SCHEDULE 14A
SCHEDULE 14A Information
Proxy Statement Pursuant to Section 14(a)
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☒ | Definitive Proxy Statement |
Columbus McKinnon Corporation | |
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NOTICE OF 2017
PROXY STATEMENT
COLUMBUS MCKINNON CORPORATION
2018
June 12, 2018
Dear Fellow Stockholder:
It is a pleasure to invite you to the Annual Meeting of Shareholders of2018 Columbus McKinnon Corporation a New York corporation,annual meeting of stockholders. The meeting will be held at 10:00 a.m., Chicago time, on Monday, July 23, 2018 at the Four Seasons Hotel Chicago, 120 East Delaware Place, Chicago, Illinois, on July 24, 2017,Illinois. The attached Notice of Annual Meeting of Stockholders and Proxy Statement discuss the items scheduled for a vote by stockholders at 10:00 a.m., local time,the meeting.
The Securities and Exchange Commission rules allow companies to furnish proxy materials to their stockholders over the Internet. As a result, most of our stockholders will receive in the mail a notice regarding availability of the proxy materials for the following purposes:
The Board of Directors has fixed the close of business on June 1, 2017,2018, as the record date for the determination of shareholders entitled to receive notice of and to vote at the Annual Meeting.
It is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to attend, please sign, date and return the enclosed proxy card in the enclosed postage-paid envelope or vote by telephone or using the internet as instructed on the enclosed proxy card. If you attend the Annual Meeting, you may vote your shares in person if you wish. We sincerely appreciate
Please vote your prompt cooperation.shares as soon as possible. This is your annual meeting, and your participation is important.
Mark D. Morelli President & Chief Executive Officer | Alan S. Korman Vice President, General Counsel & CHRO |
NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS
When:
Monday, July 23, 2017 at 10:00 a.m., Chicago Time
Where:
Four Seasons Hotel Chicago, 120 East Delaware Place, Chicago, Illinois
Items of Business:
1. | To elect nine Directors to hold office until the 2019 Annual Meeting and until their successors have been elected and qualified; |
2. | To ratify the appointment of Ernst & Young LLP as independent registered public accounting firm for the fiscal year ending March 31, 2019 |
3. | To conduct a shareholder advisory vote on the compensation of our named executive officers; and |
4. | To take action upon and transact such other business as may be properly brought before the meeting or any adjournment or adjournments thereof. |
Who Can Vote:
Only stockholders of record at the close of business on June 14, 2017
Important notice regarding the availability of proxy materials for the Annual Meeting of Shareholders to be held on July 24, 2017.Shareholders. The Company’s Proxy Statement and Annual Report to shareholders for the fiscal year ended March 31, 20172018 are available at http://www.cmworks.com/investors/proxy.
Summary of Proxy Statement
This summary highlights selected information in this Proxy Statement and does not contain all of the information that you should consider in deciding how to vote. Please read the complete proxy statement carefully before voting.
Annual Meeting Information
Time and Date | Location | Record Date | ||||
10:00 a.m., Chicago time, on Monday, July 23, 2018 | Four Seasons Hotel Chicago 120 East Delaware Place Chicago, Illinois 60611 | June 1, 2018 | ||||
This Proxy Statement and the accompanying form of proxy are being furnished in connection with the solicitation by the Board of Directors of Columbus McKinnon Corporation, a New York corporation ("(“our Company"Company”, "we"“we” or "us"“us”), of proxies to be voted at the Annual Meeting of Shareholders (the “Annual Meeting”) to be held at the Four Seasons Hotel Chicago, 120 East Delaware Place, Chicago, Illinois, on July 24, 2017, at 10:00 a.m., local time, and at any adjournment or adjournments thereof. This Proxy Statement and other proxy materials are first being sent or given to shareholders on or about June 14, 2017.
The shares represented by all valid proxies in the enclosed form will be voted if received in time for the Annual Meeting in accordance with the specifications, if any, made on the proxy card. If no specification is made, the proxies will be voted (i) FOR the nominees for Director named in this Proxy Statement, (ii) FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year ending March 31, 2018,2019, and (iii) FOR the advisory approval of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the compensation tables and the related disclosure as contained elsewhere in this Proxy Statement.
In order for business to be conducted, a quorum must be present at the Annual Meeting. A quorum is a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting. Abstentions, broker non-votes and withheld votes will be counted in determining the existence of a quorum at the Annual Meeting.
Brokers may not vote uninstructedyour shares on any matter in the electionabsence of directors and on executive compensation on a discretionary basis. Thus,specific voting instructions from you. Please contact your broker directly if a shareholder holds shares in street name and does not instruct his, her or its bank or brokeryou have questions about how to vote in the election of directors or the one advisory vote on executive compensation, no votes will be cast onprovide such shareholder’s behalf with respect to these matters. If a shareholder holds shares in his, her or its own name and does not vote, no votes will be cast on such shareholder’s behalf on any of the items of business at the Annual Meeting.
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2018 PROXY STATEMENT
Summary of Proxy Statement
* OI% is OI% revenue
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2018 PROXY STATEMENT
PROPOSAL 1
ELECTION OF DIRECTORS
Our Certificate of Incorporation provides that our Board of Directors shall consist of not less than three nor more than nine Directors, amended on March 26, 2018 to no more than ten Directors between May 1, 2018 and August 1, 2018, thereafter reverting back to nine Directors to accommodate an orderly transition of the addition of Mr. Aghili to the Board and the retirement of Mr. Rabinowitz from the Board on July 23, 2018. The Directors are to be elected at each annual meeting of shareholders and to serve for a term of one year or until their successors are duly elected and qualified. Currently,Each of the Directors attended at least 75% of the Board of Directors is comprised of eight members, asmeetings held in 2017, except Ms. Goodspeed will not be standing for re-election.Roedel who joined the Board in 2017.
Unless instructions to the contrary are received, it is intended that the shares represented by proxies will be voted for the election as Directors of Ernest R. Verebelyi, Mark D. Morelli, Richard H. Fleming, Stephen Rabinowitz, Nicholas T. Pinchuk, Liam G. McCarthy, R. Scott Trumbull, and Heath A. Mitts, Kathryn V. Roedel and Aziz A. Aghili, each of whom has been previously elected by our shareholders other than Ms. Roedel and Mr. Morelli who joined the Board on February 28, 2017.Aghili. If any of these nominees should become unavailable for election for any reason, it is intended that the shares represented by the proxies solicited herewith will be voted for such other person as the Board of Directors shall designate. The Board of Directors has no reason to believe that any of these nominees will be unable or unwilling to serve if elected to office.
The following information is provided concerning the nominees for Director:
Name | Age | Position |
Ernest R. Verebelyi | 70 | Chairman of the Board and Director |
Mark D. Morelli | 54 | President and Chief Executive Officer and Director |
Richard H. Fleming | 71 | Director |
Nicholas T. Pinchuk | 71 | Director |
Liam G. McCarthy | 62 | Director |
R. Scott Trumbull | 69 | Director |
Heath A. Mitts | 47 | Director |
Kathryn V. Roedel | 57 | Director |
Aziz S. Aghili | 59 | Director |
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2018 PROXY STATEMENT
PROPOSAL 1: ELECTION OF DIRECTORS
Ernest R. Verebelyi, age 69, was appointed a
Director of the Company in since January 2003 and was elected2003; Chairman of the Board insince August 2005. 2005
Age: 70
Principal Occupation: Retired from Terex Corporation
Board Committees: Chairman of the Board
Mr. Verebelyi retired from Terex Corporation, a global diversified equipment manufacturer, in October 2002 where he held the position of Group President. Prior to joining Terex in 1998, he held executive, general management and operating positions at General Signal Corporation, Emerson, Hussmann Corporation, and General Electric. Mr. Verebelyi served as a director of CH Energy Group, Inc. (NYSE:CHG) starting in 2006 and was elected lead director in 2012 through its sale in June of 2013.
Mr. Verebelyi’s qualifications to serve on the Board include his senior leadership and public company board and governance experience, his global strategic planning, and his strong background and expertise in the manufacturing sector with large multinational corporations, which is invaluable in evaluating the performance of management and other aspects of the Company.
Mark D. Morelli
Director since February 2017
Age: 54
Principal Occupation: President and Chief Executive Officer and a Director of the Company in February, 2017.
Mr. Morelli served as presidentPresident and chief operating officerChief Operating Officer of Brooks Automation (NASDAQ:BRKS) from 2012 to 2016. Previous to his role at Brooks Automation, Mr. Morelli was the chief executive officerChief Executive Officer of Energy Conversion Devices, an alternative energy company. Prior to that, Mr. Morelli was with United Technologies from 1993 to 2007, where he progressed through product management, marketing, strategy and increasing responsibilities of general management. His last assignment was as presidentPresident of Carrier Commercial Refrigeration. He began his career as a U.S. Army officer and helicopter pilot, serving as a company commander of an attack helicopter unit.
Mr. Morelli’s qualifications to serve on the Board include his executive leadership experience in global industrial and technology companies, operations and industrial companies, marketingproduct development expertise and his proven track record of building high performing organizations.
Richard H. Fleming
Director since March 1999
Age: 71
Principal Occupation: Retired from USG Corporation
Board Committees: Chair of our Company in March 1999. Governance and Nomination; Audit
In February 1999, Mr. Fleming was appointed Executive Vice President and Chief Financial Officer of USG Corp. (NYSE:USG). Effective May 1,
Mr. Fleming’s qualifications to serve on the Board include his senior leadership and public company board and governance experience in global manufacturing companies and his high level of expertise and background in finance and accounting matters and strategic planning.
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2018 PROXY STATEMENT
PROPOSAL 1: ELECTION OF DIRECTORS
Nicholas T. Pinchuk
Director of the Company in October 2004. He retired in 2001 from his position as since January 2007
Age: 71
Principal Occupation: Chairman, and Chief Executive Officer of General Cable Corporation, a leading manufacturer of electrical, communications and utility cable. Prior to joining General Cable as President and Chief Executive Officer in 1994, he served as President and CEO of AlliedSignal Braking Systems,Snap-on Incorporated
Board Committees: Governance and before that as PresidentNomination; Compensation and CEO of General Electric’s Electrical DistributionSuccession
Mr. Pinchuk is the Chairman and Control business. He also held management positions in manufacturing operations and technology at the General Electric Company and the Ford Motor Company. Mr. Rabinowitz’s qualifications to serve on the Board include his senior leadership and public company board and governance experience and his manufacturing and international operations expertise.
Mr. Pinchuk’s qualifications to serve on the Board include his senior leadership and public company board and governance experience and his manufacturing and international operations expertise, especially in Asia-Pacific.
Liam G. McCarthy
Director of the Company in since November 2008. 2008
Age: 62
Principal Occupation: Retired from Molex Incorporated
Board Committees: Governance and Nomination; Compensation and Succession
Mr. McCarthy retired as President and Chief Supply Chain Officer ofin June 2017 from Molex Incorporated (NASDAQ:MOLX)LLC., (previously NASDAQ:MOLX, acquired December 9, 2013 by Koch Industries, Inc, in June, 2017. Prior thereto,Inc.). Mr. McCarthy served Molex in various executive and management capacities, including President and Chief Supply Chain Officer through June 2017, President and Chief Operating Officer through December, 2015, Vice President, Operations, Europe from 2001 to 2005; President, Data Communications Division, Americas Region from 1998 to 2001; General Manager, Singapore from 1993 to 1998; Regional Marketing Manager, Far East South Region from 1991 to 1993; and Materials Director, Singapore from 1989 to 1991. Mr. McCarthy is also a Board Member of the Chicago Counsel on Global Affairs.
Mr. McCarthy’s qualifications to serve on the Board include his seniorextensive global leadership experience, having held significant executive roles in Operations and public company boardBusiness development while living in Asia, Americas and governance experience and his manufacturing and internationalEurope. A passionate leader of creating value through excellence in operations and logistics expertise.
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2018 PROXY STATEMENT
PROPOSAL 1: ELECTION OF DIRECTORS
R. Scott Trumbull, age 68, was appointed a
Director of thesince January 2014
Age: 69
Principal Occupation: Retired from Franklin Electric Company, in January, 2014. Inc.
Board Committees: Chair Compensation and Nomination; Audit
Mr. Trumbull retired as Non-Executive Chairman of the Board of Franklin Electric Company, Inc. (NASDAQ:FELE) in May, 2015. He joined the Board of Franklin Electric in 1998 and was elected Chief Executive Officer of the company in December, 2002 until retiring in May, 2014. Prior to joining Franklin Electric, Mr. Trumbull began his career at Owens-Illinois in 1972, progressively advancing through various operational and leadership positions to the role of Executive Vice President and Chief Financial Officer. Mr. Trumbull serves on the Board of Directors of Welltower, Inc. (NYSE:HCN), Schneider National (private)(NYSE:SNDR) and the Artisan Funds.
Mr. Trumbull’s qualifications to serve on the Board include his senior leadership and public company board and governance experience, his high level of finance and accounting background and extensive manufacturing and operations expertise.
Heath A. Mitts
Director of the Company in since May 2015. 2015
Age: 47
Principal Occupation: EVP and CFO at TE Connectivity
Board Committees: Chair Audit; Governance and Nomination
Mr. Mitts is Executive Vice President and Chief Financial OfficerCFO at TE Connectivity Ltd. (NYSE: TEL). Prior thereto, Mr. Mitts was Senior Vice President and Chief Financial Officer of IDEX Corporation (NYSE:IEX). Prior to joining IDEX Corporation, Mr. Mitts was at PerkinElmer, Inc. in various senior financial management roles in both North America and in Singapore. He went to PerkinElmer after five years at Honeywell where he gained world-class training in financial planning and analysis, progressing through various managerial roles including Director of Finance.
Mr. Mitt’s qualifications to serve on the Board include his senior leadership and governance experience, his high level of finance and accounting background and his international industrial experience.
Kathryn V. Roedel
Director since October, 2017
Age: 57
Principal Occupation: Retired from Sleep Number Corporation
Board Committees: Audit; Compensation and Succession
Ms. Roedel retired in 2016 from her position of EVP, Chief Services and Fulfillment Officer at Sleep Number Corporation (NASDAQ: SCSS), a direct to consumer, vertically integrated mattress retailer and manufacturer. Prior to joining Sleep Number in 2005, Ms. Roedel held VP and General Management positions in operations, supply chain, services and continuous improvement, spanning 22 years with General Electric’s Healthcare and Information Services businesses. Ms. Roedel also serves on the Board of Directors of Generac Holdings, Inc. (NYSE: GNRC) and The Jones Family of Companies, a private company.
Ms. Roedel’s qualifications to serve on the Board include her senior leadership and public company board and governance experience and her international supply chain experience.
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2018 PROXY STATEMENT
PROPOSAL 1: ELECTION OF DIRECTORS
Aziz S. Aghili
Director since May 2018
Age: 59
Principal Occupation: President, Off-Highway Drive & Motion Technologies, Dana Holding Corporation
Board Committees: Governance and Nomination; Compensation and Succession
Mr. Aghili is president of Off-Highway Drive and Motion Technologies for Dana Holding Corporation and resides in Europe. Mr. Aghili joined Dana in 2009 as president of Dana Europe, before being named President of Dana Asia-Pacific in 2010. Prior thereto, he spent more than 20 years at ArvinMeritor, where he most recently served as Vice President and General Manager of Body Systems. Additionally, he held strategic leadership positions around the world, including Vice President and General Manager of Asia Pacific and Vice President of Global Procurement, Commercial Marketing, and Business Development Asia Pacific. Before joining ArvinMeritor, he worked for Nissan Motor Company and General Electric Plastics.
Mr. Aghili’s qualifications to serve on the Board include his senior leadership and governance experience and his global manufacturing and operations experience.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.
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2018 PROXY STATEMENT
General
We are asking our shareholders to ratify our Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2018.2019. In the event our shareholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of our Company and its shareholders.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so. It is also expected that those representatives will be available to respond to appropriate questions.
Principal Accountant Fees and Services
The aggregate fees billed to us by Ernst & Young LLP for fiscal years 20162017 and 20172018 are as follows:
Fiscal Year 2018 ($ in thousands) | Fiscal Year 2017 ($ in thousands) | |||||
Audit Fees(1) | 2,608 | 1,836 | ||||
Audit Related Fees(2) | 10 | 1,036 | ||||
Tax Fees(3) | 421 | 437 | ||||
All Other Fees(4) | 3 | 3 | ||||
Total | 3,042 | 3,312 |
Fiscal Year | ||||||
2017 | 2016 | |||||
($ in thousands) | ||||||
Audit Fees (1) | 1,836 | 1,413 | ||||
Audit Related Fees (2) | 1,036 | — | ||||
Tax Fees (3) | 437 | 308 | ||||
All Other Fees (4) | 3 | 3 | ||||
Total | 3,312 | 1,724 |
(1) | Consists of fees billed for the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements. |
(2) | Consists of |
(3) | Consists of all tax related |
(4) | Consists of all other products and services provided other than the services reported under audit fees and tax fees. |
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE "FOR"“FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 2018.2019.
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2018 PROXY STATEMENT
PROPOSAL 3
We are required pursuant to Section 14A of the Exchange Act to provide a non-binding stockholder vote on our executive compensation as described in this proxy statement (commonly referred to as "Say-on-Pay"“Say-on-Pay”).
The advisory vote on executive compensation is a non-binding vote on the compensation of the Company'sCompany’s named executive officers, as described in the Compensation Discussion and Analysis section, the compensation tables, and the accompanying narrative disclosure, set forth in this proxy statement.
We maintain a compensation program that is comprehensive, consisting of base salary, annual incentives, long-term incentives and benefits, in support of our objective of providing superior value to shareholders and customers. Our program is designed to motivate and reward our executives for sustained superior performance through the use of variable compensation tied to short, intermediate and long-term results. Our business success depends on our ability to attract and retain executive talent through competitive compensation opportunities provided by our program.
For the reasons discussed above, the Board of Directors unanimously recommends that shareholders vote in favor of the following resolution:
“
RESOLVED, that the shareholders hereby APPROVE, on a non-binding, advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Company’s proxy statement prepared in connection with itsTHE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE “FOR”“FOR” THE APPROVAL OF THE COMPANY’S COMPENSATION OF ITS NAMED EXECUTIVE OFFICERS.
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2018 PROXY STATEMENT
PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Proposal No. 1 Election of Directors | If you do not provide voting instructions, your broker may not vote on this matter. Each director nominee receiving the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote in the election of directors will be elected as a director. Abstentions and broker non-votes will have no effect on the results of this vote. A majority of votes cast means the number of votes cast “For” exceeds the number of votes cast “Withhold.” |
Proposal No. 2 Ratification of Independent Registered Public Accounting Firm | If you do not provide voting instructions, your broker may not vote on this matter. The proposal to appoint Ernst & Young LLP as our independent registered public accounting firm for the year ending March 31, 2019 will be ratified by the affirmative vote of a majority of shares present or represented by proxy and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have no effect on the results of this vote. |
Proposal No. 3 Advisory Approval of Our Executive Compensation | If you do not provide voting instructions, your broker may not vote on this matter. The advisory vote approving executive compensation will be determined by the affirmative vote of a majority of shares present or represented by proxy and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will have no effect on the results of this vote. Although this advisory vote is non-binding, the compensation committee and our board of directors will review the results of the vote. The compensation committee will consider our shareholders’ preferences and take them into account in making future determinations concerning the compensation of our executives. |
The voting results of the annual meeting will be published no later than four business days after the Annual Meeting on a Form 8-K filed with the Securities and Exchange Commission, which will be available in the investor relations section of our website at www.cmworks.com.
If the Proxy is submitted and no voting instructions are given, the person or persons designated will vote the shares “For” the election of the Director nominees, “For” the appointment of Ernst & Young, LLP and “For” the advisory vote on executive compensation in accordance to the Board vote recommendations.
Our management does not presently know of any matters to be presented for consideration at the Annual Meeting other than the matters described in the Notice of Annual Meeting. However, if other matters are presented, the accompanying proxy confers upon the person or persons entitled to vote the shares represented by the proxy, discretionary authority to vote such shares in respect of any such other matter in accordance with their best judgment.
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2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
Our Company is committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability and helps build public trust.
Independence | • | Eight of our nine directors are independent |
• | Our Chairman is an independent director | |
• | Our CEO is the only management director | |
• | All of our Board committees are comprised of only independent directors and have the ability to hire third-party advisors | |
Executive Sessions | • | The independent directors regularly meet in executive sessions |
• | The Non-Executive Chairman presides at executive sessions of the independent directors | |
Board Oversight of Risk Management | • | Our Audit Committee annually reviews our guidelines and policies that govern the process by which we assess and manage our exposure to risk |
• | Our Compensation and Succession Committee reviews the annual compensation risk assessment and retains an independent compensation consultant | |
• | We have recoupment or “clawback” provisions to recover certain executive pay | |
Stock Ownership Requirements | • | Our Directors and Executives are subject to minimum stock ownership requirements designed to align their interests with those of stockholders |
Diversity | • | Our current board has a rich mixture of educational, professional, experiential, age, gender and global diversity |
Vote Standard | • | Voluntarily adopted majority voting in uncontested election; plurality voting in contested election; and implemented early retirement of the Poison Pill |
Our Board of Directors believes that its overriding responsibility is to offer guidance and the benefit of its collective experience to help our management understand the risks confronting, and opportunities available to, our Company. In furtherance of this responsibility, our Board of Directors has adopted a General Corporate Governance Policy setting forth certain policies, guidelines and procedures it deems important to the successful satisfaction of this responsibility.
These policies and procedures include guidelines as to the eligibility, independence, evaluation, education, succession planning, compensation and indemnification of our Directors, as well as with respect to specific transactions requiring the prior formal approval of our Board of Directors. A copy of our General Corporate Governance Policy is posted on the Investor Relations section of the Company’s website atwww.cmworks.com. www.cmworks.com.
The roles of the Company’s Chairman of the Board and President and Chief Executive Officer have been served by separate individuals since 1998 which will continue under the newly appointed President and Chief Executive Officer, Mark D. Morelli.1998. This leadership structure supports our belief that it is the President and Chief Executive Officer’s responsibility to manage the Company and the Chairman’s responsibility to manage the Board. Since Mr. Verebelyi’s election as our Chairman of the Board in
August 2005, that position has been filled by an independent Director. As directors continue to have more oversight responsibilities than ever before, we believe it is beneficial to have an independent Chairman whose sole job is leading the Board.
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2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
By separating the roles of the Chairman of the Board and President and Chief Executive Officer positions, we ensure there is no duplication of effort between them. We believe this provides strong leadership for our Board of Directors, while also positioning our President and Chief Executive Officer as the leader of the Company in the eyes of our customers, employees and other stakeholders.
As part of our annual Board of Directors self-evaluation process, we evaluate our leadership structure to ensure that it
continues to provide the optimal structure for our Company and shareholders. A Chair rotation and succession schedule is reviewed and updated annually by the Board in addition to the Chairman conducting individual reviews with the Directors on their interests and thoughts around Chair candidates, rotation and succession. We believe our current leadership structure is the optimal structure for our Company at this time.
Our Corporate Governance and Nomination Committee is responsible for developing the general criteria, subject to approval by our Board of Directors, for use in identifying, evaluating and selecting qualified candidates for election or re-election to the Board. The Governance and Nomination Committee annually reviews the appropriate skills and characteristics required of Board members in the context of the current composition of the Board including, reviewing and updating a Board competency skills matrix for each Director. The Corporate Governance and Nomination Committee, in recommending candidates for election or re-election to the Board, seeks to create a Board that is strong in its collective knowledge and has a diversity of skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, industry knowledge, corporate governance and global markets. When the Corporate Governance and Nomination Committee review a potential new candidate, it looks specifically at the candidate’s qualifications in light of the needs of the Board and the Company at that time, given the attributes of the existing Directors.
The charter of the Corporate Governance and Nomination Committee includes as a statement of responsibility that the Committee assure that the composition of the Board of Directors includes appropriate breadth, depth and diversity of experience and capabilities. In identifying candidates for Director, the Corporate Governance and Nomination Committee and the Board of Directors take into account (i) the comments and recommendations of Directors made in connection with the Board’s annual self-evaluation regarding the qualifications and effectiveness of the existing Board of Directors or additional qualifications that may be required when selecting new board members, (ii) the requisite expertise and sufficiently diverse backgrounds of the Board of Directors’Directors overall composition, (iii) the independence of outside Directors and other possible conflicts of interest of existing and potential members of the Board of Directors and (iv) all other factors it considers appropriate. Our current board has a rich mixture of educational, professional, experiential, gender, and global diversity and we will continue to consider these and the other mentioned factors when considering future directors.
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2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
Blend of Experiences and Qualifications
Director Experience | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
Finance/Accounting | |||||||||
Operations/Lean | |||||||||
International Business | |||||||||
Strategic Planning | |||||||||
Sales/Marketing | |||||||||
Branding/NPD | |||||||||
Human Resources | |||||||||
Supply Chain/Logistics |
Our Board of Directors has determined that each of its current members, other than Mr. Morelli, is independent within the meaning of the NASDAQ Stock Market, Inc., listing standards as currently in effect. In addition, each member of the Audit
Committee, the Corporate Governance and Nominating Committee and the Compensation and Succession Committee is independent.
The Board of Directors and its committees meet regularly throughout the year and also hold special meetings and act by written consent from time to time as appropriate. All Directors are expected to attend each meeting of the Board of Directors and the committees on which he or she serves, and are also invited, but not required, to attend the Annual Meeting. Agendas for meetings of the Board of Directors include executive sessions for the independent Directors to meet without the management Director present. During the fiscal
year ended March 31, 2017,2018, our Board of Directors held nine (9)five (5) meetings. Each Director, other than Ms. Roedel who joined the Board in October, 2017, and Mr. Morelli,Aghili who joined the Board in May, 2018 has attended at least 75% of the aggregate number of meetings of our Board of Directors and meetings held by all committees of our Board of Directors on which he or she served and attended the 20162017 Annual Shareholder Meeting.
Our Board of Directors adopted a Code of Ethics which governs all of our Directors, officers and employees, including our Chief Executive Officer and other executive officers. This Code of Ethics is posted on the Corporate Governance section of the Company’s website at www.cmworks.com. The Company will disclose on its website any amendment to this
Code of Ethics or waiver of a provision of this Code of Ethics, including the name of any person to whom the waiver was granted. Our Chief Compliance Officer has responsibility to implement and maintain an effective ethics and compliance program. She also has responsibility to provide updates on our ethics and compliance program to the Audit Committee.
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2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
Our Board of Directors oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance shareholder value. A fundamental part of the Company’s risk management is not only understanding the risks it faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The involvement of the full Board of Directors in setting the Company’s business strategy is a key part of its assessment of management’s appetite for risk and also a determination of what constitutes an appropriate level of risk for the Company.
While the Board of Directors has the ultimate oversight responsibility for the risk management process, various
committees of the Board also have responsibility for risk management. In particular, the Audit Committee oversees the Company’s enterprise risk management process, as well as focuses on financial and fraud risks, including internal controls, and receives an annual risk assessment report from the Company’s General Counsel and internal auditors. The Company’s General Counsel and his staff also assist the Board of Directors in fulfilling its oversight responsibility with respect to regulatory compliance and legal issues that affect the Company. In addition, in setting compensation, the Compensation Committee strives to create incentives that encourage a level of appropriate risk-taking behavior consistent with the Company’s business strategy and goals.
Audit Committee | Primary Responsibilities • Assist the Board in monitoring the integrity of our financial statements, our compliance with financial reporting and related legal and statutory requirements and the independence and performance of our internal and external auditors. • Review our risk assessment and risk management policies. • Select and employ a firm of independent registered public accountants to audit our financial statements and internal control over financial reporting each year, which firm is ultimately accountable to the Audit Committee and the Board. Each member of our Audit Committee is independent as defined under the Securities Exchange Act of 1934, as amended and section 3 of the Sarbanes-Oxley Act of 2002, and under the NASDAQ Stock Market, Inc. rules. Pursuant to Section 407 of the Sarbanes-Oxley Act of 2002, our Board of Directors has determined that Messrs. Trumbull, Fleming and Mitts qualify as “audit committee financial experts.” The duties of our Audit Committee consist of (i) appointing or replacing our independent auditors, (ii) pre-approving all auditing and permitted non-audit services provided to us by our independent auditors, (iii) reviewing with our independent auditors and our management the scope and results of our annual audited financial statements, our effectiveness of internal control over financial reporting, our quarterly financial statements and significant financial reporting issues and judgments made in connection with the preparation of our financial statements, (iv) reviewing our management’s assessment of the effectiveness of our internal controls, (v) reviewing insider and affiliated party transactions (vi) establishing procedures for the receipt, retention and treatment of complaints received regarding accounting or internal controls and (vii) overseeing the enterprise risk management system. The Audit Committee is governed by a written charter approved by the Board of Directors which is posted on the Investor Relations section of our website at www.cmworks.com. |
Met 5 times in fiscal year 2018 Independent Members Heath A. Mitts, Chair Richard H. Fleming R. Scott Trumbull Kathryn V. Roedel Financial Expert Heath A. Mitts, Chair Richard H. Fleming R. Scott Trumbull |
14
2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
Compensation and Succession Committee
Compensation and Succession Committee | Primary Responsibilities • Review and make recommendations to the Board regarding management organization, succession and development programs. • Review and approve, or recommend for approval, the election of corporate officers and their salaries, incentive compensation and bonus awards. • Make the decisions required by a committee of the Board under all stock and deferred compensation plans. • Approve and report to the Board changes in salary ranges for all other major position categories and, as outlined in its charter, changes in our retirement, group insurance, investment, management incentive compensation and bonus and other benefit plans. Each member of our Compensation and Succession Committee is an independent Director under the NASDAQ Stock Market, Inc., rules currently in effect. The principal functions of this Committee are to (i) review and make recommendations to the Board of Directors concerning our compensation strategy, (ii) establish corporate performance measures and goals under our performance-based incentive programs, (iii) determine individual compensation targets for our executive officers under our incentive programs, (iv) evaluate and certify whether performance goals have been met at the end of the performance period, (v) determine salary increases and award amounts for individual executive officers, (vi) review and approve (or recommend to the Board of Directors for approval) any material changes to our salary, incentive, and benefit programs and assure that these programs are administered in a manner consistent with the compensation strategy, (vii) review and make recommendations to the Board of Directors concerning equity grants, (viii) assess and evaluate risk in connection with our compensation plans and programs, (ix) review and make recommendations to the Board of Directors concerning compensation and bonus for the Chief Executive Officer and Chief Financial Officer, and (x) perform other functions as identified in the Compensation and Succession Committee charter. The Compensation and Succession Committee is governed by a written charter approved by the Board of Directors which is posted on the Investor Relations section of our website at www.cmworks.com. Additional information on the Compensation and Succession Committee’s processes and procedures are addressed in the Compensation Discussion and Analysis section of this Proxy Statement. |
Met 5 times in fiscal year 2018 Independent Members R. Scott Trumbull, Chair Nicholas T. Pinchuk Liam G. McCarthy Kathryn V. Roedel Aziz S. Aghili |
15
2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
Corporate Governance and Nomination Committee
Corporate Governance and Nomination Committee | Primary Responsibilities • Make recommendations to the Board concerning the size, composition, skills of the Board and its committees. • Recommend nominees for election or reelection as directors. • Consider other matters pertaining to Board membership and governance • Evaluate Board performance and assess the adequacy of, and compliance with, our Corporate Governance Guidelines and Code of Business Conduct. Our Corporate Governance and Nomination Committee is responsible for (i) evaluating the composition, skills, organization and governance of our Board of Directors and its committees, (ii) monitoring compliance with our system of corporate governance and (iii) developing criteria, researching and making recommendations with respect to candidates for membership on our Board of Directors. Each member of the Corporate Governance and Nomination Committee is an independent Director under the NASDAQ Stock Market, Inc., rules currently in effect. Our Corporate Governance and Nomination Committee does not solicit direct nominations from our shareholders, but will give due consideration to written recommendations for nominees from our shareholders for election as directors that are submitted in accordance with our By-Laws. See the information contained in our By-Laws under the heading “Shareholders’ Proposals.” Generally, a shareholder who wishes to nominate a candidate for Director must give us prior written notice thereof, which notice must be personally delivered or mailed via registered first class mail, return receipt requested, to our Secretary and must be received by our Secretary not less than 90 days nor more than 120 days prior to the one-year anniversary of the previous year’s Annual Meeting. The shareholder’s recommendation for nomination must contain the following information as to each nominee for Director: the nominee’s name, age, business address and residence address; the nominee’s principal occupation or employment for the previous five years; the number of shares of our common stock owned by such candidate; and any other information relating to the nominee that is required to be disclosed in solicitations of proxies for elections of directors pursuant to our By-Laws. Any nomination not made in strict accordance with the foregoing provisions will be disregarded at the direction of our Chairman of the Board. The Corporate Governance and Nomination Committee is governed by a written charter approved by the Board of Directors which is posted on the Investor Relations section of our website at www.cmworks.com. |
Met 6 times in fiscal year 2018 Members Richard H. Fleming, Chair Nicholas T. Pinchuk Liam G. McCarthy Heath A. Mitts Aziz S. Aghili |
16
2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
Our General Corporate Governance Policy contains a guideline whereby all Directors are asked to beneficially own not less than 9,00010,000 shares of our common stock within five years of becoming a Director. Any Restricted Stock Units granted to a Director pursuant to the Columbus McKinnon Corporation 2016 Long Term Incentive Plan (the "Omnibus Plan"“Omnibus Plan”) or any successor plan are included in determining the number of shares owned by such Director for these purposes. All Directors are in compliance with this Policy.
We maintain a “nonqualified” deferred compensation plan offered to our Directors. The plan is an unfunded plan intended to help participants supplement their retirement income while providing them an opportunity to invest a portion of their cash compensation. Under the plan, each Director who receives cash compensation for board service may elect to defer all or a portion of his or her cash compensation in a calendar year. Mr. Verebelyi has elected to defer cash compensation in 2018 under this plan. We do not anticipate making any changes to this plan in 2018.
Consistent with our objective of aligning management’s interests with shareholders, we have established stock ownership requirements for all corporate and operating officers to maintain or accumulate minimum ownership levels of the Company’s Common Stock. Executives are required to retain a portion of their equity compensation upon vesting of shares or exercise of options. The portion that each executive must continue to hold is described as the retention ratio which is
applied to the after-tax shares received by the executive. If the value of shares held by an executive exceeds a specified multiple of base salary, the executive is no longer subject to the retention ratio requirement with respect to additional after-tax shares received by the executive. Each NEO is currently subject to the retention ratio requirement. The following table summarizes the ownership guidelines, as well as the respective retention ratio, for executives.
Position / Title | Multiple of Base Salary | Retention Ratio |
Chief Executive Officer | 5X | 50% |
Chief Financial Officer | 4X | 50% |
Other Executive Committee Members(1) | 3X | 50% |
Other Officers(2) | 2X | 40% |
(1) | Messrs. McCormick, Korman and Wozniak are deemed Executive Committee members |
(2) | Other Officers include the Controller and Treasurer |
The following table sets forth the annual target compensation provided to the Company’s Directors during the fiscal year ended March 31, 2017:
Director | Annual Retainer - Cash ($) | Annual Retainer - Stock ($) | Restricted Stock Units(1) ($) | Chairman of the Board ($) | Committee Chair Fees ($) | Target Annual Compensation ($) | ||||||||||||
Heath A. Mitts | 65,000 | 60,000 | 53,760 | — | 20,000 | 198,760 | ||||||||||||
Richard H. Fleming | 65,000 | 60,000 | 53,760 | — | 15,000 | 193,760 | ||||||||||||
Kathryn V. Roedel | 65,000 | 60,000 | 53,760 | — | — | 178,760 | ||||||||||||
Liam G. McCarthy | 65,000 | 60,000 | 53,760 | — | — | 178,760 | ||||||||||||
Nicholas T. Pinchuk | 65,000 | 60,000 | 53,760 | — | — | 178,760 | ||||||||||||
Stephen Rabinowitz | 65,000 | 60,000 | 53,760 | — | — | 178,760 | ||||||||||||
Mark D. Morelli(2) | — | — | — | — | — | — | ||||||||||||
R. Scott Trumbull | 65,000 | 60,000 | 53,760 | — | 20,000 | 198,760 | ||||||||||||
Ernest R. Verebelyi | 65,000 | 60,000 | 53,760 | 60,000 | — | 238,760 |
Director | Annual Retainer - Cash ($) | Annual Retainer - Stock ($) | Restricted Stock Units (1) ($) | Chairman of the Board ($) | Committee Chair Fees ($) | Target Annual Compensation ($) | ||||||
Heath A. Mitts | 55,000 | 55,000 | 37,230 | 0 | 0 | 147,230 | ||||||
Richard H. Fleming | 55,000 | 55,000 | 37,230 | 0 | 8,000 | 155,230 | ||||||
Linda A. Goodspeed | 55,000 | 55,000 | 37,230 | 0 | 0 | 147,230 | ||||||
Liam G. McCarthy | 55,000 | 55,000 | 37,230 | 0 | 0 | 147,230 | ||||||
Nicholas T. Pinchuk | 55,000 | 55,000 | 37,230 | 0 | 0 | 147,230 | ||||||
Stephen Rabinowitz | 55,000 | 55,000 | 37,230 | 0 | 10,000 | 157,230 | ||||||
Mark D. Morelli (2) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Timothy T. Tevens (2) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
R. Scott Trumbull | 55,000 | 55,000 | 37,230 | 0 | 16,000 | 163,230 | ||||||
Ernest R. Verebelyi | 55,000 | 55,000 | 37,230 | 45,000 | 0 | 192,230 |
(1) | Each Director is granted 1,500 restricted stock units annually which vest over 3 years. Shares are valued based upon the March 31, |
(2) |
17
2018 PROXY STATEMENT
CORPORATE GOVERNANCE POLICY
The following table provides the taxable compensation received by the Directors during the fiscal year ended March 31, 2017.2018. Unless otherwise noted, "Other Compensation"“Other Compensation” represents the cash payment of fractional shares.
Director | Annual Retainer (Cash) ($) | Annual Retainer (Stock)(1) ($) | Chairman of the Board ($) | Committee Chair Fees ($) | Other Compensation ($) | Total Annual Fees(2) ($) | ||||||||||||
Heath A. Mitts | 62,500 | 97,801 | — | 10,000 | 17 | 170,318 | ||||||||||||
Richard H. Fleming | 62,500 | 97,801 | — | 13,250 | 33 | 173,584 | ||||||||||||
Kathryn V. Roedel | 32,500 | — | — | — | — | 32,500 | ||||||||||||
Liam G. McCarthy | 62,500 | 97,801 | — | — | 33 | 160,334 | ||||||||||||
Nicholas T. Pinchuk | 62,500 | 97,801 | — | — | 33 | 160,334 | ||||||||||||
Stephen Rabinowitz | 62,500 | 97,801 | — | 10,000 | 33 | 170,334 | ||||||||||||
R. Scott Trumbull | 62,500 | 97,801 | — | 16,500 | 33 | 176,834 | ||||||||||||
Ernest R. Verebelyi | 62,500 | 97,801 | 56,250 | — | 33 | 216,584 |
Director | Annual Retainer (Cash) ($) | Annual Retainer (Stock) (1) ($) | Chairman of the Board ($) | Committee Chair Fees ($) | Other Compensation ($) | Total Annual Fees (2) ($) | ||||||
Heath A. Mitts | 55,000 | 78,621 | 0 | 0 | 5 | 133,626 | ||||||
Richard H. Fleming | 55,000 | 78,621 | 0 | 12,000 | 31 | 145,652 | ||||||
Linda A. Goodspeed | 55,000 | 78,621 | 0 | 0 | 31 | 133,652 | ||||||
Liam G. McCarthy | 55,000 | 78,621 | 0 | 0 | 31 | 133,652 | ||||||
Nicholas T. Pinchuk | 55,000 | 78,621 | 0 | 0 | 31 | 133,652 | ||||||
Stephen Rabinowitz | 55,000 | 78,621 | 0 | 10,000 | 31 | 143,652 | ||||||
R. Scott Trumbull | 55,000 | 78,621 | 0 | 16,000 | 31 | 149,642 | ||||||
Ernest R. Verebelyi | 55,000 | 78,621 | 45,000 | 0 | 31 | 178,652 |
(1) | Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards of restricted stock using the assumptions set forth in the footnotes to the financial statements in our Annual Report on Form 10-K for the fiscal year ended March 31, |
(2) | No additional fees are paid for attendance at Board of Director or committee meetings. Our Directors are reimbursed for reasonable expenses incurred in attending such meetings. |
(3) | Other compensation in cash in lieu of fractional shares. |
18
2018 PROXY STATEMENT
Name | Age | Position | ||
Mark D. Morelli | 54 | President and Chief Executive Officer and Director | ||
Bert A. Brant | 57 | Vice President - | ||
Alan S. Korman | 57 | Vice President Corporate Development, General Counsel & | ||
Mark Paradowski | 48 | Vice President - Information Services | ||
Peter M. McCormick | 57 | Vice President - Crane Solutions | ||
Gregory P. Rustowicz | 58 | Vice President | ||
John H. Stewart | 62 | Vice President - | ||
Kurt F. Wozniak | 54 | Vice President - Industrial Products | ||
Benjamin AuYeung | 54 | Vice President - APAC |
All of our executive officers are elected annually at the first meeting of our Board of Directors following the Annual Meeting of Shareholders and serve at the discretion of our Board of Directors. There are no family relationships between any of our officers or Directors. Recent business experience of Mr. Morelli is set forth above under “Election of Directors.”Buer retired and Dr. Celi left the Company in 2017. Recent business experience of our executive officers who are not also Directors follows:
Bert A. Brant joined the Company in October, 2005 and in March, 2016 was named Vice President - Solutions Group.February, 2018 as V.P. Global Manufacturing Operations. Prior to that on April 1, 2014 he was named Vice President -SVP, Global Services & Vertical Markets and previously served as Vice President North America & Global Vertical Markets. From July 2010 to April 2013, he served as our Vice President - Hoist & Rigging - Americas. Mr. Buer served as Vice President Hoist Products - The Americas from May 2009 to July 2010. In April 2007, he also assumed the positionOperations for Colfax Fluid Handling, a division of Executive Director of our CM Hoist division.Colfax Corporation. Prior to joining our Company, Mr. Buer ownedColfax in 2014, he led operations in the U.S., Mexico and operated a marketing and business consulting service from October 2003 to October 2005.
Alan S. Korman
joined the Company in January, 2011 as General Counsel and Assistant Secretary. In July 2011, he was electedMark Paradowski
joined the Company in 1997 as a Technical Manager. In August, 2013, he was named Vice President - Information Services. Prior to that, he served as Director - Global Information Systems after having served as Director Information Services. Before joining the company, Mr. Paradowski held various positions with Oracle Corporation and Electronic Data Systems (EDS).Peter M. McCormick joined the Company in 2015 with the acquisition of Magnetek. He served as President/CEO of Magnetek from 2008 until 2016. From 2006 to 2008 he was Executive VP and COO of Magnetek. In 2016 he assumed the
role of Integration Manager STAHL. In 2017 he was appointed Vice President Crane Solutions Group.
Gregory P. Rustowicz
joined the Company in August, 2011 as Vice President - Finance and Chief Financial Officer. From 2007, he was Vice President Finance and Corporate Treasurer at Momentive Performance Materials Inc. Prior thereto, heJohn H. Stewart joined the Company in 1980 and was named V.P. Engineered Products Group in 2017. He was Managing Director of Duff Norton US from 2014 to 2017. Prior thereto, he was Corporate Director of Quality and Lean from 2006 to 2014 and Division President at Duff Norton Company/VP Operations Yale from 1980 to 2006.
Kurt F. Wozniak
joined Columbus McKinnon in 1999. He was named V.P. Industrial Products Group in 2017. Prior thereto, he was Vice President - Americas on April 1, 2014. Since July 2012, he served as the Vice President - Latin America. Prior to that, he had been Managing Director - Latin America since July 2010. He has also served as Director, Corporate Development and Director, Materials Management. Previously, Mr. Wozniak was a management consultant with Ernst & Young LLP.Benjamin AuYeung
joined Columbus McKinnon in August, 2012 as Managing Director, China. He was elected Vice President - APAC in July, 2015. Prior to joining Columbus McKinnon, Mr. AuYeung held various positions with Cummins from 1992 to 2011, most recently as General Manager, APAC for Cummins Filtration Business Unit.19
2018 PROXY STATEMENT
The following table sets forth certain information as of March 31, 2018 regarding the beneficial ownership of our common stock by (i) each person who is known by us to own beneficially more than 5% of our common stock; (ii) by each Director; (iii) by each of our executive officers named in the
Summary Compensation Table and (iv) by all of our executive officers and Directors as a group. The business address of each of the executive officers and Directors is 205 Crosspoint Parkway, Buffalo, New York 14068.
Directors, Officers and 5% Shareholders | Number Of Shares(1) | Percentage Of Class | ||||
Ernest R. Verebelyi(2) | 41,766 | * | ||||
Mark D. Morelli(3) | 36,162 | * | ||||
Richard H. Fleming(2) | 47,270 | * | ||||
Stephen Rabinowitz(2) | 42,266 | * | ||||
Nicholas T. Pinchuk(2) | 39,301 | * | ||||
Liam G. McCarthy(2) | 35,874 | * | ||||
R. Scott Trumbull(2) | 13,872 | * | ||||
Heath A. Mitts(2) | 10,192 | * | ||||
Kathryn V. Roedel | — | * | ||||
Peter M. McCormick(4) | 83,609 | * | ||||
Alan S. Korman(5) | 25,240 | * | ||||
Gregory P. Rustowicz(6) | 54,321 | * | ||||
Kurt F. Wozniak(7) | 39,761 | * | ||||
All Directors and Executive Officers as a Group (17 persons)(8) | 522,195 | 2.27% | ||||
Columbus McKinnon Corporation Employee Stock Ownership Plan | 308,192 | 1.34% | ||||
RBC Global Asset Management (US), Inc.(9) | 2,778,087 | 12.10% | ||||
BlackRock, Inc.(10) | 1,527,154 | 6.60% | ||||
Dimensional Fund Advisors LP(11) | 1,456,579 | 6.33% |
* | Less than 1% |
(1) | Rounded to the nearest whole share. Unless otherwise indicated in the footnotes, each of the shareholders named in this table has sole voting and investment power with respect to the shares shown as beneficially owned by such shareholder, except to the extent that authority is shared by spouses under applicable law. |
(2) | Does not include 2,646 Restricted Stock Units held by each of Messrs. Verebelyi, Fleming, Rabinowitz, Pinchuk, McCarthy, Trumbull and Mitts. |
(3) | Includes (i) 3,719 shares of common stock owned directly; and (ii) 32,443 shares of restricted stock units which are subject to forfeiture, of which 3,907 shares of restricted stock units vest within 60 days. Excludes 51,079 shares of common stock issuable under options granted to Mr. Morelli which are not exercisable within 60 days. |
(4) | Includes (i) 33,321 shares of common stock owned directly; (ii) 41,150 shares of restricted stock units which are subject to forfeiture, of which 2,859 shares of restricted stock units vest within 60 days; and (iv) 9,138 shares of common stock issuable under options granted to Mr. McCormick which are exercisable within 60 days. Excludes 22,253 shares of common stock issuable under options granted to Mr. McCormick which are not exercisable within 60 days. |
(5) | Includes (i) 302 shares of common stock allocated to Mr. Korman’s ESOP account; (ii) 14,869 shares of restricted stock units which are subject to forfeiture, of which 3,330 shares of restricted stock units vest within 60 days; and (iii) 10,069 shares of common stock issuable under options granted to Mr, Korman which are exercisable within 60 days. Excludes 19,575 shares of common stock issuable under options granted to Mr. Korman which are not exercisable within 60 days and 307,890 additional shares of common stock owned by the ESOP for which Mr. Korman serves as one of three trustees and for which he disclaims any beneficial ownership. |
(6) | Includes (i) 21,039 shares of common stock owned directly; (ii) 242 shares of common stock allocated to Mr. Rustowicz’s ESOP account; (iii) 15,821 shares of restricted stock units which are subject to forfeiture, of which 5,756 shares of restricted stock units vest within 60 days; and (iv) 17,219 shares of common stock issuable under options granted to Mr. Rustowicz which are exercisable within 60 days. Excludes 31,721 shares of common stock issuable under options granted to Mr. Rustowicz which are not exercisable within 60 days and 307,950 additional shares of common stock owned by the ESOP for which Mr. Rustowicz serves as one of three trustees and for which he disclaims any beneficial ownership. |
(7) | Includes (i) 15,821 shares of common stock owned directly; (ii) 1,609 shares of common stock allocated to Mr. Wozniak’s ESOP account; (iii) 10,501 shares of restricted stock units which are subject to forfeiture, of which 3,998 shares of restricted stock units vest within 60 days; and (iv) 11,830 shares of common stock issuable under options granted to Mr. Wozniak which are exercisable within 60 days. Excludes 20,404 shares of common stock issuable under options granted to Mr. Wozniak which are not exercisable within 60 days. |
(8) | Includes options to purchase an aggregate of 63,807 shares of common stock issuable to certain executive officers which are exercisable within 60 days. Excludes (i) the shares of common stock owned by the ESOP as to which Mssrs. Rustowicz and Korman serve as two of three trustees, except for an aggregate of 5,444 shares allocated to the respective ESOP accounts of our executive officers; and (ii) options to purchase an aggregate of 173,734 shares of common stock issued to certain executive officers which are not exercisable within 60 days. |
(9) | Information with respect to RBC Global Asset Management (U.S.) Inc. is based on a Schedule 13G/A filed by RBC Global Asset Management (U.S.) Inc. with the Securities and Exchange Commission on February 12, 2018. Based solely upon information in this Schedule 13G/A, RBC Global Asset Management (U.S.) Inc. has shared dispositive power with respect to all of such shares of common stock. The stated business address of RBC Global Asset Management (U.S.) Inc. is 50 South Sixth Street, Suite 2350, Minneapolis, Minnesota 55042. |
(10) | Information with respect to BlackRock, Inc. is based on a Schedule 13G/A filed with the Securities and Exchange Commission on January 29, 2018. Based solely upon information in this Schedule 13G/A, BlackRock, Inc. has sole dispositive power with respect to all of such shares of common stock. The stated business address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
(11) | Information with respect to Dimensional Fund Advisors LP is based on a Schedule 13G filed with the Securities and Exchange Commission on February 9, 2018. Based solely upon information in this Schedule 13G, Dimensional Fund Advisors LP has sole dispositive power with respect to all of such shares of common stock. The stated business address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
20
2018 PROXY STATEMENT
Section 16(a) of the Exchange Act requires our Directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the Securities and Exchange Commission and NASDAQ initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Our executive officers, Directors and greater than 10% shareholders are required to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations that no other reports were required, we are in compliance with all Section 16(a) filing requirements applicable to our executive officers, Directors and greater than 10% beneficial owners during the fiscal year ended March 31,
2018, except for the late filing of the Form 4 in connection with the vesting of Ms. Goodspeed’s restricted stock units on May 31, 2017, the late filing of the Form 4 in connection with Mr. Buer’s sale of 5,147 shares on June 7, 2017, the late filing of the Form 4’s in connection with the vesting of restricted stock units on July 18, 2017 for Messrs. Fleming, McCarthy, Mitts, Pinchuk, Rabinowitz, Trumbull and Verebleyi, the late filing of the Form 4 in connection with Mr. Tevens’ sale of 24,913 shares on August 9, 2017, the late filing of the Form 4 in connection with Mr. Korman’s sale of 500 shares on December 13, 2017, and the late filing of Mr. Stewart’s Form 3. The late Form 4 filings were due primarily to employee turnover and the timing of information received from external brokers.
The Audit Committee reviews and makes recommendations where appropriate to the Board of Directors with respect to all related party transactions and relationships. Pursuant to Regulation S-K 404, a “related person” includes (among others) an officer, director and, by reference to S-K 403(a), a party who beneficially owns more than 5% of any class of the Company’s voting securities, or a person known by the Company to be an immediate family member of any of the foregoing, who is a party to a transaction with the Company in which the payment for a fiscal year exceeds $120,000. Any
such related party transaction is required to be on terms no less favorable to the Company than could be obtained from an unaffiliated third party. The Company has a separate “Related Person Transaction Policy”, as well as other various policies and procedures, including the Company’s Global Legal Ethics and Business Compliance Manual and the annual directors’ and officers’ questionnaires that require disclosure of transactions or relationships that may constitute conflicts of interest or require disclosures or affect an independence determination under applicable SEC rules.
The cost of solicitation of proxies will be borne by us, including expenses in connection with preparing and mailing this Proxy Statement. In addition to the use of the mail, proxies may be solicited by personal interviews or by telephone, telecommunications or other electronic means by our Directors, officers and employees at no additional
compensation. Arrangements will be made with brokerage houses, banks and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of our common stock, and we will reimburse them for reasonable out-of-pocket expenses incurred by them in connection therewith.
21
2018 PROXY STATEMENT
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, some shareholder proposals may be eligible for inclusion in our 2018 proxy statement. These shareholder proposals must be submitted, along with proof of ownership of our stock in accordance with Rule 14a-8, by U.S. mail, postage prepaid, to our Corporate Secretary, Alan S. Korman, at Columbus McKinnon Corporation, 205 Crosspoint Parkway, Buffalo, New York 14068. Failure to deliver a proposal in accordance with this procedure may result in the proposal not being deemed timely received.
In addition, under our By-laws, any shareholder who intends to nominate a candidate for election to the Board or to propose any business at our 2018 annual meeting (other than precatory (non-binding) proposals presented under Rule 14a-8) pursuant to the advance notice provisions of the By-Laws, must give notice to our Corporate Secretary not less 90 days nor more than 120 days prior to the first anniversary of the 2017 Annual Meeting. In each case, the notice must include information specified in our By-Laws, including information concerning the nominee or proposal, as the case may be, and information about the shareholder’s ownership of and agreements related to our stock. In the event the date of the 2018 Annual Meeting is advanced by more than thirty (30) days, or delayed by more than sixty (60) days, from such anniversary date, notice by the shareholder, to be timely, must
be so delivered, or mailed and received, not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such annual meeting is first made by the Corporation. In no event shall any adjournment or the announcement thereof commence a new time period (or extend any time period) for the giving of a shareholder’s notice as described above.
In addition to the information required in a notice of a proposal, a notice to our Corporate Secretary with respect to nominations must contain certain information regarding each proposed nominee for director. Further information regarding proposals or nominations by shareholders can be found in Section 1.11 of the Company’s By-Laws. If our Board of Directors or a designated committee determines that any proposal or nomination was not made in a timely fashion or fails to meet the information requirements of Section 1.11, such proposal or nomination will not be considered.
As of the date of this Proxy Statement, the Board of Directors does not intend to present, and has not been informed that any other person intends to present, any matter for action at this meeting other than those specifically referred to in this Proxy Statement. If other matters properly come before the meeting, it is intended that the holders of the proxies will act with respect thereto in accordance with their best judgment.
Our Board of Directors has adopted a written policy regarding communications with our Board of Directors. A copy of this
policy is posted on the Investor Relations section of the Company’s website at www.cmworks.com.
Our orientation programs familiarize new directors with our Company’s businesses, strategies, and policies, and assist new directors in developing the skills and knowledge required for their service on the Board. Throughout the year we also
present educational materials including a membership to the National Association of Corporate Directors to the Board to assist our directors in maintaining skills and knowledge necessary or appropriate for the performance of their responsibilities.
22
2018 PROXY STATEMENT
No interlocking relationship exists between any member of our Compensation and Succession Committee or any of our executive officers and any member of any other company’s board of directors or compensation committee (or equivalent),
nor has any such relationship existed in the past. No member of our Compensation and Succession Committee was, during fiscal year 2018 or prior thereto, an officer or employee of our Company or any of our subsidiaries.
23
2018 PROXY STATEMENT
Review of Our Audited Financial Statements
Our Audit Committee is comprised of the Directors named below, each of whom is independent as defined under Section 10A(m) of the Securities Exchange Act of 1934 and Section 3 of the Sarbanes-Oxley Act of 2002 and under Rule 5605 of the NASDAQ Stock Market, Inc., listing standards as currently in effect. In addition, pursuant to the requirements of Section 407 of the Sarbanes-Oxley Act of 2002, our Board of Directors has determined that Messrs. Trumbull, Fleming and Mitts qualify as “audit committee financial experts.”
The Audit Committee operates under a written charter which includes provisions requiring Audit Committee advance approval of all audit and non-audit services to be provided by the Company’s independent registered public accounting firm. However, as a matter of course, we will not engage any outside accountants to perform any significant audit or non-audit services without the prior approval of the Audit Committee.
The Audit Committee has reviewed and discussed with our management our audited financial statements for the fiscal year ended March 31, 2018. The Audit Committee has also discussed with Ernst & Young LLP, our independent auditors, the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, “Communications with Audit Committees.”
The Audit Committee has also received and reviewed the written disclosures and the letter from Ernst & Young LLP pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence and has discussed the independence of Ernst & Young LLP with that firm.
Based on the review and the discussions noted above, the Audit Committee recommended to our Board of Directors that our audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018 for filing with the Securities and Exchange Commission.
Heath A. Mitts, Chair
R. Scott Trumbull
Richard H. Fleming
Stephen Rabinowitz
Kathryn V. Roedel
May 21, 2018
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2018 PROXY STATEMENT
The Compensation and Succession Committee of the Board of Directors recommends the compensation for our President and Chief Executive Officer and Chief Financial Officer to the full Board of Directors for approval and approves the compensation for our other executive officers. This Committee is composed entirely of Directors who are neither executive officers nor employees ("associates"(“associates”) of our Company. In addition, the Compensation and Succession Committee recommends grants under our 2016 Long Term Incentive Plan and oversees the administration of other compensation plans and programs.
The Compensation and Succession Committee has reviewed the Compensation Discussion and Analysis set forth below and has discussed it with management. In reliance on the reviews and discussions referred to above, the Compensation and Succession Committee recommended to the Board of Directors (and the Board has approved) that the Compensation Discussion and Analysis be included in this proxy statement and in the Annual Report on Form 10-K for the year ended March 31, 20172018 for filing with the Securities and Exchange Commission.
R. Scott Trumbull, Chair
May 21, 2018
25
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation Practices
What We Do | What We Don’t Do |
Pay for Performance Philosophy | No Excise Tax Gross Ups Upon Change-in-Control |
Minimum Stock Ownership Policy for NEOs | No Excessive Executive Perquisites |
Double Trigger Equity Acceleration Upon a Change-in-Control | No Tax Gross Ups on Perquisites or Benefits |
Independent Consultant Retained by Compensation & Succession Committee | No Repricing of Underwater Stock Options Without Stockholder Approval |
Regular Review of Share Utilization | No Inclusion of Long-term Incentive Awards in Severance or Retirement Benefit Calculations |
Maintain a Clawback Policy | No Permitted Hedging, Short Sales or Derivative Transactions in Company stock |
Review Compensation Related Risks | No Guaranteed Salary Increases or Guaranteed Annual Incentive Bonuses for NEOs |
We are a leading worldwide designer, manufacturer and marketer of material handling products, systems and services, which efficiently and ergonomically move, lift, position and secure materials. Key products include hoists, cranes, actuators, rigging tools and digital power and motion control systems. We are focused on commercial and industrial applications that require the safety and quality provided by our superior design and engineering know-how.
The successful execution of our business strategy depends on our ability to attract, motivate, reward and retain executive talent with the skills to foster innovative product and service development and grow the business in developing markets with the greatest opportunity. Our executive compensation program is guided by the following objectives:
Overview of Fiscal Year 20172018 Business Results and Performance-BasedPerformance-Based Compensation
For fiscal year 2017,2018, our priorities centered aroundon increasing shareholder value by driving profitable growth. Accordingly, our Annual Incentive Plan for fiscal year 20172018 was designed to focus on increasing consolidated operating income, and revenue, targeted regional operating income and revenue and certain strategic accomplishments.free cash flow for paying down debt. Our results in fiscal year 20172018 were lower than the aggressive plans that were set at the beginning of the fiscal year. A severe downturn in certain key end markets affected the ability of the team to accomplish their goals.significant and above plan. Accordingly, actual Annual Incentive Plan compensation earned by the Named Executive Officers ("NEOs"(“NEOs”) for fiscal year 20172018 averaged approximately 53.02%196.52% of the target annual incentive compensation opportunities established for each NEO at the start of the fiscal year.
Our NEOs received one-third of their fiscal year 20172018 long-term incentive compensation in the form of performance restricted stock units which are contingent upon consolidated revenue results for the two year measurement period of fiscal years 20172018 and 2018.2019. Therefore, no fiscal year 20172018 performance stock awards were earned during fiscal 2017.
26
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee establishes performance objectives for the Chief Executive Officer ("CEO"(“CEO”) based on our annual business plan and long term strategic goals approved by the Board of Directors. Progress against these goals is monitored by the Compensation Committee on a quarterly basis. The Compensation Committee evaluates the CEO’s performance against these goals annually, with input to the evaluation from all independent Directors. The Compensation Committee also considers market data validated by our independent consultant, comparisons of our performance to our peers, strategic achievements during the year, such as acquisitions and their integration into our business and value-creating divestitures. Based on these factors, the Compensation Committee makes recommendations concerning base salary increases, annual incentive award targets and payments under the Annual Incentive Plan and targets and awards under our long-term incentive program. The Compensation Committee has regularly-scheduled executive sessions to discuss CEO performance and compensation and other matters without any executive officers present. All aspects of the CEO’s compensation are approved by our
full Board of Directors upon recommendations made by the Compensation Committee, which is comprised totally of independent Directors.
Except for the CEO and Chief Financial Officer ("CFO"(“CFO”), the Compensation Committee reviews and approves base salary increases, Annual Incentive Plan targets and awards, long-term incentive program targets and awards and similar arrangements for the other NEOs in the Summary Compensation Table below after receiving recommendations from our CEO with input from the Vice President -Chief Human ResourcesResource Officer (CHRO) and our independent consultant. The Compensation Committee makes the final decision and approves compensation decisions for all NEOs, as well as all other executive officers, except for the CEO and CFO. All aspects of the CEO’s and CFO’s compensation are finally approved by our full Board of Directors.
The Compensation Committee’s composition is described in more detail in this proxy statement under the section above entitled "Corporate“Corporate Governance - Compensation and Succession Committee."”
The Compensation Committee has the authority under its charter to engage the services of outside consultants to determine the scope of the consultants’ services and to terminate such consultants’ engagement. In fiscal year 2017,2018, the Compensation Committee continued its engagement of Exequity LLP ("Exequity"(“Exequity”), an independent compensation consulting firm, to advise the Compensation Committee on certain matters related to executive compensation including:
Our compensation program should be designed to motivate and reward our executives for sustained superior performance through the use of variable compensation tied to short, intermediate and long term results; and | |
In fiscal year 2017,2018, Exequity reviewed market data based upon the Company’s target labor market for executive talent, presented market trends, proposed compensation and consulted on compliance issues. Additionally, Exequity attended in person or by telephone all Compensation Committee meetings.
Our management is involved in the following executive compensation processes:
(a) The Chief Human Resources Officer (“CHRO”) develops and oversees the creation of background and supporting materials for distribution to the Compensation Committee prior to its meetings; (2) The CEO and CHRO attend all Compensation Committee meetings, except the executive sessions of the meetings; (3) The CEO and CHRO annually present and make recommendations to the Compensation Committee relating to annual incentives and long-term incentive plan designs and changes, if warranted;(4) The CEO recommends to the Compensation Committee base salary, target annual incentive and target long term incentive adjustments for all executives, excluding the CEO; (5) The CHRO receives executive session decisions, actions and underlying rationale for implementation, as appropriate, following the Committee’s executive sessions; and (6) The CHRO regularly consults with and briefs the Compensation Committee chairman between scheduled Compensation Committee meetings.
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Our compensation philosophy and objectives are achieved by using the following elements in our compensation program for NEOs:
Element | Description | Key Objective | ||
Base Salary | Provide a fixed level of current cash compensation consonant with the executive’s primary duties and | Designed to be market competitive and enable us to attract and retain talented | ||
Short-Term Incentives - Annual Incentive | Provide | Designed to motivate and reward achievement of financial, operational and strategic | ||
Long-Term Incentives - Stock Options | Align executives with shareholders and offer retention with gradual vesting schedule. Provide motivation for long-term goals and overall | Designed to be market competitive, motivate and reward achievement of stock price growth and align executive’s interests with those of the | ||
Long-Term Incentives - Restricted Stock Units (Time-based) | Align executives with shareholders and offer retention with gradual vesting schedule. Provide motivation for long-term goals and overall | Designed to retain executives and align their interests with those of our | ||
Long-Term Incentives - Restricted Stock Units (Performance-based) | Provide variable compensation based on performance achieved against pre-established goals | Designed to retain executives and align their interests with those of our | ||
Retirement Benefits | Provide comprehensive retirement savings vehicles through qualified and non-qualified plans. Supports retention with gradual vesting | Market-based retirement programs targeted to attract and to retain talented executives while encouraging retirement | ||
Severance | Provide severance protection equal to one week of salary for every year of | Designed to be competitive in the market and allow for the attraction of talented |
In administering the compensation program, the Compensation Committee relies on market information provided periodically by its independent consultant. For evaluating compensation, the Compensation Committee reviews compensation data for industrial companies of comparable size, which reflect the types of companies with which we compete for talent. Here, we use a broader industrial market reference because the number of direct product and service market competitors is limited. Many of the companies that provide similar products and services are either privately held, headquartered overseas, or part of a larger enterprise; therefore, executive compensation
data may be either unavailable or of limited applicability to the U.S. labor market in which we principally compete.
Fiscal Year 2018 Peer Group | ||||
Alamo Group Inc. | ||||
Albany International Corp. | Altra Industrial Motion Corp. | |||
Barnes Group Inc. | Chart Industries, Inc. | CIRCOR International, Inc. | ||
Commercial Vehicle Group, Inc. | EnPro Industries, Inc. | ESCO Technologies Inc. | ||
Federal Signal Corporation | L.B. Foster Company | Franklin Electric Co., Inc. | ||
Graco Inc. | Haynes International, Inc. | Kadant Inc. | ||
Lindsay Corporation | Lydall, Inc. | NN, Inc. | ||
Powell Industries, Inc. | RBC Bearings Incorporated | |||
Standex International Corp. | ||||
Tennant Company | ||||
Xerium Technologies, Inc. |
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Comparison of Scope and Scale
Columbus McKinnon (CMCO) and Peer Companies(1) ($M)
Market Cap | Total Revenue | EBIT |
(1) | Peer data as disclosed in most recent 10-K filings |
The consultant reviewed the market data for the peer group with members of management and the CEO to obtain their views on the relative value of each position and differences in responsibilities between our jobs and those in the comparator groups.
In addition, we also consider data from compensation surveys published by leading compensation consultants and advisory
firms including Mercer and Willis Towers Watson. The survey analysis targets companies of comparable size in the manufacturing sector, supplemented with general industry data as needed.
The total compensation package for our executive officers consists of base salary, annual incentives, long-term incentives and benefits. In determining both the target level of compensation and mix of compensation elements, we consider market practice, business objectives, expectations of our shareholders and our own subjective assessment of individual executives’ performance, growth and future potential.
will continue to be monitored as one reference point as we make decisions regarding target pay mix. However, we will also continue to make strategic decisions based on our unique business objectives and circumstances, which may differ from peer company practices and circumstances.
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The following table shows the dollar values and pay mix percentages of our fiscal year 20172018 target direct pay opportunities for our NEOs:
Executive Officer | Base Salary ($) | Annual Incentive Target Opportunity ($) | Total Cash Compensation Opportunity ($) | Long-Term Incentive Target Opportunity ($) | Total Target Pay Opportunity ($) |
Mark D. Morelli President and CEO | 675,000 | 675,000 | 1,350,000 | 1,181,250 | 2,531,250 |
27% | 27% | 54% | 46% | 100% | |
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 373,430 | 186,715 | 560,145 | 448,116 | 1,008,261 |
37% | 19% | 56% | 44% | 100% | |
Peter M. McCormick Vice President - Crane Solutions | 366,000 | 183,000 | 549,000 | 329,400 | 878,400 |
41% | 21% | 62% | 38% | 100% | |
Alan S. Korman Vice President Corporate Development, General Counsel and CHRO | 309,920 | 154,960 | 464,880 | 278,928 | 743,808 |
41% | 21% | 62% | 38% | 100% | |
Kurt F. Wozniak Vice President - Industrial Products | 319,050 | 159,525 | 478,575 | 287,145 | 765,720 |
42% | 21% | 63% | 37% | 100% |
Executive Officer | Base Salary ($) | Annual Incentive Target Opportunity ($) | Total Cash Compensation Opportunity ($) | Long-Term Incentive Target Opportunity ($) | Total Target Pay Opportunity ($) | |||||
Mark D. Morelli, | 675,000 | 675,000 | 1,350,000 | 1,181,250 (1) | 2,531,250 | |||||
President and CEO | 27% | 27% | 54% | 46% | 100% | |||||
Gene P. Buer, | 304,500 | 152,250 | 456,750 | 274,050 | 730,800 | |||||
Vice President – | 42% | 21% | 63% | 37% | 100% | |||||
Solutions Group | ||||||||||
Ivo Celi, | 285,093 | 142,546 | 427,639 | 256,584 | 684,223 | |||||
Vice President - EMEA | 42% | 21% | 63% | 37% | 100% | |||||
Gregory P. Rustowicz, | 348,500 | 174,250 | 522,750 | 418,200 | 940,950 | |||||
Vice President – Finance | 37% | 19% | 56% | 44% | 100% | |||||
and Chief Financial Officer | ||||||||||
Kurt F. Wozniak, | 294,500 | 147,250 | 441,750 | 265,050 | 706,800 | |||||
Vice President - Americas | 42% | 21% | 63% | 37% | 100% | |||||
Timothy T. Tevens, | 730,000 | 730,000 | 1,460,000 | 1,277,500 | 2,737,500 | |||||
Former President and CEO | 27% | 27% | 54% | 46% | 100% |
Actual compensation levels are a function of Company and individual performance as described under each specific compensation element below. When making pay decisions, the Compensation Committee considers the competitiveness of individual elements of compensation, as well as the aggregate sum of base salary, annual incentives and the expected value of long-term incentives (determined at grant) for an executive officer. Awards are generally prorated if ana NEO is promoted during the year, based on the timing of the promotion. The Compensation Committee may also consider salary increase history, past incentive awards and past equity awards as context in understanding year-to-year changes in compensation and retention effect of prior awards.
awards are determined based upon target values established for each of the NEOs and then adjusted upon comparison of actual performance to pre-established criteria. The Compensation Committee retains the discretion to decrease the size of individual awards in situations where an executive officer’s individual performance falls below expectations. Final decisions on any major element of compensation, as well as total compensation for executive officers, are made by the Compensation Committee or the Board of Directors. Our Compensation Committee is comprised entirely of non-associateindependent Directors and our CEO does not participate in discussions related to his compensation when presented to the Board of Directors.
In establishing the structure and levels of executive compensation, the Compensation Committee has been mindful of the potential for risk taking by management to achieve certain target or above target incentives. The Compensation Committee has sought to balance fixed and variable compensation, short-term and long-term compensation, the performance metrics used in determining incentive compensation and the level of in-service and post-retirement benefits to mitigate unnecessary or excessive risk taking.
Additionally, the Company has adopted policies and programs which encourage management not to take excessive risks including:
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Base Salary
Base salary provides a fixed amount of compensation appropriate to attract and retain key executives and to underpin the cyclic nature of our business that can cause fluctuations in variable compensation from year to year. The Compensation Committee reviews base salaries on an annual basis, recommends adjustments to the CEO’s and CFO’s salaries to the Board of Directors and approves adjustments for other NEOs. Salary adjustments are based on an assessment of the individual executive’s performance and our goal of achieving market parity with the salaries of executives in the competitive market, recognition of promotion or other increases in responsibility, the scope of the executive’s role relative to our other executives and the general economic environment impacting the Company. History of salary increases may also be reviewed and considered.
Mid-year adjustments are considered when there is a significant change in the executive’s role or responsibility.The Compensation Committee has recommended that any adjustments to salary for an executive officer will depend upon a formal annual review of job performance, accomplishments and progress toward individual and/or overall goals and objectives for each segment of our business that such executive officer oversees, as well as his or her contributions to our overall direction. Long term growth in shareholder value is an important factor. The results of executive officers’ performance evaluations, as well as their demonstration and support of the Company’s values, including strong ethics, leadership and sound corporate governance, form a part of the basis of the Compensation Committee’s decision to approve, at its discretion, or recommend to the Board for the CEO and CFO, future adjustments in base salaries of our executive officers.
The Committee approved the following base salary adjustments effective April 1, 20172018 for our NEOs:
Executive Officer | FY 2017 Base Salary Adjustments ($) | FY 2018 Base Salary ($) | Percentage Change | ||||||
Mark D. Morelli President and CEO | — | 675,000 | — | % | |||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 24,930 | 373,430 | 7 | % | |||||
Peter M. McCormick Vice President - Crane Solutions | (40,234 | ) | 366,000 | (11 | )% | ||||
Alan S. Korman Vice President Corporate Development, General Counsel and CHRO | 12,420 | 309,920 | 4 | % | |||||
Kurt F. Wozniak Vice President - Industrial Products | 9,350 | 303,850 | 3 | % |
Executive Officer (1) | Base Salary ($) | FY 2017 Base Salary Adjustments ($) | FY 2017 Base Salary ($) | Percentage Increase | |||||
Gene P. Buer, | 298,700 | 5,800 | 304,500 | 1.9% | |||||
Vice President - Solutions Group | |||||||||
Ivo Celi, | 283,683 | 1,410 | 285,093 | 0.5% | (2) | ||||
Vice President - EMEA | |||||||||
Gregory P. Rustowicz, | 335,075 | 13,425 | 348,500 | 4.0% | |||||
Vice President – Finance and Chief Financial Officer | |||||||||
Kurt F. Wozniak, | 286,000 | 8,500 | 294,500 | 3.0% | |||||
Vice President - Americas | |||||||||
Timothy T. Tevens, | 718,468 | 11,532 | 730,000 | 1.6% | |||||
Former President and CEO |
The purpose of the Annual Incentive Plan is to attract, motivate, reward and retain highly qualified executives on a competitive basis and provide financial incentives that promote Company success.
At the beginning of each fiscal year, our Compensation Committee recommends, and our Board approves, the key measures or "Drivers"“Drivers” for the Annual Incentive Plan. The Annual Incentive Plan focuses on the short-term goals that are most important to our success over the fiscal year and that are generally within the control of the participants. It is the policy and ongoing intention of our Board of Directors to establish targeted performance levels for each Driver at the
beginning of the fiscal year or the start of the respective performance period. Targeted performance levels are generally set for our Company as a whole, but may also encompass individual business units, groups, divisions, or individual performance levels, as appropriate. Drivers and targeted performance levels are based on the Board of Directors’ assessment of our priorities, outlook, current and projected economic conditions and other pertinent factors, and are intended to be challenging, but achievable with significant and effective effort.
The Board of Directors reviews audited year-end results to determine whether targeted performance levels have been
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
met. The Board of Directors retains discretion to cap, reduce, or eliminate payments under the Annual Incentive Plan.
Drivers are determined by multiplying the appropriate weighting by the percentages outlined in the table below; linear interpolation is used to determine percentages when performance falls between levels. The aggregate payout to any NEO may not exceed 200% of target.
Driver Performance Level | Percentage of Target (to be multiplied by weight for each Driver) | |
Maximum Performance Level (or higher) | 200% | |
Target Performance Level | 100% | |
Threshold Performance Level | 50% | |
Below Threshold Performance Level | 0% |
The Annual Incentive Plan (AIP) for fiscal year 20172018 was designed to help us focus on increasing profitability while managing our strategic priorities to position the Company for longer term profitable growth. For fiscal 2017, forty2018, fifty percent (40%(50%) of our NEOs’ target was based on EBIT at the Consolidatedconsolidated level, fortyand fifty percent (40%(50%) was based on Revenue at the Consolidated level and the remaining twenty percent (20%) of our NEOs’ target was based upon a shared strategic measure.consolidated Free Cash Flow. Drivers and associated
weightings for fiscal year 2017,2018, which were established by the Board of Directors for each executive officer, are shown below. Our CEO has the ability to assign an individual performance factor to each of the individual NEOs, other than CEO, of up to 25% up or down based upon his evaluation of their individual performance. Lastly, no AIP will be earned unless Consolidated EBIT is positive.
Financial Measures and Weights – 80%100% of Plan
Fiscal 2018 Drivers (April 1, 2017 to March 31, 2018) | Mark D. Morelli | Gregory P. Rustowicz | Peter M. McCormick | Alan S. Korman | Kurt F. Wozniak |
Consolidated EBIT | 50% | 50% | 50% | 50% | 50% |
Free Cash Flow | 50% | 50% | 50% | 50% | 50% |
Fiscal 2017 Drivers (April 1, 2016 to March 31, 2017) | Mark D. Morelli | Gene P. Buer | Ivo Celi | Gregory P. Rustowicz | Kurt F. Wozniak |
Consolidated EBIT | 40% | 40% | 40% | 40% | 40% |
Consolidated Revenue | 40% | 40% | 40% | 40% | 40% |
Results
The fiscal year 20172018 financial targets, performance achieved as a percent of target, and the fiscal year 20172018 payout percentages under each Driver are shown below.
Fiscal 2018 Annual Incentive Plan - EBIT and Free Cash Flow (Dollars in Millions) | |||||
Threshold ($) | Target ($) | Maximum ($) | Result ($) | ||
Fiscal 2018 Drivers (April 1, 2017 – March 31, 2018) | Fiscal 2018 Performance % of Target | ||||
Consolidated EBIT(1) | 60.0 | 69.3 | 80.0 | 79.25 | 193.03% |
Consolidated Free Cash Flow(1) | 36.1 | 40.1 | 44.1 | 55.14 | 200% |
Fiscal 2017 Annual Incentive Plan - EBIT and Revenue Targets and Performance (Dollars in Millions) | ||||||||||
Threshold ($) | Target ($) | Maximum ($) | Result ($) | |||||||
Fiscal 2017 Drivers (April 1, 2016 – March 31, 2017) | Fiscal 2017 Performance % of Target | |||||||||
Consolidated EBIT (1) | 40.9 | 64.0 | 87.4 | 47.2 | 45.6 | |||||
Consolidated Revenue(1) | 603.0 | 670.0 | 737.0 | 611.2 | 34.2 | |||||
Consolidated Free Cash Flow (1) | 48.6 | 54.0 | 59.4 | 54.2 | 105.5 |
(1) | Fiscal year |
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Annual incentive targets, strategic and overall achievement percentages, as well as, the overall incentive payment as a percentage of base salary awarded for fiscal year 20172018 are shown below:
Executive Officer | Annual Incentive Target (% of Base Salary) | Overall Annual Incentive Plan Rating (% of Target Award) | Actual Payout Based on Performance Achieved (% of Base Salary) |
Mark D. Morelli President and CEO | 100% | 196.52% | 196.52% |
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 50% | 196.52% | 98.26% |
Peter M. McCormick Vice President – Crane Solutions | 50% | 196.52% | 98.26% |
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | 50% | 196.52% | 98.26% |
Kurt F. Wozniak Vice President- Industrial Products | 50% | 196.52% | 98.26% |
Executive Officer | Annual Incentive Target (% of Base Salary) | Overall Annual Incentive Plan Rating (% of Target Award) | Actual Payout Based on Performance Achieved (% of Base Salary) |
Mark D. Morelli, | |||
President and CEO | 100% | 53.0% | 4.6% (1) |
Gene P. Buer, | |||
Vice President - Solutions Group | 50% | 53.0% | 26.5% |
Ivo Celi, | |||
Vice President - EMEA | 50% | 53.0% | 26.5% |
Gregory P. Rustowicz, | |||
Vice President – Finance and Chief Financial Officer | 50% | 53.0% | 26.5% |
Kurt F. Wozniak, | |||
Vice President - Americas | 50% | 53.0% | 26.5% |
Timothy T. Tevens, | |||
Former President and CEO | 100% | 53.0% | 53.0% |
The objectives of our long term incentive program are to:
In developing target levels for long term incentive compensation for NEOs in conjunction with our current equity-based compensation strategy, the following factors were considered:
Executive Officer | Long Term Incentive Target (% of Base Salary) | |
Mark D. Morelli | ||
President and CEO | 175% | |
Gregory P. Rustowicz | ||
Vice President | 120% | |
Peter M. McCormick Vice President – Crane Solutions | 90% | |
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | 90% | |
Kurt F. Wozniak | ||
Vice President - | 90% |
The target long term incentive mix for our NEOs consists of non-qualified stock options (one-third of target value), restricted stock or RSUs (one-third of target value), and performance RSUs (one-third of target value). Dollar values are converted to share numbers based on an estimate of expected value at initial grant.
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The following tables summarize the equity granted as part of the NEOs’ annual compensation for fiscal year 2017.
Executive Officer | Target Number of Performance RSUs(1) | Options Granted | RSUs Granted |
Mark D. Morelli President and CEO | 15,576 | 51,403 | 15,576 |
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 5,909 | 19,500 | 5,909 |
Peter M. McCormick Vice President - Crane Solutions | 4,821 | 15,910 | 10,151 |
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | 3,678 | 12,138 | 9,013 |
Kurt F. Wozniak Vice President- Industrial Products | 3,606 | 11,900 | 3,606 |
Executive Officer | Target Number of Performance RSUs (1) | Options Granted | RSUs Granted | |||
Mark D. Morelli, (2) | — | 68,105 | 22,305 | |||
President and CEO | ||||||
Gene P. Buer, | 5,940 | 18,567 | 5,940 | |||
Vice President - Solutions Group | ||||||
Ivo Celi, | 5,808 | 18,155 | 5,808 | |||
Vice President - EMEA | ||||||
Gregory P. Rustowicz, | 9,064 | 28,333 | 9,064 | |||
Vice President - Finance and Chief Financial Officer | ||||||
Kurt F. Wozniak, | 5,744 | 17,957 | 5,744 | |||
Vice President - Americas | ||||||
Timothy T. Tevens, | 27,687 | 86,551 | 27,687 | |||
Former President and CEO |
(1) | Grant represents target value for fiscal year |
Stock options are included to align management and shareholder interest by encouraging decisions and actions that result in long term stock appreciation and ownership interest for management. In order to support retention and align executives with our stock performance over a longer horizon, grants generally vest 25% per year commencing on the first anniversary of the grant date and remain exercisable for 10 years from the date of grant.
RSUs are designed to support executive retention and share ownership. In order to support retention and align executives with our stock performance over a longer horizon, RSUs vest 25% annually over the 1
Grants of performance RSUs are made annually, with vesting dependent upon performance achieved. Fiscal year 20172018 performance is based upon the two year Consolidated Net Revenue performance with final vesting of the award on the
third anniversary of the grant. Actual vesting of the awards and their ultimate value will be determined by Consolidated Net Revenue results.
For fiscal year 2017,2018, performance shares are subject to adjustment based on the performance and payout relationship as illustrated in the table below:
Driver Performance Level | FY18-19 Consolidated Net Revenue Targets | Percentage of Target |
Exceed Target by 10% in Fiscal Years 2018 & 2019 | $1,758,900,000 | 150% |
Meet Target in Fiscal Years 2018 & 2019 | $1,599,000,000 | 100% |
Meet Target in Fiscal Years 2019 & 2020 | $1,599,000,000 | 75% |
Goal reached in greater than 3 years | 0% |
The performance adjusted amounts are reflected in the Outstanding Equity Awards at Fiscal Year-End table contained in this proxy.
such that long term incentives can qualify as performance-based compensation so that the expense associated with the program iscan be fully deductible for federal income tax purposes. Stock options and performance RSUs are expected to qualify as performance-based compensation.
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Stock Option Granting Practices
The exercise price for any stock option is equal to the fair market value on the date of grant, which is an average of the
high and low price on the date of grant. The date of grant is the date of the Board of Directors’Directors meeting at which the award is approved.
Retirement benefits provided to eligible U.S.-based NEOs are the same as those provided to our other full-time, salaried U.S.-based associates. Retirement programs are designed to provide a competitive benefit to associates while allowing the Company to manage costs.
In calendar 2017, we maintained a 401(k) retirement savings plan covering non-union U.S.-based associates. Highly compensated associates were eligible to contribute up to approximately 8%9% of annual cash compensation (base salary and payments under the Annual Incentive Plan), subject to limits set by the Internal Revenue Code. The Company matching contribution for partial year within fiscal year 20172018 was between 25% and 100% of associate contributions up to
6% based on years of service. Associates who arewere not grandfathered in the Pension Plan arewere also eligible for a core contribution equal to 2% of eligible wages.
We maintain an Employee Stock Ownership Plan for the benefit of our U.S.-based, non-union associates including our U.S.-based NEOs
We maintain a non-qualified deferred compensation plan (the "NQDC Plan"“NQDC Plan”) under which eligible participants (including our Directors and U.S.-based NEOs) may elect to defer a portion of their cash compensation. The NQDC Plan offers a company match and core contributions consistent with the benefits each individual is eligible for in our qualified 401(k) plan. Participants may defer up to 75% of their base salary and up to 100% of annual short-term and long-term incentive cash compensation. Payment of balances will occur in accordance with Internal Revenue Code Section 409A requirements.
With the exception of Mr. Morelli, and Dr. Celi, the Company has no employment agreements with its NEOs, but does provide the NEOs with eligibility for severance benefits under our general severance policy upon delivery of an acceptable release of legal claims, i.e., severed associates are paid one week of their base salary for every year of service at the Company.
Mr. Morelli’s agreement, entered into in February 2017, has a fixed term of three years and is then automatically renewed annually on the anniversary date for an additional one-year term unless the Company gives Mr. Morelli written notice prior to the anniversary date of its intention not to extend the term. Mr. Morelli’s salary may be reviewed from time to time by the Board but shall not be less than $675,000 per year.
Mr. Morelli participates in our Annual Incentive Plan in an amount to be set by the Board but his Target Annual Bonus shall not be less than 100% of his base salary. Additionally, Mr. Morelli participates in our Long Term Incentive Program at the discretion of the Company but the annual Long Term
35
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
terms are defined in his Employment Agreement, Mr. Morelli is entitled to receive, (a) his Base Salary through the Date of Termination, to the extent not previously paid, (b) reimbursement for any unreimbursed business expenses incurred by Mr. Morelli prior to the Date of Termination, (c) accrued but unused paid time off as of the Date of Termination, and (d) if Mr. Morelli executes and delivers a Release and Discharge of All Claims substantially in a form approved by the Company, he shall be entitled to the following payments and benefits: (i) two times (2x) the sum of (x) his Base Salary, and (y) the Target Annual Bonus for the year of termination, (ii) a pro rata bonus amount of
Annual Bonus for the year of termination, (iii) a cash payment equal to twenty-four (24) months times the monthly cost Mr. Morelli would incur if he elected to receive COBRA coverage under all Company group health care plans under which he is receiving coverage at the time of termination, (iv) automatic vesting in all employee welfare and benefit plans in which he is participating as of the Date of Termination, and (v) unless otherwise provided in an equity award agreement, full vesting as of the Date of Termination in any and all equity awards held by Mr. Morelli immediately prior to the Date of Termination.
We have entered into change in controlchange-in-control agreements with our NEOs and certain other of our officers and associates. The intent of these agreements is to provide executive officers with financial security in the event of a change in controlchange-in-control to facilitate a transaction which may benefit shareholders but result in job loss to executives. With the exception of Mr. Morelli’s change in controlchange-in-control agreement, the change in controlchange-in-control agreements provide for an initial term of one-year, which, absent delivery of notice of termination, is automatically renewed annually for an additional one year term. Mr. Morelli’s Change in Controlchange-in-control Agreement, entered into in February 2017, has an initial term through October 2020, and is then automatically renewed annually on November 1
Generally, each of the NEOs is entitled to receive, upon termination of employment within six months preceding or 24 months after a change in controlchange-in-control of our Company (unless such termination is because of death, disability, for cause or by the officer or associate other than for “good reason,” as defined in the change in controlchange-in-control agreements), (i) a lump sum severance payment up to three times the sum of (a) his or her
annual salary and (b) the greater of (1) the annual target incentive under the Annual Incentive Plan in effect on the date of termination and (2) the annual target incentive under the Annual Incentive Plan in effect immediately prior to the change in control,change-in-control, (ii) a lump sum payment, in cash, equal to thirty-six (36) times the monthly cost of continued coverage if COBRA is elected under the Company group health plans, (iii) a lump sum payment equal to the actuarial equivalent of the pension payment which he or she would have accrued under our tax-qualified retirement plans had he or she continued to be employed by us for three additional years, (iv) unless otherwise provided in an equity award agreement, all options, restricted shares or units and performance shares or units become fully vested and (v) certain other specified payments.
In October 2009, the Compensation Committee adopted a Clawback Policy applicable to our executive officers and certain other associates. Under the policy, in the event of (i) a material restatement of our consolidated financial statements, other than any restatement required pursuant to a change in applicable accounting rules or (ii) a violation of a
extent it determines that it is in our best interests to do so, in addition to all other remedies available, require reimbursement or payment by the covered person of:of Any amount (whether in cash or property) paid, payable or realized (including, but not limited to option exercises) under any plan or program providing for incentive compensation, equity compensation or performance-based compensation (“Covered Plans”) received by any covered person on or after October 19, 2009 that would not have been received had the consolidated financial statements that are the subject of such restatement been correctly stated (except that the Board or Compensation Committee shall have the right to require reimbursement of the entire amount of any such amount referenced above from any covered person whose fraud or other intentional
36
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
misconduct, in the Board’s or Committee’s judgment, alone or with others caused such restatement); and any amount (whether in cash or property) paid, payable or realized (including, but not limited to, option exercises) by a covered person under a Covered Plan if the Board or Compensation Committee determines that covered person engaged in detrimental conduct even in the absence of a subsequent restatement of our financial statements.
The Board or the Compensation Committee has sole and absolute discretion not to take action upon discovery of Detrimental Conduct, and its determination not to take action in any particular instance shall not in any way limit its authority to terminate participation of a covered person in a plan.
We generally do not consider accounting and tax issues in setting compensation levels or in establishing the implicationsparticular elements of compensation. As discussed below, however, when our compensation committee grants awards under our long-term incentive program, the committee does consider the accounting for various stock-based incentives under FASB ASC Topic 718 and the tax treatment of such incentive awards under Section 162(m) of the Internal Revenue CodeCode. However, on December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) became law, significantly amending Section 162(m). The Tax Act eliminated the performance-based compensation exception with respect to tax years beginning January 1, 2018, but included a transition rule with respect to compensation that is provided pursuant to a written binding contract in making decisions concerningeffect on November 2, 2017 and not materially modified after that date. Accordingly, commencing in 2018,
the company’s tax deduction with regard to compensation design and administration. The Compensation Committee views taxof covered employees generally will be limited to $1 million per taxable year for each officer. We will generally seek to preserve the deductibility as an important consideration and intends to maintain deductibility wherever possible, but also believes that our business needs should be the overriding factor of performance-based compensation design. Therefore, the Compensation Committee believes it is important to maintain flexibility and has not adopted a policy requiring that specific programs meetby meeting the requirements of performance-based compensation under Section 162(m). Nevertheless, we believe that all compensation provided, as amended by the Tax Act, in accordance with the transition rule applicable to binding contract in effect on November 2, 2017, to the NEOs for fiscal year 2017 is substantially deductible. The Committee also considers tax implications for executivesextent practicable and structuresin the best interests of the Company and its compensation programs to comply withstockholders.
Additionally, Section 409A of the Internal Revenue Code generally imposes a tax on non-qualified deferred compensation arrangements which do not meet guidelines established by regulations under the Internal Revenue Code. Accounting and cost implications ofThe Company’s non-qualified deferred compensation programsarrangements are considered in program design; however, the main factor is alignmentintended to comply with our business needs.Section 409A.
37
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The following table sets forth the cash compensation, as well as certain other compensation earned during the fiscal years ended March 31, 2018, 2017 2016 and 2015,2016, for the Company’s Chief Executive Officer, Chief Financial Officer and each of its three other most highly compensated executive officers who received annual compensation in excess of $100,000:
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Award(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(4) ($) | All Other Compensation(5) ($) | Total Compensation ($) | ||||||||||||||||||
Mark D. Morelli, President and CEO | 2018 | 675,000 | — | 787,523 | 393,747 | 1,326,510 | 74 | 20,220 | 3,203,074 | ||||||||||||||||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 2018 | 373,430 | — | 298,759 | 149,370 | 366,932 | 3,905 | 14,841 | 1,207,237 | ||||||||||||||||||
2017 | 349,840 | 51 | 285,334 | 139,398 | 92,387 | 7,508 | 13,431 | 887,949 | |||||||||||||||||||
2016 | 337,653 | — | 202,961 | 100,523 | 31,832 | (852 | ) | 14,011 | 686,129 | ||||||||||||||||||
Peter M. McCormick Vice President- Crane Solutions | 2018 | 366,000 | — | 443,731 | 121,871 | 359,632 | 1,793 | 10,731 | 1,303,758 | ||||||||||||||||||
2017 | 406,234 | — | 207,796 | 101,558 | 324,987 | — | 2,812 | 1,043,387 | |||||||||||||||||||
2016 | 406,234 | — | 1,425,840 | — | — | — | 7,714 | 1,839,788 | |||||||||||||||||||
Alan S. Korman Vice President, Corporate Development, General Counsel & CHRO | 2018 | 309,920 | — | 385,969 | 92,997 | 304,527 | 1,757 | 8,566 | 1,103,716 | ||||||||||||||||||
2017 | 297,500 | — | 182,620 | 89,249 | 78,867 | — | 5,347 | 653,583 | |||||||||||||||||||
2016 | 288,750 | — | 97,166 | 48,125 | 25,988 | — | 5,586 | 465,615 | |||||||||||||||||||
Kurt F. Wozniak Vice President - Industrial Products | 2018 | 319,050 | — | 182,319 | 91,154 | 313,499 | 23,873 | 20,411 | 950,306 | ||||||||||||||||||
2017 | 295,633 | — | 180,822 | 88,348 | 78,072 | (45,963 | ) | 21,383 | 618,295 | ||||||||||||||||||
2016 | 288,200 | — | 173,233 | 85,800 | 24,167 | (2,586 | ) | 22,560 | 591,374 |
Name and Principal Position | Fiscal Year | Salary ($) | Bonus (13) ($) | Stock Award (2) ($) | Option Awards (3) ($) | Non-Equity Incentive Plan Compensation (4) ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings (5) ($) | All Other Compensation ($) | Total Compensation ($) | ||
Mark D. Morelli, President and CEO (1) | 2017 | 62,308 | 0 | 577,923 | 600,005 | 31,387 | 0 | 0 | 1,271,623 | ||
Gene P. Buer, Vice President Solutions Group | 2017 | 305,671 | 0 | 186,992 | 91,350 | 80,723 | 46,430 | 7,997 | (6) | 719,163 | |
2016 | 300,998 | 0 | 180,915 | 89,610 | 13,442 | 55,607 | 8,355 | 648,927 | |||
2015 | 291,115 | 0 | 178,178 | 89,078 | 72,500 | 120,136 | 9,313 | 760,320 | |||
Ivo Celi, Vice President - EMEA | 2017 | 286,189 | (7) | 0 | 182,836 | 89,323 | 75,904 | 0 | 12,112 | (8) | 646,364 |
2016 | 289,076 | 0 | 173,184 | 85,783 | 39,603 | 0 | 10,257 | 597,903 | |||
2015 | 276,266 | 0 | 186,369 | 93,154 | 69,066 | 0 | 8,960 | 633,815 | |||
Gregory P. Rustowicz, Vice President Finance and Chief Financial Officer | 2017 | 349,840 | 51 | 285,334 | 139,398 | 92,387 | 7,508 | 13,431 | (9) | 887,949 | |
2016 | 337,653 | 0 | 202,962 | 100,523 | 31,832 | (852) | 14,011 | 686,129 | |||
2015 | 326,250 | 0 | 199,712 | 99,831 | 132,210 | 2,663 | 12,638 | 773,304 | |||
Kurt F. Wozniak, Vice President - Americas | 2017 | 295,633 | 0 | 180,822 | 88,348 | 78,072 | (45,963) | 21,383 | (10) | 618,295 | |
2016 | 288,200 | 0 | 173,233 | 85,800 | 24,167 | (2,586) | 22,560 | 591,374 | |||
2015 | 261,000 | 161 | 159,791 | 79,865 | 80,444 | 65,968 | 23,514 | 670,743 | |||
Timothy T. Tevens, Former President and CEO (11) | 2017 | 732,808 | 256 | 871,586 | 425,831 | 387,046 | 31,405 | 6,359 | (12) | 2,455,291 | |
2016 | 723,995 | 0 | 846,264 | 419,107 | 143,694 | 24,109 | 8,924 | 2,166,093 | |||
2015 | 700,225 | 0 | 833,452 | 416,637 | 453,402 | 249,874 | 9,547 | 2,663,137 |
(1) |
The amounts shown in this column reflect the aggregate grant date fair value for restricted stock units and performance shares granted in the year indicated under our Long Term Incentive Plan. However, for purposes of this table, estimates of forfeitures have been removed. The grant date fair value for each restricted stock unit is equal to the market price of our common stock on the date of grant. The assumptions used in valuing the performance shares are described in Note 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, |
The amounts shown in this column reflect the aggregate grant date fair value for non-qualified stock options to purchase our common stock granted in the year indicated under our Long Term Incentive Plan. However, for purposes of this table, estimates of forfeitures have been removed. A Black-Scholes valuation approach has been chosen for these calculations. The assumptions used in valuing these grants are described in Note 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, |
Represents amounts under the Annual Incentive Plan earned in fiscal year |
Represents the aggregate change in actuarial value under the Columbus McKinnon Corporation Monthly Retirement Benefit Plan from |
For Mr. |
38
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The following table sets forth information with respect to plan-based awards granted in fiscal year 20172018 to the executives named in the summary compensation table, including awards under the Annual Incentive Plan, and equity awards of stock options, performance shares and restricted stock units:
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: Number of Shares of Stock or Units | Awards: Number of Underlying Options | Exercise or Base Price of Option Awards per Share(4) ($) | Grant Date Fair Value of Stock and Option Awards(5) ($) | ||||||||||||||||||||||||||||
Name | Grant Date (1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||
Mark D. Morelli President and CEO | 337,500 | 675,000 | 1,350,000 | ||||||||||||||||||||||||||||||
5/22/2017 | — | 15,576 | 23,364 | 393,761 | (6) | ||||||||||||||||||||||||||||
5/22/2017 | 15,576 | 393,761 | (6) | ||||||||||||||||||||||||||||||
5/22/2017 | 51,403 | (7) | 24.33 | 393,747 | (6) | ||||||||||||||||||||||||||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 93,358 | 186,715 | 373,430 | ||||||||||||||||||||||||||||||
5/22/2017 | — | 5,909 | 8,864 | 149,380 | (6) | ||||||||||||||||||||||||||||
5/22/2017 | 5,909 | 149,380 | (6) | ||||||||||||||||||||||||||||||
5/22/2017 | 19,500 | (7) | 24.33 | 149,370 | (6) | ||||||||||||||||||||||||||||
Peter M. McCormick Vice President- Crane Solutions | 91,500 | 183,000 | 366,000 | ||||||||||||||||||||||||||||||
5/22/2017 | — | 4,821 | 7,232 | 121,875 | (6) | ||||||||||||||||||||||||||||
5/22/2017 | 4,821 | 121,875 | (6) | ||||||||||||||||||||||||||||||
11/13/2017 | 5,330 | 199,982 | (6) | ||||||||||||||||||||||||||||||
5/22/2017 | 15,910 | (7) | 24.33 | 121,871 | (6) | ||||||||||||||||||||||||||||
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | 77,480 | 154,960 | 309,920 | ||||||||||||||||||||||||||||||
5/22/2017 | — | 3,678 | 5,517 | 92,980 | (6) | ||||||||||||||||||||||||||||
5/22/2017 | 3,678 | 92,980 | (6) | ||||||||||||||||||||||||||||||
11/13/2017 | 5,335 | 200,009 | (6) | ||||||||||||||||||||||||||||||
5/22/2017 | 12,138 | (7) | 24.33 | 92,977 | (6) | ||||||||||||||||||||||||||||
Kurt F. Wozniak Vice President - Industrial Products | 79,763 | 159,525 | 319,050 | ||||||||||||||||||||||||||||||
5/22/2017 | — | 3,606 | 5,409 | 91,160 | (6) | ||||||||||||||||||||||||||||
5/22/2017 | 3,606 | 91,160 | (6) | ||||||||||||||||||||||||||||||
5/22/2017 | 11,900 | (7) | 24.33 | 91,154 | (6) |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | All Other Stock | All Other Options | |||||||||||||
Name | Grant Date (1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Awards: Number of Shares of Stock or Units | Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards per Share (4) ($) | Grant Date Fair Value of Stock and Option Awards (5) ($) | |||||
Mark D. Morelli, | 14,800 | 59,198 | 118,396 | |||||||||||||
President and CEO | 2/28/2017 | 22,305 | 577,923 | (6) | ||||||||||||
2/28/2017 | 68,105 | 25.91 | 600,005 | (6) | ||||||||||||
Gene P. Buer | 38,063 | 152,250 | 304,500 | |||||||||||||
Vice President- | 7/18/2016 | 0 | 5,940 | 5,940 | 93,496 | |||||||||||
Solutions Group | 7/18/2016 | 5,940 | (7) | 93,496 | ||||||||||||
5/23/2016 | 18,567 | (8) | 15.16 | 91,350 | ||||||||||||
Ivo Celi | 35,637 | 142,546 | 285,092 | |||||||||||||
Vice President - | 7/18/2016 | 0 | 5,808 | 5,808 | 91,418 | |||||||||||
EMEA | 7/18/2016 | 5,808 | (7) | 91,418 | ||||||||||||
5/23/2016 | 18,155 | (8) | 15.16 | 89,323 | ||||||||||||
Gregory P. Rustowicz, | 43,563 | 174,250 | 348,500 | |||||||||||||
Vice President – | 7/18/2016 | 0 | 9,064 | 9,064 | 142,667 | |||||||||||
Finance and Chief | 7/18/2016 | 9,064 | (7) | 142,667 | ||||||||||||
Financial Officer | 5/23/2016 | 28,333 | (8) | 15.16 | 139,398 | |||||||||||
Kurt F. Wozniak | 36,813 | 147,250 | 294,500 | |||||||||||||
Vice President – | 7/18/2016 | 0 | 5,744 | 5,744 | 90,411 | |||||||||||
Americas | 7/18/2016 | 5,744 | (7) | 90,411 | ||||||||||||
5/23/2016 | 17,957 | (8) | 15.16 | 88,348 | ||||||||||||
Timothy T. Tevens, | 182,500 | 730,000 | 1,460,000 | |||||||||||||
Former President and CEO | 7/18/2016 | 0 | 27,687 | 27,687 | 435,793 | |||||||||||
7/18/2016 | 27,687 | (7) | 435,793 | |||||||||||||
5/23/2016 | 86,551 | (8) | 15.16 | 425,831 |
(1) | The grant date is the date on which the equity awards were approved by our Board of Directors. |
(2) | Represents the potential payout range under the Annual Incentive Plan discussed above. The final fiscal year |
(3) | Represents the potential payout range related to performance shares awarded to NEOs on the grant date, subject to achievement of performance targets. The performance shares are earned based upon the consolidated net revenue performance for the period beginning April 1, |
(4) | Represents per-share exercise price of the options and is equal to the average of the high and low price on the grant date. |
(5) | Amounts in this column reflect the aggregate grant date fair value of the equity awards. The grant date fair value for each performance share and restricted stock unit is equal to the average of the high and low market price of our common stock on the date of grant. A Black-Scholes valuation approach has been utilized for valuing the options. The assumptions used in valuing these awards are described in Note 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2018 filed with the Securities and Exchange Commission on May 30, 2018. |
(6) |
Represents RSUs granted under the fiscal year |
Represents the number of shares of our common stock underlying options awarded to the NEOs on the grant date. The options vest at a rate of 25% per year beginning one year from the date of grant, except that options may vest earlier in the event of death, disability, retirement or |
39
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The following table sets forth information with respect to the executives named in the summary compensation table relating to unexercised stock options, stock that has not vested, and equity incentive plan awards outstanding as of March 31, 2017.2018.
Option Awards | Restricted Stock Awards | Performance Share Awards | |||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable | Option Awards Number of Securities Underlying Unexercised Options Unexercisable | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | ||||||||||||||||||
Mark D. Morelli President and CEO | 17,026 | (1) | 51,079 | (1) | N/A | 25.91 | 2/28/2027 | 16,729 | (9) | 599,567 | |||||||||||||||||
— | 51,403 | (2) | 24.33 | 5/21/2027 | 15,576 | (10) | 558,244 | 15,576 | (16) | 558,244 | |||||||||||||||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 6,000 | (3) | N/A | 13.10 | 10/24/2021 | 921 | (11) | 33,009 | 5,909 | (15) | 211,779 | ||||||||||||||||
11,942 | (4) | 13.43 | 5/21/2022 | 2,035 | (12) | 72,934 | 9,064 | (16) | 324,854 | ||||||||||||||||||
10,181 | (5) | 18.95 | 5/20/2023 | 6,798 | (13) | 243,640 | |||||||||||||||||||||
6,997 | (6) | 2,333 | (6) | 27.12 | 5/19/2024 | 5,909 | (10) | 211,779 | |||||||||||||||||||
5,858 | (7) | 5,858 | (7) | 24.94 | 5/18/2025 | ||||||||||||||||||||||
7,083 | (8) | 21,250 | (8) | 15.16 | 5/23/2026 | ||||||||||||||||||||||
19,500 | (2) | 24.33 | 5/21/2027 | ||||||||||||||||||||||||
Peter M. McCormick Vice President - Crane Solutions | 5,160 | (8) | 15,482 | (8) | N/A | 15.16 | 5/23/2026 | 26,000 | (11) | 931,840 | 6,603 | (15) | 236,652 | ||||||||||||||
15,910 | (2) | 24.33 | 5/22/2027 | 4,953 | (12) | 177,516 | 4,821 | (16) | 172,785 | ||||||||||||||||||
4,821 | (13) | 172,785 | |||||||||||||||||||||||||
5,330 | (10) | 191,027 | |||||||||||||||||||||||||
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | 3,276 | (17) | N/A | 18.63 | 1/24/2011 | ||||||||||||||||||||||
3,230 | (3) | N/A | 19.50 | 5/23/2021 | 433 | (11) | 15,519 | 5,803 | (15) | 207,980 | |||||||||||||||||
2,724 | (4) | 13.43 | 5/21/2022 | 974 | (12) | 34,908 | 3,678 | (16) | 131,820 | ||||||||||||||||||
4,601 | (5) | 18.95 | 5/20/2023 | 4,353 | (13) | 156,012 | |||||||||||||||||||||
3,289 | (6) | 1,097 | (6) | 27.12 | 5/19/2024 | 3,678 | (10) | 131,820 | |||||||||||||||||||
2,805 | (7) | 2,804 | (7) | 24.94 | 5/18/2025 | 5,335 | (14) | 191,206 | |||||||||||||||||||
2,535 | (8) | 13,605 | (8) | 15.16 | 5/23/2026 | ||||||||||||||||||||||
12,138 | (2) | 24.33 | 5/21/2027 | ||||||||||||||||||||||||
Kurt F. Wozniak Vice President- Industrial Products | 5,598 | (6) | 1,866 | (6) | N/A | 27.12 | 5/19/2024 | 737 | (11) | 26,414 | 3,606 | (15) | 129,239 | ||||||||||||||
5,000 | (7) | 5,000 | (7) | 24.94 | 5/18/2025 | 1,737 | (12) | 62,254 | 5,744 | (16) | 205,865 | ||||||||||||||||
4,489 | (8) | 13,468 | (8) | 15.16 | 5/23/2026 | 4,308 | (13) | 154,399 | |||||||||||||||||||
11,900 | (2) | 24.33 | 5/22/2027 | 3,606 | (10) | 129,239 |
(1) | These options were granted February 28, 2017 and vest 25% per year beginning February 28, 2018. |
(2) | These options were granted May 22, 2017 and vest 25% per year beginning May 22, 2018. |
(3) | These options were granted on October, 24, 2011 and vest 33.33% per year beginning October 24, 2014. |
(4) | These options were granted May 21, 2012 and vest 25% per year beginning May 21, 2013. |
(5) | These options were granted on May 20, 2013 and vest 25% per year beginning May 20, 2014. |
(6) | These options were granted on May 19, 2014 and vest 25% per year beginning May 19, 2015. |
(7) | These options were granted on May 18, 2015 and vest 25% per year beginning May 18, 2016. |
(8) | These options were granted on May 23, 2016 and vest 25% per year beginning May 23, 2017. |
(9) | These RSUs were granted February 28, 2017 and vest 25% per year beginning February 28, 2018. |
(10) | These RSUs were granted May 22, 2017 and vest 25% per year beginning May 22, 2018. |
(11) | These RSUs were granted May 19, 2014 and vest 25% per year beginning May 19, 2015. |
(12) | These RSUs were granted May 18, 2015 and vest 25% per year beginning May 18, 2016. |
(13) | These RSUs were granted July 18, 2016 and vest 25% per year beginning May 18, 2017. |
(14) | These RSUs were granted November 13, 2017 and vest 25% per year beginning November 13, 2018. |
(15) | These performance RSUs were granted May 22, 2017 and vest 100% on the third anniversary of the grant, May 22, 2020. The award earned will be adjusted effective March 31, 2019 based upon our consolidated revenue performance for the two year period ended March 31, 2019. |
(16) | These performance RSUs were granted July 18, 2016 and vest 100% on the third anniversary of the grant, May 23, 2019. The actual award earned will be adjusted effective March 31, 2018 or March 31, 2019 based upon our consolidated net revenue performance for the preceding two year period ended March 31, 2018 or March 31, 2019. |
(17) | These options were granted on October, 24, 2011 and vest 33.33% per year beginning October 24, 2014. |
Option Awards | Restricted Stock Awards | Performance Share Awards | |||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable | Option Awards Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested ($) | 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 ($) | ||||
Mark D. Morelli | 68,105 | (1) | N/A | 25.91 | 2/28/2027 | 22,305 | (13) | 553,610 | |||||
President and CEO | |||||||||||||
Gene P. Buer, | 432 | (2) | N/A | 28.45 | 5/19/2018 | 1,102 | (14) | 27,352 | 3,627 | (18) | 90,022 | ||
Vice President – Solutions Group | 1,622 | (5) | 18.24 | 5/17/2020 | 1,643 | (15) | 40,779 | 5,940 | (19) | 147,431 | |||
3,230 | (6) | 19.50 | 5/23/2021 | 2,721 | (16) | 67,535 | |||||||
8,360 | (8) | 13.43 | 5/21/2022 | 5,940 | (17) | 147,431 | |||||||
6,974 | (9) | 2,325 | (9) | 18.95 | 5/20/2023 | ||||||||
4,162 | (10) | 4,163 | (10) | 27.12 | 5/19/2024 | ||||||||
2,611 | (11) | 7,833 | (11) | 24.94 | 5/18/2025 | ||||||||
18,567 | (12) | 15.16 | 5/23/2026 | ||||||||||
Ivo Celi, | 10,000 | (4) | N/A | 14.80 | 1/25/2020 | 1,077 | (14) | 26,731 | 3,472 | (18) | 86,175 | ||
Vice President – EMEA | 3,513 | (5) | 18.24 | 5/17/2020 | 1,718 | (15) | 42,641 | 5,808 | (19) | 144,155 | |||
6,389 | (6) | 19.50 | 5/23/2021 | 2,604 | (16) | 64,631 | |||||||
11,238 | (8) | 13.43 | 5/21/2022 | 5,808 | (17) | 144,155 | |||||||
6,813 | (9) | 2,272 | (9) | 18.95 | 5/20/2023 | ||||||||
4,353 | (10) | 4,353 | (10) | 27.12 | 5/19/2024 | ||||||||
2,499 | (11) | 7,499 | (11) | 24.94 | 5/18/2025 | ||||||||
18,155 | (12) | 15.16 | 5/23/2026 | ||||||||||
Gregory P. Rustowicz | 6000 | (7) | N/A | 13.10 | 10/24/2021 | 1,207 | (14) | 29,958 | 4,069 | (18) | 100,993 | ||
Vice President - Finance and | 11,942 | (8) | 13.43 | 5/21/2022 | 1,841 | (15) | 45,694 | 9,064 | (19) | 224,968 | |||
Chief Financial Officer | 7,635 | (9) | 2,546 | (9) | 18.95 | 5/20/2023 | 3,052 | (16) | 75,751 | ||||
4,665 | (10) | 4,665 | (10) | 27.12 | 5/19/2024 | 9,064 | (17) | 224,968 | |||||
2,929 | (11) | 8,787 | (11) | 24.94 | 5/18/2025 | ||||||||
28,333 | (12) | 15.16 | 5/23/2026 |
40
2018 PROXY STATEMENT
Option Awards | Restricted Stock Awards | Performance Share Awards | |||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable | Option Awards Number of Securities Underlying Unexercised Options Unexercisable | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | ||||
Kurt F. Wozniak | 356 | (2) | N/A | 28.45 | 5/19/2018 | 805 | (14) | 19,980 | 3,473 | (18) | 86,200 | ||
Vice President – Americas | 1,777 | (5) | 18.24 | 5/17/2020 | 1,473 | (15) | 36,560 | 5,744 | (19) | 142,566 | |||
1,809 | (6) | 19.50 | 5/23/2021 | 2,605 | (16) | 64,656 | |||||||
3,335 | (8) | 13.43 | 5/21/2022 | 5,744 | (17) | 142,566 | |||||||
5,091 | (9) | 1,697 | (9) | 18.95 | 5/20/2023 | ||||||||
3,732 | (10) | 3,732 | (10) | 27.12 | 5/19/2024 | ||||||||
2,500 | (11) | 7,500 | (11) | 24.94 | 5/18/2025 | ||||||||
17,957 | (12) | 15.16 | 5/23/2026 | ||||||||||
Timothy Tevens | 8,770 | (2) | N/A | 28.45 | 5/19/2018 | 16,966 | (18) | 421,096 | |||||
Former President and CEO | 45,172 | (3) | 13.27 | 5/18/2019 | 27,687 | (19) | 687,191 | ||||||
33,190 | (5) | 18.24 | 5/17/2020 | ||||||||||
31,902 | (6) | 19.50 | 5/23/2021 | ||||||||||
53,568 | (8) | 13.43 | 2/28/2022 | ||||||||||
33,516 | (9) | 11,173 | (9) | 18.95 | 2/28/2022 | ||||||||
19,469 | (10) | 19,469 | (10) | 27.12 | 2/28/2022 | ||||||||
12,211 | (11) | 36,636 | (11) | 24.94 | 2/28/2022 | ||||||||
86,551 | (12) | 15.16 | 2/28/2022 |
COMPENSATION DISCUSSION AND ANALYSIS
The following table sets forth information with respect to the executives named in the summary compensation table relating to the exercise of stock options, stock appreciation rights and similar rights, and the vesting of stock in connection therewith, in fiscal year 2017:2018:
Option Awards | Stock Awards | |||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting | Value Realized on Vesting(2) ($) | ||||||||
Mark D. Morelli President and CEO | — | — | 5,604 | 205,218 | ||||||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | — | — | 5,494 | 133,185 | ||||||||
Peter M. McCormick Vice President - Crane Solutions | — | — | 28,025 | 1,040,990 | ||||||||
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | 11,424 | 210,590 | 2,957 | 71,782 | ||||||||
Kurt F. Wozniak Vice President – Industrial Products | 14,065 | 193,599 | 3,907 | 94,496 |
(1) | Represents the difference between the option exercise price and the average of the high and low market prices of our common stock on the date of exercise as quoted on Nasdaq multiplied by the number of shares acquired. |
(2) | Represents the average of the high and low market price of our common stock on the vesting date multiplied by the number of shares acquired. |
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting | Value Realized on Vesting(2) ($) | ||||
Mark D. Morelli, | ||||||||
President and CEO (3) | __ | __ | __ | __ | ||||
Gene P. Buer, | ||||||||
Vice President – Solutions Group | __ | __ | 6,928 | 102,300 | ||||
Ivo Celi, | ||||||||
Vice President – EMEA | __ | __ | 6,852 | 101,183 | ||||
Gregory P. Rustowicz, | ||||||||
Vice President - Finance and Chief Financial Officer | __ | __ | 9,636 | 148,406 | ||||
Kurt F. Wozniak | ||||||||
Vice President - Americas | __ | __ | 4,936 | 72,611 | ||||
Timothy T. Tevens, | ||||||||
Former President and CEO | __ | __ | 87,093 | 1,888,034 |
The Pension Plan is a non-contributory, qualified defined benefit plan which provides certain of our U.S.-based associates with retirement benefits. As defined in the Pension Plan, a participant’s annual pension benefit at age 65 is equal to the product of (i) 1% of the participant’s final average earnings, as calculated by the terms of the Pension Plan, plus 0.5% of
that part, if any, of final average earnings in excess of such participant’s "social“social security covered compensation,"” as such term is defined in the Pension Plan, multiplied by (ii) such participant’s years of credited service, limited to 35 years. Plan benefits are not subject to reduction for social security benefits.
The following table sets forth with respect to each of our plans that provide retirement benefits to our NEOs, (i) the years of credited service of each of the executives named in the summary compensation table, (ii) the present value of his or her accumulated benefit and (iii) payments received by him or her during fiscal year 2017:
Name | Plan Name | Number of Years of Credited Service(1) | Present Value of Accumulated Benefit(2) ($) | Payments During Last Fiscal Year ($) | ||||||
Mark D. Morelli President and CEO | N/A(3) | — | (3) | — | — | |||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | N/A(3) | — | (3) | — | — | |||||
Peter M. McCormick Vice President - Crane Solutions | Magnetek Retirement Plan | 10.04 | (4) | 106,593 | — | |||||
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | Columbus McKinnon Corporation Monthly Retirement Benefit Plan | 0.17 | (4) | 7,359 | — | |||||
Kurt F. Wozniak, Vice President - Industrial Products | Columbus McKinnon Corporation Monthly Retirement Benefit Plan | 11.58 | (4) | 269,906 | — |
Name | Plan Name | Number of Years of Credited Service(1) | Present Value of Accumulated Benefit(2) ($) | Payments During Last Fiscal Year ($) | ||||
Mark D. Morelli, President and CEO | N/A(3) | __ | __ | __ | ||||
Gene P. Buer, Vice President - Solutions Group | Columbus McKinnon Corporation Monthly Retirement Benefit Plan | 11.25 | 511,372 | — | ||||
Ivo Celi, Vice President - EMEA | N/A(3) | __ | __ | __ | ||||
Gregory P. Rustowicz, Vice President – Finance and Chief Financial Officer | N/A(3) | __ | __ | __ | ||||
Kurt F. Wozniak, Vice President – Americas | Columbus McKinnon Corporation Monthly Retirement Benefit Plan | (4) | 246,382 | __ | ||||
Timothy T. Tevens, Former President and CEO | Columbus McKinnon Corporation Monthly Retirement Benefit Plan | 25.17 | 961,309 | — |
(1) | Years of credited service determined as of March 31, |
(2) | The present value of accumulated benefit under the Columbus McKinnon Corporation Monthly Benefit Plan is calculated as of March 31, |
(3) |
(4) | Mr. Wozniak |
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2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The Company maintains a Non-Qualified Deferred Compensation Plan (the "NQDC"“NQDC”) under which eligible participants (including our Directors and U.S.-based NEOs) may elect to defer a portion of their cash compensation. Payment of balances will occur in accordance with Internal Revenue Code Section 409A requirements. For more information about our retirement program see “Elements of Our Compensation Program for Named Executive Officers” in this document.
Name | Executive Contributions in fiscal year 2018 | Company Contributions in fiscal year 2018 | Aggregate earnings in fiscal year 2018 | Aggregate withdrawals / distributions | Aggregate balance at 3/31/2018 | ||||||||||
Mark D. Morelli President and CEO | — | 3,016 | 74 | — | 611 | ||||||||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 13,204 | 9,431 | 3,905 | 15,284 | 61,345 | ||||||||||
Peter M. McCormick Vice President - Crane Solutions | — | — | — | — | — | ||||||||||
Alan S. Korman Vice President Corporate Development, General Counsel & CHRO | — | 2,304 | 1,193 | — | 11,964 | ||||||||||
Kurt F. Wozniak Vice President - Industrial Products | 6,659 | 8,878 | 349 | 6,331 | 20,831 |
Name | Executive Contributions in fiscal year 2017 | Company Contributions in fiscal year 2017 | Aggregate earnings in fiscal year 2017 | Aggregate withdrawals / distributions | Aggregate balance at 3/31/2017 |
Mark D. Morelli, President and CEO | — | — | — | — | — |
Gene P. Buer, Vice President - Solutions Group | — | — | — | — | — |
Ivo Celi, Vice President - EMEA | N/A | N/A | N/A | N/A | N/A |
Gregory P. Rustowicz, Vice President – Finance and Chief Financial Officer | 7,806 | 5,576 | 7,508 | 31,273 | 55,770 |
Kurt F. Wozniak, Vice President – Americas | 3,075 | 4,100 | 99 | 11,653 | 11,344 |
Timothy T. Tevens, Former President and CEO | 104,167 | 18,162 | 154,271 | — | 900,689 |
It is our policy to provide severance benefits to each of our U.S.-based full-time salaried associates and hourly associates not covered by a collective bargaining agreement who involuntarily lose their positions without cause. Eligible associates who sign a release generally receive one week of base salary at the rate then in effect for each full year of continuous service (with any fractions being rounded up).
Name | Voluntary Termination ($) | Retirement ($) | Involuntary Termination ($) | Termination in Connection with Change in Control ($) | Death ($) | Change in Control Only ($) | ||||||||||||
Mark D. Morelli President and CEO | 309,071 | (1) | 3,892,255 | (2) | 322,052 | (3) | 5,668,204 | (4) | 4,392,255 | (5) | — | (6) | ||||||
Gregory P. Rustowicz Vice President Finance and Chief Financial Officer | 1,166,930 | (1) | 2,842,775 | (2) | 1,217,199 | (3) | 4,617,512 | (4) | 3,216,205 | (5) | — | (6) | ||||||
Peter M. McCormick Vice President- Crane Solutions | 1,045,864 | (1) | 3,381,955 | (2) | 1,221,825 | (3) | 5,458,435 | (4) | 3,694,551 | (5) | — | (6) | ||||||
Alan Korman Vice President Corporate Development, General Counsel & CHRO | 505,102 | (1) | 1,800,294 | (2) | 546,822 | (3) | 3,169,466 | (4) | 2,106,843 | (5) | — | (6) | ||||||
Kurt F. Wozniak Vice President- Industrial Products | 1,522,123 | (1) | 2,694,187 | (2) | 1,638,699 | (3) | 4,095,687 | (4) | 2,874,946 | (5) | — | (6) |
Name | Voluntary Termination ($) | Retirement ($) | Involuntary Termination ($) | Termination in Connection with Change in Control ($) | Death ($) | Change in Control Only ($) | |||||
Mark Morelli, President and CEO | 64,904 | (1) | 649,900 | (2) | 3,593,258 | (3) | 3,593,258 | (4) | 699,900 | (5) | 0 (6) |
Gene P. Buer, Vice President - Solutions Group | 1,080,862 | (1) | 1,637,687 | (2) | 1,145,275 | (3) | 3,293,639 | (4) | 1,414,888 | (5) | 0 (6) |
Ivo Celi, Vice President – EMEA(7) | 325,348 | (8) | 867,798 | (9) | 364,262 | (10) | 1,820,093 | (11) | 867,798 | (12) | 0 (6) |
Gregory P. Rustowicz, Vice President Finance and Chief Financial Officer | 501,722 | (1) | 1,259,121 | (2) | 541,933 | (3) | 3,016,873 | (4) | 1,309,121 | (5) | 0 (6) |
Kurt F. Wozniak, Vice President – Americas | 1,172,616 | (1) | 1,697,876 | (2) | 1,271,616 | (3) | 3,130,925 | (4) | 1,621,899 | (5) | 0 (6) |
(1) | Includes (i) the value of vested stock options, (ii) accrued vacation through the date of termination, (iii) the vested portion of his 401(k) Plan account, (iv) any vested benefits under our Pension Plan and (v) any vested benefits under our ESOP. In addition, each NEO would be entitled to receive accrued salary through the date of termination. |
(2) | Includes (i) the value of vested stock options, (ii) accrued vacation through the date of termination, (iii) the vested portion of his 401(k) Plan account, (iv) any vested benefits under our Pension Plan and (v) any vested benefits under our ESOP, (vi) unless otherwise provided in an equity award agreement, the value of all options, restricted shares or units and performance shares or units which become fully vested and (vii) awards under the Annual Incentive Plan earned in fiscal year |
42
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
(3) | Includes (i) severance, (ii) the value of vested stock options, (iii) accrued vacation through the date of termination, (iv) the vested portion of his 401(k) Plan account, (v) any vested benefits under our Pension Plan and (vi) any vested benefits under our ESOP. In addition, each NEO would be entitled to receive accrued salary through the date of termination. |
(4) | Includes (i) termination payments under the |
(5) | Includes (i) Company provided group term life insurance benefits, (ii) the value of vested stock options, (iii) accrued vacation through the date of termination, (iv) the vested portion of his or her 401(k) Plan account, (v) any vested benefits under our Pension Plan (vi) any vested benefits under our ESOP, (vii) unless otherwise provided in an equity award agreement, the value of all stock options not previously vested, restricted shares or units and earned performance shares or units which become fully vested and (viii) awards under the Annual Incentive Plan earned in fiscal year |
(6) | No payments or awards are provided unless restricted shares and options held by the NEOs are not assumed by the successor entity. In the event that the successor entity does not assume the restricted shares and options, all options and earned restricted shares would be vested and payable to the NEOs. |
The following table provides information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of March 31, 2017,2018, including the Restricted Stock Plan, Omnibus Plan, Non-Qualified Plan and ISO Plan.
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 ($) | Number of Securities Remaining for Future Issuance under Equity Compensation Plans (excluding securities reflected in first column) | ||||||
Equity compensation plans approved by security holders | 922,450 | 21.04 | 903,975 | ||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||
Total | 922,450 | 21.04 | 903,975 |
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($) | Number of Securities Remaining for Future Issuance under Equity Compensation Plans (excluding securities reflected in first column) | ||||
Equity compensation plans approved by security holders | 1,063,894 | 19.10 | 1,402,194 | ||||
Equity compensation plans not approved by security holders | __ | __ | __ | ||||
Total | 1,063,894 | 19.10 | 1,402,194 |
We believe executive pay must be market competitive and internally fair and equitable to motivate our associates to create shareholder value. The Compensation and Succession Committee or any ofmonitors the relationship between the pay our executive officers receive and any member of any other company’s board of directors or compensation committee (or equivalent), nor has any such relationship existed in the past. No memberpay of our associates to ensure we remain competitive, fair and equitable. The Compensation and Succession Committee was, during fiscal year 2017 or prior thereto, an officer or employee of our Company or any of our subsidiaries.
The compensation of our CEO in fiscal year 2018 was approximately 52:1 times the median pay of our employees.
Our CEO to median employee pay ratio is calculated in accordance with the SEC’s 2018 proxy statement requirements pursuant to Item 402(u) of Regulations S-K. We determined
the median employee through examination of the calendar year 2017 annual total compensation for all associates, excluding the CEO who were actively employed on December 31, 2017, the final day of the calendar year. We included all employees by applying a recognized test as defined by labor law. We annualized the pay of any associates that were absent without pay or newly hired during the fiscal year. We believe the use of annual total compensation for all associates consistently applies the measure globally.
After identifying the median employee based on annual total compensation we calculated this associates annual total compensation using the same methodology used for our named executive officers and Directors as a group. The business address of each ofset for the executive officers and Directors is 205 Crosspoint Parkway, Getzville, New York 14068.in the 2018 Summary Compensation Table.
Directors, Officers and 5% Shareholders | Number Of Shares (1) | Percentage Of Class | ||
Ernest R. Verebelyi (2) | 37,866 | * | ||
Timothy T. Tevens (3) | 361,517 | 1.6% | ||
Richard H. Fleming (2) | 43,370 | * | ||
Stephen Rabinowitz (2) | 38,366 | * | ||
Linda A. Goodspeed (2) | 39,416 | * | ||
Nicholas T. Pinchuk (2) | 35,401 | * | ||
Liam G. McCarthy (2) | 31,974 | * | ||
R. Scott Trumbull (2) | 9,972 | * | ||
Heath A. Mitts (2) | 6,675 | * | ||
Gene Buer (4) | 50,329 | * | ||
Ivo Celi (5) | 51,983 | * | ||
Gregory Rustowicz (6) | 48,013 | * | ||
Kurt Wozniak (7) | 35,404 | * | ||
Mark D. Morelli (8) | 22,305 | * | ||
All Directors and Executive Officers as a Group (18 persons) (9) | 881,502 | 3.91% | ||
Columbus McKinnon Corporation Employee Stock Ownership Plan | 365,979 | 1.62% | ||
RBC Global Asset Management (US), Inc. (10) | 2,467,538 | 12.2% | ||
Graham Holding Company (11) | 1,776,185 | 8.83% | ||
Adage Capital Partners GP, LP (12) | 1,818,460 | 8.07% | ||
BlackRock, Inc. (13) | 1,310,617 | 6.5% | ||
Dimensional Fund Advisors LP (14) | 1,112,644 | 5.5% |
43
2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
WE WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS SOLICITED, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF OUR ANNUAL REPORT ON FORM 10-K, FOR THE FISCAL YEAR ENDED MARCH 31, 2017,2018, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO
Such written request should be directed to Columbus McKinnon Corporation, 205 Crosspoint Parkway, Getzville,Buffalo, New York 14068, Attention: Secretary. Each such request must set forth a good faith representation that, as of June 1, 2017,2018, the person making the request was a beneficial owner of securities entitled to vote at the Annual Meeting. The accompanying Notice and this Proxy Statement are sent by order of our Board of Directors.
ALAN S. KORMAN
Dated: June 14, 201712, 2018
44
2018 PROXY STATEMENT