shares separately. You are entitled to direct Vanguard how to vote your plan shares. If you do not provide voting instructions to Vanguard by 11:59 p.m. Eastern time on April 16, 2020, the Whirlpool shares in your plan account will be voted by Vanguard in the same proportion as the shares held by Vanguard for which voting instructions have been received from other participants in the plan. You may revoke your previously provided voting instructions by submitting either a written notice of revocation or a properly executed proxy dated as of a later date prior to the deadline for voting plan shares.
What should I know about attending the annual meeting?
If you attend, please note that you will be asked to check in at the registration desk and present valid photo identification. Please check in at least 10 minutes prior to the start of the meeting to ensure timely entry to the meeting. If you are a beneficial owner, you will also need to bring a copy of your voting instruction card or brokerage statement reflecting your stock ownership as of the record date. If you wish to designate someone as a proxy to attend the annual meeting on your behalf, that person must bring a valid legal proxy containing your signature and printed or typewritten name as it appears in the list of registered stockholders or on your account statement if you are a beneficial owner. Cameras, recording devices, cell phones, and other electronic devices will not be permitted at the meeting other than those operated by Whirlpool or its designees. All bags, briefcases, and packages will need to be checked at the door and/or will be subject to search.
Who will count the votes?
Broadridge Financial Solutions, Inc. will act as the independent inspector of election and will certify the voting results.
Will my vote be confidential?
Our Board has adopted a policy requiring all votes to be kept confidential from management except when disclosure is made public by the stockholder, required by law, and/or in other limited circumstances.
What is the quorum for the annual meeting?
Stockholders representing at least 50% of the common stock issued and outstanding as of the record date must be present at the annual meeting, either in person or represented by proxy, for there to be a quorum at the annual meeting. Abstentions and brokernon-votes are counted as present for establishing a quorum.
How many votes are needed to approve the proposals?
Item 1 (Election of Directors). For the election of directors (provided the number of nominees does not exceed the number of directors to be elected), each director nominee must receive the majority of the votes cast with respect to that director nominee (number of votes cast “for” a director nominee must exceed the number of votes cast “against” that director nominee).
Item 2 (Advisory Vote to Approve Whirlpool Corporation’s Executive Compensation). The affirmative vote of a majority of the outstanding common stock present in person or represented by proxy at the annual meeting and entitled to vote is required to approve Whirlpool Corporation’s Named Executive Officer compensation.
Item 3 (Ratification of the Appointment of Ernst & Young LLP as Whirlpool Corporation’s Independent Registered Public Accounting Firm for fiscal 2020). The affirmative vote of a majority of the outstanding common stock present in person or represented by proxy at the annual meeting and entitled to vote is required to approve the ratification of Ernst & Young LLP as Whirlpool Corporation’s independent registered public accounting firm for 2020.
Other Business. The affirmative vote of a majority of the outstanding common stock present in person or represented by proxy at the annual meeting and entitled to vote is required to approve any other matter that may properly come before the meeting.
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | 57 |
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING |
How are abstentions and brokernon-votes treated?
Abstentions will have no effect on Item 1. Abstentions will be treated as being present and entitled to vote on Items 2 and 3, and therefore, will have the effect of votes against such proposals. If you do not provide your broker or other nominee with instructions on how to vote your shares held in street name, your broker or nominee will not be permitted to vote them onnon-routine matters, such as Items 1 and 2, which will result in a brokernon-vote. Shares subject to a brokernon-vote will not be considered entitled to vote with respect to Items 1 and 2, and will not affect the outcome on those Items. We encourage you to provide instructions to your broker regarding how to vote your shares.
Who will pay for this proxy solicitation?
Whirlpool will pay the expenses of the solicitation of proxies. We expect to pay fees of approximately $15,000 plus certain expenses for assistance by D.F. King & Co., Inc. in the solicitation of proxies. Proxies may be solicited by directors, officers, Whirlpool employees, and by D.F. King & Co., Inc., personally and by mail, telephone, or other electronic means.
How do I submit a stockholder proposal for the 2021 annual meeting?
Our annual meeting of stockholders is generally held on the third Tuesday in April. Any stockholder proposal that you intend to have us include in our proxy statement for the annual meeting of stockholders in 2021 must be received by the Corporate Secretary of Whirlpool at corporate_secretary@whirlpool.com by November 11, 2020, and must otherwise comply with the SEC’s rules in order to be eligible for inclusion in the proxy statement and proxy form relating to this meeting. Other proposals must be received by the Corporate Secretary of Whirlpool personally, by registered or certified mail sent to the address provided under “Communications Between Stockholders and the Board” by January 20, 2021, and must satisfy the procedures set forth in ourby-laws to be considered at the 2021 annual meeting.
Stockholders may also, under certain circumstances, nominate directors for inclusion in our proxy materials by complying with the requirements in ourby-laws. For more information regarding proxy access, please see the next question.
How do I nominate a director using proxy access?
Our proxy accessby-law allows a stockholder, or a group of up to 20 stockholders, who have held 3% or more of our outstanding shares continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of our Board, provided that the stockholder(s) and nominee(s) satisfy the requirements specified in Article II, Section 13 of ourby-laws.
To be included in the proxy materials for our 2021 annual meeting of stockholders, we must receive a stockholder’s notice to nominate a director under our proxy accessby-law between October 12, 2020 and November 11, 2020. Such notice must be delivered to, or mailed to and received by, the Corporate Secretary of Whirlpool. The notice must contain the information required by ourby-laws, and the stockholder(s) and nominee(s) must comply with the information and other requirements in ourby-laws relating to the inclusion of stockholder nominees in our proxy materials.
58 | ç | Notice of Annual Meeting of Stockholders and 2020 Proxy Statement |
We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP)(“GAAP”) with certainnon-GAAP financial measures, some of which we refer to as "ongoing business"“ongoing business” measures, including ongoing earnings per diluted share, ongoing EBIT,earnings before interest and taxes (“EBIT”), organic net sales, regional organic net sales and free cash flow. Ongoing business measures exclude items that may not be indicative of, or are unrelated to, results from our ongoing business operations and provide a better baseline for analyzing trends in our underlying businesses. Management believes that free cash flow provides investors and stockholders with a relevant measure of liquidity and a useful basis for assessing the company's ability to fund its activities and obligations. Sales excluding foreign currency is calculated by translating the current period net sales, in functional currency, to U.S. dollars using the prior-year period'speriod’s exchange rate compared to the prior-year period net sales. Organic net sales is calculated by excluding divestitures and foreign currency. Management believes that organic net sales and sales excluding the impact of foreign currency fluctuations provides stockholders with a clearer basis to assess our results over time.
Full-Year 20182019 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share
The reconciliation provided below reconciles thenon-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings available to Whirlpool and net earnings per diluted share available to Whirlpool, for the twelve months ended December 31, 2018.2019. Net earnings margin is calculated by dividing net earnings available to Whirlpool by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on apre-tax basis. Our full-year GAAP tax rate of approximately 22.8% includes the impact of the gain on sale of Embraco. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our full-year adjusted tax rate of approximately 15.3%.
Results classification | Earnings before interest & taxes | Earnings per diluted share | ||||||||||
Reported measure* | $ | 1,739 | $ | 18.45 | ||||||||
Restructuring costs | Restructuring costs | 188 | 2.93 | |||||||||
Brazil indirect tax credit | Interest and sundry (income) expense | (180 | ) | (2.80 | ) | |||||||
(Gain) loss on sale and disposal of businesses | (Gain) loss on sale and disposal of businesses | (437 | ) | (6.79 | ) | |||||||
Product warranty and liability expense | Cost of products sold | 126 | 1.96 | |||||||||
Product warranty and liability expense | Interest and sundry (income) expense | 5 | 0.08 | |||||||||
Sale leaseback, real estate and receivable adjustments | Cost of products sold | (95 | ) | (1.48 | ) | |||||||
Sale leaseback, real estate and receivable adjustments | Selling, general and administrative | 9 | 0.14 | |||||||||
Trade customer insolvency claim settlement | Interest and sundry (income) expense | 59 | 0.92 | |||||||||
Income tax impact | — | 0.75 | ||||||||||
Normalized tax rate adjustment | — | 1.84 | ||||||||||
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Ongoing measure | $ | 1,414 | $ | 16.00 | ||||||||
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Net sales | $ | 20,419 | ||||||||||
Ongoing EBIT margin | 6.9 | % |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | A-1 |
ANNEX A: NON-GAAP RECONCILIATION |
Earnings Before Interest & Taxes Reconciliation: | Twelve Months Ended December 31, 2019 | ||||
Net earnings (loss) available to Whirlpool | $ | 1,184 | |||
Net earnings (loss) available to noncontrolling interests | 14 | ||||
Income tax expense (benefit) | 354 | ||||
Interest expense | 187 | ||||
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*Earnings before interest & taxes | $ | 1,739 | |||
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Net sales | $ | 20,419 | |||
Net earnings margin | 5.8 | % |
Full-Year 2018 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share
The reconciliation provided below reconciles thenon-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings (loss) available to Whirlpool and net earnings (loss) per diluted share available to Whirlpool, for the twelve months ended December 31, 2018. Net earnings margin is calculated by dividing net earnings available to Whirlpool by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on apre-tax basis. Our full-year GAAP tax rate includes the nondeductible earnings impact of the impairment of goodwill and intangibles of $747 million and the France antitrust settlement charge of $103 million. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our full-year adjusted tax rate of approximately 6.6%.
Twelve Months Ended December 31, 2018 | ||
Earnings before interest & taxes (in Millions)(1) | Earnings per diluted share | |
Reported measure | $171 | $(2.72) |
Restructuring expense (a) | 247 | 3.68 |
France antitrust settlement (d) | 103 | 1.53 |
Impairment of goodwill and intangibles (e) | 747 | 11.11 |
Trade customer insolvency (c) | 30 | 0.45 |
Divestiture related transition costs (f) | 21 | 0.32 |
Income tax impact | – | (0.29) |
Normalized tax rate adjustment (b) | – | 1.25 |
Share adjustment* | – | (0.17) |
Ongoing measure | $1,319 | $15.16 |
Results classification | Earnings before interest & taxes (2) | Earnings (loss) per diluted share | |||||||||||||
Reported measure | $ | 171 | $ | (2.72 | ) | ||||||||||
Restructuring costs | Restructuring costs | 247 | 3.68 | ||||||||||||
France antitrust settlement | | Interest and sundry (income) expense | 103 | 1.53 | |||||||||||
Impairment of goodwill and intangibles | | Impairment of goodwill and other intangibles | 747 | 11.11 | |||||||||||
Trade customer insolvency | | Selling, general and administrative | 30 | 0.45 | |||||||||||
Divestiture related transition costs | | Selling, general and administrative | 21 | 0.32 | |||||||||||
Income tax impact | — | (0.29 | ) | ||||||||||||
Normalized tax rate adjustment | — | 1.25 | |||||||||||||
Share adjustment* | — | (0.17 | ) | ||||||||||||
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Ongoing measure | $ | 1,319 | $ | 15.16 | |||||||||||
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Net sales | $ | 21,037 | |||||||||||||
Ongoing EBIT margin | 6.3 | % |
Twelve Months Ended | |||||
Earnings Before Interest & Taxes Reconciliation: | December 31, 2018 | ||||
Net earnings (loss) available to Whirlpool | $ | (183 | ) | ||
Net earnings (loss) available to noncontrolling interests | 24 | ||||
Income tax expense (benefit) | 138 | ||||
Interest expense | 192 | ||||
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Earnings before interest & taxes(2) | $ | 171 | |||
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Net sales | $ | 21,037 | |||
Net earnings margin | (0.9 | )% |
* | As a result of our full-year GAAP earnings loss, the impact of antidilutive shares was excluded from the loss per share calculation on a GAAP basis. The share count adjustment used in the calculation of the full year ongoing earnings per diluted share includes the full-year weighted average basic shares outstanding of 67.2 million plus the impact of antidilutive shares of 0.7 million which were excluded on a GAAP basis. |
Organic Net Sales
The reconciliation provided below reconciles the impact of antidilutive shares was excluded fromnon-GAAP financial measure organic net sales with reported net sales, for the loss per share calculation on a GAAP basis. The share count adjustment used in the calculation of the full year ongoing earnings per diluted share includes the full-year weighted average basic shares outstanding of 67.2 million plus the impact of antidilutive shares of 0.7 million which were excluded on a GAAP basis.
Twelve Months Ended | ||||||||||||
Whirlpool Corporation | 2019 | 2018 | Change | |||||||||
Net sales | $ | 20,419 | $ | 21,037 | (2.9 | )% | ||||||
Less: Embraco net sales | (635 | ) | (1,135 | ) | ||||||||
Add-Back: currency | 430 | 0 | ||||||||||
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Organic net sales | $ | 20,214 | $ | 19,902 | 1.6 | % | ||||||
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Twelve Months Ended | ||||||||||||
Whirlpool Latin America | 2019 | 2018 | Change | |||||||||
Net sales | $ | 3,177 | $ | 3,618 | (12.2 | )% | ||||||
Less: Embraco net sales | (635 | ) | (1,135 | ) | ||||||||
Add-Back: currency | 171 | — | ||||||||||
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Organic net sales | $ | 2,713 | $ | 2,483 | 9.3 | % | ||||||
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(e) IMPAIRMENT OF GOODWILL AND INTANGIBLES - During the second quarter of 2018, we performed a quantitative assessment of the EMEA region's goodwill and intangible assets for impairment. Based on a third-party valuation, we concluded that fair value of equity did not exceed its carrying value and therefore goodwill and intangible assets were impaired. The impact of this impairment was $168 million to intangible assets and $579 million to goodwill in the second quarter of 2018.
As defined by the Company,Whirlpool, free cash flow is cash provided by (used in) operating activities after capital expenditures, proceeds from the sale of assets and businesses and changes in restricted cash. The reconciliation provided below reconciles twelve months ended December 31, 20182019 and 20172018 free cash flow with cash provided by (used in) operating activities, the most directly comparable GAAP financial measure.
Twelve Months Ended December 31 | ||||||||
(millions of dollars) | 2019 | 2018 | ||||||
Cash provided by (used in) operating activities | $ | 1,230 | $ | 1,229 | ||||
Capital expenditures, proceeds from sale of assets/businesses and change in restricted cash | 682 | (376 | ) | |||||
Repayment of term loan | (1,000 | ) | 0 | |||||
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Free cash flow | $ | 912 | $ | 853 | ||||
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Cash provided by (used in) investing activities | $ | 636 | $ | (399 | ) | |||
Cash provided by (used in) financing activities | $ | (1,424 | ) | $ | (518 | ) |
Notice of Annual Meeting of Stockholders and 2020 Proxy Statement | ç | A-3 |
WHIRLPOOL CORPORATION 2000 NORTHM-63 BENTON HARBOR, MI 49022-2692 | VOTE BY INTERNET - www.proxyvote.com | |
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 04/20/2020 for shares held directly and by 11:59 P.M. ET on 04/16/2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | ||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||
VOTE BY PHONE -1-800-690-6903 | ||
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 04/20/2020 for shares held directly and by 11:59 P.M. ET on 04/16/2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. | ||
VOTE BY MAIL | ||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Board of Directors recommends you vote FOR the following: |
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1.Election of Directors | ||||||||||||||||||||||||||
Nominees | For | Against | Abstain | |||||||||||||||||||||||
1a. Samuel R. Allen | ☐ | ☐ | ☐ | For | Against | Abstain | ||||||||||||||||||||
1b. Marc R. Bitzer | ☐ | ☐ | ☐ | 1l. Larry O. Spencer | ☐ | ☐ | ☐ | |||||||||||||||||||
1c. Greg Creed | ☐ | ☐ | ☐ | 1m. Michael D. White | ☐ | ☐ | ☐ | |||||||||||||||||||
1d. Gary T. DiCamillo | ☐ | ☐ | ☐ | The Board of Directors recommends you vote FOR proposals 2 and 3. | For | Against | Abstain | |||||||||||||||||||
1e. Diane M. Dietz | ☐ | ☐ | ☐ | 2.Advisory vote to approve Whirlpool Corporation’s executive compensation. | ☐ | ☐ | ☐ | |||||||||||||||||||
1f. Gerri T. Elliott | ☐ | ☐ | ☐ | 3.Ratification of the appointment of Ernst & Young LLP as Whirlpool Corporation’s independent registered public accounting firm for 2020. | ☐ | ☐ | ☐ | |||||||||||||||||||
1g. Jennifer A. LaClair | ☐ | ☐ | ☐ | NOTE:I also authorize my proxies to vote in their discretion with regard to such other business as may | ||||||||||||||||||||||
1h. John D. Liu | ☐ | ☐ | ☐ | properly come before the meeting or any adjournment thereof. | ||||||||||||||||||||||
1i. James M. Loree | ☐ | ☐ | ☐ | |||||||||||||||||||||||
1j. Harish Manwani | ☐ | ☐ | ☐ | |||||||||||||||||||||||
1k. Patricia K. Poppe | ☐ | ☐ | ☐ | |||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Twelve Months Ended December 31 (in Millions) | ||
2018 | 2017 | |
Cash provided by (used in) operating activities | $1,229 | $1,264 |
Capital expenditures, proceeds from sale of assets/businesses and change in restricted cash* | (376) | (557) |
Free cash flow | $853 | $707 |
Cash provided by (used in) investing activities | $(339) | $(721) |
Cash provided by (used in) financing activities | $(518) | $(553) |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The change in restricted cash relates to the private placement funds paid by Whirlpool to acquire majority control of Whirlpool China (formerly Hefei Sanyo)Notice and whichProxy Statement and Annual Report are used to fund capital and technical resources to enhance Whirlpool China’s research and development and working capital, as required by the terms of the Hefei Sanyo acquisition completed in October 2014.available at www.proxyvote.com.
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WHIRLPOOL CORPORATION | ||||
Annual Meeting of Stockholders | ||||
April 21, 2020 at 8:00 AM (Chicago Time) This proxy is solicited by the Board of Directors | ||||
The stockholder(s) hereby appoint(s) Marc R. Bitzer and Bridget K. Quinn, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of WHIRLPOOL CORPORATION that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 8:00 AM, Chicago Time, on April 21, 2020, at 331 N. LaSalle, Chicago, IL 60654, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy, when properly executed, will be voted in accordance with the Board of Directors’ recommendations. | ||||
Continued and to be signed on reverse side |