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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
| Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 | |
| WORLD FUEL SERVICES CORPORATION | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
| (1) | Title of each class of securities to which transaction applies: | |||
| (2) | Aggregate number of securities to which transaction applies: | |||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
| (4) | Proposed maximum aggregate value of transaction: | |||
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o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
| (2) | Form, Schedule or Registration Statement No.: | |||
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| (4) | Date Filed: | |||
WORLD FUEL SERVICES CORPORATION
9800 Northwest 41st Street
Miami, Florida 33178
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 2017
22, 2020
April 13, 20179, 2020
Notice is hereby given that the Annual Meeting of Shareholders of WORLD FUEL SERVICES CORPORATION will be held on Thursday,Friday, May 25, 2017,22, 2020, at 8:00 a.m., Eastern Time, at theour offices of Chadbourne & Parke LLP located at 1301 Avenue of the Americas, New York, NY 100199800 Northwest 41st Street, Miami, Florida 33178* for the following purposes:
These matters are more fully discussed in the accompanying proxy statement.
Shareholders of record at the close of business on March 29, 201730, 2020 are entitled to notice of and to vote at the meeting and any adjournment thereof.
Whether or not you expect to be present at the meeting, please vote using the Internet, by telephone or by mail, in each case by following the instructions in our proxy statement. Shareholders who execute a proxy may nevertheless attend the meeting, revoke their proxy and vote their shares in person.
| By Order of the Board of Directors WORLD FUEL SERVICES CORPORATION | ||
 | ||
| R. Alexander Lake, Jr. Executive Vice President, Chief Legal Officer and Corporate Secretary |
We mailed a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and annual report for the year ended December 31, 20162019 on or about April 13, 2017.9, 2020.
Our proxy statement and annual report are available online at: www.proxyvote.com
| PROXY SUMMARY |
This proxy summary highlights information contained elsewhere in this proxy statement and does not contain all information that you should review and consider. Please read the entire proxy statement with care before voting.
|
| Date and Time: | ||
| Place: | ||
| Record Date: | March | |
| Voting: | Each share of common stock outstanding at the close of business on March |
PROPOSALS AND BOARD RECOMMENDATION |
| PROPOSAL | Board Recommendation | Page Reference (for more details) | ||||
|---|---|---|---|---|---|---|
Election of Directors | FOR each Director Nominee | | 7 | |||
Non-Binding, Advisory Vote on Executive Compensation | ||||||
| 68 | |||||
Ratification of | FOR | 69 | ||||
Approval of the 2020 Omnibus Plan | FOR | 73 | ||||
|
The following summary of our executive compensation program highlights our commitment to executive compensation practices that align the interests of our executives and shareholders. For a comprehensive discussion of our executive compensation, see "Compensation Discussion and Analysis", beginning on page 3136 of this proxy statement.
World Fuel Services Corporation|2020 Proxy Statement i
| What We Do | What We Don't Do | |
|---|---|---|
| | | |
Executive compensation program tied to our financial and operating performance and
|
No tax gross ups
No excessive perquisites
No single-trigger vesting of awards upon a change of control
|
BOARD AND GOVERNANCE HIGHLIGHTS |
We believe that good corporate governance is critical to achievingsupport our efforts to achieve our performance goals while delivering long-term shareholder value.value to our shareholders, employees, customers and other stakeholders. The following table summarizes certain highlights of our corporate governance practices, policies and highlights. For a comprehensive discussion of our corporate governance policies, see "Corporate Governance", beginning on page 1312 of this proxy statement.
Director resignation policy for all directors in uncontested elections
Annual election of directors
Regular shareholder engagement on governance, compensation and other issues of interest to our shareholders
Robust stock ownership guidelines applicable to directors |
Independent lead director facilitates and strengthens the Board's independent oversight
Independent directors meet in executive session without management present
Strong
Annual
Policies prohibiting hedging of shares by directors
No related |
World Fuel Services Corporation|2020 Proxy Statement ii
RECENT GOVERNANCE ACTIONS |
 Documented and formalized ourcommitment to Board diversity in our Corporate Governance Guidelines and the Governance Committee charter; | ||
| Formed theSustainability and Corporate Responsibility Committee of the Board in 2020 to oversee our programs, policies, risks and initiatives regarding environmental, health, safety, sustainability, diversity and other social responsibility issues and impacts (collectively, "Sustainability Matters") on us and our business; | ||
| Commenced the development of a multi-yearsustainability and corporate responsibility program designed to identify and prioritize the most significant Sustainability Matters for us and our stakeholders, establish goals and objectives in areas where our actions can be most impactful on those priorities, implement initiatives to achieve those goals and objectives, and identify and collect the data needed to measure and report our progress; and | ||
| Became asignatory to the United Nations Global Compact, the world's largest corporate responsibility initiative established to encourage companies to align strategies and operations with universal principles on human rights, labor, environment and anti-corruption, and to report on the actions being taken to advance these societal goals. | ||
World Fuel Services Corporation|2020 Proxy Statement iii
WORLD FUEL SERVICES CORPORATION
9800 Northwest 41st Street
Miami, Florida 33178
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON THURSDAY,FRIDAY, MAY 25, 201722, 2020
The proxy materials listed below are available to you at www.proxyvote.com. You will need your 12-digit control number found on your proxy card, voter instruction form or Notice of Internet Availability to access these materials:
Among other things, this proxy statement contains information regarding (i) the date, time and location of the meeting; (ii) a list of the matters being submitted to our shareholders; and (iii) information concerning voting for these matters at the meeting.
This proxy statement is furnished to the shareholders of World Fuel Services Corporation in connection with the solicitation of proxies by the Board of Directors, or the "Board", for the 20172020 annual meeting of shareholders, or the "Annual Meeting". The terms "World Fuel", "Company," "we," "our" and "us" used in this proxy statement refer to World Fuel Services Corporation and its subsidiaries unless the context otherwise requires.
We are utilizing the Securities and Exchange Commission, or "SEC", rule allowing companies to furnish proxy materials to their shareholders over the Internet. In accordance with this rule, on or about April 13, 2017,9, 2020, we sent our shareholders atas of the close of business on March 29, 201730, 2020 a Notice of Internet Availability of Proxy Materials for the Annual Meeting, which we refer to as the "Notice". The Notice contains instructions on how to access our proxy statement and annual report and vote online. If you received a Notice and would like to receive a printed copy of our proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions included in the Notice for requesting such materials at no charge.
World Fuel Services Corporation | 20172020 Proxy Statement 1
| QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING |
What is the date, time and place of the Annual Meeting?
Our Annual Meeting will be held on Thursday,Friday, May 25, 2017,22, 2020, at 8:00 a.m., Eastern Time, at theour offices of Chadbourne & Parke LLP located at 1301 Avenue9800 Northwest 41st Street, Miami, Florida 33178. We currently intend to hold the Annual Meeting in person. However, we are actively monitoring the coronavirus, or COVID-19, pandemic and are sensitive to the public health and travel concerns that our shareholders may have, as well as protocols that federal, state, and local governments may impose. If it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include switching to a virtual meeting format, or changing the time, date or location of the Americas, New York, NY 10019.Annual Meeting. Any such change will be announced via press release and will be available on our website at: www.wfscorp.com in the Investor Relations section and filed as definitive additional soliciting materials with the SEC.
What am I being asked to vote on and what is the Board recommendation?
At the Annual Meeting you will be asked to vote on the following four proposals. Our Board recommendation for each of these proposals is set forth below:
| | Proposal | Board Recommendation | ||
|---|---|---|---|---|
| 1. | To elect eight directors each for a term expiring at the next annual meeting or until his or her successor has been duly elected and qualified. | FOR each Director Nominee | ||
| 2. | To approve on a non-binding, advisory basis, the compensation of our named executive officers ("NEOs"), as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion below. | FOR | ||
| 3. | To | |||
FOR | ||||
| 4. | To approve the World Fuel Services Corporation 2020 Omnibus Plan (the "2020 Plan" or the "Plan"). | FOR |
You will also be asked to consider and act upon such other business as may properly come before the Annual Meeting.
Who is entitled to vote at the Annual Meeting?
Only holders of record of our common stock at the close of business on March 29, 2017,30, 2020, the record date for the Annual Meeting, are entitled to notice of, and to attend and vote at the Annual Meeting, or any postponements or adjournments of the meeting. At the close of business on the record date, 69,061,81065,504,262 shares of our common stock were issued and outstanding.
World Fuel Services Corporation|2020 Proxy Statement 2
What is the difference between a shareholder of record and a beneficial owner?
If your shares are registered directly in your name with our transfer agent, Wells FargoEQ Shareowner Services, you are considered, with respect to those shares, the "shareholder of record."
If your shares are held by a brokerage firm, bank, trustee, other agent or record holder, each sometimes referred to as a "nominee","nominee," you are considered the "beneficial owner" of shares held in street name. The Notice has been forwarded to you by your nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your nominee on how to vote your shares by following their instructions for voting by telephone or on the
World Fuel Services Corporation|2017 Proxy Statement 2
Internet or, if you specifically request a copy of the printed materials, you may use the voting instruction card included in such materials.
What are the voting rights of our shareholders?
Our shareholders have one vote per share of our common stock owned on the record date for each matter properly presented at the Annual Meeting. For example, if you owned 100 shares of our common stock at the close of business on March 29, 2017,30, 2020, you can cast 100 votes for each matter properly presented at the Annual Meeting. Holders of our common stock have no cumulative voting rights.
A quorum will be present at the Annual Meeting if holders of a majority of the issued and outstanding shares of our common stock on the record date are represented at the Annual Meeting in person or by proxy. If a quorum is not present at the Annual Meeting, we expect to postpone or adjourn the Annual Meeting to solicit additional proxies. Abstentions and broker non-votes (as described below) will be counted as shares present and entitled to vote for the purpose of determining the presence or absence of a quorum.
What are "broker non-votes" and how are they treated?
A "broker non-vote" occurs when a bank, broker, trustee, agent or other holder of record holding shares for a beneficial owner withholds its vote on a particular proposal because that holder does not have discretionary voting power for such proposal and has not received instructions from the beneficial owner. If your broker is the shareholder of record, your broker is required to vote your shares in accordance with your instructions. If you do not give instructions to your broker, the rules of the New York Stock Exchange, or "NYSE", allow brokers the discretionary authority to vote your shares with respect to "routine" matters but not "non-routine" matters.
The table below sets forth, for each proposal on the ballot, whether a broker can exercise discretion and vote your shares absent your instructions. If they cannot, such broker non-vote will not be counted as a vote cast and will therefore have no impact on the approval of the proposal.
| Proposal | Can Brokers Vote Absent Instructions? | |
|---|---|---|
| Election of Directors | No | |
| Non-Binding, Advisory Vote on Executive Compensation | No | |
| Ratification of Independent Registered Certified Public Accounting Firm | Yes | |
| Approval of the 2020 Omnibus Plan | No |
World Fuel Services Corporation|2020 Proxy Statement 3
If other matters are properly brought before the Annual Meeting and they are not considered routine under the applicable NYSE rules, shares held by a bank, broker or other holder of record holding shares for a beneficial owner will not be voted on such non-routine matters by that holder unless that holder has received voting instructions. As stated above, broker non-votes are counted as present for the purpose of determining whether a quorum is present.
World Fuel Services Corporation|2017 Proxy Statement 3
How are abstentions treated?
Abstentions will not be counted as votes cast in the final tally of votes with regard to any proposal.Proposals 1, 2 and 3. Therefore, abstentions will have no effect on the outcome of any proposal.these proposals. Proposal 4 (Approval of the 2020 Omnibus Plan) is subject to NYSE shareholder approval rules which provide that abstentions are counted as votes cast. Therefore abstentions will have the effect of a vote "AGAINST" Proposal 4. As stated above, abstentions will be counted for the purpose of determining whether a quorum is present.
Will my shares be voted if I do not provide my proxy?
If your shares are held in the name of a bank, broker or other holder of record, they may be voted by the bank, broker or other holder of record with respect to "routine" matters (as described above under the caption "What are "broker non-votes" and how are they treated?") even if you do not give the bank, broker or other holder of record specific voting instructions. If you are a shareholder of record and hold your shares directly in your own name, your shares will not be voted unless you provide a proxy or fill out a written ballot in person at the Annual Meeting.
To Vote by Internet, Telephone or Mail:
You can vote by proxy whether or not you attend the Annual Meeting. To vote by proxy, shareholdersyou have a choice of voting over the Internet, by telephone or by using a traditional proxy card.
To reduce our administrative and postage costs, we ask that you vote through the Internet or by telephone, both of which are available 24 hours a day. To ensure that your vote is counted, please remember to submit your vote by 11:59 p.m. Eastern Time on Wednesday,Thursday, May 24, 2017.21, 2020.
World Fuel Services Corporation|2020 Proxy Statement 4
To Vote in Person:
If your shares are registered in your name, you must bring a valid photo identification and deliver your completed proxy card or ballot in person.
If you hold your shares in "street name," you will need to bring a valid photo identification to the Annual Meeting and obtain a legal proxy from your bank, broker or other nominee to vote the shares that are held for your benefit, attach such legal proxy to your completed proxy card and deliver it in person.
World Fuel Services Corporation|2017 Proxy Statement 4
Table of Contents If I plan to attend the Annual Meeting, should I still vote by proxy?
Yes. Casting your vote in advance does not affect your right to attend the Annual Meeting. If you vote in advance and also attend the Annual Meeting, you do not need to vote again at the Annual Meeting unless you want to change your vote.
What vote is required for the proposals?
| Proposal | Description of Votes Needed | |
|---|---|---|
Election of Directors | The eight nominees for election as directors will be elected by a "plurality" of the votes cast at the Annual Meeting. This means that the eight nominees who receive the highest number of "FOR" votes will be elected as directors, even if those nominees do not receive a majority of the votes cast. | |
| The affirmative vote of a majority of the votes cast on the proposal is required for the approval of the non-binding, advisory vote with respect to executive compensation. | |
|
| |
| The affirmative vote of a majority of the votes cast on the proposal is required for the ratification of the appointment of PwC as our independent | |
| The affirmative vote of a majority of the votes cast on the proposal is required for the approval of the 2020 Omnibus Plan. |
How will my proxy holder vote?
The enclosed proxy designates Michael J. Kasbar, our Chairman, President and Chief Executive Officer and Paul H. Stebbins, Director and Chairman Emeritus, to hold your proxy and vote your shares. Messrs. Kasbar and Stebbins will vote all shares of our common stock represented by properly executed proxies received in time for the Annual Meeting in the manner specified by the holders of those shares. Messrs. Kasbar and Stebbins intend to vote all shares of our common stock represented
World Fuel Services Corporation|2020 Proxy Statement 5
by proxies that are properly executed by the record holder but that otherwise do not contain voting instructions as follows:
| Proposal | | |
|---|---|---|
Election of Directors | FOR each Director Nominee | |
Non-Binding, Advisory Vote on Executive Compensation | FOR | |
| ||
Ratification of Independent Registered Certified Public Accounting Firm | FOR | |
Approval of 2020 Omnibus Plan | FOR |
World Fuel Services Corporation|2017 Proxy Statement 5
What happens if additional matters are presented at the Annual Meeting?
Other than the items of business described above, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy to the proxy holders named in the attached proxy card, such persons will vote in accordance with the recommendation of our Board, "FOR" or "AGAINST" such other matters.
Can I change my vote after I have voted?
Voting by telephone, over the Internet or by mailing a proxy card does not preclude a shareholder from voting in person at the Annual Meeting. A shareholder may revoke a proxy, whether submitted via telephone, the Internet or mail, at any time prior to its exercise by (i) filing with our Corporate Secretary a duly executed revocation of proxy, (ii) properly submitting, either by telephone, mail or Internet, a proxy to our Corporate Secretary bearing a later date or (iii) appearing at the Annual Meeting and voting in person. Attendance at the meeting will not itself constitute revocation of a proxy.
If I plan to attend the Annual Meeting, should I still vote by proxy?
Yes. Casting your vote in advance does not affect your right to attend the Annual Meeting. If you vote in advance and also attend the Annual Meeting, you do not need to vote again at the Annual Meeting unless you want to change your vote.
What do I need to bring with me in order to attend the Annual Meeting?
If you are a shareholder of record, you will need to bring with you to the Annual Meeting any proxy card that is sent to you and valid photo identification. Otherwise, you will be admitted only upon other verification of record ownership at the admission counter.
If you are the beneficial owner of shares held in street name, bring with you to the Annual Meeting your most recent brokerage statement or a letter from your bank, broker, trustee, agent or other record holder indicating that you beneficially owned shares of our common stock on March 29, 201730, 2020 and valid photo identification. We can use that to verify your beneficial ownership of common stock and admit you to the Annual Meeting.If you intend to vote at the Annual Meeting, you also will need to bring to the Annual Meeting a legal proxy from your bank, broker, trustee, agent or other holder of record that authorizes you to vote the shares that the record holder holds for you in its name.
Where can I find voting results of the Annual Meeting?
We will announce the results for the proposals voted upon at the Annual Meeting and publish final detailed voting results in a Form 8-K filed with the SEC within four business days after the Annual Meeting.
How can I nominate directors at an Annual Meeting?
Our By-Laws provide that a shareholder wishing to nominate a director at a shareholders' meeting must deliver written notice to our Corporate Secretary that meets the procedural and disclosure requirements set forth in our By-Laws, including disclosure of: (i) the relationship between the nominating shareholder and the underlying beneficial owner, if any, and such parties' stock holdings and derivative positions in our securities; (ii) information we deem appropriate to ascertain the nominee's qualifications to serve on the Board, including disclosure of compensation arrangements
World Fuel Services Corporation|2017 Proxy Statement 6
between the nominee, the nominating shareholder and the underlying beneficial owner, if any; and (iii) any other information required to comply with the proxy rules and applicable law. These requirements are more fully described in Article I, Section 7 of our By-Laws, a copy of which will be provided without charge to any shareholder upon written request to our Corporate Secretary.
What was the deadline to nominate a director for the Annual Meeting?
According to the advance notice provisions contained in our By-Laws, any shareholder who intended to nominate a director at the Annual Meeting was required to deliver a notice to our Corporate Secretary at World Fuel Services Corporation, 9800 Northwest 41st Street, Miami, FL 33178 not less than 90 days (February 27, 2017) nor more than 120 days (January 26, 2017) prior to the anniversary date of the 2016 annual meeting of shareholders (May 26, 2017). A nomination not made in accordance with the procedures set forth in our By-Laws is void.
Who should I call with other questions?
If you have additional questions about this proxy statement or the Annual Meeting or would like additional copies of this proxy statement or our annual report, please contact: World Fuel Services Corporation at 9800 Northwest 41st Street, Miami, Florida 33178, Attention: Corporate Secretary, Telephone: (305) 428-8000.
World Fuel Services Corporation | 20172020 Proxy Statement 76
I. PROPOSAL NO. 1—ELECTION OF DIRECTORS |
Eight individuals have been nominated to serve as our directors for the ensuing year and until their successors shall have been duly elected and qualified. All of such personsnominees are presently directors. One individual who is presently serving as a director,of our existing independent directors, Mr. Myles Klein,Stephen J. Gold will not be seeking another term.standing for re-election to the Board following the Annual Meeting.
The persons named as proxies in the accompanying proxy card have advised management that unless authority is withheld in the proxy, they intend to vote for the election of the individuals listedidentified as nominees in the table below. We do not contemplate that any nominee named in the tablebelow will be unable or will decline to serve. However, if any nominee is unable to serve or declines to serve, the persons named in the accompanying proxy card may vote for another person, or persons, in their discretion, unless our Board of Directors chooses to reduce the number of directors serving on the Board. In accordance with our By-Laws, the Board may consist of four to ten directors, and the Board may increase or decrease the number of directors by amending our By-Laws. The Board presently consists of nine directors.directors and will be reduced to eight following the Annual Meeting.
We have adopted a director resignation policy for the election of directors in an uncontested election, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. In uncontested elections of directors, such as this election, any director nominee who receives a greater number of votes "withheld" from his or her election than votes "for" his or her election must promptly tender his or her resignation for consideration by the Governance Committee. The Governance Committee will recommend to the Board whether the Board should accept or reject the resignation or whether other action should be taken. The Board will publicly disclose its decision regarding the tendered resignation within 90 days after certification of the election results. The director whose resignation is under consideration will not participate in the recommendation of the Governance Committee or deliberations of the Board with respect to his or her resignation. If a director's resignation is not accepted by the Board, the director will continue to serve until the next annual meeting of shareholders or until his or her successor is duly elected and qualified, or his or her earlier resignation or removal. A copy of our director resignation policy, included in our Corporate Governance Principles, is available on our website at www.wfscorp.com. Our website and information contained on our website are not part of this proxy statement and are not incorporated by reference in this proxy statement.
Director Nominees
We believe that each of our nominees possesses the experience, skills and qualities to fully perform his or her duties as a director and to contribute to our success. In addition, each of our nominees is being nominated because they each possess the highest standards of personal integrity, are accomplished in their field, have an understanding of the interests and issues that are important to our shareholders and are able to dedicate sufficient time to fulfilling their obligations as a director. Our nominees as a group complement each other and each other's respective experiences, skills and qualities. For an additional discussion of the nomination process, see "The Governance Committee"Nominee Qualifications and Nominating Subcommittee"the Nomination Process" beginning on page 1922 of this proxy statement.
The following table sets forth certain information with respect to each nominee standing for election to the Board. The biographies of each of the nominees and directors contain information regarding the individual's service as a director, business experience, director positions held currently or within the last five years, and the experience, qualifications, attributes or skills that led to the conclusion that the individual should serve as a director of the Company.
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Table of Contentsour director.
| ||||||||
| Age: 63 | Director Since: 1995 | |||||||
| Chairman, President and Chief Executive Officer | ||||||||
Background: | ||||||||
Mr. Kasbar has served as Chairman of the Board since May 2014 and has served as our President and Chief Executive Officer | ||||||||
Skills & Qualifications: | ||||||||
Mr. Kasbar brings to the Board a unique understanding of our strategies and operations through over 20 years of service | ||||||||
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| ||||||||
| Age:70 | Director Since:2002 | ||||||
| Independent Director | ||||||||
| Committees: | Compensation (Chair), Governance, Sustainability & Corporate Responsibility, Technology & Operations and Nominating Subcommittee (Chair) | |||||||
Background: | ||||||||
Since June 2003, Mr. Ken (Kanwaljit) Bakshi has | ||||||||
Skills & Qualifications: | ||||||||
Mr. Bakshi brings to the Board extensive experience in private equity investments, management consulting and technology and significant executive experience running operating units within large multinational | ||||||||
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| ||||||||
| Age:60 | Director Since:2015 | ||||||
| Independent Director | ||||||||
| Committees: | Audit, Governance, Sustainability & Corporate Responsibility (Chair), Technology & Operations (Chair) and Nominating Subcommittee | |||||||
Background: | ||||||||
Mr. Benitez retired from Accenture plc in September 2014 after more than 33 years of service, the last three years of which Mr. Benitez served as Chief Executive Officer of North America, where he had primary responsibility for Accenture's business and operations in North America. From September 2006 to August 2011, Mr. Benitez served as Chief Operating Officer, Products Operating Group, the largest of Accenture's five operating groups, where he was responsible for executing the business strategy and ensuring operational excellence across a wide set of consumer industry groups, including: automotive; air, freight and travel services; industrial equipment; and infrastructure and transportation services. Prior to that, Mr. Benitez held various senior leadership roles and other positions since joining Accenture in 1981. In 2015, Mr. Benitez | ||||||||
Skills & Qualifications: | ||||||||
Mr. Benitez brings to the Board his extensive experience developing and executing business strategies across a range of industries, particularly air, freight and travel and transportation services, as well as significant executive experience running operating units within a large multinational | ||||||||
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| ||||||||
| Age:61 | Director Since:2020 | ||||||
| Independent Director | ||||||||
| Committees: | Governance, Sustainability & Corporate Responsibility and Technology & Operations | |||||||
Background: | ||||||||
Ms. Cherwoo retired as a Senior Partner from Ernst & Young LLP ("EY") in January 2020, after more than 37 years of service, including 28 years as a Client Service Partner with specialized industry focus in private equity, financial services, health care and emerging and disruptive technology companies. Since October 2015, Ms. Cherwoo launched and spearheaded EY's Intelligent Automation program, with a focus on strategic direction, governance and risk management. As part of that role, she also directed EY's investments in robotic process automation ("RPA") and digital transformation initiatives. She also advised a number of Fortune 500 companies on their intelligent automation strategies, including operating models, digital and talent transformation planning, artificial intelligence and blockchain initiatives. Ms. Cherwoo concurrently served as a | ||||||||
In addition to her strategic, operational and leadership roles, Ms. Cherwoo has been committed to mentoring and bringing innovative ideas to diversity and inclusiveness efforts. In 2018, she was awarded the American Business Award® Silver Stevie® Award for Most Innovative Woman of the | ||||||||
Skills & Qualifications: | ||||||||
Ms. Cherwoo brings to the Board her significant experience in advising companies on digital transformation initiatives and RPA strategies, including digital and talent transformation planning, artificial intelligence and blockchain initiatives, as well as substantial management experience. | ||||||||
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| RICHARD A. KASSAR | Age:72 | Director Since:2002 | ||||||
| Independent Director | ||||||||
| Committees: | Audit, Compensation, Governance and Technology & Operations | |||||||
Background: | ||||||||
Mr. Kassar is the Chief Financial Officer of Freshpet Company, a | ||||||||
Skills & Qualifications: | ||||||||
Mr. Kassar brings to the Board his extensive executive experience in brand management, consumer products and corporate finance and has significant experience as a senior finance executive. | ||||||||
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| ||||||||
| Age:71 | Director Since:2010 | ||||||
| Independent Director | ||||||||
| Committees: | Audit (Chair), Governance and Technology & Operations | |||||||
Background: | ||||||||
Mr. Manley retired from Deloitte & Touche LLP in 2009 after more than 27 years as a partner, the last three years of which Mr. Manley was Managing Partner of Deloitte's Northeast Region Audit and Enterprise Risk Services Practice. Mr. Manley founded and was the National Director of Deloitte's Regulatory Consulting Practice, which included practices in financial services, health care, government contracting, energy and utilities. Before joining Deloitte, Mr. Manley had seven years of regulatory experience with the SEC and the Commodity Futures Trading Commission, or CFTC, in various positions, including serving as the Chief Accountant and Director of the Division of Trading and Markets of the CFTC. Mr. Manley served as a director and Chairman of the audit committee of UBS Trust Company N.A. from 2013 to August 2015. Mr. Manley is a Certified Public Accountant, on inactive status. | ||||||||
Skills & Qualifications: | ||||||||
Mr. Manley brings to the Board extensive executive management, financial reporting, risk management and regulatory experience. | ||||||||
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| STEPHEN K. RODDENBERRY | Age:71 | Director Since:2006 | |||||
| Independent Director, Lead Independent Director | ||||||||
| Committees: | Compensation and Governance (Chair; Presiding Director) | |||||||
Background: | ||||||||
Mr. Roddenberry has served as | ||||||||
Skills & Qualifications: | ||||||||
Mr. Roddenberry brings to the Board extensive experience in private equity mergers and acquisitions, investment management, venture capital, public finance and securities. | ||||||||
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| Age:63 | Director Since:1995 | |||||||
| Independent Director, Chairman Emeritus | ||||||||
| Sustainability & Corporate Responsibility | ||||||||
Background: | ||||||||
Prior to his appointment as Chairman Emeritus, from January 2012 to May 2014, Mr. Stebbins served as Executive Chairman of the Board. From July 2002 to December 2011, he served as our Chairman of the Board and Chief Executive Officer | ||||||||
Skills & Qualifications: | ||||||||
Mr. Stebbins brings to the Board a unique understanding of our strategies and operations through over 20 years of service to our Company and more than 30 years of experience in the fuel services business. | ||||||||
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE ABOVE DIRECTOR NOMINEES.
World Fuel Services Corporation | 20172020 Proxy Statement 1211
II. CORPORATE GOVERNANCE |
Board and Committee Governance
The Board regularly considers the appropriate leadership structure for the Companyus and does not have a formal policy with respect to the separation of the positions of Chief Executive Officer and Chairman of the Board. Rather, the Board believes that different Board leadership structures may be appropriate for the Companyus at different times, and that it should have the flexibility to make this decision based on its evaluation of current circumstances. When making this decision, the Board considers factors such as:
Mr. Kasbar currently serves as Chairman of the Board in addition to his role as President and Chief Executive Officer. Our Board believes that our Chief Executive Officer is in the best position to most effectively serve as the Chairman of the Board given that he has the primary responsibility for managing the Company'sour day-to-day operations and therefore has a detailed and in-depth knowledge of the issues, opportunities and challenges facing the Companyus and itsour businesses. The Board also believes that the Chief Executive Officer serving as Chairman of the Board further promotes information flow between management and the Board and enhances the quality of the Board's overall decision-making process.
In making its decision to combine the roles of Chief Executive Officer and Chairman of the Board, the Board considered that its leadership structure was appropriate given the following strong governance structures and processes that are in place to ensure the independence of the Board, eliminate conflicts of interest and prevent the dominance of the Board by senior management:
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Our independent directors annually elect our lead independent director is elected annually by the independent directors and has duties consistentdirector. Consistent with best practices, including:our lead independent director:
Currently, Mr. PresbyRoddenberry serves as our lead independent director. Assuming that both Messrs. Roddenberry and Presby are re-elected to the Board, immediately after the Annual Meeting, Mr. Presby will step down as our lead independent director and the independent directors intend to elect Mr. Rodenberry as our lead independent director. The Board believes that having a lead independent director benefits us and our shareholders by providing leadership and an organizational structure for the independent directors.
We regularly engage with our shareholders to better understand better their perspectives on our Company, including our business strategies, financial performance, and matters of corporate governance and executive compensation. This dialogue has helped inform the Board's decision-making and ensure our interests remain well-aligned with those of our shareholders. In recent years, these engagements have covered governance issues, such as majority voting, board leadership and director nomination processes, and compensation and capital allocation policies. During 2016,2019, we interacted with 17 of the 2518 largest active shareholdersholders of our common stock, representing approximately 50% percent of our outstanding shares. We believe that all these engagements provide valuable feedback and this feedback is shared regularly with the Board and its relevant committees. As a result of the feedback we received from our shareholders in the past few years, we have, among other things:
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During 2016,2019, the Board met sevenfour times. Each current director attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by each of the Board committees on which he or she served. In addition, it is our policy that each director should attend all meetings of shareholders, absent extenuating circumstances. All of our directors attendedthat were standing for election at the 20162019 annual meeting of shareholders.shareholders attended the meeting.
All of our independent directors meet in executive session (without management present) prior toduring each scheduled Board meeting and at other times as they may deem necessary. Mr. Roddenberry currently serves as the Presiding Director over all executive sessions of the independent directors.
Our Corporate Governance Principles require that a majority of our directors meet the standards for independence required by the listing standards of the NYSE. In addition, members of our Audit Committee must meet the independence standards for Audit Committeeaudit committee members adopted by the SEC. Members of the Audit Committee must also have no relationship with us that interferes with their exercise of independent judgment. Members of our Compensation Committee must meet the independence standardsdefinition of "non-employee director" contained in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and meet the independence requirements under the NYSE listing standards and Section 162(m) of the Internal Revenue Code (the "Code").standards. The Board may also consider other factors in making its determination that a director has no material relationship with us that could compromise that director's independence.
Our Corporate Governance Principles provide that no more than two members of management shall serve on the Board. Our Board affirmatively determined that sevenMr. Kasbar is the only member of the eight existing non-managementmanagement currently serving on our Board. All of our other directors, Messrs. Bakshi, Benitez, Gold, Kassar, Klein, Manley, Presby, Roddenberry, Stebbins and RoddenberryMs. Cherwoo, are independent of us and our management under NYSE listing standards, and our Audit Committee members and Compensation Committee members are independent under the standards applicable to membership in such committees. In making this determination, our Board considered that Mr. Kassar is the first cousin of Mr. Kasbar, and the Board determined that the familial relationship between Messrs. Kasbar and Kassar was not material because it would not adversely affect Mr. Kassar's ability to exercise his independent judgment as our director. Mr. Kasbar is not deemed to be an independent director because of his employment relationship with us. Additionally, although Mr. Stebbins is a non-management director,us and therefore he is not deemed to be independent because of his recent employment relationship with us, which existed within the last three years. As a result, Messrs. Kasbar and Stebbins are precluded from sitting on any of our Audit, Compensation, Governance and Technology and Operations Committees.committees.
Annual Board and Committee Self-Evaluations
Committees Each year, our Board and its committees conduct self-evaluations to ensure they are performing effectively and to identify opportunities to improve Board and committee performance. The Governance Committee annually reviews the format and scope of our Board's evaluation process in light of general corporate governance developments and best practices and recommends changes it believes are appropriate. Each chair of our Board's committees also reviews and updates, as appropriate, a separate self-evaluation of committee performance, which is provided to the members of each committee for comment and feedback. Once the format and content of the Board
Ourevaluation is approved, a Board has four standing committees:self-assessment is conducted under the oversight of the Governance Committee and for each committee, led by the Audit Committee,committee chair. As part of the Compensationassessment, a written questionnaire is circulated which is designed to solicit feedback on a range of issues, including Board and committee structure, process and dynamics, the flow of information from management, and agenda topics. The feedback received from the evaluations is discussed during a review session led by the Governance Committee and the Technology and Operations Committee. The following tableindividual committees, as appropriate.
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In addition to these annual self-assessments, the Board evaluates and modifies its oversight of our business operations on an ongoing basis. During their executive sessions, the independent directors consider agenda topics that they believe deserve additional focus and raise new topics to be addressed in future meetings.
Corporate Governance Principles
The Board has adopted Corporate Governance Principles, which are amended from time to time to incorporate certain current best practices in corporate governance. The Corporate Governance Principles describe our corporate governance practices and policies and provide a framework for our Board governance. The topics addressed in our Corporate Governance Principles include, among other things:
Our Corporate Governance Principles are available on our website at www.wfscorp.com by clicking on Investor Relations and then Corporate Governance. Copies of this document may also be obtained by any shareholder, without charge, by writing to our Corporate Secretary.
Our Board has five standing committees: the Audit Committee, the Compensation Committee, the Governance Committee, the Sustainability & Corporate Responsibility Committee and the Technology & Operations Committee. The following table illustrates the current membership of each of our Board's committees, which are composed entirely of independent directors:
| Director | Audit | Compensation | Governance | Sustainability & Corporate Responsibility | Technology Operations | |||||
|---|---|---|---|---|---|---|---|---|---|---|
Ken Bakshi |   | | | |||||||
Jorge L. Benitez |
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| Chair | Chair | ||||||
Sharda Cherwoo |
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Stephen J. Gold |
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Richard A. Kassar |
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John L. Manley | Chair |
| | |||||||
| |
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Stephen K. Roddenberry |
| Chair | ||||||||
Paul H. Stebbins |
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World Fuel Services Corporation|2020 Proxy Statement 15
As discussed above, Mr. Klein isGold will not seeking another term onbe standing for re-election at the Board,2020 Annual Meeting, thus the size of the Audit Committee will be reduced to three members and the Governance Committee will be reduced to six members and the size of the Technology & Operations Committee will be reduced to five members.
Each of the Board's committees operates under a written charter adopted by our Board which addresses the purpose, duties and responsibilities of the committee. Each committee reviews its charter at least annually and recommends charter changes to the Board as appropriate. During 2016,2019, each of the committees in existence at the time reviewed and revised its charter. The Sustainability & Corporate Responsibility Committee was formed in March 2020 and its initial charter andwas adopted by the Audit Committee and Technology and Operations Committee revised their charters.Board upon the committee's inception. A current copy of each committee charter can be found on our website at www.wfscorp.com by clicking on Investor Relations and then Corporate Governance. In 2016, members
AUDIT COMMITTEE | ||||
Members: John L. Manley (Chair) Jorge L. Benitez Richard A. Kassar Meetings in 2019: 10 | | Responsibilities The Audit Committee's responsibilities include: • overseeing and reviewing the financial reporting process and the integrity of our financial statements and related financial information; • reviewing the qualifications, performance and independence, and approving the appointment and compensation of, our independent auditors; • reviewing with our independent auditors the results of the audit engagement, including a review of the consolidated financial statements and other matters required to be discussed under the standards of the Public Company Accounting Oversight Board; • reviewing the effectiveness of our internal audit function as well as our internal control environment and systems; • approving all audit and non-audit services to be provided by our independent auditors; • discussing with management financial risks and the policies and practices established to manage such risks; • together with the Technology & Operations Committee, reviewing our cybersecurity and related information technology risks, controls and procedures, including plans to mitigate cybersecurity risks and to respond to data breaches; • monitoring and reviewing our compliance with applicable laws and regulations and our Code of Conduct; and • establishing procedures for: (i) the receipt, retention, and treatment of complaints we receive from our employees regarding accounting, internal accounting controls, and auditing matters; and (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. | ||
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Independence and Financial Expertise The Board • meets the NYSE listing standards • is financially literate, knowledgeable and • qualifies as an "audit committee financial | |||
| The charter provides that a member of the Audit Committee shall not simultaneously serve on the audit committees of more than two other public companies unless the Board determines that simultaneous service would not impair the ability of the member to effectively serve on the Audit Committee. None of the members of our Audit Committee currently serve on the audit committees of more than two other public companies. | |||
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COMPENSATION COMMITTEE | ||||
Members: Ken Bakshi (Chair) Richard A. Kassar Stephen K. Roddenberry Meetings in 2019: 7 | | Responsibilities The Compensation Committee's responsibilities include:
• reviewing and
• evaluating the
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| Independence The Board reviewed the background, experience and
Nominating Subcommittee The Nominating Subcommittee was formed by the Governance Committee to assist the Governance Committee with identifying and recruiting qualified candidates for Board membership. The Nominating Subcommittee, which does not have a separate committee charter, consists of two of the members at large of the Governance Committee, currently Messrs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Meetings in 2019: Not applicable, as the committee was formed in March 2020. | | Responsibilities The • reviewing and • overseeing internal and external communications and disclosures regarding our position on, reporting of, or approach to significant Sustainability Matters, including by reviewing, as appropriate, disclosures and other communications to stakeholders; • overseeing and providing input to management on our identification, assessment and management of risks associated with Sustainability Matters such as climate change and its impact on us and our business; • considering, analyzing and providing input on significant public issues, trends, regulation and legislation regarding Sustainability Matters that are pertinent to us and our stakeholders; • reviewing the goals that we may publish from time to time for our performance with respect to Sustainability Matters and monitoring our progress against those goals; | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| • reviewing, overseeing and providing input to management on the Company's policies, strategies and programs related to Sustainability Matters; and • reviewing our charitable giving policies and programs and receiving reports from management on charitable contributions made by us, directly and through any foundations, that are in support of our goals regarding Sustainability Matters. Independence The Board reviewed the background, experience and independence of the Sustainability & Corporate Responsibility Committee members and based on this review, the Board determined that each member of the committee meets the independence requirements specified in its charter. | ||||||||||||||||||||||||
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TECHNOLOGY & OPERATIONS COMMITTEE | |||||||||||||||||||||||||
Members: Jorge L. Benitez (Chair) Ken Bakshi Sharda Cherwoo Stephen J. Gold Richard A. Kassar John L. Manley Meetings in 2019: 5 | | Responsibilities The Technology & Operations Committee's responsibilities include: • reviewing and
• reviewing and, as appropriate, making recommendations to the • reviewing and
•
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Nominee Qualifications and the Nomination Process
The Governance Committee believes that the Board should collectively possess a broad range of skills, knowledge, business experience and diversity of backgrounds that provides effective oversight of our business. The Governance Committee has established a matrix of skills and experience which it has determined would be beneficial to have represented on our Board based on a number of factors, including our current operating requirements, business strategy, and the long-term interests of our shareholders. The following table highlights certain of the skills and experience of our Board (additional details are set forth in their individual biographies beginning on page 7 of this proxy statement):
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The Board's objective is to maintain a diverse membership that can best further the success of our business and represent shareholder interests through the exercise of sound judgment using its diversity of experience and perspectives. The Governance Committee periodically assesses the skills and experience required of directors, comparing our needs in Board composition and the individual skills and experience of our directors. This assessment enables the Governance Committee to update the skills and experience it seeks in the Board, as a whole and in individual directors, as our needs evolve over time in order to maintain a balance of knowledge, experience and capabilities. As a result of such periodic assessment, the Governance Committee evaluates current directors and potential director nominees and will recommend any changes to Board size or composition that it believes is necessary to create a balanced and effective Board.
To the extent that the Governance Committee believes that specific skills or experience needs to be added to the Board, the committee initiates a search for a Board nominee, seeking input from board members and senior management. The Governance Committee may retain professional search firms to identify director candidates and maintains the authority to approve the fees and other retention terms of any such firm. The criteria for evaluating director nominees takes into account the candidate's intellect, integrity, judgment, experience and background, including diversity, such as race, gender and ethnicity, as well other factors deemed appropriate in adding value to the composition of the Board, such as public service. Further, as set forth in our Corporate Governance Principles, the Governance Committee is committed to actively seeking highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences, as part of the search process for new director candidates. The Governance Committee believes that it has been able to attract and appoint directors of diverse backgrounds in the past using these criteria.
Finally, in order to ensure that our independent directors have sufficient time to devote to overseeing the Company, our Corporate Governance Principles prohibit our directors from serving on the board of directors of more than three other publicly traded companies, unless the Board determines that such service will not impair the ability of such director to effectively perform his or her obligations as our director.
We believe the Governance Committee has a sound director evaluation process and that such process is an effective method for determining whether a director is fit to serve on the Board. Our Governance Committee welcomes candidates recommended by shareholders and, assuming a submission is in proper form as provided under our By-Laws, it will apply the same standards described above to the evaluation of a shareholder nominee as it applies to all nominees, including those recommended by current directors, employees and others. The procedural and disclosure requirements of our By-Laws provide that shareholders who would like to propose a Board nominee for consideration by the Governance Committee must deliver written notice to our Corporate Secretary, including disclosure of: (i) the relationship between the nominating shareholder and the underlying beneficial owner, if any, and such parties' stock holdings and derivative positions in our securities; (ii) information we deem appropriate to ascertain the nominee's qualifications to serve on the Board, including disclosure of compensation arrangements between the nominee, the nominating shareholder and the underlying beneficial owner, if any; and (iii) any other information required to comply with the proxy rules and applicable law. These requirements are more fully described in Article I, Section 7 of our By-Laws, a copy of which will be provided without charge to any shareholder upon written request to our Corporate Secretary at World Fuel Services Corporation, 9800 Northwest 41st Street, Miami, Florida 33178.
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We have adopted a director resignation policy for the election of directors in an uncontested election, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. In uncontested elections of directors, such as this election, any director nominee who receives a greater number of votes "withheld" from his or her election than votes "for" his or her election must promptly tender his or her resignation for consideration by the Governance Committee. The Governance Committee will recommend to the Board whether the Board should accept or reject the resignation or whether other action should be taken. The Board will publicly disclose its decision regarding the tendered resignation within 90 days after certification of the election results. The director whose resignation is under consideration will not participate in the recommendation of the Governance Committee or deliberations of the Board with respect to his or her resignation. If a director's resignation is not accepted by the Board, the director will continue to serve until the next annual meeting of shareholders or until his or her successor is duly elected and qualified, or his or her earlier resignation or removal. A copy of our director resignation policy, included in our Corporate Governance Principles, is available on our website at www.wfscorp.com. Our website and information contained on our website are not part of this proxy statement and are not incorporated by reference in this proxy statement.
Sustainability and Corporate Responsibility
We believe that conducting our operations in a safe and responsible manner, while maintaining the trust that we have built up among our key stakeholders, is vital to growing our business and continuing our success in a sustainable manner. This includes the protection of people, respect for individual rights, engaging with our communities, and working to reduce our overall impact on the environment through increased efficiency in our operations. We are committed to fostering a corporate culture of safety and conducting our business in a manner that respects the environment, benefits the communities in which we operate and promotes collaboration with our key stakeholders to develop sustainable programs that minimize the impact of our activities.
Over the last several years, we have reinforced our focus on environmental, health and safety, sustainability, diversity and other social responsibility issues and impacts (collectively, "Sustainability Matters"), through various enhancements to our policies and processes as well as our governance structure. In 2019, we took a number of significant steps to further strengthen our commitment to operating in a sustainable manner and proactively working with the communities in which we operate, including becoming a signatory to the United Nations ("UN") Global Compact, the world's largest corporate responsibility initiative. The UN Global Compact provides a universal framework for sustainability in the areas of human rights, labor, environment and anti-corruption. We aim to incorporate the UN Global Compact and its principles in our strategy, culture and operations and intend to support and engage in collaborative projects to advance the broader UN goals, with a special focus on the UN Sustainable Development Goals (SDG) that are in line with our mission and values. As part of our participation, starting in late 2020 we will provide an annual "Communication on Progress" report, setting forth our actions to implement the UN Global Compact principles and our progress in these key areas.
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In addition, in 2019 we commenced the development of a multi-year sustainability and corporate responsibility program designed to:
We are currently working on completing the assessment phase of this program and developing recommendations for review and consideration by our executive leadership and our Board.
Finally, to further illustrate our commitment to increasing transparency on Sustainability Matters, we have also enhanced our Investor Relations website located at: www.wfscorp.com and launched a dedicated area for information regarding our principles, policies and actions relating to sustainability and corporate responsibility matters that we believe are relevant to our business and meet the overall needs of our shareholders and other stakeholders. Our efforts in this area will continue to evolve in the future and we welcome any shareholder feedback as we continue on our sustainability journey.
Management and Board Oversight
As we have progressed in our approach to sustainability and corporate responsibility, our governance and oversight structure has also evolved. At the Board level, we began in 2018 by enhancing the responsibilities of our Governance Committee, which already included oversight of our corporate governance policies and practices, to also include oversight of our policies and programs related to environmental and social matters. We also established a cross-functional Sustainability Management Committee, which includes senior leaders and subject matter experts from across the Company who collaborate to identify priorities, set goals and drive the implementation of our strategy and objectives with respect to Sustainability Matters. This committee is also responsible for developing and implementing our multi-year sustainability and corporate responsibility program currently underway.
Furthermore, as a reflection of our commitment to embedding sustainability and corporate responsibility as an integral part of our business strategy for long-term value creation, in March 2020 our Board established the Sustainability & Corporate Responsibility Committee as a standing committee of the Board responsible for overseeing the environmental and social matters previously overseen by the Governance Committee. The Governance Committee will continue to be responsible for the oversight of our corporate governance policies and practices.
The Sustainability & Corporate Responsibility Committee is comprised solely of independent directors and responsible for overseeing and reviewing our programs, policies, risks and initiatives with respect to all Sustainability Matters not otherwise overseen by the other committees of the Board. These duties include reviewing and providing input on our strategy, goals and integration of Sustainability Matters into strategic and tactical business activities across the Company. The committee is also responsible for monitoring our progress against our goals and reviewing any disclosures
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regarding our position, approach and reporting of Sustainability Matters. Our Board's governance structure for the oversight of Sustainability Matters is reflected below and described in the "Corporate Governance" section beginning on page 12 of this proxy statement.
Our Environmental Stewardship
Environmental stewardship is at the core of our business operations and we continuously strive to identify opportunities to make a positive contribution to protecting our environment and reducing the impact of our global business operations. We are also working to create sustainability solutions for our customers and offer renewable energy and sustainable fuel products to support our customers in managing their energy needs while reducing their environmental impact.
| | | | | |
| Highlights of "Our Environmental Stewardship" Programs and Efforts | | |||
Getting to Zero. In September 2019, we joined the "Getting to Zero Coalition", a global alliance of private and public stakeholders within the maritime, energy, infrastructure and finance sectors focused on developing fuels, energy solutions and technology necessary to develop commercially viable deep-sea zero emission vessels powered by zero emission fuels by 2030. The Getting to Zero Coalition is | ||||
| Reducing Greenhouse Gas (GHG) Emissions. As a member of the | ||||
| Sustainability Products and Services. As an energy management company, we have been focused on investing in and expanding our portfolio of sustainability products and services across the energy product spectrum to
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World Fuel Services Corporation|2020 Proxy Statement 26
Our People
The passion and expertise of our people differentiate us. We firmly believe the power of our differences fuel innovation and investing in our people is of upmost priority. We strive to provide our employees with an environment where they can learn and grow, build their careers, take care of their families and support their communities. We also place a high value on cultivating growth and offer opportunities to learn and development programs across every level of our organization.
| | | | | |
| Highlights of "Our People" Programs and Efforts | | |||
Diversity & Inclusion. We have continued to focus on embedding diversity and inclusion throughout our talent acquisition, management and development practices. From recent graduates to experienced hires, we seek to attract and develop top talent to continue building a unique blend of cultures, background, skills and beliefs that mirrors the world we live in. We have focused on creating an environment that embraces diversity and encourages each employee to thrive. | ||||
| ITWomen. We have partnered with ITWomen, a non-profit organization founded in 2002 to narrow the gender gap in technology and increase the potential for innovation and economic growth through gender equality. The programs are geared to ignite a passion for technology in the next generation by reaching out to girls in middle school, high school, and college. Our technology leaders contribute their time in the ITWomen speaker series to share experiences that encourage girls in high school to pursue technology and engineering careers, including hosting them at our headquarters to experience IT careers in the corporate environment. For the fifth year in a row, we hosted a group of more than 60 high school girls at our headquarters in 2019 to participate in an interactive journey through the Agile lifecycle, where they were able to experience first-hand how a global company leverages technologies such as cloud and artificial intelligence. | ||||
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Our Community
We believe that sustainable growth is about conducting our business to promote a healthy environment and strengthen the local communities where we operate in order to foster sustainable economic growth. We believe that this approach will enable us to deliver long-term value to all our stakeholders. As a signatory to the UN Global Compact, we endeavor to implement its key social principles, including the protection of employees, respect for individual rights, and engagement with local communities. We also respect the rights and dignity of all people and are committed to preventing modern slavery in our operations and supply chains.
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| Highlights of "Our Community" Programs and Efforts | | |||
Human Rights. Our commitment to human rights is embodied in our corporate values and our policies and processes. We are a strong advocate of various human rights initiatives, such as the United Nations Declaration of Human Rights, and comply with various national and multinational efforts to enforce labor protections and individual rights, such as the United Kingdom Modern Slavery Act. We have various policies, procedures and public statements in place that support these principles. These resources, many of which have been translated into multiple languages, include our Code of Conduct, Anti-Corruption Policy and Business Partner Code of Conduct. | ||||
| Track My ElectricityTM. Track my ElectricityTM is a platform developed by our World Kinect Energy Services business that enables businesses to not only significantly reduce their organizational carbon footprint by sourcing 100% renewable energy, but to also support vulnerable communities in developing countries by combating energy poverty. For every MWh of clean energy sourced through the platform, a portion goes towards funding renewable energy projects in remote, off-grid areas to eliminate energy poverty and build sustainable communities. We have also participated in funding projects through this program. One such project included the installation of renewable energy solar panels in a community center in Mae Sot, Thailand to support around-the-clock powered activities, enabling access to educational opportunities within the community center, freshly prepared food and a safe environment to socialize. The solar panels that were installed also increased safety and visibility at night by powering streetlights in the area. | ||||
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Board's Role in Risk Oversight
The role of the Board is to understand the nature of the material risks we face and, based upon the information brought to its attention by management and our risk management processes, policies and procedures, evaluate whether such processes, policies and procedures are reasonably designed to respond to and mitigate the risks we face. Throughout the year, the Board and its committees receive periodic reports from management identifying and explaining key areas of risk applicable to us and an explanation of the processes, policies and procedures in place to monitor and assess those risks.
The Board and each of its committees oversee the risks pertaining to their principal areas of focus as described in the table below:
| | | | | | | |
Board or Committee | Area of Risk Oversight | | ||||
Board | • Considers strategic and operational risks associated with the annual operating plan and other current matters that may present material risks to our operations, plans, prospects or reputation and risks associated with acquisitions. | |||||
| Audit | • Considers risks associated with the financial reporting and disclosure process, major litigation, cybersecurity and related information technology risks, and regulation and legal compliance; and | | |||
| | • Discusses the guidelines and policies that govern the process by which risk assessment and management is undertaken in accordance with its charter and NYSE rules. | | |||
Compensation | • Considers risks associated with our compensation programs, policies and practices. | |||||
| Governance | • In conjunction with the Compensation Committee, considers risks associated with management development and succession. | | |||
Sustainability & Corporate Responsibility | • Considers the risks and initiatives regarding our environmental, health and safety, sustainability, diversity and other social responsibility issues and impacts. | |||||
| Technology & Operations | • Considers risks related to technology and operations initiatives, including regulatory, environmental and other significant technology-related risks; and | | |||
| | • Consults with the Audit Committee regarding technology and operations systems and processes that relate to or affect our internal control systems, information security, fraud and cybersecurity risks. | | |||
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Each committee also provides periodic reports to the Board on the risks pertaining to their principal areas of focus so that the Board is informed of our risk profile.
Periodically, we also perform risk management assessments, both in specific areas of our business or on an enterprise wide basis. The principal purposes of these assessments are to:
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The results of these risk assessments are regularly communicated to the Board. In addition, each year management conducts, and the Compensation Committee oversees, a risk assessment of our compensation policies and practices with respect to all employees, including NEOs. The employee population is segmented into groups based on commonalities across their reward programs. Each program is then evaluated using the key design features of the program and the applicable risk mitigation features that exist in such programs. Once the assessment is completed, management reviews the assessment data, methodology and findings with the Compensation Committee. A key goal of this process is to ensure that there are controls in place to (i) safeguard us from unwarranted exposure to particular risks that individual employees might choose to take and (ii) avoid any inadvertent incentives for employees to take inappropriate business risks by making decisions that may be in their best interests but not in the best interests of our shareholders.
All of our employees, officers (including our principal executive, financial and accounting officers) and directors are held accountable for adherence to our Code of Conduct. Our Code of Conduct is designed to help us meet our responsibility of conducting our business in compliance with laws and good ethical practice. Our Code of Conduct is available in multiple languages on our website at www.wfscorp.com, either by clicking on About Us and then Ethics & Compliance, or by clicking on Investor Relations and then Corporate Governance. We intend to disclose any substantive amendments to our Code of Conduct and any waivers with respect to our Code of Conduct granted to our principal executive, financial and accounting officers on our website at www.wfscorp.com. We have also established a separate Business Partner Code of Conduct outlining our standards and expectations of our suppliers and other business partners, which can also be found in the Investor Relations section of our website at www.wfscorp.com.
Review and Approval of Related Person Transactions
Related person transactions can create actual or potential conflicts of interests and can create the appearance that certain decisions may not be in the best interest of us or our shareholders. Therefore, our Board has adopted a written policy with respect to related person transactions. It is our policy that, as a general matter, we should avoid related person transactions except in circumstances where the transaction is consistent with our best interests, such as obtaining products or services that are not readily available from alternative sources or when the transaction meets the standards that apply to similar transactions with unrelated third parties.
For purposes of our policy, we review all of the following relationships and transactions between us and:
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Pursuant to our policy, the Governance Committee will review any transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which we (including any of our subsidiaries) were, are or will be a participant and the amount involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. The foregoing rule will not be applied to those transactions exempt under Item 404(a) of Regulation S-K, such as the employment of an executive officer or compensation of a director if such executive officer's or director's compensation is required to be, or otherwise would be required to be, reported under the SEC's compensation disclosure requirements, any transaction with another entity where the related person's only relationship is as a beneficial owner of less than 1% of that corporation's publicly traded securities, or any transaction where the related person's interest arises solely from the ownership of our common stock and where all shareholders received the same benefit on apro rata basis (e.g. dividends). In addition, the Governance Committee has determined that the following types of transactions, which involve ordinary course business transactions shall not be deemed to create or involve a direct or indirect "material" interest for a Related Person, even if the aggregate amount involved exceeds $120,000: (1) a transaction in which the related person's interests arises solely based on his or her position as an employee or executive officer of the other entity and (i) the related person was not involved in the transaction, (ii) the transaction was entered into in our ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons, and (iii) the transaction does not involve the greater of $500,000 or 2% of the recipient's total annual revenues and (2) any charitable contributions if the related person's interest arises only from (i) the person's or the person's immediate family member's position as an employee (other than an executive officer) or other position that does not involve policy-making decisions or (ii) the person's or person' immediate family member's position as an executive officer or director and the aggregate amount involved does not exceed the lesser of $1,000,000 or 2% of the charitable organization's total annual receipts.
If the Chairman of the Governance Committee determines that a proposed transaction is a related person transaction, it will submit the proposed transaction to the Governance Committee for approval. The Governance Committee reviews any related person transactions that are not among the types described above, and determines whether to approve or ratify any such transaction. The Governance Committee will analyze the following factors, in addition to any other factors the Governance Committee deems appropriate, in determining whether to approve a related person transaction:
The Governance Committee will only approve or ratify related person transactions that are consistent with our best interests and those of our shareholders. The Governance Committee's approval is not a directive to enter into the related person transaction, rather it is evidence that the Governance Committee does not object to the transaction based on relatedness issues. The Governance Committee will regularly review any ongoing related person transactions to determine whether it remains in our best interests and those of our shareholders to continue, modify or terminate the transactions.
There were no reportable transactions in 2019.
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Director Compensation and Ownership Guidelines
Director Fees Earned or Paid in Cash
Non-management directors earn fees for their services that are paid in cash on an annual basis. If a non-management director does not serve a full year in a position, such fees are paid on a pro-rated basis. The current fee structure for our non-management directors serving during the 2019-2020 term is as follows:
Our non-management directors are also reimbursed by us for their travel, food, lodging and related expenses incurred in connection with attending Board, committee and shareholder meetings, as well as continuing education programs.
Equity Awards
In 2016,2019, the Board elected to grantgranted each non-management director approximately $145,000$150,000 worth of restricted stock units ("RSUs") for board service and to each member of the Governance Committee, an additional $10,000 worth ofin RSUs as the fee for service on the Governance Committee.committee. This resulted in each non-management director (other than Mr. Stebbins) receiving 3,355 RSUs.5,321 RSUs and Mr. Stebbins, a non-management director, received 3,139 RSUs, which is the portion of the RSUs granted for board service only since he iswho does not independent and is, therefore, currently ineligible to serve on the Governance Committee.Committee, receiving 4,989 RSUs. In addition, beginning in May 2019, the Chair of each Committee was also granted $5,000 in RSUs as a portion of their fee for serving as Chair, provided, however, that where a director served as Chair of more than one committee, only one additional $5,000 equity grant was made. This resulted in each of Messrs. Bakshi, Benitez, Manley and Roddenberry receiving an additional 167 RSUs. As described in greater detail above, although Messrs. Bakshi and Benitez serve as Chair of two committees, they only received one equity grant for such service.
The RSUs vest on the earlier of: (i) the day prior to the Annual Meeting that next follows the grant date or (ii) one year from the grant date. Upon vesting of the RSUs, 50%100% of the underlying shares will be issued. The issuance of the remaining 50% of the shares will be deferred for three years from the grant date or until the director ceases to be a member of the Board, whichever occurs first.
Our 2016 Omnibus Plan includes limits on equity awards that may be granted to non-management directors. The table below summarizes the compensation paid by us to our non-management directors for services rendered in 2016.2019. Directors who are employed by us do not receive additional compensation for serving as directors.
DIRECTOR COMPENSATIONWorld Fuel Services Corporation|2020 Proxy Statement 31
2019 Director Compensation Table
| Name | Fees Earned or Paid in Cash | Stock Awards(1)(2) | All Other Compensation(3) | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Ken Bakshi | $ | 113,417 | $ | 155,001 | $ | 1,461 | $ | 269,879 | |||||
Jorge L. Benitez | 96,667 | 155,001 | 689 | 252,356 | |||||||||
Richard A. Kassar | 92,417 | 155,001 | 1,461 | 248,879 | |||||||||
Myles Klein | 79,917 | 155,001 | 1,461 | 236,379 | |||||||||
John L. Manley | 109,083 | 155,001 | 1,461 | 265,546 | |||||||||
J. Thomas Presby | 123,917 | 155,001 | 1,461 | 280,379 | |||||||||
Stephen K. Roddenberry | 86,667 | 155,001 | 1,461 | 243,129 | |||||||||
Paul H. Stebbins | 68,750 | 145,022 | 640 | 214,411 | |||||||||
| Name(1) | Fees Earned or Paid in Cash | Stock Awards(2)(3) | Total | |||
|---|---|---|---|---|---|---|
Ken Bakshi | $145,000 | $165,024 | $310,024 | |||
Jorge L. Benitez | 128,333 | 165,024 | 293,357 | |||
Stephen J. Gold | 90,833 | 160,002 | 250,836 | |||
Richard A. Kassar | 114,583 | 160,002 | 274,586 | |||
John L. Manley | 133,333 | 165,024 | 298,357 | |||
J. Thomas Presby(4) | 37,917 | — | 37,917 | |||
Stephen K. Roddenberry | 148,750 | 165,024 | 313,774 | |||
Paul H. Stebbins | 80,833 | 150,019 | 230,853 |
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| Name | RSUs | Stock Units(a) | |||||
|---|---|---|---|---|---|---|---|
Ken Bakshi | 35,640 | 12,776 | |||||
Jorge L. Benitez | 5,371 | — | |||||
Richard A. Kassar | 22,950 | — | |||||
Myles Klein | 22,950 | — | |||||
John L. Manley | 8,020 | — | |||||
J. Thomas Presby | 27,171 | 4,130 | |||||
Stephen K. Roddenberry | 22,950 | — | |||||
Paul H. Stebbins | 5,011 | — | |||||
| Name | Units(b) | |
|---|---|---|
Ken Bakshi(a) | 37,405 | |
Jorge L. Benitez | 7,628 | |
Stephen J. Gold | 6,687 | |
Richard A. Kassar | 24,140 | |
John L. Manley | 9,377 | |
Stephen K. Roddenberry | 24,307 | |
Paul H. Stebbins | 6,991 |
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Director Stock Ownership Guidelines
Each non-management director is required to accumulate, over a period of five years following election to the Board, a minimum of five times the annual fee for service on the Board, or $300,000,$425,000, in our common stock. All of our non-management directors, with the exception of Mr. Benitez,Ms. Cherwoo, who joined the Board on January 1, 2015,February 5, 2020, have achieved stock ownership levels in excess of the amount required. Vested RSUs and stock units that a director has elected to defer until retirement are included in the calculation of whether the minimum ownership requirement has been achieved.
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III. INFORMATION CONCERNING EXECUTIVE OFFICERS |
The following table sets forth certain information with respect to our current executive officers and lists their current titles. A summary of the background and experience of Messrs. Birns, Smith, Crosby, Rau, and Lake are set forth in the paragraphs following the table. The background and experience of Mr. Kasbar is described above in the section titled "Proposal No. 1—Election of Directors." All executive officers serve at the discretion of the Board.
| Name and Current Position | Age | Year First Became Executive Officer | Age | Year First Became Executive Officer | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Michael J. Kasbar | 60 | 1995 | 63 | 1995 | |||||||
Ira M. Birns | 54 | 2007 | 57 | 2007 | |||||||
Jeffrey P. Smith | 58 | 2017 | |||||||||
Michael J. Crosby | 52 | 2016 | 55 | 2016 | |||||||
John P. Rau | 53 | 2016 | 56 | 2016 | |||||||
R. Alexander Lake, Jr. | 45 | 2017 | 48 | 2017 | |||||||
IRA M. BIRNS has served as our Executive Vice President and Chief Financial Officer since April 2007. From August 2004 to March 2007, Mr. Birns served as Vice-President and Treasurer and Vice President-Investor Relations of Arrow Electronics, Inc., a NYSE company and electronics distributor. From May 2002 until August 2004, he served as Vice President and Treasurer of Arrow Electronics, Inc. Prior thereto and from 1996, he served as Treasurer of Arrow Electronics, Inc. He was Assistant Treasurer of Arrow Electronics, Inc. from 1989 to 1996. Mr. Birns is a member of the Board of Trustees of the New World Symphony of Miami, Florida.
JEFFREY P. SMITH has served as our Executive Vice President and Chief Operating Officer since October 2017. Previously, he served as Chief Information Officer of International Business Machines Corporation ("IBM") from August 2014 through May 2017, where he was responsible for global information technology ("IT") operations, including provisioning and management of all computing devices and all software solutions required to run IBM, such as Customer Relationship Management ("CRM") for sales and service and Enterprise Resource Planning ("ERP") for financials and manufacturing. Prior to joining IBM, Mr. Smith served as Chief Executive Officer of Suncorp Business Services, part of Suncorp Group Limited, from July 2010 to August 2014, and Chief Information Officer from March 2007 to July 2010. While at Suncorp, Mr. Smith was responsible for the Group's technology, analytics, real estate, finance, procurement, and customer relationship, IT and business process outsourcing operations. With more than 30 years of corporate experience, Mr. Smith has also held senior executive roles in a number of companies including Telstra Corporation and Honeywell.
MICHAEL J. CROSBY has served as our Executive Vice President of Global Land since March 2016. Previously, he served as our Executive Vice President of Land Americas since April 2015. From January 2014 to March 2015, Mr. Crosby was the Chief Operating Officer of Next Generation Energy Logistics, a private equity-backed fuel and lubes distribution business, where he was instrumental in raising capital and executing the company's acquisition and consolidation strategy. Prior
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to that, from June 2011 to July 2013, Mr. Crosby served as President of Maxum Petroleum, Inc.'s industrial business, including the marine and rail segments, and as President, Commercial Fuel & Lubricants of SC Fuels Trading, LLC from July 2013 to December 2013 following its acquisition of Maxum Petroleum. From January 2009 to December 2010, Mr. Crosby served as Chief Executive Officer of Highlands Override Inc., a new business venture owned by Irving Oil Corporation, a company specializing in finished energy products. From June 2004 to December 2008, Mr. Crosby served as Chief Operating Officer at Irving Oil Corporation, prior to which he was its Chief Resource Officer from November 1999 to May 2004.
JOHN P. RAU has served as our Executive Vice President of Global Aviation and Marine since March 2016. Previously, he served as our Executive Vice President of Aviation from April 2014 and as our Senior Vice President of Aviation Americas from October 2011 to April 2014. From July 1995 to October 2011, Mr. Rau served as Managing Director at American Airlines, where he was responsible for the purchase and management of jet fuel, utilities, deicing fluids, and transportation, as well as management of American's supplier diversity program. From January 1987 to July 1995, Mr. Rau served as Manager of Fuel Supply and Trading at United Airlines. Prior to that, he served as United
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Airlines' Operations Manager from January 1987 to November 1988. From May 1985 to January 1987, Mr. Rau was a Supply, Marketing and Distribution representative for Koch Industries.
R. ALEXANDER LAKE, JR. has served as our Executive Vice President, Chief Legal Officer and Corporate Secretary since March 2017. Previously, he served as our Senior Vice President, General Counsel and Corporate Secretary since May 2010 and as our General Counsel and Corporate Secretary from January 2004 to May 2010. Prior to joining the Company,us, Mr. Lake served as Assistant General Counsel of America Online Latin America, Inc., a leading interactive service provider in Latin America. Prior to that, from September 1996 to January 2001, Mr. Lake served in private practice as a corporate attorney with the law firms of White & Case, Winston & Strawn and Curtis Mallet-Prevost, Colt & Mosle.
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IV. COMPENSATION DISCUSSION AND ANALYSIS |
The following Compensation Discussion and Analysis contains statements regarding future individual and Company performance goals. These performance goals are disclosed in the limited context of our executive compensation program and should not be understood to be statements of management's expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.
This Compensation Discussion and Analysis is designed to provide our shareholders with a clear understanding of our compensation philosophy and objectives, compensation-setting process, and the 20162019 compensation of our named executive officers, or NEOs. As discussed in Proposal 2 of this proxy statement, we are conducting a Say-on-Pay vote this year that requests your approval, on a non-binding advisory basis, of the compensation of our NEOs as described in this section and in the tables and accompanying narrative contained below under "Executive Compensation."Compensation". To assist you with this vote, you should review our compensation philosophy, the design of our executive compensation programs and how, we believe, these programs contribute to our financial performance.
For 2016,2019, our NEOs were:
| Name | Title | |
|---|---|---|
Michael J. Kasbar | Chairman, President and Chief Executive Officer | |
Ira M. Birns | Executive Vice President and Chief Financial Officer | |
Jeffrey P. Smith | Executive Vice President and Chief Operating Officer | |
Michael J. Crosby | Executive Vice President, Global Land | |
John P. Rau | Executive Vice President, Global Aviation and Marine |
As part of an organizational change to further strengthen management and strategic execution across our aviation, marine and land businesses, we created two new expanded leadership positions which are responsible for managing our principal businesses. The Board appointed Mr. CrosbyPlease note that the decisions with respect to the newly created position of Executive Vice President, Global Landtargets and Mr. Rauincentive compensation program described in this Compensation Discussion and Analysis were made in the normal course in early 2019 and the resulting payments were thereafter made in early 2020 for the corresponding amount. The Committee is monitoring and will continue to consider the newly created position of Executive Vice President, Global Aviationbusiness and Marine. In their new roles, each of these executives is responsible for overseeing all aspectsfinancial impact of the businesses they manage, including operations, salesCOVID-19 pandemic on the Company, our shareholders, employees and other stakeholders in evaluating 2020 performance throughout the developmentyear and implementationinto early 2021.
Principles of our strategy in each of these key business areas. In connection with their respective promotions, the Compensation Committee, or the Committee, approved certain compensation actions for Messrs. Crosby and Rau commensurate with their new roles, including equity awards, which actions are described below under "2016 Compensation Program—2016 Compensation".
Executive SummaryProgram
Our compensation program is designed to attract and retain executives and motivate them to deliver strong financial results. We structure our compensation program to directly align our compensation levels with our current and future performance that creates value for shareholders. For example,our shareholders, employees, customers and other stakeholders. As a result, a significant percentage of the total target compensation opportunities for our Chief Executive Officer for 2016NEOs in 2019 was a combination of short- and long-term performance-based or equity-basedequity awards such that the ultimate realizable value would be highly contingent upon our future operating results and stock price.
For 2016, approximately 86%2019, the portion of the total target direct compensation ofthat was variable or "at-risk" for our Chief Executive Officer was variable or "at-risk."83% and averaged to 71% for our other NEOs, reflecting our commitment to linking compensation to Company performance and strategy.
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CEO Total DirectTarget Compensation
Mix
Compensation Governance Highlights
| What We Do | What We Don't Do | |
|---|---|---|
| | | |
| Executive compensation program tied to our financial and operating performance and designed to create value for our shareholders, employees, customers and other stakeholders
|  No guaranteed bonuses
|
Our Performance in 2019
DespiteIn 2019, our management team continued to successfully advance our key objectives of sharpening our portfolio, driving aggressive organic growth and increasing operating leverage. We further rationalized our portfolio of businesses, exiting certain non-core business activities in our land segment, and continued to focus on our core competencies, shifting towards businesses and opportunities that we believe are capable of producing more ratable, sustainable and scalable profits that will ultimately deliver greater shareholder value over the long-term. Our marine segment also performed exceptionally well, generating some of its strongest results in years that were largely attributable to our management's efforts to right-size the business, refine the portfolio and focus on driving stronger returns. Our technical expertise also enabled us to help customers navigate increased fuel price volatility, as well as the risks related to product availability and logistics that arose as a result of the implementation of the International Maritime Organization's low sulfur fuel regulations that went into effect on January 1, 2020.
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In addition, the cost discipline and restructuring activities that began at the end of 2017 yielded improvements in our operating leverage and market segmentation, which enabled an increase in gross profit despite a decline in volume. Our aviation segment delivered a solid increase in year-over-year results, driven by a strong contribution from government-related activity and strength in our core commercial and general aviation offerings. This was further supported by our management's focus on improving our global logistics capability, expanding our fuel operations footprint and making further enhancements to our non-fuel service offerings.
All of the foregoing ultimately contributed to a significant accomplishmentsincrease in implementing our strategic plan,earnings before interest, taxes, depreciation and amortization ("EBITDA") for 2019 as compared to the previous year, which resulted in our financial results during 2016 were impacted by challenging market conditions that affectedNEOs earning higher payouts under our businessannual incentive compensation program, consistent with our pay-for-performance philosophy.
Say-on-Pay Vote and thatShareholder Engagement
At our 2019 annual meeting of shareholders, we sought and received approval from 93.6% of votes cast (excluding abstentions), on a non-binding, advisory basis, of the 2018 compensation of our customers. Thus,NEOs. We regularly engage with our executive compensation reflected these results and demonstrated that, as designed,shareholders to understand better their perspectives on our compensation programs. As discussed above under "Shareholder Engagement" on page 13, during 2019 we interacted with 18 of the 25 largest holders of our common stock, representing approximately 50% percent of our shares outstanding. In the past, shareholder feedback has led to changes to our incentive compensation program, pays for performance.such as modifying our long-term incentive compensation program to enhance predictability and shareholder alignment through the adoption of annual grants of equity with multi-year performance periods.
Executive Compensation Philosophy and Objectives
Pay for Performance Alignment
A guiding principle of our compensation philosophy is that the compensation of our NEOs should be closely linked with, and reasonable in relation to, the level of shareholder value created through the Company's financial, operating and strategic performance. The Compensation Committee (the "Committee") believes that the use of incentive compensation, particularly equity-based awards, together with stock ownership and retention guidelines are effective methods for motivating our executives and aligning their interests with those of our shareholders. As demonstrated in the chart below, since establishing our comprehensive incentive compensation award program in 2009, we believe the Total Realizable Compensation of our named executive officers, Messrs. Kasbar, Birns, Crosby and Rau, has been in alignment with our total shareholder return, or TSR, over the relevant period.
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Total Realizable Compensation of Named Executive Officers vs. Indexed TSR*
This illustration is made using the named executive officers' "Total Realizable Compensation" for their performance in each of fiscal years 2009 through 2016 for Messrs. Kasbar and Birns and fiscal year 2016 for Messrs. Crosby and Rau as they became executive officers during this year (see "Alternate Summary Compensation Table" beginning on page 46 for more information regarding fiscal year 2016 and the calculation of "Total Realizable Compensation").
Performance Metrics Aligned with Value Creation
Consistent with our objective of rewarding shareholder value creation, we select performance metrics that we believe, if achieved, will most directly translate into both strong short-term financial performance both in the short- and long-term, value thereby resulting in higher share prices. As a result, we principally use annual financial metrics, such as growth of our consolidated net after-tax income ("Net Income"), the level of our business units'EBITDA and operating income ("Operating Income") and, commencing in 2016, our three-year compound annual growth ("CAGR") in earnings per share ("EPS")for key "lines of sight", or LOS, to reward our named executive officers.NEOs. Our long-term incentive financial metrics consist of three-year growth in EPS ("EPS Growth") and beginning in 2019, as modified by our return on invested capital ("ROIC"). In addition, to a lesser extent, we reward achievement of individual performance metricsstrategic objectives that we believe will help us achieve our strategic objectives.drive long-term benefits and sustainable value. Due to the variability inof business conditions within the industries in which we operate, we believe it is important that our compensation program isbe designed to measure and reward both annualshort-term, long-term and multi-year performance.
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Ensuring Retention and Continued Engagement through Multi-Year Vesting Requirements
In order to promote retention of our named executive officersNEOs and provide further incentive for creating shareholder value, we believe executivesNEOs should be required to provide services over multi-year periods in
World Fuel Services Corporation|2020 Proxy Statement 38
order to vest in equity-based awards. Consequently, all of the equity awards granted to our named executive officersNEOs in 20162019 vest over a three or five-yearthree-year period.
Strong Compensation-Related Corporate Governance Policies
To ensure continued alignment of compensation with Company performance and the creation of shareholder value without encouraging excessive risk-taking, our Committee has adopted strong compensation-related corporate governance policies, including the following:
| | | | | | | |
| Negative Discretion on Annual Compensation | The Committee can use "negative discretion" to reduce payouts, such as in the event of a significant disconnect between compensation and Company and individual performance. | |||||
Cap on Annual Incentive Awards | Annual cash and equity performance-based awards under our annual incentive program are subject to a maximum, which serves to limit the total direct compensation opportunity, or TDC, that can be earned by any of our NEOs. | |||||
Stock Ownership and Retention Guidelines | Our executive officers are subject to robust stock ownership guidelines. Our current stock ownership guidelines are as follows: | |||||
• Chief Executive Officer 7x base salary | ||||||
• Chief Financial Officer and 5x base salary | ||||||
• All other executive officers 3x base salary | ||||||
Furthermore, our executive officers are required to retain 50% of any net shares acquired pursuant to any equity award for three years after the shares are delivered (or until the individual ceases to be an executive officer, if earlier). | ||||||
Anti-Hedging Policy | We have a robust anti-hedging policy that prohibits all of our directors, executive officers, employees and their respective related persons from (1) engaging in hedging or monetization transactions, or any transaction that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of our securities, such as prepaid variable forward contracts, equity swaps, collars and exchange funds (which we refer to as "Hedging Transactions") or (2) buying or selling of publicly traded options based on our common stock or engaging in short sales of our securities. | |||||
| | | | | | | |
Negative Discretion on Annual Compensation—The Committee can use "negative discretion" to reduce payouts in order to align with Company and individual performance.
The Compensation-Setting Process
Annually, the Committee reviews and assesses:
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World Fuel Services Corporation|2020 Proxy Statement 39
compensation programs adhere to the core principles as described above under "Executive Compensation Philosophy and Objectives."
The Committee also reviews comprehensive detailed historical compensation analysis to ensure that it is fully informed of all the compensation and benefits each named executive officerNEO has received as an employee of the Company. This analysis includes information such as the aggregate amounts realized from prior years' compensation, the potential future payout scenarios at various levels of growthachievement taking into account any outstanding unearned performance-based awards, and the current value (as compared to the grant date fair value) of outstanding equity awards and of each named executive officer'sNEO's shareholdings in the Company (what some commentators call an "accumulated wealth analysis"). However, the Committee does not specifically use the accumulated wealth analysis as a material factor in determining the named executive officer'sNEO's compensation for a given year.
The Committee strongly believes that:
The Committee also considers the recommendations of our Chief Executive Officer with respect to the compensation of our other executive officers. Following these reviews and assessments, the Committee determines the compensation packages for each named executive officer.NEO. This process is subjective and involves the exercise of discretion and judgment. While the Committee will review detailed financial models showing variations in compensation at differing levels of growth,achievement, the Committee does not rely on a fixed formula but rather, it establishes the compensation packages based on the Committee's judgment as to what it believes areis reasonable in relation to the levels of shareholder value created at each level of Company performance.
Evaluating Compensation Program Design Using Compensation Comparison Companies
We believe we have a unique business model and that there is no other companyare few, if any, companies of a similar size and complexity engaged in our same lines of business on a global scale. However, in order to ensure that the Committee has a comprehensive view of market trends in executive compensation, in November 2015, the Committee approved a group of compensation comparison companies that it would use to benchmark our executive compensation program commencing in 2016. The Committee, with assistance from its independent compensation consultant, developed a group of compensation comparison companies that reflects multiple aspects of our complex business model.model and it uses this group to benchmark our executive compensation program. In forming the group, wethe Committee considered companies in the industry sectors listed below, taking into account their relative financial size (with a specific focus on net income and market capitalization), and maintaining a reasonable expectation these companies will have some consistency in terms of ongoing groupindustry sector membership.
• Asset-light demand aggregators; | • Marine, land, and aviation services providers; | |
• Energy commodity trading organizations; | • Freight forwarding and logistics services providers; and | |
• Wholesale diversified distributors; | • Systems/payment processing services providers. |
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The Compensation Committee used data derived from the compensation comparison companies group shown below to inform its decisions about NEO compensation including amounts, design and mix of pay components. For 2019, the Committee maintained the same compensation comparison companies group as was utilized in 2018.
| | | | | | | |
| | 2019 Comparison Companies | | ||||
• Anixter International Inc. | • Noble Energy, Inc. | |||||
• Arrow Electronics, Inc. | • Owens & Minor, Inc. | | ||||
• Atlas Air Worldwide Holdings, Inc. | • Performance Food Group, Inc. | |||||
• C.H. Robinson Worldwide, Inc. | • Ryder System, Inc. | | ||||
• Expeditors International of Washington, Inc. | • Sysco Corporation | |||||
• FleetCor Technologies, Inc. | • Tech Data Corporation | | ||||
• Henry Schein, Inc. | • United Natural Foods, Inc. | |||||
• Hub Group, Inc. | • W.W. Grainger, Inc. | | ||||
• J.B. Hunt Transport Services, Inc. | • WESCO International, Inc. | |||||
• Jones Lang LaSalle Incorporated | • WEX Inc. | | ||||
• Kirby Corporation | • XPO Logistics, Inc. | |||||
• Landstar System, Inc. |
| | ||||
| | | | | | | |
Although the Committee believes comparison compensation and performance data can be useful, the Committee does not believe that any peercomparison group company, whose composition is based solely on our industry classification, revenues, net income and/or market capitalization, is fully reflective of the markets in which we compete for talent. Consequently, the Committee does not set the executives' target total direct compensation, or any of the target components of such compensation, at any specific percentile of the comparison group. Rather, it considers, as part of the overall compensation discussion, base salary, as well as the target and actual (1) base salary, (2) short-termshort- and long-term incentive compensation and (3) long-term compensation of the NEOs against the 50th percentile of the comparison group.
Independent Compensation ConsultantsConsultant
In connection with the setting of 20162019 executive compensation, the Committee engaged and received advice and assistance from Compensation Strategies, Inc. ("Compensation Strategies"), its independent compensation consultant. Compensation Strategies provides services solely to the Committee and reports directly and exclusively to the Committee. The Committee has assessed the independence of Compensation Strategies pursuant to SEC and NYSE rules and the guidelines of the Compensation Committeeits Charter and concluded that itsCompensation Strategies' work for the Committee does not raise any conflict of interest and that it is independent.
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For 2016,2019, Compensation Strategies provided assistance to the Committee as follows:
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In addition, Compensation Strategies
World Fuel Services Corporation|2020 Proxy Statement 42
Table of the new PSP (defined below).Contents
At our 2016 annual meeting of shareholders, we sought and received approval from 97% of votes cast (excluding abstentions), on a non-binding, advisory basis, of the 2015 compensation of our named executive officers. We regularly engage with our shareholders to understand better their perspectives on our compensation programs. As discussed above under "Shareholder Engagement" on page 14, during 2016 we interacted with 17 of our 25 largest active shareholders of our common stock, representing approximately 49% percent of our shares outstanding. Based on previous shareholder feedback, the Committee made certain changes to our 2016 long-term incentive compensation program payable to our executive officers to enhance predictability, add a long-term performance metric and enhance shareholder alignment. Specifically, we adopted a performance-based long-term incentive share program (the "Performance Share Plan" or "PSP") to complement the existing annual incentive compensation program. As discussed below, on an annual basis, executives are granted an opportunity to earn equity, with the actual number of shares earned determined based on the Company's CAGR in EPS over the subsequent three-year period. Compensation Program
2016 Compensation Program
Elements of Compensation
The Committee uses a variety of compensation elements to establish individual compensation programs for each of its named executive officers.NEOs. The table below sets forth the compensation elements that the Committee uses in its programs and the objective of each of these elements.
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In connection with performance-related awards for Messrs. Kasbar, Birns, Crosby and Rau, the Committee may use its discretion to determine on a case-by-case basis the extent of recognition or charges to Net Income or Operating Income derived from companies acquired by mergers or other corporate transactions and the manner of recognition and for Messrs. Crosby and Rau, also excludes the impact of bonus expense in their Operating Income-based compensation. In addition, for all named executive officers, the Committee may exercise negative discretion on the prescribed incentive awards in accordance with the terms of the 2013 Executive Incentive Plan (the "EIP") and 2016 Omnibus Plan, as deemed appropriate by the Committee, such as when there is a significant disconnect between TSR and compensation.
In addition to the compensation elements set forth above, the Committee may grant additional equity awards, including sign-on awards, special retention awards or other discretionary awards from time to time. The Committee uses these awards to attract, reward, incentivize and retain key executives that it believes are integral to our overall long-term success, as well as to promote business continuity, drive achievement and growth and ensure proper focus on achieving our long-term strategic objectives. These types
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In 2016, our2019, the Committee used each of the compensation elements described above in establishing the executive compensation programs for Messrs. Kasbar, Birns, Smith, Crosby and Rau and determined the amounts that could be earned for each of these elements in accordance with our pay-for-performance philosophy. Base salary was the only fixed portion of the named executive officers'NEOs' direct compensation. The remainder of the direct compensation for Messrs. Kasbar, Birns, Crosby and Rau (consisting of annual performance-related cash incentives, strategic objective cash incentives, and annual, as well as long-term, performance-based equity awards)our NEOs was variable and designed to:to reward: (1) share with each of our named executive officers a portionNEOs for achieving specified levels of EBITDA, EPS and ROIC, (2) each of our NEOs for achievement of strategic operational and organizational objectives that the Company's Net IncomeCommittee believes would contribute to our long-term growth, and (3) for Messrs. Crosby and Rau, a portionfor achieving specified levels of the Operating Income in their respective lines of the businesses for which they are responsible, and (2) reward the named executive officers for achievement of those strategic objectives thatsight.
For 2019, the Committee believes will contribute tocontinued the Company's long-term growth and operational excellence.
For 2016,performance-based components of our annual incentive program that were first introduced in 2018. Specifically, the Committee adoptedcontinued the PSP as an overlay to the current core compensation program. In the past, the Committee has used special performance-based equity awards with an extended measurement period, i.e. five years, to provide the long-term compensation componentuse of the program. However, given the length of the vesting period and the rapidly changing business
World Fuel Services Corporation|2017 Proxy Statement 39
environment in the industries in which the Company operates, this type of long-term equity incentive has proven challenging to implement. For example, the most recent long-term equity incentive award was granted in 2012 and expired completely unvested on December 31, 2016 during a time in which oil prices dramatically declined and then experienced historically lowtargeted levels of volatility overEBITDA, which we define as income from operations, excluding the five-year measurement period. Underimpact of depreciation and amortization and adjusted for non-operational items as appropriate, for the new PSP, executives will be granted a PSP opportunity of a fixed amount (the "PSP Opportunity") annually at the beginning of the three-year vesting period. Similar to the 2012 long-term equityannual incentive award, the PSP Opportunity will be earned based on the CAGR in EPS over the vesting period in order to provide the executives with appropriate incentives to balance the objectives of maximizing earnings with a minimum amount of dilution. The CAGR in EPS performance levels established a Threshold CAGR, at which 25% of the PSP Opportunity will be earned, a Target CAGR at which 100% of the PSP Opportunity will be earned and a Maximum CAGR, at which 200% of the PSP Opportunity will be earned. It is anticipated that the value of the awarded PSP Opportunity will stay relatively constant from year to year but that the number of shares granted at the end of each three-year period would vary based on the CAGR in EPS achieved and the value of the stock at the grant date.program. The Committee believesdecided that this layering approach to long-term equity (1) is consistent with the practices of our compensation comparison companies and the broader market and (2) will provide executives a consistent and continuous incentive to focus on our long-term EPS growth and to share in increases in our market value.
Kasbar and Birns Compensation Program
For 2016, the Committee reviewed the compensation program for Messrs. Kasbar and Birns and, based on this review, determined to maintain a similar comprehensive incentive compensation award approach as utilized in 2015, with the addition of the new PSP component described above to overlay their core compensation program.
Annual Incentive Compensation Awards. For 2016, the Committee approved the same metric for the incentive compensation award for each of Messrs. Kasbar and Birns as the previous year, growth in Net Income. As in prior years, each of Messrs. Kasbar and Birns could earn an annual incentive award equal to a prescribed portion of the Net Income created at each level of Net Income growth, as long as a threshold Net Income growth was achieved. The award is payable in cash and equity with the proportion of the award payable in equity generally increasing, and the proportion of the award payable in cash generally decreasing, as the aggregate amount of the award increases.
The Committee established the incentive payout at the threshold, the maximum and each intermediary level of Net Income growth. The amount of incentive payout would increase as Net Income growth increased, however, the slope of the graph line marking the incentive payouts at each growth level was curvilinear, which is why we refer to that slope as the "incentive payout curve". The Committee also established a cap for total direct compensation (base salary, annual cash incentive award, strategic objective cash incentive award and performance-based equity awards other than the PSP). The total direct compensation for 2016 under the program was capped at $9,250,000 for Mr. Kasbar and $4,346,487 for Mr. Birns.
Strategic Objective Cash Incentive Award. For 2016, the Committee provided Messrs. Kasbar and Birns the opportunity to earn a cash incentive award up to a maximum of $750,000 and $300,000, respectively, upon achievement of specified strategic objectives, provided that the Company's consolidated net revenues for 2016 were at least equal to 75% of prior year consolidated net revenues. The objectives included measures considered to be of strategic importance to the Company, including implementation of key global initiatives in areas such as sales and marketing excellence, portfolio management and achieving operational efficiencies, as well as alignment and execution of the Company's strategies relating to operational and integration excellence.
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Performance Share Plan Award. For 2016, the Committee approved a PSP Opportunity award of $2,000,000 and $1,000,000 to Messrs. Kasbar and Birns, respectively. The PSP Opportunity will vest in 2019 based on our three-year CAGR in EPS forcurrent strategic focus, EBITDA was the period ending December 31, 2018. Theappropriate metric as it is a better indicator of our business' financial performance and each NEO can more directly impact the result. Further, it is aligned with the metrics being provided to our investors as measurements of our future operational success. Threshold, Targettarget and Maximum CAGR in EPS performancemaximum levels were set based on the Company'sachievement of specified levels of growth in EBITDA over the previous year as well as our internal growth targets with the maximumbudgets. While each of these performance set at a level that could only be attained when applicable results are exceptional and justify the higher bonus payout.
Crosby and Rau Compensation Program
Annual Incentive Compensation Awards. For 2016,levels were based on EBITDA, the Committee intended, and did, adjust the actual results for items that are considered to be non-operational and are not representative of our core business, such as those associated with acquisition-related charges and restructuring-related costs.
The Committee also establishedcontinued to utilize the multi-year Performance Share Program ("PSP") in the form of Performance SSARs to serve as an annualoverlay to the core compensation program. As in prior years, this long-term incentive compensation program for Messrs. Crosby and Rau based on the financial performance of the Company and the businesses for which the executive had primary responsibility. The target cash and equity bonus for each executive was 150% and 100%, respectively, of their annual base salary, with the Company profitability portion payable in cash and equity and the business unit profitability portion (including the strategic objective cash incentive award described below) being payable in cash.
Company Profitability—For each of Messrs. Crosby and Rau, twenty percent (20%) of their target cash bonus, or $150,000, and one hundred percent (100%) of their target equity bonus, or $500,000, was based on the Company'sthree-year growth in consolidated Net Income. For each executive,EPS. However, due in part on our shareholder engagement initiatives, including conversations with investors, the payout ranged from $65,000 for 3% Net Income growthCommittee decided to $1.95 million for 30% Net Income growth. The award would be payable in cash and equity withalter the proportion of the award payable in equity generally increasing, and the proportion of the award payable in cash generally decreasing,PSP performance metric by adding our ROIC as the aggregate amount of the award increases.
Business Unit Profitability—For each of Messrs. Crosby and Rau, a total of sixty percent (60%) of their target cash bonus or $450,000, was based on the Operating Income (excluding bonus expense) of the businesses for which they had responsibility. For Mr. Crosby, this amount was based on the Operating Income of the land segment (excluding our payment processing operations) (the "Land Business Unit"), which would be adjustedmodifier to adjust, positively or negatively, based on the land segment's return on working capital percentage ("ROWC") achieved fornumber of Performance SSARs earned from EPS Growth during the year (the "ROWC Modifier") and the Operating Incomeperformance period at each level of a portionEPS. The Committee believes that while growth in EPS reflects execution of the Company's government business. For Mr. Rau, this amount was based on the Operating Income of the aviation segment (excluding the Company's government business) (the "Aviation Business Unit") and the marine segment (the "Marine Business Unit"), subject in each casestrategy to the ROWC Modifier.
The Committee established five tiers of performance for each business unit and the executive would receive a greater payout ratio for each successive tier. The five performance tiers were based on the Company's confidential operating plan such that the top of Tier 1 would only earn 6.3% of the target cash bonus opportunity and it was only at the top of Tier 4 that the executive would earn 100% of the target cash bonus opportunity. Meanwhile, the maximum performance level of Tier 5 was intended to be extremely challenging, representing significant annual growth. The maximum that could be earned by each executive in connection with this metric was equal to 200% of the allocated target cash bonus, or $900,000.
Strategic Objective Cash Incentive Award. For each of Messrs. Crosby and Rau, twenty percent (20%) of their target cash bonus or $150,000, would be earned upon achievement of specified strategic objectives, provided that the Company's consolidated net revenues for 2016 were at least equal to 75% of prior year consolidated net revenues. The objectives included measures considered to be of strategic importance togrow the Company, such as operational excellenceROIC measures the efficiency with which our NEOs allocate capital resources to drive that growth, taking into account the quantity of earnings, the quality of earnings and systems integration, safety and physical operations, sales and marketing excellence, portfolio management and strategy execution. The
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maximuminvestments that could be earned by each executive in connection with this metric was equal to 100% of the allocated target bonus.
Performance Share Plan Award. For 2016, the Committee approved a PSP Opportunity award of $500,000 to each of Messrs. Crosby and Rau. The PSP Opportunity will vest based on our three-year CAGR in EPS. The Threshold, Target and Maximum CAGR in EPS performance levels were set based on the Company's internal growth targets with the maximum performance set at a level that could only be attained when applicable results are exceptional and justify the higher bonus payout.drive sustainable growth.
2016 Compensation
Base Salary
Base salary is the only fixed portion of our compensation program for our NEOs. The base salary for each NEO is based on various factors, including position, responsibility, experience, tenure and capacity for growth. In 2016,March 2019, the Committee reviewed the base salaries for Messrs. Kasbarour NEOs and Birns and noted that the base salaries for each were below marketdetermined to increase Mr. Rau's salary levels of both the industry and the Company's comparison companies. Consequently, the Committee increased Mr. Kasbar's base salary from $750,000by $50,000 to $900,000 and Mr. Birns' base salary from $500,000 to $600,000 togradually make thehis compensation of both NEOs more competitive with industry levels and to reflect each executive'shis experience, tenure and contribution to the Company. In connection with the promotions of Messrs. Crosby and Rau, effective March 1, 2016, the Committee also increased theirNo other changes to NEO base salaries to $500,000 each.were made in 2019.
Annual Incentive Program
The Committee's design of the annual incentive compensation program is intended to promote investments in near-term and long-term growth opportunities, as well as motivate and reward annual performance. As described above,such, the Annual Incentive Programannual incentive program for each of Messrs. Kasbar, Birns, Smith, Crosby and Rau consisted of a mix of performance-related cash and performance-related equityperformance-based incentive awards based on Net Incomeannual EBITDA growth
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and, also Operating Income growth for Messrs. Crosby and Rau.Rau, also growth in Operating Income for their respective lines of sight. Each NEO was also provided the opportunity to earn a strategic objective cash incentive award based on the individual's performance against certain strategic operational and organizational objectives.
Performance-Related Incentive Awards
In 2019, our performance-related incentive awards were structured so that they are aligned with each NEO's responsibilities. Accordingly, Messrs. Kasbar, Birns and Smith's compensation was based on EBITDA growth at the consolidated level. The Committee believes that this metric is appropriate because Messrs. Kasbar, Birns and Smith have roles that directly affect the strategic direction of the Company and our overall performance on a consolidated basis. For Messrs. Crosby and Rau, who each individually oversee a component of our operations, the Committee decided to award a portion of their performance-related incentive award based on EBITDA achievement and a portion based on the Operating Income for select lines of sight for which they have responsibility and for which the Committee believes they can impact achievement levels.
As in prior years, the performance-related incentive award for 2019 was payable in cash and equity with the Committee establishing threshold levels at which each component would begin to be earned. The Committee then established the amount of cash and equity that would be earned at target and maximum performance levels. The Committee believes that awarding a portion of the annual performance-related incentive award in equity that vests over time once earned further aligns our NEOs interests with the interests of our shareholders and encourages executive decision-making that maximizes value creation over the long-term and leads to share price appreciation.
In March of the subsequent year, the Committee determines the extent to which the level of financial performance was achieved and thereafter the dollar value of any cash or equity earned by each NEO. In the event that growth falls anywhere between the specified performance levels, linear interpolation is applied to determine the appropriate payout. The amount of equity awarded is calculated by dividing the dollar amount earned by the NEO for EBITDA Growth by the closing price of our common stock on the NYSE on the date of issuance in March of the year following the performance year. Once issued, the equity vests ratably in equal annual installments over the following three years, beginning on the first anniversary of the grant date.
For 2019, the Committee established the following threshold, target and maximum opportunities for our performance-related incentive awards and the amounts that would be paid in cash and equity. As in prior years, the Committee chose to use RSUs for the equity portion of the annual performance-related incentive award rather than restricted stock based on tax considerations.
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Performance-Related Cash Incentive AwardsCompany Profitability
| Bonus Opportunity – EBITDA | ||||||||||||||
| | | | | | | | | | | | | | | | |
| NEO | | Threshold | | Target | | Maximum | | |||||||
| Kasbar | Equity | $ | 100,000 | $ | 600,000 | $ | 3,492,500 | | ||||||
| | Cash | | 70,000 | | 900,000 | | 2,857,500 | | ||||||
| | | | | | | | | | | | | | | | |
| | Total | | 170,000 | | 1,500,000 | | 6,350,000 | | ||||||
| | | | | | | | | | | | | | | | |
| Birns | Equity | 50,000 | 240,000 | 1,430,000 | ||||||||||
| Cash | 40,000 | 360,000 | 1,170,000 | |||||||||||
| | | | | | | | | | | | | | | | |
| Total | 90,000 | 600,000 | 2,600,000 | |||||||||||
| | | | | | | | | | | | | | | | |
| Smith | Equity | | 50,000 | | 240,000 | | 1,430,000 | | ||||||
| | Cash | | 40,000 | | 360,000 | | 1,170,000 | | ||||||
| | | | | | | | | | | | | | | | |
| | Total | | 90,000 | | 600,000 | | 2,600,000 | | ||||||
| | | | | | | | | | | | | | | | |
| Crosby | Equity | 50,000 | 200,000 | 965,000 | ||||||||||
| Cash | 100,000 | 300,000 | 785,000 | |||||||||||
| | | | | | | | | | | | | | | | |
| Total | 150,000 | 500,000 | 1,750,000 | |||||||||||
| | | | | | | | | | | | | | | | |
| Rau | Equity | | 50,000 | | 200,000 | | 965,000 | | ||||||
| | Cash | | 100,000 | | 300,000 | | 785,000 | | ||||||
| | | | | | | | | | | | | | | | |
| | Total | | 150,000 | | 500,000 | | 1,750,000 | | ||||||
| | | | | | | | | | | | | | | | |
The Committee then determined the performance levels of EBITDA at which the performance-related incentive awards could be earned by our NEOs, beginning with our income from operations calculated in accordance with generally accepted accounting principles, or GAAP, excluding depreciation, amortization and adjusting for non-operational items to the extent deemed appropriate by the Committee. The following EBITDA performance levels for 2019 were based on growth over the previous year and our internal budgets, with the threshold, target and maximum performance levels representing significant growth over the previous year.
| Performance Level | | EBITDA (millions) | | |||
| Threshold | $ | 364.2 | ||||
| Target | $ | 373.8 | | |||
| Maximum | $ | 467.3 | ||||
| | | | | | | | |
Line of Sight Profitability
The tables below sets forthFor each of Messrs. Crosby and Rau, a portion of their performance-related incentive award was also based on the amountsOperating Income of select parts of our business for which they had responsibility. For Mr. Crosby, this amount was based on the Operating Income of our government-related physical operations ("Physical Operations LOS") and award percentagesthe Operating Income of our land segment, excluding our payment processing operations and Physical Operations LOS ("Land LOS"). For Mr. Rau, this amount was based on the combined Operating Income of our marine segment and our aviation segment, excluding our payment processing operations and Physical Operations LOS ("Aviation/Marine LOS").
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For 2019, the Committee set the following threshold, target and maximum cash bonus opportunities for the cash componentOperating Income of the annual incentive awards that could have been earned by each NEO in 2016 (1) atMessrs. Crosby's and Rau's respective lines of sight.
| Bonus Opportunity – Line of Sight Operating Income | ||||||||||||||
| | | | | | | | | | | | | | | | |
| NEO | | Threshold | | Target | | Maximum | ||||||||
| Crosby | Land | $ | 75,000 | $ | 350,000 | $ | 900,000 | | ||||||
| | Physical Operations | | 50,000 | | 100,000 | | 300,000 | | ||||||
| | | | | | | | | | | | | | | | |
| | Total | | 125,000 | | 450,000 | | 1,200,000 | | ||||||
| | | | | | | | | | | | | | | | |
| Rau | Aviation/Marine | 200,000 | 450,000 | 1,200,000 | ||||||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
The Committee established the threshold, target and maximum performance levels for each line of sight based on our confidential operating plan. The threshold was set above the prior year's performance, while the target level of 3%represented significant growth in Net Income and (2) at the maximum performance level was intended to be extremely challenging, representing extraordinary annual growth.
Strategic Objectives
As part of Net Income growth, which was 38%its annual incentive program, the Committee also rewards NEOs based on the achievement of certain strategic objectives that support key strategic and operational areas of focus for the year. In 2019, these objectives related to a number of Company initiatives, including sharpening the portfolio, digitizing the business to, among other things, enhance the customer experience and increase efficiencies, developing talent and fostering a culture of innovation, as well as driving operational efficiencies and increasing operating leverage. The Committee sets the maximum cash incentive at the beginning of the year and determines in March of the following year the percentage of cash compensation that will be awarded based on each NEO's individual achievement of their respective objectives. For 2019, the Committee set the following maximum cash incentive for each NEO based on the Committee's review of Messrs. Kasbarthe objectives as whole and Birns.
2016 Annual Cash Incentive Awards
each individual NEO's contribution to achieving those objectives.
| Executive | Threshold(1) | Maximum(1) | ||
|---|---|---|---|---|
Michael J. Kasbar, | $162,500 | $3,050,000 | ||
Chairman, President and Chief Executive Officer | (18%) | (339%) | ||
Ira M. Birns, | $73,069 | $1,325,000 | ||
Executive Vice President and Chief Financial Officer | (12%) | (221%) |
|
| | Maximum Cash Incentive | ||||
Kasbar | $ 750,000 | ||||||
Birns | | 300,000 | | ||||
Smith | 300,000 | ||||||
Crosby | | 150,000 | | ||||
Rau | 150,000 | ||||||
| | | | | | | | |
(1)Long-Term Incentive Program
Performance-Based Share Plan
As discussed above, the threshold and maximum levels,Committee utilized the executive incentive payoutPSP equity award in 2019 based on the achievement of EPS Growth during the three-year performance period, as modified by our ROIC, in order to incentivize long-term growth. Under the PSP, executives are granted an opportunity each year to earn a fixed-dollar target award of equity (the "PSP Opportunity") which is calculatedissued at the beginning of a three-year performance period. The PSP Opportunity can be earned based on the achievement of a specified level of EPS Growth, as a portionmodified by our ROIC, for the three-year performance period beginning January 1st of the Net Income achieved, based upon the incentive payout curve established by the Committee. The threshold, maximum and actual award payouts are shown in dollar amounts and (in parentheses) as percentagesfirst year of the base salaryperformance period and ending on December 31st of the named executive officer.
The table below sets forth the threshold and maximum for the cash component of the annual incentive awards that could have been earned by Messrs. Crosby and Rau in 2016 based on the
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company-widethird year of the performance period. The corresponding payout for the level of EPS Growth achieved will then be modified upwards or downwards within a specified range based on our ROIC over the same three-year performance period.
The PSP award is designed to provide our executives with appropriate incentives to balance the objectives of maximizing earnings with a minimum amount of dilution, while at the same time ensuring an effective use of our capital resources. Once a three-year performance metric is set, it cannot be changed. At the beginning of the year following the end of the three-year performance period, the Committee will determine the level of EPS Growth achieved based on our financial results, and the respective business unit financial performance. With respectcorresponding payout will then be modified upwards or downwards within the specified range based on our ROIC percentage for the same three-year performance period. The executive will thereafter be delivered any earned equity in March of the year following the performance period.
Similar to 2018, the company-wide performance,Committee utilized Performance SSARs in 2019 rather than RSUs. The exercise price of the table sets forthPerformance SSARs was set at $29.68 per share, which was the dollar amount andclosing stock price on the percentgrant date. The PSP Opportunity was then divided by the fair value of base salary that couldthe Performance SSAR on the date of the award (based on Black Scholes) to calculate the number of SSARs to be earned at (1)issued. The Committee determined the threshold, target, excellence and maximum EPS Growth performance level of 3% growth in Net Incomelevels for the three-year performance period commencing on January 1, 2019 and (2)ending on December 31, 2021, as modified by our ROIC over that period, based on our internal targets, with the maximum performance set at a level that could only be attained when applicable results are exceptional and justify the higher bonus payout. Once earned, the applicable number of 30%earned Performance SSARs would vest in March 2022, the third anniversary of the grant date, and expire in March 2024, the fifth anniversary of the grant date.
The Committee believes that this layering approach to long-term equity (1) is consistent with the practices of our compensation comparison companies and the broader market and (2) provides executives a consistent and continuous incentive to focus on our long-term growth in Net Income. With respectEPS and to share in increases in our market value, while maintaining effective use of our capital resources. For 2019, the business unit performance, the table sets forth the dollar amountPSP Opportunity and the percenttarget number of base salary that could be earned (1) at the threshold performance level, which is no Operating Income for the relevant business unit and (2) at the maximum level, which assumes that the respective business units for each of Messrs. Crosby and Rau exceeded the maximum performance, including the impact of the ROWC Modifier.
| | Net Income Growth(1) | Business Unit Performance(3) | ||||||
|---|---|---|---|---|---|---|---|---|
| Executive | Threshold(2) | Maximum(2) | Threshold(2) | Maximum(2) | ||||
Michael J. Crosby, | $15,000 | $450,000 | $0 | $900,000 | ||||
Executive Vice President, Global Land | (3%) | (90%) | (0%) | (180%) | ||||
John P. Rau, | $15,000 | $450,000 | $0 | $900,000 | ||||
Executive Vice President, Global Aviation and Marine | (3%) | (90%) | (0%) | (180%) | ||||
In 2016, we did not meet the threshold growth of 3% for Net Income establishedPerformance SSARs granted by the Committee forto each of our NEOs. As a result, neither Mr. Kasbar nor Mr. Birns received a 2016 annual performance-related cash incentive award and neither Messrs. Crosby nor Mr. Rau received a performance-related cash incentive award based on Net Income. Each of Messrs. Crosby and Rau earned a portion of their performance-related cash incentive award based on the Operating Income performance of the business units for which he had responsibility. The actual amount of such incentive awardNEOs is set forth in the Summary Compensation Table under "Non-Equity Incentive Plan Awards".below.
Performance-Related Annual Equity-Based Awards
| | Performance SSARs | | ||||||
| | | | | | | | | | |
| NEO | Target Grant Date | | Target Number | | ||||
| Dollar Value | | of Performance SSARs | | |||||
| Kasbar | $ 1,000,000 | 109,290 | ||||||
| Birns | 500,000 | | 54,645 | | ||||
| Smith | 500,000 | 54,645 | ||||||
| Crosby | 300,000 | | 32,787 | | ||||
| Rau | 300,000 | 32,787 | ||||||
| | | | | | | | | | |
The Committee chose to award RSUsthen established the following EPS Growth performance levels. The number of Performance SSARs earned in respect of the level of EPS Growth achieved for the performance-related equity portion ofthree-year performance period will be adjusted upwards or downwards within the annual incentive awardsranges set forth below based on tax considerations. The table below sets forthour ROIC percentage for that period:
Performance Level | Payout (% of target) | | ||||
Threshold | 40% - 60% | |||||
Target | 80% - 120% | | ||||
Excellence | 120% - 180% | |||||
Maximum | 160% - 200% | | ||||
| | | | | | | |
In the grant date fair values ofevent that growth falls anywhere between the performance-related RSU component offoregoing performance levels, linear interpolation will be applied to determine the annual incentive awards that could have been earned by each NEO in 2016 (1) at the threshold performance level of 3% growth in Net Income and (2) for Messrs. Kasbar and Birns at the maximum performance level of 38% growth in Net Income and forappropriate payout.
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Messrs. Crosby and Rau at the maximum performance level of 30% growth in Net Income. Since Net Income did not meet the threshold growth established by the Committee, Messrs. Kasbar, Birns, Crosby and Rau did not earn any RSUs in respect of the 2016 Annual Incentive Program.
2016 Performance-RelatedAdditional Equity Awards
| Executive | Threshold(1) | Maximum(1) | ||
|---|---|---|---|---|
Michael J. Kasbar, | $105,625 | $4,550,000 | ||
Chairman, President and Chief Executive Officer | (12%) | (506%) | ||
Ira M. Birns, | $42,250 | $2,121,487 | ||
Executive Vice President and Chief Financial Officer | (7%) | (354%) | ||
Michael J. Crosby, | $50,000 | $1,500,000 | ||
Executive Vice President, Global Land | (10%) | (300%) | ||
John P. Rau, | $50,000 | $1,500,000 | ||
Executive Vice President, Global Aviation and Marine | (10%) | (300%) |
Strategic Objective Cash Incentive Award
In determining the amount of payout under the strategic objective cash incentive award, the Committee first determines whether the threshold net revenue performance has been met and then evaluates the performance of each NEO against his individual strategic objective. For 2016, the Company's consolidated net revenues were 104% of 2015 consolidated net revenues, consequently the 75% threshold for payment of the strategic objective cash incentive award was met. The Committee evaluated the results of each of the NEOs against his individual strategic objectives and determined that most but not all of such strategic objectives had been met. In making this determination, the Committee took into consideration the fact that the NEOs had accomplished several objectives, in strategic areas such as sales and marketing, business process improvement and the implementation of organizational decision-making councils, which together should improve our long-term financial performance. However, the Committee determined that not all of the strategic objectives had been satisfactorily met and decided to exercise its negative discretion by reducing the value of the strategic objective cash incentive award earned by each of the NEOs by 40%. Accordingly, Messrs. Kasbar and Birns received $450,000, and $180,000, respectively and each of Messrs. Crosby and Rau received $90,000 in respect of the strategic objective cash incentive awards.
2016 Special Equity Awards
During the evaluation of our NEOs 2015NEO's 2019 compensation, the Committee determined to provide additional incentive for Mr. Kasbar to drive shareholder value and the long-term sustained growth of the Company through the issuance ofand awarded Mr. Kasbar a service-based SSAR award. The Committee concluded that such incentive would be appropriate to effectively motivate, reward and retain Mr. Kasbar in light of the current competitive environment while further aligning his interests with the Company'sour shareholders. Consequently, in March 2016,2019, the Committee decided to grantgranted Mr. Kasbar an award of 100,000service-based SSARs havingwith a grant date fair value of $1.2 million. The SSAR award$1,000,000, which vests on the third anniversary of the grant date and will expire five yearsexpires on the fifth anniversary of the grant date. For more information about the SSARs, see the "Grants of Plan-Based Awards" table below.
Determining 2019 Performance Results
In early March of 2020, the Committee determined our financial metrics achieved and the extent to which each of our NEOs achieved their strategic objectives. As part of this determination, the Committee could use its discretion to determine on a case-by-case basis the extent to which recognition or charges to EBITDA or Operating Income are to be included or excluded from the determination of the performance level achieved. For example, the Committee could adjust for non-operational items and one-time benefits that the Committee does not believe reflect our on-going business or the efforts of the NEOs. In addition, the Committee could exercise negative discretion on the prescribed incentive awards in accordance with the terms of the 2016 Omnibus Plan, as it deemed appropriate.
Annual Incentive Awards
Company Profitability. The Committee evaluated our 2019 actual financial results and decided, consistent with the foregoing, to make adjustments for certain non-operational items, such as those associated with acquisition-related charges and restructuring-related costs, which the Committee believed did not adequately reflect the on-going business and financial performance of the Company or economic trends. Based on the foregoing evaluation, the Committee determined that our EBITDA performance was above the target level, totaling $409.2 million, or 109% of target. As a result, our NEOs received the following payouts under the cash and equity portions of the annual incentive awards:
| | 2019 Annual Incentive Award Payout EBITDA | | |||||
| | | | | | | | | |
| NEO | Cash | Equity* | | ||||
| Kasbar | $ 1,868,903 | 80,815 | |||||
| Birns | 734,614 | 31,766 | | ||||
| Smith | 734,614 | 31,766 | |||||
| Crosby | 535,629 | 20,391 | | ||||
| Rau | 535,629 | 20,391 | |||||
| | | | | | | | | |
Line of Sight Profitability. The Committee also determined that (i) the Operating Income for the Aviation/Marine LOS was between the target and maximum level, (ii) the Operating Income for the Physical Operations LOS exceeded the maximum level and (iii) the Operating Income for the Land LOS did not meet the threshold level. Consequently, for this component of Messrs. Crosby and Rau's annual performance-based cash incentive awards, Mr. Crosby earned the maximum of $300,000 for the
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In addition,Physical Operations component and zero for the Land component and Mr. Rau earned $612,319 for the Aviation/Marine component.
Strategic Objectives. The NEOs were successful in connection withaccomplishing several of their 2019 objectives, including successfully divesting of certain non-core business activities, digitizing several aspects of our back office functions to improve efficiencies and reduce cost, launching the promotionsmyWorld portal in several lines of business to allow customers to manage their fuel purchases online using automated functionality, and expanding our talent development program through, among other things, the implementation of various rotational and internship opportunities. However, the Committee determined that the strategic objectives had not been fully accomplished to some degree by each of the NEOs. Accordingly, the Committee decided to exercise its negative discretion by reducing the value of the strategic objective cash incentive awards, such that Mr. Kasbar received $525,000, Mr. Birns received $240,000, Mr. Smith received $195,000, Mr. Crosby received $82,500 and Mr. Rau received $120,000.
Long-Term Incentive Awards
Performance Share Plan. The 2019 financial year was the final year of the three-year performance period for the PSP award granted to Messrs. Kasbar, Birns, Crosby and Rau in March 2016,2017 (the "2017 PSP"). The Committee determined that the EPS Growth for the 2017 PSP, including adjustments for non-operational items such as acquisition-related charges, restructuring-related costs, and gains or losses on business dispositions or extinguishment of debt, had been met between the threshold and target levels as set forth below:
|
| | EPS | ||||
| Threshold | $ | 2.61 | ||||
| Target | $ | 2.90 | | |||
| Maximum | $ | 3.39 | ||||
| | | | | | | | |
| Actual | $ | 2.79 | | |||
| | | | | | | | |
Consequently, the Committee determined tothat the NEOs had earned 81% of the RSUs granted under the 2017 PSP awards. The three-year performance periods for the 2018 and 2019 PSP awards have not yet passed, therefore, the Committee did not make a one-time promotional equity awarddetermination with respect to each executive in the form of RSUs having a grant date fair value of $1.0 million to effectively motivate, reward and retain these executives. The RSUs vest ratably on the third, fourth and fifth anniversaries of the grant date.our EPS Growth for those awards.
Employee Benefits and Executive Perquisites
In keeping with our pay-for-performance philosophy,We provide only limited standard employee benefits and executivelimited perquisites are provided to our named executive officers asNEOs. These are described below.below and reflected in the "All Other Compensation" column of the "Summary Compensation Table" and the accompanying footnote. The total amount of employee benefits and executive perquisites provided to the named executive officersNEOs during 20162019 represents only a small percentage of each named executive officer'sNEO's total compensation and are comprised of those benefits which we believe are necessary to attract and retain executives. We believe that these benefits and perquisites are competitive in our industry and consistent with our overall compensation philosophy
World Fuel Services Corporation|2020 Proxy Statement 50
Retirement and Deferred Compensation
We maintain the World Fuel Services Corporation 401(k) Profit Sharing Plan, or our 401(k) Plan, to enable eligible employees to save for retirement through a tax-advantaged combination of elective employee contributions and our matching contributions. The 401(k) Plan allows eligible employees, including our named executive officers,NEOs, to elect to contribute a percentage of their eligible compensation on a pre-tax basis, up to the maximum dollar amounts permitted by law. In 2016,2019, the maximum employee elective contribution to the 401(k) Plan was $18,000,$19,000, plus an additional $6,000 for employees who were at least 50 years old in 2016. Matching contributions under the 401(k) Plan are discretionary.2019. For 2016,2019, we matched 50% of the first 6% of eligible compensation that each eligible participant elected to contribute to the 401(k) Plan. The portion of an employee's account under the 401(k) Plan that is attributable to matching contributions vests immediately.
We do not maintain any pension, non-qualified deferred compensation plan, supplemental executive retirement plan or other defined benefit retirement plans for our named executive officers.NEOs. However, we do permit that our NEOs participate in the non-qualified deferred compensation plan, or NQDC, that we offer to other senior employees based in the United States ("U.S."). As discussed under "Non-Qualified Deferred Compensation" later in this proxy, pursuant to the NQDC, participants may defer up to 75% of their base salary and up to 90% of any annual bonus, on a pre-tax basis, and an additional amount equal to any "excess contributions" that are refunded to them from the 401(k) Plan. We do not match any participant deferrals under the NQDC. During 2019, only Mr. Smith contributed to the NQDC. In addition, Mr. Kasbar also has a deferred compensation balance which arose as a result of his prior employment agreement in effect for Mr. Kasbarthat provided that any bonus payable to him that would not be deductible under Section 162(m) of the Code ("Section 162(m)") for the year earned would be deferred until a fiscal year in which it would be deductible. Payment of the deferred bonus would be made in all events in the year in which Mr. Kasbar's employment terminates or the employment agreement expires. Any amount deferred in this manner is being credited with interest at the prime rate as published in the Wall Street Journal.
Other Benefits and Perquisites
Our named executive officersNEOs are eligible for the same health and welfare benefits as are available to all of our eligible employees during active employment. These benefits include medical, dental, vision, short-termshort- and long-term disability and term life insurance and accidental death and dismemberment coverage. Our named executive officersNEOs receive additional individual disability insurance coverage and are eligible for additional executive life insurance coverage. We pay the entire cost of coverage of the term life insurance and executive life insurance as well as short-term disability and for Messrs. Kasbar and Birns, a portion of the cost of coverage for medical and dental insurance for the named executive officers and their covered dependents.
insurance. Messrs. Kasbar, Birns, Crosby and Rau are also provided with a country club membership to be used for business entertainment purposes and to facilitate business meetings. Additionally, until December 31, 2016, weMr. Smith was also provided housing allowances to eachrelocation services for a period of Messrs. Crosby and Rau which have been discontinued commencing January 1, 2017.
World Fuel Services Corporation|2017 Proxy Statement 45
Alternate Summary Compensation Table
The following table summarizes the "Total Realizable Compensation" of Messrs. Kasbar, Birns, Crosby and Rau for the fiscal year ended December 31, 2016. We define "Total Realizable Compensation" to be the sum of all value earned by the executive from continued employment during the applicable year (the "Calculation Year"), including:
| Name and Principal Position | Year | Salary | Benefits and Perquisites | Non-Equity Incentive Plan Compensation | Stock Awards | Change in Current Value | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Michael J. Kasbar, | 2016 | $875,100 | $78,621 | $450,000 | $1,952,260(1) | $137,953 | $3,493,934 | |||||||
Chairman, President and Chief Executive Officer | ||||||||||||||
Ira M. Birns, | 2016 | 583,400 | 54,200 | 180,000 | 714,041(1) | 38,059 | 1,569,700 | |||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||
Michael J. Crosby, | 2016 | 487,550 | 135,899 | 168,707 | 276,172(2) | —(3) | 1,068,328 | |||||||
Executive Vice President, Global Land | ||||||||||||||
John P. Rau, | 2016 | 475,100 | 136,845 | 202,815 | 276,172(2) | —(3) | 1,090,932 | |||||||
Executive Vice President, Global Aviation and Marine |
World Fuel Services Corporation|2017 Proxy Statement 46Miami, Florida.
includes the amortized expense value of 10,292 RSUs issued as the target equity opportunity under the PSP to each of Messrs. Kasbar and Birns, respectively, in March 2016. This amount does not include any expense value for the performance-based RSAs granted in 2012 to Messrs. Kasbar and Birns that expired unvested at the end of the five-year measurement period on December 31, 2016. (See "Outstanding Equity Awards at Fiscal Year End" table beginning on page 53 of this proxy statement and "Grants of Plan based Awards" table beginning on page 52 for additional information about these awards).
Agreements with Executives
Our Committee believes that it is important to protect our intellectual capital. Accordingly, we have agreements and an executive severance policy with respect to our named executive officersNEOs that provide consideration for, and thus ensure the effectiveness of, important non-compete and other restrictive covenants and consulting obligations applicable under such agreements or policy following termination of employment. The Committee believes that these arrangements serve to encourage the continued attention and dedication of the executives to their assigned duties and mitigate the uncertainty and questions a potential change of control may raise among executives. The Committee also believes these arrangements are appropriate and necessary to attract and retain these executives.
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Our Committee generally views the potential payments and benefits payable under a termination or change of control scenario as a separate compensation element because such payments and benefits are not expected to be paid in a particular year and serve a different purpose for the executive than other elements of compensation. Accordingly, those payments and benefits do not significantly affect decisions regarding other elements of compensation. See "Potential Payments upon Termination of Employment or Change of Control" beginning on page 5660 of this proxy statement for a discussion of these arrangements and certain compensation and benefits that will be provided in the event of the termination of the employment of our named executive officers.NEOs.
Our equity grant policy provides that equity grants made to named executive officersNEOs related to prior year performance will be effective on March 15 of each year. Retention, promotion and performance share awards are typically granted in March 31 of each year.year on the 15th or 31st. Annual grants of equity awards to directors will be effectiveare made on the date that the director is elected or re-elected to the Board. Grants made to new hires or existing employees (excluding executive officers) will beare made effective on one of the following quarterly dates per year: February 10, May 10, August 10 and November 10.
Under the terms of the 2016 Omnibus Plan, we are not permitted to cancel outstanding stock options or SSARs for the purpose of re-pricing or otherwise replacing or re-granting such options or SSARs with an exercise or conversion price that is less than the exercise or conversion price of the original stock option or SSAR without shareholder consent. We do not have a program, plan or
World Fuel Services Corporation|2017 Proxy Statement 47
practice of timing equity award grants in order to benefit our executive officers or in coordination with the release of material non-public information.
Tax and Accounting Implications
Deductibility of Executive Compensation
As part of its role, the Committee reviews and considers the deductibility of executive compensation under Section 162(m). Section 162(m) provides that generally limits the Company may not take aU.S. federal income tax deduction for compensation paid to each of our NEOs to a maximum of $1 million in any calendar year (the "Deduction Limit"). For fiscal years prior to 2018, we were also permitted to deduct compensation to our NEOs in excess of $1,000,000 paid in any year to any of our named executive officers (excludingthe Deduction Limit (other than our Chief Financial Officer)Officer, who prior to 2018 was not subject to the extent that suchDeduction Limit), if the compensation is notqualified as "performance-based" as defined under Section 162(m). To qualify as "performance-based,"performance-based, certain pre-established objective performance goals or certain other conditions mustwere required to be met. Annual cashThe Committee generally sought to structure incentive awards underfor our EIP and equity-based awards under our 2016 Omnibus Plan may be granted in a manner so that they are intended to qualify for the "performance-based" exception to Section 162(m).
We generally seek to preserve such tax deductibility for compensation to the extent practicable, although the Committee retains flexibility to approve, when appropriate, compensation arrangements which promote the objectives of our compensation program but which do not qualify for full tax deductibility. Accordingly, in the future, the Committee may also determine, in light of applicable circumstances, to award certain compensationNEOs in a manner that will not preservepreserved the tax deductibility of suchthe compensation under Section 162(m).the performance-based exemption. However, with the enactment of the Tax Cuts and Jobs Act in December 2017, the performance-based exception was eliminated, other than with respect to payments made pursuant to certain grandfathered arrangements. We believe that the 2017 PSP awards earned by the NEOs in 2019 qualify as performance-based compensation under the applicable grandfathering rules.
While the Committee considers tax implications as a factor in determining executive compensation, the Committee will continue to link pay with performance and consider other factors as noted above, including the long-term interests of our shareholders and other stakeholders. Accordingly, the Committee retains the flexibility to structure, where appropriate, compensation arrangements that are consistent with the goals of our executive compensation program, even if the awards are not deductible for tax purposes.
World Fuel Services Corporation|2020 Proxy Statement 52
Accounting for Share-Based Compensation
Before granting equity-based compensation awards, the Committee considers the accounting impact of the award, including the compensation cost and the grant date fair value, as structured and under various other scenarios in order to analyze the expected impact of the award. We expense the cost of our NEOs' equity-based compensation in accordance with the fair value method contained in the Financial Accounting Standards Board Accounting Standards Codification (FASB ASC)—"Compensation—Stock Compensation".
Stock Ownership Policies
The Committee has adopted arobust stock retention requirementrequirements and stock ownership guidelines to align the interests of named executive officersour NEOs with those of our shareholders and ensure that the executives responsible for overseeing operations have an ongoing financial stake in the Company's success.
Stock Retention Requirement
Our named executive officersNEOs are required to retain at least 50% of any shares acquired (net of any shares that would need to be withheld or sold to satisfy any applicable income and employment taxes relating to the award) pursuant to any equity award granted after they become an executive officer for three years after the shares are delivered (or until the individual ceases to be an executive officer of the Company, if earlier). All of our named executive officersNEOs are in compliance with these retention requirements.
World Fuel Services Corporation|2017 Proxy Statement 48
Stock Ownership Requirement
Our named executive officersNEOs are subject to the stock ownership guidelines set forth below, which are expressed as a multiple of base salary determined by leadership level.
| Position | Multiple of Base Salary | |||
|---|---|---|---|---|
Chief Executive Officer | 7 | |||
Chairman of the Board (if an executive officer) | 5 | |||
Chief Financial Officer and Chief Operating Officer | 5 | |||
All Other Executive Officers | 3 | |||
The stock ownership guidelines provide that executive officers must attain the applicable ownership requirement within five years of the date such individual becomes an executive officer. Equity vehicles that count towards compliance with the ownership requirement include: common stock, unvested time-based restricted stock or RSUs and the earned portion of performance-based awards. Unexercised stock options or stock appreciation rights, the unearned portion of performance-based awards and any shares of common stock that are pledged as collateral do not count towards the requirement.
The Committee uses the three-year average closing stock price on the last trading day of each fiscal year to determine compliance and to manage against the risk of the named executive officersNEOs falling out of compliance due to volatility in the stock price. The Committee has discretion to determine the penalties for non-compliance, including: requiring the payment of cash incentives in equity, instituting a higher equity retention requirement and reducing or eliminating incentive compensation. Furthermore, the Committee, in its discretion, may determine the appropriate hardship relief, if any, for non-compliance including: allowing named executive officersprovide waivers, additional time to regain compliance and suspending ownership requirementsor other appropriate relief on a case-by-case basis due to hardships, dispositions due to court-ordered domestic relations orders ("DROs") or in the event of extreme volatility in the Company's stock price. All of our NEOs are in compliance with the policy, although one NEO was granted temporary relief for 2019 due
World Fuel Services Corporation|2020 Proxy Statement 53
The stock ownership guidelines provide that executive officers must attain the applicable ownership requirement within five yearsto a required disposition of shares pursuant to a DRO. As of the date of this proxy statement, however, such individual becomes an executive officer.NEO is in full compliance with the policy.
Our directors are also subject to stock ownership requirements as described on page 2733 of this proxy statement under "Director Compensation". All of our named executive officers are in compliance with the above requirements.Stock Ownership Guidelines."
Derivatives, Hedging and Pledging Transactions
We prohibit our directors, executive officers, employees and employeestheir respective related persons from engaging in hedging or monetization transactions, such as prepaid variable forward contracts, equity swaps, collars and exchange funds, which areor any transaction that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of our common stock.the Company's securities, such as prepaid variable forward contracts, equity swaps, collars and exchange funds. We also do not permit the buyingallow our directors, executive officers, and employees to buy or selling ofsell publicly traded options based on our common stock or engagingto engage in short sales of our securities. The purpose of these policies is to align the interests, including the economic risk of ownership, of directors, executive officers, employees and shareholders.
We also discourage our directors, executive officers and employees from holding our common stock in a margin account or pledging our common stock as collateral for a loan. Any directors or executive officers who wish to pledge shares must first obtain the prior approval of the General Counselour Chief Legal Officer and the Governance Committee. As noted above, any shares pledged as collateral will not count towards any executive officer's respective stock ownership requirement.
World Fuel Services Corporation|2017 Proxy Statement 49
Compensation Committee Report on 20162019 Executive Compensation
The Committee is responsible for establishing and administering the executive compensation programs of the Company. The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement on Schedule 14A.
Ken Bakshi, Chairman
Richard A. Kassar, Member
Stephen K. Roddenberry, Member
World Fuel Services Corporation | 20172020 Proxy Statement 5054
V. EXECUTIVE COMPENSATION TABLES |
The following table summarizes the "total compensation" of our named executive officers for the fiscal years ended December 31, 2016, 2015,2019, 2018, and 20142017 according to the rules promulgated by the SEC.
| Name and Principal Position | Year | Salary(1) | Stock Awards(2) | Option Awards(2) | Non-Equity Incentive Plan Compensation | All Other Compensation(5) | Total | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Michael J. Kasbar | 2016 | $ | 875,100 | $ | 1,999,990 | $ | 1,232,000(3) | $ | 450,000(4) | $ | 81,585(7) | $ | 4,638,675 | |||||||||
Chairman, President | 2015 | 750,000 | 436,208 | 221,700 | 650,000 | 91,293 | 2,149,202 | |||||||||||||||
and Chief Executive | 2014 | 713,542 | 5,549,473 | — | 1,374,521 | 69,463 | 7,706,999 | |||||||||||||||
Officer | ||||||||||||||||||||||
Ira M. Birns | 2016 | 583,400 | 1,000,019 | — | 180,000(4) | 57,164 | 1,820,583 | |||||||||||||||
Executive Vice | 2015 | 500,000 | 184,102 | 88,680 | 250,000 | 91,692 | 1,114,474 | |||||||||||||||
President and Chief | 2014 | 489,583 | 2,076,898 | — | 509,410 | 50,853 | 3,126,744 | |||||||||||||||
Financial Officer | ||||||||||||||||||||||
Michael J. Crosby | 2016 | 487,550 | 1,500,004 | — | 168,707(4)(6) | 135,899(8) | 2,292,160 | |||||||||||||||
Executive Vice President, Global Land | ||||||||||||||||||||||
John P. Rau | 2016 | 475,100 | 1,500,004 | — | 202,815(4)(6) | 136,845(8) | 2,314,764 | |||||||||||||||
Executive Vice President, Global Aviation and Marine | ||||||||||||||||||||||
| Name and Principal Position | Year | Salary | Stock Awards(1)(2) | Option Awards(1)(2) | Non-Equity Incentive Plan Compensation(3) | Change in Non-Qualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Michael J. Kasbar | 2019 | $900,000 | $1,762,873 | $2,000,007(6) | $2,393,903 | $5,569 | $37,705 | $7,094,488 | ||||||||
Chairman, President | 2018 | 900,000 | 134,247 | 2,000,007 | 1,812,748 | 2,059 | 36,041 | 4,883,043 | ||||||||
and Chief Executive | 2017 | 900,000 | 1,999,985 | 1,999,993 | 562,500 | 1,907 | 37,875 | 5,500,354 | ||||||||
Officer | ||||||||||||||||
Ira M. Birns | 2019 | 600,000 | 695,106 | 500,002 | 974,614 | — | 25,815 | 2,795,537 | ||||||||
Executive Vice | 2018 | 600,000 | 60,423 | 500,002 | 718,397 | — | 25,117 | 1,903,940 | ||||||||
President and Chief | 2017 | 600,000 | 750,013 | 400,000 | 225,000 | — | 26,943 | 2,001,956 | ||||||||
Financial Officer | ||||||||||||||||
Jeffrey P. Smith | 2019 | 600,000 | 695,106 | 500,002 | 929,614 | — | 95,593 | 2,820,315 | ||||||||
Executive Vice | 2018 | 600,000 | — | 500,002 | 718,397 | — | 111,211 | 1,929,610 | ||||||||
President and Chief | 2017 | 118,077 | 2,999,985 | — | — | — | 25,585 | 3,143,648 | ||||||||
Operating Officer | ||||||||||||||||
Michael J. Crosby | 2019 | 500,000 | 471,971 | 300,001 | 918,129(7) | — | 21,660 | 2,211,762 | ||||||||
Executive Vice | 2018 | 500,000 | 134,247 | 300,002 | 847,303 | — | 21,431 | 1,802,983 | ||||||||
President, Global Land | 2017 | 500,000 | 999,993 | 250,001 | 200,000 | — | 21,209 | 1,971,203 | ||||||||
John P. Rau | 2019 | 589,583 | 471,971 | 300,001 | 1,267,948(7) | — | 23,016 | 2,652,519 | ||||||||
Executive Vice | 2018 | 539,583 | 134,247 | 300,002 | 1,032,673 | — | 22,198 | 2,028,704 | ||||||||
President, Global Aviation | 2017 | 500,000 | 999,993 | 250,001 | 112,500 | — | 21,894 | 1,884,388 | ||||||||
and Marine |
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Name | Insurance & Health Benefits(1) | Country Club Membership Dues | Matching Contributions to 401(k)(2) | Short-Term Travel and Housing Allowance(3) | Total | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Michael J. Kasbar | $ | 15,305 | $ | 14,000 | $ | 8,400 | $ | — | $ | 37,705 | ||||||
Ira M. Birns | 11,702 | 5,714 | 8,400 | — | 25,816 | |||||||||||
Jeffrey P. Smith | 9,993 | — | 5,600 | 80,000 | 95,593 | |||||||||||
Michael J. Crosby | 7,800 | 5,460 | 8,400 | — | 21,660 | |||||||||||
John P. Rau | 8,774 | 5,842 | 8,400 | — | 23,016 | |||||||||||
The following table provides additional information about stock awards and equity and non-equity incentive plan awards granted to our named executive officers during the year ended December 31, 2016.
GRANTS OF PLAN-BASED AWARDS
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| | | | | | | | | | All Other Stock Awards: Number of Shares of Stock or Units(2) (#) | All Other Option Awards: Number of Securities Underlying Options(3) (#) | | | ||||||||||||
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| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | | Grant Date Fair Value of Stock and Option Awards(4) ($) | ||||||||||||||||||
| | | | Exercise Price of Option Awards ($/share) | |||||||||||||||||||||
Name | Grant Date | Committee Approval | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||
Michael J. Kasbar | n/a | 3/7/2019 | 70,000(5) | 900,000(5) | 2,857,500(5) | |||||||||||||||||||
| n/a | 3/7/2019 | —(6) | 750,000(6) | |||||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 43,716 | 109,290 | 218,580 | 1,000,004 | |||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 109,290 | 29.68 | 1,000,004 | ||||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 59,396 | 1,762,873 | |||||||||||||||||||||
Ira M. Birns | n/a | 3/7/2019 | 40,000(5) | 360,000(5) | 1,170,000(5) | |||||||||||||||||||
| n/a | 3/7/2019 | —(6) | 300,000(6) | |||||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 21,858 | 54,645 | 109,290 | 500,002 | |||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 23,420 | 695,106 | |||||||||||||||||||||
Jeffrey P. Smith | ||||||||||||||||||||||||
| n/a | 3/7/2019 | 40,000(5) | 360,000(5) | 1,170,000(5) | ||||||||||||||||||||
| n/a | 3/7/2019 | —(6) | 300,000(6) | |||||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 21,858 | 54,645 | 109,290 | 500,002 | |||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 23,420 | 695,106 | |||||||||||||||||||||
Michael Crosby | n/a | 3/7/2019 | 50,000(5) | 750,000(5) | 1,985,000(5) | |||||||||||||||||||
| n/a | 3/7/2019 | —(6) | 150,000(6) | |||||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 13,115 | 32,787 | 65,574 | 300,002 | |||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 15,902 | 471,971 | |||||||||||||||||||||
John Rau | n/a | 3/7/2019 | 100,000(5) | 750,000(5) | 1,985,000(5) | |||||||||||||||||||
| n/a | 3/7/2019 | —(6) | 150,000(6) | |||||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 13,115 | 32,787 | 65,574 | 300,002 | |||||||||||||||||||
| 3/15/2019 | 3/7/2019 | 15,902 | 471,971 | |||||||||||||||||||||
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ending on December 31, 2021. Depending on the percentage of ROIC achieved for the period, the range of payout based on EPS Growth will be as follows: (i) threshold—40% to 60% of target, (ii) target—80% to 120% of target, (iii) maximum—160% to 200% of target. For purposes of this table, the lowest level of the threshold range, the mid-point of the target range and the highest level of the maximum range is assumed. Please see the discussion regarding the compensation programs for the NEOs beginning on page 44 of this proxy statement for additional information.
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$90,000, respectively. Please see the discussion regarding the compensation programs for the named executive officers beginning on page 39 of this proxy statement for additional information.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth the outstanding equity awards at fiscal year-end, or December 31, 2016,2019, for our named executive officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | Option Awards | Stock Awards | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | Equity Incentive Plan Awards | ||||||||||||||||||
| | | | | | | | Number of Unearned Shares, Units or Other Rights That Have Not Vested | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | |||||||||||||||||
| | | | | | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | |||||||||||||||||||
| | Number of Securities Underlying Unexercised Options/SSARs | | | ||||||||||||||||||||||
| | Option Exercise Price | Option Expiration Date | |||||||||||||||||||||||
| Name | Exercisable | Unexercisable | |||||||||||||||||||||||
Michael J. Kasbar | 38,431 | $ | 39.58 | 03/15/18 | 4,133(2) | $ | 189,746 | 10,292(7) | $ | 472,506 | |||||||||||||||
Chairman, President | 29,991 | 45.517 | 03/15/18 | 67,706(3) | 3,108,382 | ||||||||||||||||||||
and Chief Executive | 5,000 | 10,000(4) | 57.48 | 03/31/20 | 5,375(5) | 246,766 | |||||||||||||||||||
Officer | 100,000(6) | 48.58 | 03/31/21 | ||||||||||||||||||||||
Ira M. Birns | 21,083 | 39.58 | 03/15/18 | 578(2) | 26,536 | 5,146(7) | 236,253 | ||||||||||||||||||
Executive Vice President | 12,811 | 45.517 | 03/15/18 | 27,083(3) | 1,243,381 | ||||||||||||||||||||
and Chief Financial Officer | 2,000 | 4,000(4) | 57.48 | 03/31/20 | 2,268(5) | 104,124 | |||||||||||||||||||
Michael J. Crosby | 3,886(8) | 178,406 | 2,573(7) | 118,126 | |||||||||||||||||||||
Executive Vice President, Global Land | 20,585(10) | 945,057 | 1,214(9) | 55,746 | |||||||||||||||||||||
John P. Rau | 1,326(2) | 60,877 | 2,573(7) | 118,126 | |||||||||||||||||||||
Executive Vice | 3,296(2) | 151,319 | 1,214(9) | 55,746 | |||||||||||||||||||||
President, Global | 5,414(3) | 248,557 | |||||||||||||||||||||||
Aviation and Marine | 9,714(11) | 445,970 | |||||||||||||||||||||||
| 20,585(10) | 945,057 | ||||||||||||||||||||||||
| 2,255(12) | 103,561 | ||||||||||||||||||||||||
| | | | | | | Stock Awards | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Option Awards | |||||||||||||||||||||||||||
| | | | Equity Incentive Plan Awards | |||||||||||||||||||||||||
| | | | Equity Incentive Plan Awards | | | | | |||||||||||||||||||||
| | | | | | | | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) | ||||||||||||||||||||
| | | | | | | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) | ||||||||||||||||||||||
| | Number of Securities Underlying Unexercised Options/SSARs (#) | Number of Securities Underlying Unexercised Unearned Options (#) | | | Number of Shares or Units of Stock That Have Not Vested (#) | |||||||||||||||||||||||
| | Option Exercise Price ($) | | ||||||||||||||||||||||||||
| | Option Expiration Date | |||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | ||||||||||||||||||||||||||
Michael J. Kasbar | 15,000 | 57.48 | 3/31/2020 | 3,740(2) | 162,391 | 44,689(3) | 1,940,410 | |||||||||||||||||||||
| 100,000 | 48.58 | 3/31/2021 | 59,396(4) | 2,578,974 | ||||||||||||||||||||||||
| 113,507(5) | 36.25 | 3/31/2022 | ||||||||||||||||||||||||||
| 152,439(6) | 23.93 | 3/15/2023 | ||||||||||||||||||||||||||
| 109,290(7) | 29.68 | 3/15/2024 | ||||||||||||||||||||||||||
| 373,137(8) | 27.52 | 3/15/2023 | ||||||||||||||||||||||||||
| 393,444(9) | 29.68 | 3/15/2024 | ||||||||||||||||||||||||||
Ira M. Birns | 6,000 | 57.48 | 3/31/2020 | 1,684(2) | 73,119 | 16,759(3) | 727,671 | |||||||||||||||||||||
| 186,568(8) | 27.52 | 3/15/2023 | 23,420(4) | 1,016,896 | ||||||||||||||||||||||||
| 196,722(9) | 29.68 | 3/15/2024 | ||||||||||||||||||||||||||
Jeffrey Smith | 186,568(8) | 27.52 | 3/15/2023 | 55,949(10) | 2,429,306 | 111,898(11) | 4,858,611 | |||||||||||||||||||||
| 196,722(9) | 29.68 | 3/15/2024 | 23,420(4) | 1,016,896 | ||||||||||||||||||||||||
Michael J. Crosby | 111,941(8) | 27.52 | 3/15/2023 | 972(12) | 42,204 | 11,172(3) | 485,103 | |||||||||||||||||||||
| 118,033(9) | 29.68 | 3/15/2024 | 13,724(13) | 595,896 | ||||||||||||||||||||||||
| 4,598(12) | 199,645 | |||||||||||||||||||||||||||
| 3,740(2) | 162,391 | |||||||||||||||||||||||||||
| 15,902(4) | 690,465 | |||||||||||||||||||||||||||
John P. Rau | 111,941(8) | 27.52 | 3/15/2023 | 3,239(12) | 140,637 | 11,172(3) | 485,103 | |||||||||||||||||||||
| 118,033(9) | 29.68 | 3/15/2024 | 13,724(13) | 595,896 | ||||||||||||||||||||||||
| 4,598(12) | 199,645 | |||||||||||||||||||||||||||
| 3,740(2) | 162,391 | |||||||||||||||||||||||||||
| 15,902(4) | 690,465 | |||||||||||||||||||||||||||
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Option Exercises and 2019 Stock Vested
The following table sets forth the stock vested during the year ended December 31, 20162019 for our named executive officers.
| | Option Awards | Stock Awards | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Number of Shares Acquired on Exercise(1) | Value Realized on Exercise(2) | Number of Shares Acquired on Vesting | Value Realized on Vesting(3) | |||||||||
Michael J. Kasbar | 29,389 | $ | 1,419,489 | ||||||||||
Ira M. Birns | 10,740 | 518,742 | |||||||||||
Michael J. Crosby | 971 | 44,617 | |||||||||||
John P. Rau | 4,310 | $ | 18,576 | 4,366 | 199,881 | ||||||||
| | Stock Awards | ||||||
|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting(2) | |||||
Michael J. Kasbar | 24,439 | $ | 725,350 | ||||
Ira M. Birns | 9,869 | 292,912 | |||||
Michael J. Crosby | 14,300 | 415,255 | |||||
John P. Rau | 18,372 | 535,623 | |||||
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Non-Qualified Deferred Compensation
The following table sets forth non-qualified deferred compensation during the year ended December 31, 20162019 for the named executive officers set forth below.
NON-QUALIFIED DEFERRED COMPENSATION
We offer our executives and other senior employees based in the U.S. an opportunity to defer compensation under our non-qualified deferred compensation plan, or NQDC. Pursuant to the NQDC, participants may defer up to 75% of their base salary and up to 90% of any annual bonus, on a pre-tax basis, and an additional amount equal to any "excess contributions" that are refunded to them from the 401(k) Plan. We do not match any participant deferrals under the NQDC. Participants can elect from a variety of investment choices for their deferred compensation and gains and losses on these investments are credited to their respective accounts. Participants may elect, depending on whether their termination is in connection with retirement or otherwise, to receive deferred amounts in a lump sum, in annual installments over a period of up to ten years, or in a partial lump sum with the balance paid in installments. However, these payments are accelerated upon a change in control or the death of the participant.
| Name | Aggregate Earnings in Last Fiscal Year | Aggregate Balance at Last Fiscal Year-End | |||||
|---|---|---|---|---|---|---|---|
Michael J. Kasbar(1) | $ | 7,245 | $ | 210,388 | |||
Name | Executive Contributions in Last Fiscal Year | Aggregate Earnings in Last Fiscal Year | Aggregate Balance at Last Fiscal Year-End | |||
|---|---|---|---|---|---|---|
Michael J. Kasbar(1) | $ — | $12,680 | $241,951 | |||
Jeffrey P. Smith | 1,096,557(2) | 218,540 | 1,738,646 |
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the employment agreement expires), and that any amount so deferred would be credited with interest at the prime rate as published in the Wall Street Journal. A portion of the bonus earned by Mr. Kasbar for the 2002 fiscal year, equal to $109,375, was deferred pursuant to that provision of his employment agreement and remains unpaid. Because the aggregateThe portion of these earnings in the last fiscal year did notthat constitute "above market earnings" within the meaning of the applicable SEC rules, this amount is not reflected in the Summary"Summary Compensation Table.
Potential Payments upon Termination of Employment or Change of Control
Our employment agreement with Mr. Kasbar (the "Kasbar Agreement") and executive severance agreement with Mr. Birns (the "Birns Agreement") each provides for the payment of certain compensation and benefits in the event of the termination of the executive's employment, the amount of which varies depending upon the reason for such termination. In lieu of entering into separate executive severance agreements with each of Messrs. Crosby and Rau in connection with their promotions to executive officers, effective December 31, 2016, our Board adopted an Executive Severance Policy ("ESP") applicable to Messrs. Crosby and Rau and other executives that the Committee may subsequently designate as participating executives. Upon his appointment as our Executive Vice President and Chief Operating Officer in October 2017, Mr. Smith was designated a participating executive. The ESP provides for the payment of certain severance payments and benefits in the event of a termination of such executives' employment in certain specified circumstances.
Each of the Kasbar Agreement, the Birns Agreement and the Executive Severance PolicyESP provides for certain benefits (1) if the NEO's employment is terminated due to Death or Disability, (2) if the NEO's employment is
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terminated by the Company without "Cause" (as that term is defined in the relevant agreement or arrangement) or (3) if the NEO terminates his employment with "Good ReasonReason" (as that term is defined in the relevant agreement or arrangement, which for Messrs. Crosby and Rau is within two (2) years after a Change of Control has occurred). If the employment of any of the four covered NEOs is Terminated without Cause or for Good Reason within two (2) years after a Change of Control then the severance benefits are slightly higher. The actual amounts of such payments are set forth in the table below the relevant definitions.
Termination Without Cause
Kasbar Agreement—Under the Kasbar Agreement, "cause" means (i) any act of fraud, misappropriation, embezzlement or material dishonesty by Mr. Kasbar, which results in his personal enrichment at our expense; (ii) willful misconduct that results in material economic harm to us; (iii) a felony conviction or conviction for a crime involving moral turpitude; (iv) the willful and continued material failure of Mr. Kasbar to perform his duties under the Kasbar Agreement; (v) a willful and material breach by Mr. Kasbar of his non-compete, non-solicitation, non-disparagement or cooperation obligations under the Kasbar Agreement (and in the case of (i) through (v) the failure to cure such breach); or (vi) a material breach by Mr. Kasbar of our Code of Conduct, Securities Trading Policy or any other related corporate and personnel policies generally applicable to our executives or employees.
Birns Agreement—Under the Birns Agreement, "cause" means (i) the willful, material failure by Mr. Birns to perform the duties consistent with his position or to comply with the obligations of the Birns Agreement, or his willful, material failure to carry out the reasonable and lawful directions of our CEO, President or Board and not curing such failure; (ii) any willful and material breach of our Code of Conduct or any other Company policy; (iii) Mr. Birns' gross negligence or willful misconduct which is harmful to us, monetarily or otherwise, including but not limited to fraud, misappropriation or embezzlement; (iv) use of alcohol, drugs or other similar substances during work hours, other than at a Company sanctioned event, or at any time in a manner that adversely affects his work performance; (v) being
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charged with a criminal offense that is a felony or misdemeanor involving moral turpitude; or (vi) a material breach of the Birns Agreement that cannot be cured.
ESP—Under the ESP, "cause" means (i) the failure by the executive to perform, in a reasonable manner, his or her duties as assigned by the Company or any subsidiary (or any successor company); (ii) any violation or breach by the executive of his or her employment agreement, consulting or other similar agreement with the Company or any subsidiary (or successor company), if any; (iii) any actual or threatened violation or breach by the executive of any non-competition, non-solicitation, non-disclosure and/or other similar agreement with the Company or any subsidiary (or successor company); (iv) any violation or breach by the executive of any Company policy; (v) any act by the executive of dishonesty or fraud that injures the reputation or business of, or causes harm to, the Company or any subsidiary (or successor company); (vi) the conviction of, or entry of a plea of guilty or nolo contendere to, a felony or a crime involving moral turpitude; or (vii) the executive's impeding of, interfering with, or failing to reasonably cooperate with an investigation authorized by the Company or any subsidiary or affiliate. In the event of a change of control, upon and during the two years following such change of control, clauses (i)-(v) above will be deemed to have the term "materiality" inserted as a qualifier to each instance of violation, breach or other misconduct by the executive.
None of the agreements or arrangements provide for any payment of severance or other benefits in the case of a Termination With Cause, although our Deferred Compensation Plan requires repayment of prior earnings that have been deferred irrespective of the basis for employment being terminated and our paid-time-off policy provides that all employees are entitled to their accrued but unused vacation upon termination.
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Termination Forfor Good Reason
Kasbar Agreement—Under the Kasbar Agreement, "good reason" means (i) any reduction in the annual base salary of Mr. Kasbar to a level that is less than 85% of Mr. Kasbar's base salary for the immediately preceding year or our failure to pay or provide any material compensation or benefit other than an insubstantial and inadvertent reduction that is remedied by us; (ii) following a change of control, our failure to provide Mr. Kasbar his total annual cash compensation, including bonus, total aggregate value of perquisites, total aggregate value of benefits or total aggregate value of long-term compensation equal to or higher than the highest level received by Mr. Kasbar in the preceding 6 months or 1 year, in certain cases, other than an insubstantial and inadvertent failure that is remedied by us; (iii) if we require Mr. Kasbar to be based at a location outside of Miami-Dade County, Florida; (iv) our failure to obtain any successor's agreement to perform and assume the Kasbar Agreement; (v) without the express prior written consent of Mr. Kasbar, assigning Mr. Kasbar any duties that are materially inconsistent with his current position (including titles and reporting relationships) or making any other material adverse change in his position, authority, responsibilities or status; and (vi) a voluntary termination by Mr. Kasbar for any reason within 30 days following the first anniversary of a change of control.
Birns Agreement—The definition of "good reason" in the Birns Agreement means the occurrence of any of the following (i) the assignment to the executive of any duties materially inconsistent with his position, authority, duties or responsibility or any other action by us that results in a material diminution in his position, authority, duties or responsibilities, excluding any action not taken by us in bad faith that is remedied; (ii) any reduction in, or failure to pay the executive's base salary other than a reduction or failure remedied by us; (iii) within two years after the occurrence of a change of control, any failure by us to provide the executive his bonus and equity opportunities, or employee benefits and perquisites in the aggregate, that are not less than those provided to the executive in the calendar year immediately preceding the change of control, other than a failure not
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occurring in bad faith that is remedied by us; or (iv) if we require the executive to be based at any office or location outside of Miami-Dade or Broward County.
ESP—The definition of "good reason""good reason" under the ESP is substantially the same as the definition included in the Birns Agreement, except that the events have to have occurred within two years after a "Change of Control" (as defined in the ESP). Specifically, an executive will have the ability to terminate his employment with "Good Reason" upon the happening of any of the following within two years after a "Change of Control": (i) the assignment to the executive of any duties materially inconsistent with his position, authority, duties or responsibility or any other action by us that results in a material diminution in his position, authority, duties or responsibilities, excluding any action not taken by us in bad faith that is remedied; (ii) any reduction in, or failure to pay the executive's base salary other than a reduction or failure remedied by us; (iii) any failure by us to provide the executive his bonus and equity opportunities, or employee benefits and perquisites in the aggregate, that are not less than those provided to the executive in the calendar year immediately preceding the change of control, other than a failure not occurring in bad faith that is remedied by us; or (iv) if we require the executive to be based at any office or location outside of Miami-Dade or Broward County.
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Change of Control
Under the Kasbar Agreement, the Birns Agreement and the ESP, a "change of control" is deemed to have occurred if (i) any person or "group" (as defined in Section 13(d)(3) of the Exchange Act), excluding any employee benefit plans, becomes the beneficial owner of at least (a) 30% (in the case of the ESP) or (b) 20% (in the case of the Kasbar Agreement or the Birns Agreement) of the combined voting power of our outstanding common stock; (ii) we merge, consolidate, reorganize or carry out any similar event which results in the holders of our common stock prior to the event owning less than 51% of the total voting power of the capital stock of the surviving company; (iii) our current Board ceases to make up at least2/3 of our Board, the board of the surviving company or the board of the controlling company, as the case may be, with the exception that any director approved by a vote of at least2/3 of our current Board will be considered to be a member of our current Board; or (iv) we are liquidated or dissolved or we sell all or substantially all of our assets. In addition, the Kasbar Agreement provides that a change of control is deemed to have occurred if we enter into an agreement or our Board passes a resolution to do any of the items listed in (i)-(iv) above and Mr. Kasbar's employment is terminated after the execution of any such agreement or the passage of any such resolution, but before the event takes place.
Severance Payments and Benefits
Kasbar Agreement—As set forth in the table below, upon the occurrence of a termination by Mr. Kasbar for good reason, by the Company without cause, following a change of control or non-renewal, we will make the following payments:
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Upon the occurrence of a termination by Mr. Kasbar without good reason, by the Company for cause or by the Company due to Mr. Kasbar's death or disability, Mr. Kasbar will be entitled to the payments specified in (i) above.
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Birns Agreement and ESP—As set forth in the table below, under the ESPBirns Agreement and the Birns Agreement,ESP, upon the occurrence of a termination by the Company without Cause or by the executive for good reason we will make the following payments:
Upon the occurrence of a termination due to death or disability, Mr. Birns will be entitled to the payments specified in (i)-(iii) above and, under the ESP, Messrs. Smith, Crosby and Rau will be entitled to the payments specified in (i)-(iv) above.
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Potential Payments Upon Termination Table
The estimated payments and benefits that would be provided to each of Messrs. Kasbar, Birns Crosby and Rauthe NEOs pursuant to their respective agreements or the ESP, as the case may be, as a result of (1) Termination by Company for Cause or by Executive Without Good Reason, (2) Termination by Company Without Cause, (3)Termination by Executive for Good Reason, (4) Termination by Company Without Cause or by Executive for Good Reason within two (2) years of a Change of Control, and (5) Termination of employment due to death or disability are set forth in the table below. Calculations for this table are based on the assumption that the termination took place on December 31, 2016.2019. In order to receive the benefits set forth below, an executive must satisfy certain restrictive covenants for a specified period of time after the termination event before any cash severance payment is made. We have the right to
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not pay or provide these benefits or discontinue the payment and provision of these benefits if the executive fails to satisfy such obligations.
| | Severance Payment(1) | Pro-Rata Bonus(2) | Medical Benefits(3) | Acceleration and Continuation of Equity Awards(4) | Total(5) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Kasbar | ||||||||||||||||
Termination by Company for Cause or by Executive Without Good Reason | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Termination by Company Without Cause(6) or by Executive for Good Reason | 3,000,000 | 450,000 | 181,824 | 1,947,273(9) | 5,579,098 | |||||||||||
Termination by Company Without Cause or by Executive for Good Reason within two (2) years of a Change of Control | 5,000,000 | 450,000 | 181,824 | 3,362,678(9) | 8,994,504 | |||||||||||
Death or Disability | — | 450,000 | — | 1,947,273(9) | 2,397,273 | |||||||||||
Mr. Birns | ||||||||||||||||
Termination by Company for Cause or by Executive Without Good Reason | — | — | — | — | — | |||||||||||
Termination by Company Without Cause or by Executive for Good Reason | 1,200,000 | 180,000 | 31,739 | 738,921 | 2,150,661 | |||||||||||
Termination by Company Without Cause or by Executive for Good Reason within two (2) years of a Change of Control | 1,200,000 | 180,000 | 31,739 | 1,490,147 | 1,701,886 | |||||||||||
Death or Disability | — | 180,000 | — | 738,921 | 918,921 | |||||||||||
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| | Severance Payment(1) | Pro-Rata Bonus(2) | Medical Benefits(3) | Total(4) | |||||
|---|---|---|---|---|---|---|---|---|---|
Mr. Kasbar | |||||||||
Termination by Company for Cause or by Executive Without Good Reason | $— | $— | $— | $— | |||||
Termination by Company Without Cause(5) or by Executive for Good Reason | 3,000,000 | 4,225,969 | 28,627 | 7,254,596 | |||||
Termination by Company Without Cause or by Executive for Good Reason within two (2) years of a Change of Control | 5,000,000 | 4,225,969 | 28,627 | 9,254,596 | |||||
Death or Disability | — | 4,225,969 | — | 4,225,969 | |||||
Mr. Birns | |||||||||
Termination by Company for Cause or by Executive Without Good Reason | — | — | — | — | |||||
Termination by Company Without Cause or by Executive for Good Reason | 1,200,000 | 1,694,745 | 38,665 | 2,933,411 | |||||
Termination by Company Without Cause or by Executive for Good Reason within two (2) years of a Change of Control | 1,200,000 | 1,694,745 | 38,665 | 2,933,411 | |||||
Death or Disability | — | 1,694,745 | — | 1,694,745 | |||||
Mr. Smith | |||||||||
Termination by Company for Cause or by Executive Without Good Reason | — | — | — | — | |||||
Termination by Company Without Cause | 600,000 | 734,614 | 38,665 | 1,373,280 | |||||
Termination by Company Without Cause or by Executive for Good Reason(6) within two (2) years of a Change of Control | 600,000 | 1,034,614 | 38,665 | 1,673,280 | |||||
Death or Disability | — | 1,034,614 | 38,665 | 1,073,280 | |||||
Mr. Crosby | |||||||||
Termination by Company for Cause or by Executive Without Good Reason | — | — | — | — | |||||
Termination by Company Without Cause | 1,000,000 | 835,629 | 45,745 | 1,881,374 | |||||
Termination by Company Without Cause or by Executive for Good Reason(6) within two (2) years of a Change of Control | 1,000,000 | 985,629 | 45,745 | 2,031,374 | |||||
Death or Disability | — | 985,629 | 45,745 | 1,031,374 | |||||
Mr. Rau | |||||||||
Termination by Company for Cause or by Executive Without Good Reason | — | — | — | — | |||||
Termination by Company Without Cause | 1,200,000 | 1,147,948 | 45,745 | 2,393,693 | |||||
Termination by Company Without Cause or by Executive for Good Reason(6) within two (2) years of a Change of Control | 1,200,000 | 1,366,130 | 45,745 | 2,611,875 | |||||
Death or Disability | — | 1,366,130 | 45,745 | 1,411,875 |
| | Severance Payment(1) | Pro-Rata Bonus(2) | Medical Benefits(3) | Acceleration and Continuation of Equity Awards(4) | Total(5) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Crosby | ||||||||||||||||
Termination by Company for Cause or by Executive Without Good Reason | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Termination by Company Without Cause | 1,000,000 | 78,707 | 31,826 | 192,042 | 1,302,574 | |||||||||||
Termination by Company Without Cause or by Executive for Good Reason(7) within two (2) years of a Change of Control | 1,000,000 | 78,707 | 31,826 | 1,818,954 | 2,929,487 | |||||||||||
Death or Disability | — | 168,707 | 31,826 | 330,644 | 531,176 | |||||||||||
Mr. Rau | ||||||||||||||||
Termination by Company for Cause or by Executive Without Good Reason | — | — | — | — | — | |||||||||||
Termination by Company Without Cause | 1,000,000 | 112,815 | 31,824 | 587,005 | 1,731,646 | |||||||||||
Termination by Company Without Cause or by Executive for Good Reason(7) within two (2) years of a Change of Control | 1,000,000 | 112,815 | 31,824 | 2,961,516 | 4,106,157 | |||||||||||
Death or Disability | — | 202,815 | 31,824 | 725,608 | 960,248 | |||||||||||
World Fuel Services Corporation|2020 Proxy Statement 65
target only in the case of deathDeath or disability.
Disability or upon a Termination without Cause or for Good Reason within the two-year period following a Change of Control.
World Fuel Services Corporation|2017 Proxy Statement 61
restricted stock and performance-related restricted stock represent the value of unvested and accelerated stock as of December 31, 2016, calculated by multiplying the number of accelerated shares by the closing price of our common stock on December 30, 2016. The equity granted under the PSP is reflected assuming performance at target, pro rata for all events other than those that occur after a Change of Control and full acceleration for either a Termination without Cause or a Termination with Good Reason that occurs after a Change of Control.
Equity Treatment
Our outstanding equity awards are subject to a "double trigger" in the event of a Change of Control where the awards are replaced or substituted by the acquiror. Consequently, in addition to the amounts set forth in the table above, outstanding equity held by each of the NEOs would only accelerate to the extent that such executive was terminated in the two years following a Change of Control. Specifically, (i) our outstanding service-based SSARs would vest and be exercisable until the earlier of (a) two years plus 90 days following the termination date or (b) the expiration date, (ii) our service-based RSUs would vest and (iii) our outstanding RSUs and SSARs granted under the PSP would vest at either target or actual, as determined by the Committee, depending on the date of termination. The PSP SSARs are thereafter exercisable until the earlier of: (a) one year after the termination date, or (b) the expiration date. With respect to any of the SSARs that vest as set forth above, the executive would be entitled to receive shares with a value equal to the difference between the conversion price of the SSAR, which ranges from $27.52 and $57.48, and the closing price of our common stock on the date of exercise.
Our equity award agreements further provide that the outstanding equity awards held by our NEOs will pro-rata accelerate upon a Termination without Cause or upon death or disability. In addition, Mr. Kasbar's employment agreement provides that, in addition to the conditions for acceleration set forth above, the outstanding equity held by Mr. Kasbar will accelerate upon a Termination with Good Reason or upon the non-renewal of his employment agreement.
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of our Chief Executive Officer, Michael J. Kasbar.
World Fuel Services Corporation | 20172020 Proxy Statement 6266
As of December 31, 2017, our employee population consisted of approximately 5,225 individuals working at the Company and our subsidiaries, of which approximately 2,501 were located in the U.S. (and approximately 2,724 were located outside the U.S.). We selected December 31, 2017, the last day of our fiscal year, as the determination date for identifying the median employee. In connection with this analysis, we excluded 49 employees, which were all of our employees located in Sweden.
In 2017, we identified the median employee by calculating the amount of annual total cash compensation (salary plus bonus, commissions, and the portion of long-term cash awards paid in 2017) paid to all of our employees (other than our CEO). We did not make any cost-of-living or other adjustments in identifying the median employee. Based on this methodology, the median employee in 2017 was a full-time, salaried employee in the U.S.
There have been no material changes in our employee population or employee compensation arrangements in that would significantly impact the process that we used to identify the median employee for the 2017 compensation. However, the median employee identified for 2017 was not employed by us on December 31, 2019. Therefore, as permitted by the SEC rules, we replaced the 2017 median employee's compensation with that of another employee whose compensation was substantially similar to that of the 2017 median employee. For 2019, the median employee is also a full-time, salaried employee in the U.S.
Once we identified our 2019 median employee, we then calculated the 2019 annual total compensation for such employee in accordance with the requirements of the executive compensation rules for the Summary Compensation Table (Item 402(c)(2)(x) of Regulation S-K). Under this calculation, the median employee's annual total compensation in 2019 was $59,716. With respect to the annual total compensation of our CEO, we used the amount reported in the "Total" column of the Summary Compensation Table included in this proxy statement. The resulting ratio of the annual total compensation of our CEO to the annual total compensation of the median employee was 119 to 1.
World Fuel Services Corporation|2020 Proxy Statement 67
|
| Introduction | ||
Pursuant to amendments to Section 14A of the Exchange Act, we are asking our shareholders to vote to approve or not approve, on an advisory basis, the executive compensation philosophy, policies and procedures described in the Compensation Discussion and Analysis section beginning on page |   |
The Board believes that our executive compensation programs follow the guiding principles stated above. In order to align the interests of our senior executives with those of our shareholders, our executive compensation framework emphasizes the following:
This framework has resulted in compensation for our named executive officersNEOs that is commensurate with our financial results, as demonstrated by the bar graph on page 33 of this proxy statement andhigher payouts in 2019 as compared to the related tabular quantifications and narratives.
previous year. Accordingly, we are asking our shareholders to vote, in an advisory manner, "FOR" the adoption of the following resolution:
"RESOLVED, that the compensation paid to the Company's named executive officers,our NEOs, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion above is hereby APPROVED."
World Fuel Services Corporation|2017 Proxy Statement 63
Vote Required
The affirmative vote of a majority of the votes cast on the proposal is required for the approval of the non-binding, advisory vote on executive compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE COMPENSATION PAID TO THE COMPANY'S NAMED EXECUTIVE OFFICERS,OUR NEOS, AS DISCLOSED PURSUANT TO ITEM 402 OF REGULATION S-K, INCLUDING THE COMPENSATION DISCUSSION AND ANALYSIS, COMPENSATION TABLES AND NARRATIVE DISCUSSION CONTAINED
ABOVE IN THIS PROXY STATEMENT.
World Fuel Services Corporation | 20172020 Proxy Statement 64
|
Introduction
Pursuant to amendments to Section 14A of the Exchange Act, we are required to provide our shareholders with the opportunity to vote, on an advisory, non-binding basis, for their preference as to whether future advisory votes on the compensation of our named executive officers should occur every one, two or three years. A shareholder advisory vote on executive compensation (such as Proposal No. 2 in this Proxy Statement) is referred to as a "Say on Pay Proposal". At our 2011 annual meeting of shareholders, our shareholders voted to hold an annual advisory vote on our executive compensation program. Accordingly, we have submitted Say on Pay proposals on the compensation of our named executive officers at every subsequent annual meeting.
We are required to hold a vote on the frequency of Say on Pay Proposals every six years. In this Proposal 3, we are again asking for shareholder input as to whether, after this year, a Say on Pay Proposal should occur every one, two or three years.
After careful consideration, our Board recommends that we continue to conduct an annual advisory vote on executive compensation. Our Board believes that an annual advisory vote is the best approach for our Company and our shareholders. An annual advisory vote provides more frequent shareholder feedback to our Board, the Compensation Committee and management regarding our executive compensation programs and policies. As in the past six years, our Board, Compensation Committee and management intend to consider this advisory vote as part of the design of our executive compensation programs and communication of such programs to our shareholders.
The Board will carefully consider the outcome of the vote when making future decisions regarding the frequency of advisory votes on executive compensation. However, because this vote is advisory and not binding, the Board may decide that it is in the best interests of the Company and our shareholders to hold an advisory vote more or less frequently than the alternative that has been selected by our shareholders.
Vote Required
The frequency (every one, two or three years) receiving the highest number of votes will be deemed to be the choice of our shareholders with respect to the non-binding, advisory vote on the frequency of future advisory votes on executive compensation. You are not voting to approve or disapprove the recommendation of the Board. You may choose to vote for a frequency of every "one year," every "two years," every "three years" or you may abstain from voting on this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO CONDUCT AN ANNUAL ADVISORY SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION
World Fuel Services Corporation|2017 Proxy Statement 6568
VII. PROPOSAL NO. |
The Audit Committee is responsible for the appointment, compensation, retentionappoints, compensates, retains and oversight of the Company'soversees our auditors. The Committee engages in an annual evaluation of the independent registered certified public accounting firm'sfirm, or "independent auditor," qualifications, performance and independence and considers the advisability and potential impact of selecting a different independent registered certified public accounting firm.
The Audit Committee has selected PwC to serve as our independent registered public accounting firmauditor for 2017.2020. In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to our Company.us. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of the Company'sour lead audit partner pursuant to this rotation policy includes meetings between the Chairman and the members of the Audit Committee and the candidates for the role, as well as discussion by the full Committee andcommittee with input from management.
The Audit Committee and the Board of Directors believe that the continued retention of PwC as our independent registered public accounting firmauditor is in theour best interestinterests and those of the Company and our shareholders, and we are asking our shareholders to ratify the selection of PwC as our independent registered public accounting firmauditor for 2017.2020. Although the Board is submitting the selection of PwC to our shareholders for ratification, the Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal. If our shareholders do not ratify the selection of PwC as our independent registered certified public accounting firm, other independent registered certified public accounting firms will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage PwC. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered certified public accounting firm at any time during the year if it determines that such a change would be in the best interest of us and our shareholders.
Representatives of PwC are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire and will be available to respond to questions.
Fees and Services of PricewaterhouseCoopers LLP
The following table presents aggregate fees for professional audit services rendered by PwC for the audit of our consolidated financial statements for the fiscal years ended December 31, 20162019 and 2015,2018, and fees billed for other services rendered by PwC during those periods.
World Fuel Services Corporation | 20172020 Proxy Statement 6669
Services Rendered(In thousands)
| | 2016 | 2015 | |||
|---|---|---|---|---|---|
Audit Fees(1) | $5,748 | $6,363 | |||
Audit-Related Fees | 63 | (2) | 37 | (3) | |
Tax Fees | 36 | (4) | — | ||
All Other Fees | — | — | |||
| | | | | | |
Total | $5,847 | $6,400 | |||
| | | | | | |
| | | | | | |
| | | | | | |
| (in millions) | |||||||
| 2019 | 2018 | ||||||
| | | | | | | | |
Audit Fees(1) | $ | 7.0 | $ | 5.9 | |||
Audit-Related Fees(2) | 0.1 | 0.3 | |||||
Tax Fees(3) | 2.5 | 0.9 | |||||
All Other Fees | — | — | |||||
| | | | | | | | |
Total | $ | 9.6 | $ | 7.1 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Audit Committee Pre-Approval Policy
Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (PCAOB)("PCAOB") regarding auditor independence, the Audit Committee has responsibility for (i) appointing,appoints, (ii) negotiatingnegotiates and settingsets the compensation of and (iii) overseeingoversees the performance of the independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a pre-approval policy for all audit and permitted non-audit services performed by our independent auditors to ensure that providing such services does not impair the auditors' independence. There are two types of pre-approval under the policy, general and specific. Under the general type of pre-approval, proposed services are pre-approved on a categorical basis for up to 12 months and must be detailed as to the particular services provided and sufficiently specific and objective so that no judgments by management are required to determine whether a specific service falls within the pre-approved category. The Audit Committee reviews the general pre-approval categories on a periodic basis and approves the fee levels for each category annually. Under the specific type of pre-approval, proposed services, such as the annual audit engagement terms and fees, are approved on a case-by-case basis. Any services that have not been generally pre-approved or that exceed the approved fee levels must be specifically pre-approved. Specific pre-approval must be obtained from the Audit Committee.
The Audit Committee has delegated the authority to the Chairman of the Audit Committee to pre-approve audit and non-audit services to be provided by the independent registered certified public accounting firm so long as such services: (a) involve fees of less than $100,000, and (b) are subsequently reported to and approved by the full Audit Committee at its next scheduled meeting. The Audit Committee approved all services provided by, and all fees paid to, PwC. The Audit Committee has considered the services provided by PwC as described above and has determined that such services are compatible with maintaining PwC's independence.
World Fuel Services Corporation | 20172020 Proxy Statement 6770
The Audit Committee has reviewed and discussed with management and with the independent registered certified public accounting firm the audited consolidated financial statements for the 20162019 fiscal year. The Audit Committee has also performed the other reviews and duties set forth in its charter. The Audit Committee discussed with the independent registered certified public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communication with Audit Committees, as adopted by the Public Company Accounting Oversight Board.PCAOB.
Additionally, the Audit Committee has: (i) received the written disclosures and the letter from the independent registered certified public accounting firm required by the applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent registered certified public accounting firm's communications with the Audit Committee concerning independence; (ii) considered whether the provision of tax and accounting research and other non-audit services by our independent registered certified public accounting firm is compatible with maintaining their independence; and (iii) discussed with the independent registered certified public accounting firm their independence from us and our management.
In reliance on the foregoing reviews and discussions, the Audit Committee recommended to the Board that the audited consolidated financial statements referred to above be included in our Annual Report on Form 10-K for the 20162019 fiscal year for filing with the SEC.
In determining whether to reappoint PwC as our independent registered certified public accounting firm for 2020, the Audit Committee considered the qualifications, performance and independence of the firm and the audit engagement team, together with the following factors:
In light of the Audit Committee's views on the performance of PwC, it is the Audit Committee's belief that continuing to retain PwC is in our best interest and those of our shareholders. Consequently, the Audit Committee has appointed PwC as our independent registered certified public accounting firm for fiscal year 2020 and recommends that shareholders ratify the appointment at the Annual Meeting.
John L. Manley, Chairman
Jorge L. Benitez, Member
Richard A. Kassar, MemberMyles Klein, MemberJ. Thomas Presby, Member
World Fuel Services Corporation|2020 Proxy Statement 71
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate future filings, including this proxy statement, in whole or in part, the Report of the Audit Committee and the Compensation Committee Report above shall not be incorporated by reference into this proxy statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP
AS OUR INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
FOR THE 20172020 FISCAL YEAR
World Fuel Services Corporation | 20172020 Proxy Statement 6872
VIII. PROPOSAL NO. 4—APPROVAL OF THE 2020 OMNIBUS PLAN |
On March 12, 2020, the Board approved the adoption of the World Fuel Services Corporation 2020 Omnibus Plan (the "2020 Plan" or the "Plan"), subject to approval by our shareholders. The Board of Directors adopted the 2020 Plan as a flexible omnibus incentive compensation plan that would allow the Company to use different forms of compensation awards to attract new employees, executives and directors, to further the goal of retaining and motivating employees and directors and to further align such individuals' interests with those of our shareholders.
The use of equity as part of our compensation program is important because it fosters a pay-for-performance culture, which is an essential element of our overall compensation philosophy. We believe that equity compensation motivates individuals to create shareholder value since the value they ultimately realize from such compensation is based on our stock performance. As described in greater detail below, the Board believes that the effective use of equity-based compensation and performance-based compensation has been integral to our success in the past and is a key component of our ability to drive strong performance in the future. Accordingly, the Board is seeking shareholder approval of the 2020 Plan. The summary that follows represents the terms of the 2020 Plan in the event it is approved by the shareholders.
The following information regarding the 2020 Plan is being provided to you in connection with the solicitation of proxies for the approval of the adoption of the 2020 Plan. The following description of the 2020 Plan is a summary only and does not purport to be complete. The summary is qualified in its entirety by reference to the 2020 Plan. The text of the 2020 Plan is attached as Annex A to this proxy statement. You are urged to read the 2020 Plan.
The 2020 Plan is intended to replace our 2016 Omnibus Plan (the "2016 Plan"). No new awards will be granted under the 2016 Plan upon approval of the 2020 Plan by our shareholders, however, outstanding awards under the 2016 Plan will continue to be governed by the terms of the 2016 Plan until exercised, settled, expired or otherwise terminated or canceled. If the 2020 Plan is approved, the number of shares of our common stock (the "Stock") that will be available for issuance under the 2020 Plan pursuant to any form of equity awards permitted under the 2020 Plan will be equal to the sum of (a) 1,550,000 shares of Stock plus (b) any shares of Stock remaining available for future awards under the 2016 Plan on the date the 2020 Plan is approved by the Company's shareholders (of which there were 2.4 million shares of Stock remaining available for future awards under the 2016 Plan as of March 30, 2020); plus (c) any shares of Stock with respect to awards that were granted under the 2020 Plan, the 2016 Plan or our 2006 Omnibus Plan (the "2006 Plan" and together with the 2016 Plan, the "Prior Plans") that are forfeited or canceled (e.g., due to the recipient's failure to satisfy applicable service or performance conditions) after the 2020 Plan is approved by the Company's shareholders. However, shares of Stock with respect to awards under the 2020 Plan or the Prior Plans that are withheld or tendered or not issued to the Participant to satisfy tax withholding obligations or to pay the exercise price of an award under the 2020 Plan or any award under a Prior Plan would not become available for issuance pursuant to the 2020 Plan.
Share Reservation
In its determination to recommend that the Board approve the 2020 Plan, the Compensation Committee reviewed a summary of the 2020 Plan terms and the share usage, overhang and dilution metrics set forth below, as well as market practices and trends and the cost of the 2020 Plan. The following table summarizes the number of shares (in millions) that were authorized for issuance related
World Fuel Services Corporation|2020 Proxy Statement 73
to outstanding awards under the Prior Plans and available for future awards under the 2016 Plan as of March 30, 2020 (in millions).
| Shares Subject to Outstanding SSARs/PSSARs | Shares Subject to Outstanding Full-Value Awards | Shares Remaining Available for Future Grants under the 2016 Plan | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2.4 | (1) | 1.6 | 2.4 | 6.4 | |||||||
Our Board recognizes the impact of dilution on our shareholders and has evaluated this impact carefully in the context of the need to attract, retain, motivate and ensure that our leadership team and key employees are focused on our strategic priorities and their interests are aligned with those of our shareholders. We had approximately 65.5 million shares outstanding as of March 30, 2020.
The aggregate total of 6.4 million shares represents a fully-diluted overhang of approximately 8.9% of our shares of Stock outstanding as of March 30, 2020. If the 2020 Plan is approved, the 1.55 million newly authorized shares requested would increase the overhang to approximately 10.8%. Overhang is calculated as the total of (a) shares underlying outstanding awards plus shares available for issuance under future equity awards, divided by (b) the total number of shares outstanding, shares underlying outstanding awards and shares available for issuance under future equity awards. Our Board believes that the proposed share reserve represents a reasonable amount of potential equity dilution to accommodate our long-term strategic and growth priorities.
Share Usage
We believe we have demonstrated our commitment to sound equity compensation practices. For example, as set forth in the table below, our average three-year burn rate for 2017, 2018 and 2019 is 1.69%. Our average three-year burn rate is calculated as the number of shares granted under the 2016 Plan in each fiscal year, including SSARs, PSSARs, RSAs, RSUs, and performance-based RSUs ("PSUs"), divided by the weighted average common shares outstanding. Management and our Board are cognizant of the expense attributable to compensatory stock awards, as well as dilution, and strive to maintain both at appropriate levels.
| | (Amounts in millions) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year | SSARs/PSSARs Granted | Full- Value Awards Granted | Total Granted | Weighted Average Common Shares Outstanding | Burn Rate | |||||||||||
2019 | 0.7 | 0.3 | 1.0 | 66.1 | 1.51 | % | ||||||||||
2018 | 1.2 | 0.2 | 1.4 | 67.4 | 2.08 | % | ||||||||||
2017 | 0.4 | 0.6 | 1.0 | 68.1 | 1.47 | % | ||||||||||
| | | | | | | | | | | | | | | | | |
Three-Year Average | 1.69 | % | ||||||||||||||
World Fuel Services Corporation|2020 Proxy Statement 74
Important Governance Features and Practices
The 2020 Plan and our equity grant practices are designed to reflect leading corporate governance practices and protect shareholder interests:
| FEATURE/PRACTICE | | | DESCRIPTION | |
|---|---|---|---|---|
No Liberal Share Recycling | | | Neither shares of Stock withheld or tendered to satisfy applicable tax withholding obligations or in payment of the exercise price of an award either under the 2020 Plan or a Prior Plan nor any shares of Stock repurchased by the Company on the open market with the proceeds of an award under the 2020 Plan or Prior Plan paid to the Company by or on behalf of the Participant would be available again for purposes of determining the maximum number of shares of Stock available for delivery under the 2020 Plan. Each share of Stock with respect to which a SAR is exercised would be counted as one share of Stock against the maximum number of shares of Stock available for delivery under the Plan, regardless of the number of shares of Stock actually delivered upon settlement of such SAR. | |
| | | | | |
No Evergreen Provision | | | The Plan does not contain an "evergreen" feature that automatically replenishes the shares available for future grants under the 2020 Plan. | |
| | | | | |
No Automatic Grants | | | The Plan does not provide for automatic grants to any participant. | |
| | | | | |
No Tax Gross-Ups | | | The Plan does not provide for any tax gross-ups. | |
| | | | | |
No Discounted Options or SARs | | | Options and SARs may not be granted with exercise prices lower than the market value of the underlying shares on the grant date. | |
| | | | | |
Explicit "No Repricing" Provisions | | | Subject to certain adjustment provisions, the Plan expressly provides that the terms of Options or SARs may not be amended, substituted or replaced or re-granted, without shareholder approval, to (1) reduce the exercise price of outstanding Options or SARs or (2) cancel outstanding options or SARs in exchange for Options or SARs with a lower exercise price. | |
| | | | | |
Minimum Vesting/ Minimum Retention | | | Stock-based awards are subject to a minimum vesting period of one year, subject to a de minimis exception and a further exception in connection with a participant's death or disability. In addition, as discussed in the Compensation Discussion and Analysis section of this proxy statement, our stock ownership and retention guidelines require our NEOs to retain 50% of any net after-tax shares acquired pursuant to any equity award for three years after the shares are delivered (or until the individual ceases to be an executive officer, if earlier) and own shares of our Stock with a total value equal to a specified multiple of their base salary, based on level. | |
| | | | | |
Individual Limits on Awards | | | The Plan limits the number of shares of Stock underlying performance compensation awards that may be granted to a participant in a calendar year. There are further limits on the number of shares underlying awards that may be granted to independent directors. | |
| | | | | |
World Fuel Services Corporation|2020 Proxy Statement 75
| FEATURE/PRACTICE | | | DESCRIPTION | |
|---|---|---|---|---|
| No discretionary authority to accelerate upon termination | | | The Committee does not have discretionary authority to accelerate vesting of an award in the event of a participant's termination of employment other than in connection with the participant's death or disability. | |
| | | | | |
Double-trigger vesting of awards upon a Change of Control | | | Awards do not accelerate upon a Change of Control (as defined below), unless the employee is terminated without Cause (as defined below) within 12 months following the Change of Control or the awards are not assumed by the acquiror. For performance awards outstanding at the Change of Control, (i) the performance period would end on the date immediately prior to such Change of Control, (ii) the Committee would determine the actual level of achievement of performance goals based upon the Company's audited or unaudited financial information or other information then available as the Committee deems relevant and (iii) the earned amount of performance awards will continue to be subject to any service-based vesting conditions that remain in place. | |
| | | | | |
No liberal Change of Control definition | | | The definition of Change of Control would require consummation, not only shareholder approval, of a merger or similar corporate transaction. | |
| | | | | |
No Dividends on Unvested Awards, Stock Options or SARs | | | The Plan prohibits the payment of dividends or dividend equivalents on Options and SARs. Where permitted for other awards, dividends or dividend equivalent rights, if any, will be subject to the same vesting requirements and risk of forfeiture as the underlying award and will only be paid at the time those vesting requirements are satisfied. | |
| | | | | |
Seven-year expiration | | | No Option or SAR is permitted to be exercisable after the seven-year anniversary of the date of grant. | |
| | | | | |
Independent Administration | | | The Plan is administered by the Compensation Committee, which is composed entirely of directors which are "independent" within the meaning of the NYSE independence requirements and "non-employee directors" as defined in Rule 16b-3 under the Exchange Act. | |
| | | | | |
| | |||
Vote Required
Under the NYSE rules, approval of the Plan requires the affirmative vote of the majority of the votes cast on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" APPROVAL OF THE WORLD FUEL SERVICES CORPORATION 2020 OMNIBUS PLAN
World Fuel Services Corporation|2020 Proxy Statement 76
Administration
The Plan is to be administered by the Compensation Committee (the "Committee") of the Board, which is comprised exclusively of non-management independent directors, who serve at the discretion of the Board. In the absence of the Committee, the Plan is administered by the Board. The Committee would also be permitted to delegate its responsibilities and powers to any director, officer or employee it chooses, and such delegation may be revoked by the Committee at any time, provided that such persons may not take any action with respect to (i) awards held by "officers" of the Company (within the meaning of Rule 16a-1 under the Exchange Act) or independent directors, (ii) take any action inconsistent with Section 409A of the Code, or (iii) take any action inconsistent with applicable provisions of the Florida Business Corporation Act.
Subject to the terms of the Plan, the Committee is authorized to (i) select eligible recipients, (ii) determine the terms and conditions of the awards, (iii) construe and interpret the Plan and awards, (iv) grant replacement awards in specified circumstances, (v) establish, amend and revoke rules and regulations for its administration and (vi) cancel awards. The Committee would not, however, have discretionary authority to accelerate vesting of an award in the event of a participant's termination of employment other than in connection with the participant's death or disability. Any interpretation of the Plan by the Committee, and any decision made by the Committee under the Plan, is binding and conclusive on all persons. In no event would the Committee have the power to reprice options or SARs with an exercise price that is less than the original exercise price, unless such action is approved by the Company's shareholders. Any awards granted to an independent director of the Board is administered by the Board, and the Board would have all the powers of the Committee in such circumstances.
Eligibility
Any current or prospective employee, officer or member of the Board of the Company or any of its Subsidiaries, any individual consultant or other person who performs services for the Company or any of its Subsidiaries is eligible for selection by the Committee to receive awards and participate in the Plan. The Company currently expects that awards would be generally granted to approximately 275 employees and non-employee directors (of whom there are currently eight non-employee directors.)
Shares Available for Awards
Subject to adjustment for changes in capitalization, the maximum total number of shares of Stock that may be delivered to participants and their beneficiaries under the Plan is equal to the sum of (a) 1,550,000 shares of Stock plus (b) any shares of Stock remaining available for future awards under the 2016 Plan on the date the 2020 Plan is approved by the Company's shareholders; plus (c) any shares of Stock with respect to awards that were granted under the 2020 Plan or Prior Plans that are forfeited or canceled (e.g., due to the recipient's failure to satisfy applicable service or performance conditions) after the 2020 Plan is approved by the Company's shareholders. However, shares of Stock with respect to awards under the 2020 Plan or the Prior Plans that are withheld or tendered or not issued to the Participant to satisfy tax withholding obligations or to pay the exercise price of any such award would not become available for issuance pursuant to the 2020 Plan. In addition, any shares of Stock repurchased by the Company on the open market with the proceeds of an award under the 2020 Plan or Prior Plan paid to the Company by or on behalf of the Participant would also not become available for issuance under the 2020 Plan.
Upon exercise of a SAR, each share of Stock with respect to which such SAR is exercised is counted as one share of Stock against the maximum aggregate number of shares of Stock that may be
World Fuel Services Corporation|2020 Proxy Statement 77
delivered pursuant to awards granted under the Plan, regardless of the number of shares of Stock actually delivered upon settlement of such SAR. If and to the extent that shares of Stock are not delivered because an award is settled in cash, those shares would not be deemed to have been delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan. Shares of Stock issued pursuant to awards granted in substitution for awards previously granted by a company acquired by the Company or subsidiary, or with which the Company or any subsidiary combines, would not reduce the limit on shares of Stock available for delivery under the Plan.
Types of Awards
Under the Plan, the Committee is authorized to grant stock options, SARs, SSARs, stock unit awards, performance compensation awards, RSAs, RSU awards, other stock-based awards and cash incentive awards.
Stock Options and SARs
The Committee is authorized to grant incentive stock options ("ISOs"), which can result in potentially favorable tax treatment to the participant, non-qualified stock options and SARs, which entitle the participant to receive the amount by which the fair market value of a share of Stock on the date of exercise exceeds the exercise price of the SAR. The exercise price per share subject to an option and the exercise price of a SAR is determined by the Committee, but may not be less than the fair market value of a share of Stock on the date of grant. For purposes of the Plan, the fair market value of a share of Stock as of any given date is the closing sales price per share of Stock as reported on the principal securities exchange or market on which Stock is then listed or admitted to trading on the date that the award is granted or, if the grant date is not a trading day, the fair market value is the closing sales price per share of Stock on the most recent trading prior to the date the award was granted. The maximum term of each option or SAR, the times at which and the manner in which each option or SAR will be exercisable, and provisions requiring forfeiture of unexercised options or SARs at or following termination of employment generally is fixed by the Committee, provided, however, that in no event may an option or SAR remain exercisable after the seven-year anniversary of the date of grant.
Stock-Based Awards and Cash Incentive Awards
Stock-based awards (other than Options and SARs) would consist of: (1) stock unit awards, which are vested awards that entitle the participant to receive shares of Stock in the future; (2) RSAs, which are shares of Stock that are subject to forfeiture or other restrictions that would lapse upon the achievement of one or more goals relating to completion of service, performance or other objectives; (3) RSU awards, which entitle the participant to receive shares of Stock in the future subject to the achievement of one or more goals, relating to completion of certain service, performance or other objectives; and (5) other stock-based awards, which are awards (other than Options, SARs, stock unit awards, RSAs or RSU awards), that is denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Stock. Cash incentive awards would entitle the participant to receive a designated dollar value amount of cash and is subject to the achievement of one or more goals relating to completion of service, performance or other objectives
Performance Compensation Awards
The Committee is authorized to designate any award granted under the 2020 Plan as a performance compensation award that is contingent on the achievement of performance measures during a performance period as determined by the Committee upon the grant of the performance
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compensation award. Performance compensation awards may be settled by delivery of cash, shares or other property, or any combination thereof, as determined by the Committee.
The Committee may establish the performance measures for awards under the Plan which may be based on the achievement of one or more of the following business criteria for the Company, on a consolidated basis, or for any Subsidiary, or for business or geographical units of the Company or any Subsidiary (except with respect to the shareholder return measures and earnings per share criteria),: (1) earnings per share or diluted earnings per share; (2) revenues or margins; (3) cash flow; (4) gross or net profitability/profit margins (including profitability of a product or service); (5) return measures (including return on net assets, investment, capital, equity, or sales); (6) economic value; enterprise value; (7) direct contribution; (8) net income; (9) pretax earnings; (10) earnings before interest and taxes; (11) earnings before interest, taxes, depreciation and amortization; (12) earnings after interest expense and before non-recurring or special items; (13) operating income; (14) income before interest income or expense, unusual items and income taxes, local, state, federal or foreign and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (15) working capital; (16) costs or expenses (including specified types or categories thereof); (17) identification and/or consummation of investment opportunities or completion of specified projects, including strategic mergers, acquisitions or divestitures; (18) shareholder return measures; share price; (19) debt reduction or borrowing levels; (20) improvements in capital structure; (21) sales or product volume; days sales outstanding; (22) market share (in the aggregate or by segment); (23) ratios (including operating, leverage, combined); (24) book, economic book or intrinsic book value (including book value per share); (25) entry into new markets, either geographically or by business unit; (26) customer retention and satisfaction; (27) safety and accident rates; (28) strategic plan development and implementation, including turnaround plans; (29) funds from operations, (30) any other financial or operational metric selected by the Committee; or (31) any other criteria as the Committee determines in its discretion.
Any of the above goals may be determined on an absolute or relative basis (e.g. growth in earnings per share) or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor's 500 Stock Index or a group of companies that are selected by the Committee. The Committee may adjust the impact of one or more events or occurrences as the Committee determines appropriate, including, without limitation, (i) acquisitions, divestitures, restructurings, discontinued operations, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or any of its affiliates, Subsidiaries, divisions, segments or operating units or not within the reasonable control of the Company's management, or (iii) a change in accounting standards required by generally accepted accounting principles.
Other Terms of Awards
Awards issued under the Plan may also include the following terms:
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been earned for the applicable period. In addition, no dividends or dividend equivalents will be paid on Options or SARs.
Change of Control
In the event of a Change of Control, unless otherwise provided in the applicable award or an individual employment agreement, all awards that are outstanding and unvested as of immediately prior to a Change of Control would remain outstanding and unvested, provided that for any outstanding performance compensation awards, (i) the performance periods that would be in effect on the date the Change of Control occurs would instead end on the date immediately prior to such Change of Control, (ii) the Committee would determine the actual level of achievement of the performance goals with respect to each such performance period as of the most recent practicable date prior to such Change of Control based upon the Company's audited or unaudited financial information or other information then available as the Committee deems relevant and (iii) to the extent earned, such performance awards will continue to be subject to any service-based vesting conditions that remain in place. If, however, (A) within two years following a Change of Control, the participant's employment with the Company and its affiliates is terminated without Cause or (B) in connection with the Change of Control, no provision is made for assumption, continuation or substitution of awards in a manner that preserves the material terms and conditions of the awards, then any awards that are unexercisable, unvested or subject to restrictions would automatically become exercisable and vested and all restrictions would lapse as of the date of such termination or immediately prior to the Change of Control, as applicable.
The term "Change of Control" is defined in the Plan to mean any one of the following events:
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cease for any reason to constitute at least two-thirds (2/3) of the Board, or in the case of a merger or consolidation of the Company, do not constitute or cease to constitute at least two-thirds (2/3) of the board of directors of the surviving company (or in a case where the surviving corporation is controlled, directly or indirectly by another corporation or entity, do not constitute or cease to constitute at least two-thirds (2/3) of the board of such controlling corporation or do not have or cease to have at least two-thirds (2/3) of the voting seats on any body comparable to a board of directors of such controlling entity, or if there is no body comparable to a board of directors, at least two-thirds (2/3) voting control of such controlling entity); provided that any person becoming a director (or, in the case of a controlling non-corporate entity, obtaining a position comparable to a director or obtaining a voting interest in such entity) subsequent to the Effective Date whose election, or nomination for election, was approved by a vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is pursuant to an actual or threatened election contest), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board; or
Unless defined otherwise in the award or individual employment agreement, the term "Cause" is defined in the Plan to mean:
The good faith determination by the Committee of whether the participant's employment or service was terminated for Cause is final and binding for all purposes.
Share Limits
Subject to adjustment for changes in capitalization, the maximum number of shares of Stock that may be issued as a result of the exercise of ISOs is 2,500,000. Furthermore, with respect to awards that are performance compensation awards, the maximum number of shares of Stock that is available to be granted to any one individual in any fiscal year in respect of stock-settled awards, is no more than 600,000, multiplied by the number of fiscal years (and fractions thereof) over which the performance
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criteria are measured. In the case of such awards that are cash-settled based upon the fair market value of a share of Stock, the maximum amount of cash that may be paid to any one individual in any fiscal year is equal to 600,000 shares of Stock multiplied by the fair market value as of the relevant vesting, payment or settlement date, multiplied by the number of fiscal years (and fractions thereof) over which the performance criteria are measured. In the case of all other performance compensation awards, the maximum amount of cash and other property (valued at its fair market value) other than shares of Stock that may be paid or delivered pursuant to such awards granted to any one individual in any fiscal year is equal to $10,000,000 multiplied by the number of complete fiscal years (and fractions thereof) over which the performance criteria are measured.
Subject to adjustment for changes in capitalization, with respect to awards granted to independent directors, in the case of such stock-settled awards, the maximum number of shares of Stock that is available to be granted to any one independent director in any fiscal year is 60,000. In the case of such awards that are cash-settled based on the fair market value of a share of Stock, the maximum amount of cash that may be paid to any one independent director in any fiscal year is equal to 60,000 shares of Stock multiplied by the per share fair market value as of the relevant vesting, payment or settlement date. In the case of all other awards granted to independent directors, the maximum amount of cash and other property (valued at its fair market value) other than shares of Stock that may be paid or delivered pursuant to such awards to any one independent director in any fiscal year is $500,000.
Minimum Vesting
All equity-based awards granted under the 2020 Plan would be subject to a minimum vesting period of one (1) year from the date of grant (excluding, for this purpose, any substitute awards and shares of Stock issued pursuant to a participant's election to receive shares of Stock in lieu of cash compensation), provided that (i) up to five percent (5%) of the shares of Stock available under the Plan may be granted free of any vesting requirements, (ii) the restriction does not apply to the Committee's discretion to provide for accelerated exercisability or vesting of any award upon the death or disability of a participant and (iii) the minimum vesting period would be deemed satisfied with respect to any award granted to an independent director if such award vests on the earlier of the one-year anniversary of the date of grant and the next annual shareholder meeting.
Adjustments
In the event of any equity restructuring of the Company, such as a stock dividend, stock split, spin-off, reverse stock split, split-up, rights offering, recapitalization or non-recurring cash dividend or other distribution (whether in the form of shares of Stock, other securities or other property), the Committee would adjust each award to prevent dilution or enlargement of the rights of the holders with respect to outstanding awards. In addition, in the event of any merger, consolidation, combination, exchange of shares or any similar corporate transaction (including any Change of Control), the Committee is permitted to make other adjustments in order to preserve the benefits and potential benefits of outstanding awards. Such actions may include, but are not limited to, adjustments to the aggregate number of shares available for issuance under the 2020 Plan, the annual per participant limits, the number and kind of shares subject to outstanding award, and the exercise price of any outstanding Options or SARs, as well as any other appropriate adjustments it deems necessary.
Amendment and Termination
The Board is permitted, at any time, to amend or terminate the Plan, and the Board or the Committee is permitted, at any time, to amend any award outstanding thereunder, provided that no amendment or termination may, in the absence of written consent by the affected participant (or the
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participant's beneficiary if the participant is no longer living), materially and adversely affect the rights of any participant or beneficiary granted under the Plan prior to the date that the amendment is adopted by the Board, unless such amendment is made to comply with applicable law, or with tax, security exchange or accounting rules. The Board is permitted to so amend the Plan without further shareholder approval, except to the extent shareholder approval is required by law or regulation or under the rules of any securities exchange or quotation system on which shares of Stock are then listed or quoted. Thus, shareholder approval would not necessarily be required for every amendment to the Plan which might increase the cost of the Plan or alter the eligibility of persons to receive awards.
The Plan would remain in effect as long as any award under it is outstanding. However, no awards is permitted to be granted under the Plan after the tenth anniversary of the date the Plan was approved by our shareholders.
Federal Income Tax Consequences of Awards
The Plan would not be qualified under the provisions of section 401(a) of the Code and would not be subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended.
Nonqualified Stock Options
A non-qualified stock option results in no taxable income to the participant or deduction to the Company at the time it is granted. A participant exercising a non-qualified stock option will, at that time, realize taxable income (subject to withholding and employment taxes) in the amount equal to the excess, if any, of the then fair market value of the shares over the option exercise price. Subject to the applicable provisions of the IRC, the Company will be entitled to a deduction for federal income tax purposes in the year of exercise in an amount equal to the taxable income realized by the participant. The participant's tax basis in shares received upon exercise is equal to the sum of the option exercise price plus the taxable income recognized by him or her upon exercise.
Any gain (or loss) upon subsequent disposition of the shares will be a long- or short-term capital gain (or loss) to the participant, depending upon the holding period of the shares. If a non-qualified option is exercised by tendering previously owned shares in payment of the option price, then, instead of the treatment described above, the following will apply: a number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the participant's basis and holding period for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The participant will have taxable income equal to the fair market value on the date of exercise of the number of new shares received in excess of such number of exchanged shares; the participant's basis in such excess shares will be equal to the amount of such taxable income, and the holding period in such shares will begin on the date of exercise.
Incentive Stock Options
An incentive stock option results in no taxable income to the participant or a deduction to the Company at the time it is granted or exercised. However, upon exercise, the excess of the fair market value of the shares acquired over the option exercise price is an item of adjustment in computing the alternative minimum taxable income of the participant, if applicable. If the participant holds the stock received as a result of an exercise of an incentive stock option until the later of two years from the date of the grant and one year from the date of exercise, then the gain realized on disposition of the shares is treated as a long-term capital gain. If the shares are disposed of during this period, however (i.e., a "disqualifying disposition"), then the participant will realize taxable income for the year of the
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disposition in an amount equal to the excess, if any, of the fair market value of the shares, upon exercise of the option over the option exercise price (or, if less, the excess of the amount realized upon disposition of the shares over the option exercise price). Any additional gain or loss recognized upon the disposition will be recognized as a capital gain or loss by the participant. In the event of a disqualifying disposition, the Company will generally be entitled to a deduction, in the year of such a disposition, in an amount equal to the taxable income realized by the participant. The participant's tax basis in the shares acquired upon exercise of an incentive stock option is equal to the option exercise price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.
Stock Awards
Generally, if a participant receives a stock award under the Plan, the participant would recognize ordinary compensation income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount the participant paid in exchange for the stock. If, however, the stock is not vested when it is received under the Plan (for example, if the participant is required to work for a period of time in order to have the right to sell the stock), the participant generally would not recognize income until the stock becomes vested, at which time the participant would recognize ordinary compensation income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount the participant paid in exchange for the stock. The participant may, however, file an election with the Internal Revenue Service, within 30 days of the participant's receipt of the stock award, to recognize ordinary compensation income, as of the date the participant received the stock award, equal to the excess, if any, of the fair market value of the stock on the date the other stock award is granted over any amount the participant paid in exchange for the stock. If the participant is an employee of the Company, the ordinary compensation income the participant recognizes is subject to federal and state income and employment tax withholding.
Stock Appreciation Rights
Generally, the recipient of a stand-alone SAR will not recognize taxable income at the time the stand-alone SAR is granted. The value received by an employee (in cash or stock) from the exercise or settlement of a SAR will be taxed as ordinary income to the employee in the year of exercise or settlement. In general, there will be no federal income tax deduction allowed to the Company upon the grant or termination of SARs. However, upon the exercise or settlement of a SAR, the Company will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the exercise or settlement.
Cash Incentive Awards
Cash incentive awards entitle the participant to receive a cash award and, upon payment of the cash award, the participant recognizes ordinary income equal to the cash award. Generally, the Company would be entitled to a deduction for Federal income tax purposes equal to the amount of ordinary income taxable to the participant.
Section 162(m) Limitations
Section 162(m) of the Code generally limits a public company's federal income tax deduction for compensation paid to "covered employees" (in general, the CEO, the CFO, and the three other most highly compensated executive officers for any year beginning with fiscal year 2017) in each fiscal year to $1 million. Thus, certain compensation, including compensation attributable to awards granted under the 2020 Plan, paid by the Company to any NEO (and to any person who was a named executive
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officer for any year beginning with fiscal year 2017) may be nondeductible to the Company due to the application of Section 162(m) of the Code.
Section 409A
If any award constitutes a "nonqualified deferred compensation plan" under Section 409A of the Code (a "Section 409A Plan"), then the award is subject to certain additional requirements discussed in the Plan, if and to the extent required to comply with Section 409A of the Code. Any award agreement for any award that the Committee believes may constitute a Section 409A Plan, and the provisions of the Plan applicable to that award, is construed in a manner consistent with the applicable requirements of Section 409A, and the Committee, in its sole discretion and without the participant's consent, may amend any award agreement (and the provisions of the Plan applicable thereto) if and to the extent that the Committee determines that such amendment is necessary or appropriate to comply with the requirements of Section 409A of the Code. In the event of a Change of Control, any outstanding awards that constitute deferred compensation is paid in accordance with Section 409A of the Code. If any award agreement or award is deemed not to comply with Section 409A of the Code, then neither the Company, the Committee nor its or their designees or agents is liable to any participant or other person for actions, decisions or determinations made in good faith.
Importance of Consulting Tax Adviser
The information set forth above is a summary only and does not purport to be complete. It is for general information only and is not intended or written to be used as tax advice. It is based on the U.S. federal income tax laws currently in effect and does not address state, local or foreign tax consequences. This summary also does not purport to deal with all material aspects of U.S. federal taxation that may be relevant to a participant's personal investment circumstances and does not discuss the tax consequences of those participants who are subject to special treatment under any country's income tax laws. Participants are strongly urged to consult with their tax advisor regarding the specific tax consequences (including the federal, state, local and foreign tax consequences) that may affect participants in the Plan and of potential changes in applicable tax laws.
A new plan benefits table for the Plan and the benefits or amounts that would have been received by or allocated to certain participants for the last completed fiscal year under the Plan if the Plan was then in effect, as described in the federal proxy rules, is not provided because all awards made under the Plan will be made at the Board's or Committee's discretion, as applicable. Therefore, the benefits and amounts that would be received or allocated under the Plan are not determinable at this time. However, please refer to the Summary Compensation Table, which includes certain information regarding awards granted to our NEOs during the fiscal year ended December 31, 2019. Equity grants to our non-employee directors are described under "Director Compensation".
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The following table sets forth certain information with respect to the beneficial ownership of our common stock, as of April 3, 2017,March 30, 2020 (the "Reporting Date"), by (i) each person known to us to beneficially own more than 5% of our outstanding common stock; (ii) our named executive officers for the fiscal year ended December 31, 2016;2019; (iii) each director and nominee for director and (iv) all of the executive officers and directors as a group. Except as shown in the table, no other person is known by us to beneficially own more than 5% of our outstanding common stock.
| Name of Beneficial Owner(1) | Number of Shares of Common Stock Beneficially Owned(2) | Percent(2) | ||
|---|---|---|---|---|
Holding more than 5% | ||||
FMR, LLC(3) | 8,682,204 | 12.6% | ||
BlackRock, Inc.(4) | 5,690,316 | 8.2% | ||
The Vanguard Group, Inc.(5) | 5,751,277 | 8.3% | ||
Named executive officers and directors: | ||||
Michael J. Kasbar(6) | 773,266 | 1.1% | ||
Ira M. Birns(7) | 97,818 | * | ||
Michael J. Crosby(8) | 1,676 | * | ||
John P. Rau(9) | 11,085 | * | ||
Ken Bakshi(10) | 19,266 | * | ||
Jorge L. Benitez(11) | 7,387 | * | ||
Richard A. Kassar(12) | 39,162 | * | ||
Myles Klein(13) | 36,795 | * | ||
John L. Manley(14) | 22,826 | * | ||
J. Thomas Presby(15) | 9,732 | * | ||
Stephen K. Roddenberry(16) | 69,377 | * | ||
Paul H. Stebbins(17) | 381,846 | * | ||
All executive officers and directors as a group (13 persons) | 1,496,918 | 2.2% |
| Name of Beneficial Owner(1) | Number of Shares of Common Stock Beneficially Owned(2) | Percent(2) | ||
|---|---|---|---|---|
Holding more than 5% | ||||
BlackRock, Inc.(3) | 7,740,753 | 11.8% | ||
The Vanguard Group, Inc.(4) | 6,021,926 | 9.2% | ||
Dimensional Fund Advisors LP(5) | 5,367,158 | 8.2% | ||
Named executive officers and directors: |
| |||
Michael J. Kasbar(6) | 719,820 | 1.1% | ||
Ira M. Birns(7) | 78,259 | * | ||
Jeffrey P. Smith(8) | 5,905 | * | ||
Michael J. Crosby(9) | 42,530 | * | ||
John P. Rau(10) | 57,118 | * | ||
Ken Bakshi(11) | 53,180 | * | ||
Jorge L. Benitez(12) | 29,589 | * | ||
Sharda Cherwoo(13) | 1,590 | |||
Stephen Gold(14) | 15,487 | * | ||
Richard A. Kassar(15) | 53,697 | * | ||
John L. Manley(16) | 35,028 | * | ||
Stephen K. Roddenberry(17) | 91,579 | * | ||
Paul H. Stebbins(18) | 395,993 | * | ||
All executive officers and directors as a group (14 persons)(19) | 1,612,438 | 2.5% |
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settlement, 29,4557,628 shares will be delivered to Mr. Bakshi in May 2020 and 29,777 shares will be delivered upon his departure from the Board, 1,678 will be delivered in May 2017 and the balance will be delivered on the earlier of his departure from the Board or the third anniversary of the respective grant date.
Board.
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delivered to Mr. Benitez in May 2017 and the balance will be delivered on the earlier of his departure from the Board or the third anniversary of the respective grant date.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and certain officers, and persons who own more than 10% of our common stock, to file with the SEC reports of ownership and changes in ownership of our common stock and other equity securities. Based solely on a review of such reports that were filed with the SEC, all filings required of directorsour records and Section 16certain written representations received from our executive officers and persons who own more than 10% of our common stock in 2016directors, we believe that all required filings during the year ended December 31, 2019 were made on a timely basis, with the exception of Carlos M. Velazquez who reported twoa late Form 4 transactions on Form 5 due to an inadvertent administrative oversight.filing disclosing one transaction for each of Messrs. Lake and Stebbins.
Shareholder Proposals for the 20182021 Annual Meeting
Proposals for Inclusion in the Proxy Statement. The date by which shareholder proposals must be received by us for inclusion in proxy materials relating to the 20182021 annual meeting of shareholders, or the "2018"2021 Annual Meeting," is December 14, 2017.10, 2020. Upon receipt of any such proposal, we will determine whether or not to include such proposal in the proxy materials in accordance with SEC regulations governing the solicitation of proxies.
Proposals not Included in the Proxy Statement and Nominations for Director. Shareholder proposals not included in the Company'sour proxy statement and shareholder nominations for director may be brought before an annual meeting of shareholders in accordance with the advance notice procedures described in the Company'sour By-Laws. In general, notice must be received by the Corporate Secretary not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting (i.e., May 25, 2018)22, 2021) and must contain specified information concerning the matters to be brought before such meeting and concerning the shareholder proposing such matters. For the 20182021 Annual Meeting, the Corporate Secretary must receive notice of the proposal on or after the close of business on January 25, 201823, 2021 and no later than the close of business on February 26, 2018.24, 2021. Shareholder proposals must be in proper written form and must meet the detailed disclosure requirements set forth in the Company'sour By-Laws, including a description of the proposal, the relationship between the proposing shareholder and the underlying beneficial owner, if any, and such parties' stock holdings and derivative positions in the Company'sour securities. If we hold the 20182021 Annual Meeting more than 30 days earlier or more than 60 days later than such anniversary date, we must receive your notice not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
The Company'sOur By-Laws also require that shareholder proposals concerning nomination of directors provide additional disclosure, including information the Company deemswe deem appropriate to ascertain the nominee's qualifications to serve on the Board, disclosure of compensation arrangements between the nominee, the nominating shareholder and the underlying beneficial owner, if any, and other information required to comply with the proxy rules and applicable law.
The specific requirements of these advance notice provisions are set forth in Article I, Sections 6 and 7 of our By-Laws, a copy of which is available upon request. Such request and any shareholder proposals or director nominations should be sent to our Corporate Secretary at our principal executive offices.
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List of Shareholders Entitled to Vote at the Annual Meeting
The names of shareholders of record entitled to vote at the Annual Meeting will be available at our corporate office for a period of 10 days prior to the Annual Meeting and continuing through the Annual Meeting.
Expenses Relating to this Proxy Solicitation
We will bear the cost of the solicitation of proxies from our shareholders, including preparing, printing and mailing the Notice and this proxy statement. In addition to solicitations by mail, our directors, officers and employees, and those of our subsidiaries and affiliates, may solicit proxies from shareholders by telephone or other electronic means or in person but will receive no additional compensation for soliciting such proxies. We will cause banks and brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of our common stock held of record by such banks, brokerage firms, custodians, nominees and fiduciaries. We may reimburse such banks, brokerage firms, custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in doing so. We may also retain the services of a solicitor to assist in soliciting proxies and pay them a fee as well as other costs and expenses.
Communication with our Board of Directors
Any interested party can contact our Board, any Board committee, our presiding director, our lead independent director, the non- managementnon-management directors as a group or any individual director by (i) writing to any of them, c/o Corporate Secretary, at our principal office at 9800 Northwest 41st Street, Miami, Florida 33178, (ii) contacting our compliance hotlinecalling the WFS Anonymous Compliance Hotline at (877) 787-8742 (Toll Free Domestic)1-888-549-0965 (US toll-free) or (770) 776-5690 (Collect)at any of the other country-specific toll-free numbers found at www.wfscompliance.com; or (iii) accessing www.reportlineweb.com/wfs onsubmitting a report or request online using the Internet.intake portal found at www.wfscompliance.com. Such communications may be submitted on an anonymous or confidential basis. Any communications received from interested parties in the manner described above will be collected and organized by our Corporate Secretary and will be periodically, but in any event prior to each regularly-scheduled Board meeting, reported and/or delivered to the appropriate director or directors.
We maintain an Internet website at www.wfscorp.com. Copies of the Committee charters of each of the Audit Committee, Compensation Committee, Governance Committee, Sustainability & Corporate Responsibility Committee and Technology and& Operations Committee, together with other corporate governance materials, such as our Corporate Governance Principles and Code of Conduct, can be found under the Investor Relations—Corporate Governance section of our website located at www.wfscorp.com, and such information is also available in print to any shareholder who requests it by writing to our Corporate Secretary at the address below.
We will furnish without charge to each person whose proxy is being solicited, upon request of any such person, a copy of our 20162019 annual report on Form 10-K as filed with the SEC, including the financial statements and schedules thereto. In addition, such report is available, free of charge, through the Investor Relations—Corporate Governance section of our Internet website, located at www.wfscorp.com. AYou should direct a request for a copy of suchthis report should be directed to World Fuel Services Corporation, 9800 Northwest 41st Street, Miami, Florida 33178, Attention: Corporate Secretary. AWe will forward you a copy of any exhibit to the 20162019 annual report on Form 10-K will be forwarded following receipt ofwhen you send a written request with respect thereto addressed to Investor Relations.
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Pursuant to rules adopted by the SEC, we are furnishing our proxy materials to our shareholders over the Internet and providing a Notice of Internet Availability of Proxy Materials by mail instead of mailing a printed copy of our proxy materials, which include our proxy statement and annual report. This process has allowed us to expedite our shareholders' receipt of proxy materials, lower the costs of distribution and reduce the environmental impact of our Annual Meeting. All shareholders receiving the Notice will have the ability to access the proxy materials over the Internet and receive a paper copy of the proxy materials by mail at no charge upon request.
We have adopted a procedure approved by the SEC called "householding." Under this procedure, shareholders of record who have the same address and last name will receive only one copy of our Notice, unless one or more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will reduce our printing costs and postage fees.
If you are eligible for householding, but you and other shareholders of record with whom you share an address currently receive multiple copies of the Notice, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of the Notice for your household, please contact our transfer agent, Wells FargoEQ Shareowner Services (in writing: P.O. Box 64854, St. Paul, MN 55164-0854, or by telephone: (800) 468-9716 or (651) 450-4064).
If you participate in householding and wish to receive a separate copy of the Notice, or if you do not wish to participate in householding and prefer to receive separate copies of the Notice in the future, please contact Wells FargoEQ Shareowner Services as indicated above. Beneficial shareholders can request information about householding from their broker, bank, trustee, agent or other record holder.
World Fuel Services Corporation | 20172020 Proxy Statement 7491
WORLD FUEL SERVICES CORPORATIONTHIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORSFOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ONTHURSDAY, MAY 25, 20172020 OMNIBUS PLAN
SECTION I
GENERAL
1.1 Purpose.The undersigned shareholder acknowledges receiptWorld Fuel Services Corporation 2020 Omnibus Plan (as may be amended from time to time, the "Plan") has been established by World Fuel Services Corporation (the "Company"), a Florida corporation, to: (a) attract and retain persons eligible to participate in the Plan; (b) motivate Participants, by means of appropriate incentives, to achieve long-range goals; (c) provide incentive compensation opportunities that are competitive with those of other similar companies; and (d) further align Participants' interests with those of the NoticeCompany's other shareholders through compensation that is based on the Company's common stock; and thereby promote the long-term financial interest of Internet Availabilitythe Company and the Subsidiaries, including the growth in value of the Company's equity and enhancement of long-term shareholder return.
1.2 Participation. Subject to the terms and conditions of the Plan, the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of the Company shall determine and designate, from time to time, from among the Eligible Persons, those persons who will be granted one or more Awards under the Plan, and thereby become "Participants" in the Plan.
1.3 Operation, Administration, and Definitions. The operation and administration of the Plan, including the Awards made under the Plan, shall be subject to the provisions of Section IV (relating to operation and administration). Capitalized terms in the Plan shall be defined as set forth in the Plan (including the definition provisions of Section IX of the Plan).
SECTION II
OPTIONS AND SARS
2.1 Definitions.
(a) An "Option" is a right that entitles the Participant to purchase shares of Stock at an Exercise Price established by the Committee. Any Option granted under this Section II may be either an Incentive Stock Option or a Non-Qualified Stock Option, as determined in the discretion of the Committee. An "Incentive Stock Option" is an Option that is intended to satisfy the requirements applicable to an "incentive stock option" described in Section 422(b) of the Code. Only Employees of the Company or any Subsidiary shall be eligible to be awarded Incentive Stock Options under the Plan. A "Non-Qualified Stock Option" is an Option that is not intended to be an "incentive stock option" as that term is described in Section 422(b) of the Code.
(b) A "Stock Appreciation Right" or "SAR" is a right that entitles the Participant to receive, in cash or Stock (as determined in accordance with Section 4.7), value equal to (or otherwise based on) the excess of: (i) the Fair Market Value of a share of Stock at the time of exercise; over (ii) an Exercise Price established by the Committee.
2.2 Exercise Price. The "Exercise Price" of each share of Stock purchasable under an Option and each SAR shall be determined by the Committee, provided that such Exercise Price shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant of the Option or SAR and shall not, in any event, be less than the par value of a share of Stock on the date of grant of the Option or SAR. If an Eligible Person owns or is deemed to own (by reason of the attribution rules
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applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company (or any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and hereby appoints Michael J. Kasbar(f) of the Code, respectively) and Paul H. Stebbinsan Incentive Stock Option is granted to such person, the Exercise Price of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no less than 110% of the Fair Market Value of a share of Stock on the date that the Incentive Stock Option is granted.
2.3 Exercise. Each Option and SAR shall become exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee, but in no event shall the Option or SAR remain exercisable after the seven-year anniversary of the date of grant.
2.4 Payment of Option Exercise Price. The payment of the Exercise Price of an Option granted under this Section II shall be subject to the following:
(a) Subject to the following provisions of this Section 2.4, the full Exercise Price for shares of Stock purchased upon the exercise of any Option shall be paid at the time of such exercise (except that, in the case of an exercise arrangement described in Section 2.4(c), payment may be made as soon as practicable after the exercise).
(b) The Exercise Price shall be payable in cash or, in the discretion of the Committee, either by tendering shares of them, proxiesStock (by actual delivery of shares or by attestation), or by the withholding of shares of Stock that otherwise would have been delivered as a result of the exercise of the Option, in each case valued at Fair Market Value as of the day of exercise, or in any combination thereof, as determined by the Committee.
(c) The Committee may permit a Participant to elect to pay the Exercise Price upon the exercise of an Option by irrevocably authorizing a third party to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.
2.5 Settlement of Award. Settlement of Options and SARs is subject to Section 4.7.
SECTION III
OTHER AWARDS
3.1 Definitions.
(a) A "Cash Incentive Award" is a grant of a right to receive a designated dollar value amount in cash that is not calculated by reference to the Fair Market Value of a share of Stock and is subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant, or achievement of performance or other objectives, as determined by the Committee.
(b) An "Other Stock-Based Award" is any Award other than an Option, SAR, Stock Unit Award, Restricted Stock Award or Restricted Stock Unit Award, that is denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Stock (including without limitation any award of shares of Stock that is not subject to any vesting or other restrictions and any awards of shares of Stock in lieu of obligations to pay cash or deliver other property under the Plan or under any other plan or compensatory arrangements).
(c) A "Performance Compensation Award" is the grant of any Award designated by the Committee as a Performance Compensation Award pursuant to Section 3.3 that is contingent on the
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achievement of Performance Goals or other performance objectives as determined by the Committee, during a Performance Period.
(d) A "Restricted Stock Award" is a grant of shares of Stock with such shares of Stock subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant, or achievement of performance or other objectives, as determined by the Committee.
(e) A "Restricted Stock Unit Award" is the grant of a right to receive shares of Stock, cash, other securities or other Awards (as determined in accordance with Section 4.7) in the future, with such right to future delivery of such shares of Stock, cash, other securities or other Awards subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant, or achievement of performance or other objectives, as determined by the Committee.
(f) A "Stock Unit Award" is the grant of a right to receive shares of Stock in the future, which right is not subject to future vesting conditions.
3.2 Restrictions on Awards. Each Stock Unit Award, Performance Compensation Award, Restricted Stock Award, Restricted Stock Unit Award, Other Stock-Based Award and Cash Incentive Award shall be subject to such conditions, restrictions and contingencies as the Committee shall determine.
3.3 Performance Compensation Awards.
(a) Subject to the provisions of Section 4.2(e)(ii) (relating to the limitations on the maximum amount of specified Awards), the Committee may designate any Award as a Performance Compensation Award, the grant or vesting of which is conditioned on the achievement of one or more "Performance Goals." The Committee may establish one or more of the following business criteria for the undersigned, each with full power of substitution, to vote allCompany, on a consolidated basis, and/or for any Subsidiary, or for business or geographical units of the undersigned’sCompany and/or any Subsidiary (except with respect to the shareholder return measures and earnings per share criteria), as the Performance Goals for such Performance Compensation Awards: (1) earnings per share or diluted earnings per share; (2) revenues or margins; (3) cash flow; (4) gross or net profitability/profit margins (including profitability of a product or service); (5) return measures (including return on net assets, investment, capital, equity, or sales); (6) economic value; enterprise value; (7) direct contribution; (8) net income; (9) pretax earnings; (10) earnings before interest and taxes; (11) earnings before interest, taxes, depreciation and amortization; (12) earnings after interest expense and before non-recurring or special items; (13) operating income; (14) income before interest income or expense, unusual items and income taxes, local, state, federal or foreign and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (15) working capital; (16) costs or expenses (including specified types or categories thereof); (17) identification and/or consummation of investment opportunities or completion of specified projects, including strategic mergers, acquisitions or divestitures; (18) shareholder return measures; share price; (19) debt reduction or borrowing levels; (20) improvements in capital structure; (21) sales or product volume; days sales outstanding; (22) market share (in the aggregate or by segment); (23) ratios (including operating, leverage, combined); (24) book, economic book or intrinsic book value (including book value per share); (25) entry into new markets, either geographically or by business unit; (26) customer retention and satisfaction; (27) safety and accident rates; (28) strategic plan development and implementation, including turnaround plans; (29) funds from operations; (30) any other financial or operational metric selected by the Committee; or (31) any other criteria as the Committee shall determine in its discretion.
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(b) Any of the above Performance Goals may be determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor's 500 Stock Index or a group of companies that are selected by the Committee. The Committee may adjust the impact of one or more events or occurrences as the Committee determines appropriate, including, without limitation, (i) acquisitions, divestitures, restructurings, discontinued operations, and other unusual or non-recurring charges or extraordinary items, (ii) an event either not directly related to the operations of the Company or any of its Affiliates, Subsidiaries, divisions, segments or operating units (to the extent applicable to such Performance Goal) or not within the reasonable control of the Company's management, including any macroeconomic or market-driven events or (iii) a change in accounting standards required by generally accepted accounting principles.
(c) No Participant shall receive any payment under the Plan that is subject to this Section 3.3 unless the Committee has certified, by resolution or other appropriate action in writing, that the Performance Goals and any other material terms previously established by the Committee, have been satisfied.
SECTION IV
OPERATION AND ADMINISTRATION
4.1 Effective Date; Term of Plan. The Plan shall be effective as of the Effective Date and shall remain in effect as long as any Awards under it are outstanding; provided, however, that no Awards may be granted under the Plan after the tenth anniversary of the Effective Date.
4.2 Shares Subject to Plan. The shares of Stock for which Awards may be granted under the Plan shall be subject to the following:
(a) The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued or currently held or subsequently acquired by the Company as treasury shares, including shares purchased in the open market or in private transactions.
(b) Subject to the following provisions of this Section 4.2, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under the Plan shall be equal to the sum of: (i) 1,550,000; plus (ii) any shares of Stock remaining available for future awards under a Prior Plan on the Effective Date; plus (iii) any shares of Stock with respect to Awards and Prior Plan Awards that are forfeited, canceled, expire unexercised, or are settled in cash following the Effective Date. Upon shareholder approval of the Plan, no further awards will be made under any Prior Plans.
(c) To the extent provided by the Committee, any Award may be settled in cash rather than Stock. Notwithstanding any provision of the Plan to the contrary, none of the following shares of Stock shall be available again for delivery under the Plan: (i) any shares of Stock with respect to Awards or Prior Plan Awards that are withheld or tendered (by actual delivery or by attestation) to the Company or not issued to the Participant, in either case, to satisfy the applicable tax withholding obligation or in payment of the exercise price of such Award or Prior Plan Award, or (ii) any shares of Stock repurchased by the Company on the open market with the proceeds of an Award or Prior Plan Award paid to the Company by or on behalf of the Participant.
(d) For the avoidance of doubt, the full number of shares of Stock with respect to an Award or Prior Plan Award originally granted (rather than the net number of shares of Stock actually delivered) shall count against the maximum number of shares of Stock available for delivery pursuant to Awards granted under the Plan. Upon exercise of a stock-settled SAR, each such stock-settled SAR originally granted shall be counted as one share of Stock against the maximum aggregate number of
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shares of Stock that may be delivered pursuant to Awards granted under the Plan as provided in Section 4.2(b), regardless of the number of shares of Stock actually delivered upon settlement of such stock-settled SAR.
(e) Subject to Section 4.2(f), the following additional maximums are imposed under the Plan.
(i) The maximum number of shares of Stock that may be issued as a result of the exercise of Options intended to be Incentive Stock Options shall be 2,500,000.
(ii) With respect to Awards that are designated as Performance Compensation Awards:
(A) in the case of such Awards that are settled in shares of Stock, no more than 600,000 shares of Stock may be subject to such Awards granted to any one Participant with respect to any one fiscal-year Performance Period (multiplied by the number of complete fiscal year Performance Periods (and fractions thereof) over which the Performance Goals are measured if based upon satisfaction of Performance Goals measured over a Performance Period of more than one fiscal year);
(B) in the case of such Awards that are settled in cash based on the Fair Market Value of a share of Stock, the maximum aggregate amount of cash that may be paid pursuant to such Awards granted to any one Participant with respect to any one fiscal-year Performance Period shall be equal to 600,000 shares of Stock multiplied by the per share Fair Market Value as of the relevant vesting, payment or settlement date (multiplied by the number of complete fiscal year Performance Periods (and fractions thereof) over which the Performance Goals are measured if based upon satisfaction of Performance Goals measured over a Performance Period of more than one fiscal year); and
(C) in the case of all such Awards other than those described in clauses (A) and (B), the maximum aggregate amount of cash and other property (valued at its Fair Market Value) other than shares of Stock that may be paid or delivered pursuant to such Awards granted to any one Participant in any one fiscal-year Performance Period shall be equal to $10,000,000 (multiplied by the number of complete fiscal year Performance Periods (and fractions thereof) over which the Performance Goals are measured if based upon satisfaction of Performance Goals measured over a Performance Period of more than one fiscal year).
(iii) With respect to Awards granted to Independent Directors, (A) in the case of such Awards that are settled in shares of Stock, no more than 60,000 shares of Stock may be subject to such Awards granted to any one Independent Director in any fiscal year, (B) in the case of such Awards that are settled in cash based on the Fair Market Value of a share of Stock, the maximum aggregate amount of cash that may be paid pursuant to such Awards granted to any one Independent Director in any fiscal year shall be equal to 60,000 shares of Stock multiplied by the per share Fair Market Value as of the relevant vesting, payment or settlement date, and (C) in the case of all Awards other than those described in clauses (A) and (B), the maximum aggregate amount of cash and other property (valued at its Fair Market Value) other than shares of Stock that may be paid or delivered pursuant to such Awards to any one Independent Director in any fiscal year shall be equal to $500,000.
(iv) Substitute Awards shall not reduce the shares of Stock authorized for grant under the Plan or authorized for grant to a Participant in any period. Additionally, in the event
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that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares of stock available for delivery pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Stock authorized for delivery under the Plan; provided that Awards using such available shares of Stock shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employees, officers, or members of the board of directors of the Company or Subsidiaries, or consultants or other persons providing services to the Company or any Subsidiary, prior to such acquisition or combination.
(f) In the event of any equity restructuring, such as a stock dividend, stock split, spin-off, reverse stock split, split-up, rights offering, recapitalization or non-recurring cash dividend or other distribution (whether in the form of shares of Stock, other securities or other property), the Committee shall adjust each Award, in such manner as the Committee shall determine, to prevent dilution or enlargement of the rights of the holders with respect to outstanding awards. In addition, in the event of any merger, consolidation, combination, exchange of shares or other similar corporate transaction (including any Change of Control), the Committee may make other adjustments to outstanding Awards (and to any limitations on the number or kind of Awards that may be granted under the Plan in the future) to preserve the benefits or potential benefits of the Awards. Action by the Committee pursuant to this Section 4.2(f) may include, to the extent that the Committee determines to be appropriate: (i) adjustment to the number or kind of shares which may be delivered under the Plan, including but not limited to, increases in the limitations set forth in subsection (b) above and paragraphs (i) through (iii) of subsection (e) above; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the Exercise Price of outstanding Options and SARs; and (iv) any other adjustments that the Committee determines to be equitable or appropriate, including but not limited to, (A) a cash payment to the holder of an outstanding Award in consideration for the cancelation of such Award, including, in the case of an outstanding Option or SAR, a cash payment to the holder of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the shares of Stock subject to such Option or SAR over the aggregate Exercise Price of such Option or SAR and (B) cancel and terminate any Option or SAR having a per share Exercise Price equal to, or in excess of, the Fair Market Value of a share of Stock subject to such Option or SAR without any payment or consideration therefor.
4.3 General Restrictions. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares of Stock under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933, as amended), and the applicable requirements of any securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange.
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4.4 Minimum Vesting Requirement.
(a) All equity-based Awards granted under the Plan shall be subject to a minimum vesting period of one (1) year from the date of grant (excluding, for this purpose, any Substitute Awards and shares of Stock issued to Eligible Persons pursuant to their election to receive shares of Stock in lieu of cash compensation); provided that up to five percent (5%) of the shares of Stock available under the Plan may be granted free of any vesting requirements.
(b) For the avoidance of doubt, the foregoing restriction does not apply to the Committee's discretion to provide for accelerated exercisability or vesting of any Award upon the death or disability of a Participant in accordance with the terms of the Plan or the Award Agreement. In addition, the minimum vesting period shall be deemed satisfied with respect to any Award granted to an Independent Director if such Award vests on the earlier of the one-year anniversary of the date of grant and the next annual shareholder meeting.
4.5 Grant and Use of Awards. In the discretion of the Committee, a Participant may be granted any Award permitted under the provisions of the Plan, and more than one Award may be granted to a Participant. Awards may be granted as alternatives to or replacement of awards granted or outstanding under the Plan, or any other plan or arrangement of the Company or a Subsidiary (including a plan or arrangement of a business or entity, all or a portion of which is acquired by the Company or a Subsidiary). Subject to the overall limitation on the number of shares of Stock that may be delivered under the Plan, the Committee may use available shares of Stock as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company or a Subsidiary, including the plans and arrangements of the Company or a Subsidiary assumed in business combinations.
4.6 Dividends and Dividend Equivalents in Unvested Awards. In no event shall dividends or dividend equivalents be paid with respect any Option or SAR. At the discretion of the Committee, an Award (other than an Option or SAR) may provide the Participant with the right to receive dividends or dividend equivalents with respect to the Stock subject to any such Award for dividends declared during the period that an Award is outstanding, provided, that, any such dividends or dividend equivalents shall be subject to the same vesting conditions and risk of forfeiture as the underlying Award. Subject to the foregoing, any such dividends or dividend equivalents may be credited to an account for the Participant and may be settled in cash or Stock, as determined by the Committee. Any such settlements, and any such crediting of dividends or dividend equivalents or reinvestment in shares of Stock, may be subject to such further conditions, restrictions and contingencies as the Committee shall establish, including the reinvestment of such credited amounts in Stock equivalents or the withholding of such amounts, in each case subject to the same vesting conditions and risk of forfeiture as the underlying Award.
4.7 Settlement of Awards. The obligation to make payments and distributions with respect to Awards may be satisfied through cash payments, the delivery of shares of Stock, the granting of replacement Awards, or combination thereof as the Committee shall determine. Satisfaction of any such obligations under an Award, which is sometimes referred to as "settlement" of the Award, may be subject to such conditions, restrictions and contingencies as the Committee shall determine. The Committee may permit or require the deferral of any Award payment, subject to applicable law, the terms of the Plan and such rules and procedures as the Committee may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, and may include converting such credits into deferred Stock equivalents, in each case subject to the same vesting conditions and risk of forfeiture as the underlying Award. Each Subsidiary shall be liable for payment of cash due under the Plan with respect to any Participant to the extent that such benefits are attributable to the
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services rendered for that Subsidiary by the annual meetingParticipant. Any disputes relating to liability of shareholdersa Subsidiary for cash payments shall be resolved by the Committee.
4.8 Transferability. Except as otherwise provided by the Committee, Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution; provided, however, that in no case may any Award be transferred for value.
4.9 Form and Time of Elections. Unless otherwise specified herein, each election required or permitted to be heldmade by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be in writing filed with the Committee or its designee at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the offices of Chadbourne & Parke LLP located at 1301 Avenueterms of the Americas, New York, NY 10019, May 25, 2017, at 8:00 a.m., Eastern Time,Plan, as the Committee or its designee shall require.
4.10 Agreement with Company. An Award under the Plan shall be subject to such terms and atconditions, not inconsistent with the Plan, as the Committee shall, in its sole discretion, prescribe. The terms and conditions of any adjournmentsAward to any Participant shall be reflected in such form of written document as is determined by the Committee. A copy of such document shall be provided to the Participant, and the Committee may, but need not require that the Participant sign a copy of such document. Such document is referred to in the Plan as an "Award Agreement" regardless of whether any Participant signature is required.
4.11 Clawback. Awards shall be subject to any clawback policy maintained by the Company, as it may exist or postponements thereof.
PLEASE SIGN, DATE AND RETURN THE PROXY IN THE ENVELOPE ENCLOSED. THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE DIRECTOR NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSALS 2 AND 4 AND FOR “1 YEAR” IN PROPOSAL 3. THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY YOU.
(Please Signbe amended from time to time, subject to the discretion of the Committee. Furthermore, if required by Company policy, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any Securities and Exchange Commission rule or other applicable laws, each Participant's Award shall be conditioned on Reverse Side)
Address Changes/Comments (Mark the corresponding box on the reverse side)
FOLD AND DETACH HERE
The Board of Directors recommends a vote FOR the director nominees listed in proposal 1, FOR proposals 2 and 4 and for 1 YEAR in proposal 3. If no specification is made, the shares will be votedrepayment or forfeiture in accordance with such applicable laws, Company policy, and any relevant provisions in the related Award Agreement. Nothing in the Plan shall prevent a Participant from exercising any legally protected whistleblower rights, including pursuant to Section 21F of the Exchange Act or the rules thereunder.
4.12 Action by Company or Subsidiary. Any action required or permitted to be taken by the Company or any Subsidiary regarding the Plan shall be by resolution of the Committee, or by action of one or more members of the Board (including a committee of Directors’ recommendation.the Board) who are duly authorized to act for the Board, or (except to the extent prohibited by applicable law or applicable rules of any securities exchange) by one or more duly authorized officers of the Company.
SECTION V
CHANGE OF CONTROL
5.1 Change of Control. Subject to the provisions of Section 4.2(f) (relating to the adjustment of shares), unless otherwise provided in the applicable Award Agreement or an individual employment agreement, in the event of a Change of Control, all Awards that are outstanding and unvested as of immediately prior to a Change of Control (after giving effect to any action by the Committee pursuant to Section 4.2(f) or Section 5.3) shall remain outstanding and unvested immediately thereafter, provided, however, that if within 12 months following a Change of Control, a Participant's employment or services, as applicable, with the Company and its Affiliates is terminated without Cause, then:
(a) any outstanding Options or SARs then held by Participants that are unexercisable or otherwise unvested as of the date of such termination shall automatically be deemed exercisable or otherwise vested, as the case may be, as of the date of such termination; and
(b) all other outstanding Awards (i.e., other than Options and SARs) then held by Participants that are unexercisable, unvested or still subject to restrictions or forfeiture as of
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the date of such termination, shall automatically be deemed exercisable and vested and all restrictions and forfeiture provisions related thereto shall lapse as of the date of such termination.
5.2 Substitution or Assumption. Notwithstanding Section 5.1 and unless otherwise provided in the applicable Award Agreement or an individual employment agreement, in the event of a Change of Control, unless provision is made in connection with the Change of Control for assumption or continuation of Awards previously granted or substitution of such Awards for new awards covering shares of a successor corporation or its "parent corporation" (as defined in Section 424(e) of the Code) or "subsidiary corporation" (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares and, if applicable, Exercise Prices, that the Committee determines will preserve the material terms and conditions of such Awards as in effect immediately prior to the Change of Control (including, without limitation, with respect to the vesting schedules, the intrinsic value of the awards (if any) as of the Change of Control, and transferability of the shares underlying such Awards) then, subject to Section 5.3:
(a) all outstanding Options or SARs then held by Participants that are unexercisable or otherwise unvested shall automatically be deemed exercisable or otherwise vested, as the case may be, as of immediately prior to such Change of Control; and
(b) all other outstanding Awards (i.e., other than Options and SARs) then held by Participants that are unvested or still subject to restrictions or forfeiture shall automatically be deemed vested and all restrictions and forfeiture provisions related thereto shall lapse as of immediately prior to such Change of Control.
To the extent practicable, any actions taken by the Committee under this Section 5.2 shall occur in a manner and at a time which allows affected Participants the ability to participate in the Change of Control transaction with respect to the shares of Stock subject to their Awards or Prior Plan Awards, if any.
5.3 Effect on Performance Compensation Awards. Unless otherwise provided in the applicable Award Agreement or an individual employment agreement, with respect to outstanding Performance Compensation Awards in the event of a Change of Control:
(a) any Performance Periods that would be in effect on the date the Change of Control occurs shall instead end on the date immediately prior to such Change of Control;
(b) the Committee shall determine the actual level of achievement of the Performance Goals with respect to each such Performance Period as of the most recent practicable date prior to such Change of Control based upon the Company's audited or unaudited financial information or other information then available as the Committee deems relevant; and
(c) to the extent earned, such Performance Compensation Awards shall continue to be subject to any service-based vesting conditions that remain in place.
5.4 Section 409A and Change of Control. Notwithstanding anything to the contrary herein and unless otherwise provided in the applicable Award Agreement or an individual employment agreement, if any amount payable pursuant to an Award constitutes deferred compensation that is subject to Section 409A of the Code, in the event of a Change of Control, to the extent provided in Section 5.2, any unvested but outstanding Awards shall automatically vest as of the date of such Change of Control and shall not be subject to the forfeiture restrictions following such Change of Control; provided that in the event that such Change of Control does not qualify as an event described
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Table of director nomineesContents
in Section 409A(a)(2)(A)(v) of the Code or to the extent that payment upon such Change of Control would otherwise violate Section 409A of the Code, such Awards (and any other Awards that constitute deferred compensation that vested prior to the date of such Change of Control but are outstanding as of such date) shall not be settled until the earliest permissible payment event under Section 409A of the Code following such Change of Control.
SECTION VI
COMMITTEE
6.1 Administration. The authority to control and manage the operation and administration of the Plan shall be vested in the Committee in accordance with this Section VI. The Committee shall be selected by the Board, and shall be comprised solely of two or more members of the Board, each of whom, to the extent required under applicable laws and rules, shall be (i) "independent", within the meaning of the rules of the New York Stock Exchange or, if the shares of Stock are not listed for trading on the New York Stock Exchange, under the rules of the applicable securities exchange on which the shares are listed or quoted and (ii) a "Non-Employee Director", within the meaning of Rule 16b-3 as promulgated and interpreted by the Securities and Exchange Commission under the Exchange Act (each an "Independent Director"). If the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee; provided, however, that in that event, any such action taken by the Board shall require the approval of at least a majority of the Independent Directors.
6.2 Powers of Committee. The Committee's administration of the Plan shall be subject to the following:
(a) Subject to the provisions of the Plan and applicable law, and in addition to the other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have sole and plenary authority to administer the Plan, including the authority (i) to select from among the Eligible Persons those persons who shall receive Awards, (ii) to determine the time or times of receipt, (iii) to determine the types of Awards and the number of shares or dollar value covered by the Awards, (iv) to establish the terms, conditions, performance and vesting criteria, restrictions, terms of exercise and settlement and other provisions of the Awards, (v) to interpret, administer, reconcile any inconsistency in, correct any default in and/or supply any omission in, the Plan and any instrument or agreement relating to, or Award made under, the Plan, (vi) grant a replacement Award for an Award previously granted under the Plan if, in its sole discretion, the Committee determines that (A) the tax consequences of such Award to the Company or the Participant differ from those consequences that were expected to occur on the date the Award was granted or (B) clarifications or interpretations of, or changes to, tax law or regulations permit Awards to be granted that have more favorable tax consequences than initially anticipated and (vii) subject to the restrictions imposed by Section VII, to cancel or suspend Awards; provided, however, that, notwithstanding the provisions of this Section 6.2, the Committee shall not have the authority to accelerate vesting of an Award in the event of a Participant's termination of employment other than in connection with the Participant's death or disability.
(b) The Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of any countries in which the Company or any Subsidiary may operate to ensure the viability of the benefits from Awards granted to Participants employed or providing services in such countries, to meet the requirements of local laws that permit the Plan to operate in a qualified or tax-efficient manner, to comply with applicable foreign laws and to meet the objectives of the Plan; provided, however, that no such action taken pursuant to this Section 6.2(b) shall result in a "material revision" of the Plan under applicable securities exchange governance rules.
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(c) The Committee will have full and complete authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any Award Agreement made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan; it being the intention of the Plan that the Committee have the utmost authority and discretion permitted by law in making decisions and performing its other functions under the Plan.
(d) Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.
(e) In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the Articles of Incorporation and By-laws of the Company, and applicable state corporate law.
6.3 No Repricing or Exchange. Notwithstanding the authority set forth in Section 6.2, in no event shall the Committee have the power to cancel outstanding Options or SARs for the purpose of repricing, substituting for another Award, or otherwise replacing or re-granting such Options or SARs with an exercise price that is less than the exercise price of the original Option or SAR, unless such action is approved by the Company's shareholders. For the avoidance of doubt, an adjustment to the Exercise Price made in accordance with Section 4.2(f) or as a result of a substitution pursuant to Section V shall not be considered a re-pricing for purposes of this Section 6.3.
6.4 Delegation by the Committee.
(a) Except to the extent prohibited by applicable law or the applicable rules of a securities exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including a subcommittee consisting of one or more members of the Board or officers or employees of the Company to grant Awards to persons who are not "officers" of the Company (within the meaning of Rule 16a-1 under the Exchange Act) or Independent Directors, subject to such restrictions and limitations as the Committee may specify and to the requirements of the Florida Business Corporation Act. The acts of any such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any Awards so granted.
(b) The Committee may also delegate the administration of the Plan to one or more officers or employees of the Company, and such administrator(s) may have the authority to administer the Plan, including to: (i) execute and distribute Award Agreements, (ii) maintain records relating to Awards, (iii) process or oversee the issuance of Stock under Awards, (iv) interpret and administer the terms of Awards, and (v) take such other actions as may be necessary or appropriate for the administration of the Plan and of Awards under the Plan. In no event shall any such administrator be authorized to (w) grant Awards under the Plan (except in connection with any delegation made by the Committee pursuant to Section 6.4(a), (x) take any action with respect to Awards held by "officers" of the Company (within the meaning of Rule 16a-1 under the Exchange Act) or Independent Directors, (y) take any action inconsistent with Section 409A of the Code, or (z) take any action inconsistent with applicable provisions of the Florida Business Corporation Act. Any action by any such administrator within the scope of its delegation shall be deemed for all purposes to have been taken by the Committee and, except as otherwise specifically provided, references in this Plan to the Committee shall include any such administrator.
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(c) Any of the allocations or delegations described in this Section 6.4 may be revoked by the Committee at any time. In the event of any delegations described in this Section 6.4, the term expiring"Committee", as used herein, shall include any persons so delegated to the extent of such delegation.
6.5 Awards to Independent Directors. Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards to Independent Directors or administer the Plan with respect to such Awards. In any such case, the Board shall have all the authority and responsibility granted to the Committee herein.
6.6 Information to be Furnished to Committee. The Company and Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Subsidiaries as to an employee's or Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.
6.7 Limitation of Liability. The Committee, each member thereof, and any other person acting pursuant to authority delegated by the Committee shall be entitled, in good faith, to rely or act upon any report or other information furnished by any officer or employee of the Company, the Company's independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee or any other person acting pursuant to authority delegated by the Committee, and any officer or employee of the Company acting at the next annual meetingdirection or until his successor has been duly elected and qualified:
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Please Mark Here for Address Change or Comments ¨
SEE REVERSE SIDE
2. Approvalon behalf of the non-binding, advisory vote on executive compensation.Committee or other delegee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
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3. Recommendation on the frequency of future advisory votes on executive compensation. 6.8
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4. Ratification Indemnification. Each person who is or shall have been a member of the appointmentCommittee or of PricewaterhouseCoopers LLPthe Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or By-laws, as World Fuel’s independent registered public accounting firm fora matter of law, or otherwise, or any power that the 2017 fiscal year.Company may have to indemnify them or hold them harmless.
6.9 Code Section 409A.
(a) If any Award constitutes a "nonqualified deferred compensation plan" under Section 409A of the Code (a "Section 409A Plan"), then the Award shall be subject to the following additional requirements, if and to the extent required to comply with Section 409A of the Code:
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(i) Payments under the Section 409A Plan may not be made earlier than (A) the Participant's "separation from service", (B) the date the Participant becomes "disabled", (C) the Participant's death, (D) a "specified time (or pursuant to a fixed schedule)" specified in the Award Agreement at the date of the deferral of such compensation, (E) a "change in the ownership or effective control of the corporation, or in the ownership of a substantial
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portion of the assets of the corporation", or (F) the occurrence of an "unforeseeable emergency";
Note. Such (ii) The time or schedule for any payment of the deferred compensation may not be accelerated, except to the extent provided in applicable Treasury Regulations or other business asapplicable guidance issued by the Internal Revenue Service;
(iii) Any elections with respect to the deferral of such compensation or the time and form of distribution of such deferred compensation shall comply with the requirements of Section 409A(a)(4) of the Code;
(iv) In the case of any Participant who is a "specified employee", a distribution on account of a "separation from service" may properly comenot be made before the Annual Meetingdate which is six months after the date of the Participant's "separation from service" (or, if earlier, the date of the Participant's death); and any postponements or adjournments thereof.
If you plan(v) In the case of any such Awards that are payable upon a Change of Control, notwithstanding any provision of the Plan to attend the Annual Meeting, please markcontrary, the WILL ATTEND box. ¨WILL ATTEND
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Signature should agree with name printed hereon. If stock is heldCompany will not be deemed to have undergone a Change of Control unless the Company has undergone a "change in the nameownership or effective control of more than one person, EACH joint owner should sign. Executors, administrators, trustees, guardians,the corporation, or in the ownership of a substantial portion of the assets of a corporation" within the meaning of Section 409A(a)(2)(A)(v) of the Code.
For purposes of the foregoing, the words and attorneys should indicate the capacityphrases in which they sign. Attorneys should submit powers of attorney.
FOLD AND DETACH HERE
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE PROXY SUBMISSION, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone proxy submission is available through 11:59 p.m. Eastern Time the day prior to Annual Meeting day.
Your Internet or telephone proxy submission authorizes the named proxies to vote your sharesquotations in this Section 6.9 shall be defined in the same manner as those words and phrases are defined for purposes of Section 409A of the Code, and the limitations set forth herein shall be applied in such manner (and only to the extent) as shall be necessary to comply with any requirements of Section 409A of the Code that are applicable to the Award.
(b) Any Award Agreement for any Award that the Committee reasonably determines to constitute a Section 409A Plan, and the provisions of the Plan applicable to that Award, shall be construed in a manner consistent with the applicable requirements of Section 409A, and the Committee, in its sole discretion and without the consent of any Participant, may amend any Award Agreement (and the provisions of the Plan applicable thereto) if you marked, signed and returnedto the extent that the Committee determines that such amendment is necessary or appropriate to comply with the requirements of Section 409A of the Code. Further, in the event that the Plan, any Award Agreement or any Award shall be deemed not to comply with Section 409A of the Code, then neither the Company, the Committee nor its or their designees or agents shall be liable to any Participant or other person for actions, decisions or determinations made in good faith.
SECTION VII
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, and the Board or Committee may, at any time, amend any Award outstanding thereunder, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board; and further provided that any amendment made to comply with applicable law, tax rules, securities exchange rules or accounting rules and adjustments pursuant to Section 4.2(f) shall not be subject to the foregoing limitations of this Section VII. Notwithstanding the foregoing, approval of the Company's shareholders shall be required for any amendment or alteration of the Plan if such shareholder approval is required by any federal or state law or regulation (including without limitation, Rule 16b-3
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under the Exchange Act or the rules of any securities exchange or automated quotation system on which the shares of Stock may then be listed or quoted). Unless otherwise determined by the Committee, any amendments to the Plan will apply prospectively only.
SECTION VIII
GENERAL PROVISIONS
8.1 Tax Withholding. All distributions under the Plan are subject to withholding of all applicable taxes, and the Committee may condition the delivery of any shares or other benefits under the Plan on satisfaction of the applicable withholding obligations. The Committee, in its discretion, and subject to such requirements as the Committee may impose prior to the occurrence of such withholding, may permit such withholding obligations to be satisfied through cash payment by the Participant, through the surrender of shares of Stock which the Participant already owns, through the withholding of shares of Stock that otherwise would have been delivered pursuant to the Award, or through the surrender of shares of Stock to which the Participant is otherwise entitled under the Plan.
8.2 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of participation in the Plan, acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the Stock or amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.
(b) The Plan does not constitute a contract of employment, and selection as a Participant will not give such Participant the right to be retained in the employ or service of the Company or any Subsidiary, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan or any Award Agreement, no Award under the Plan shall confer upon the holder thereof any rights as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.
8.3 No Fractional Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, an additional share of Stock or Award, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
8.4 Governing Law. The Plan and all Award Agreements shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida.
8.5 Severability. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.
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8.6 Successors. All of the obligations of the Company under the Plan and any Award Agreement shall be binding upon any successor corporation or organization resulting from the merger, amalgamation, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.
8.7 Gender and Number, Titles and Headings. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control.
SECTION IX
DEFINED TERMS
In addition to the other definitions contained herein, the following definitions shall apply:
(a) Affiliate. The term "Affiliate" means (i) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and/or (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee.
(b) Award. The term "Award" means any award or benefit granted under the Plan, including, without limitation, the grant of Options, SARs, Stock Unit Awards, Performance Compensation Awards, Restricted Stock Awards, Restricted Stock Unit Awards, Other Stock-Based Awards and Cash Incentive Awards.
(c) Award Agreement. The term "Award Agreement" means the written agreement, in a form determined by the Committee from time to time, between the Company and a Participant that evidences the grant of an Award and sets out the terms and conditions of an Award or Prior Plan Award.
(d) Board. The term "Board" shall have the meaning set forth in Section 1.2.
(e) Cash Incentive Award. The term "Cash Incentive Award" shall have the meaning set forth in Section 3.1(a).
(f) Cause. The term "Cause" (i) shall have the meaning set forth in an Award Agreement or in an individual employment agreement between the Participant and the Company, if any or (ii) if there is no definition set forth in an Award Agreement or applicable employment agreement, means:
(A) the material failure by the Participant to perform, in a reasonable manner, his or her duties as assigned by the Company or any Subsidiary (or any successor company);
(B) any material violation or material breach by the Participant of his or her employment agreement, consulting or other similar agreement with the Company or any Subsidiary (or successor company), if any;
(C) any material violation or material breach by the Participant of any non-competition, non-solicitation, non-disclosure and/or other similar agreement with the Company or any Subsidiary (or successor company);
(D) any material violation or material breach by the Participant of the Company's Code of Conduct or any other Company (or successor company) policy;
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(E) any act by the Participant of material dishonesty or fraud that injures the reputation or business of the Company or any Subsidiary (or successor company); or
(F) the conviction of or entry of a plea of guilty or nolo contender to a felony or a crime involving moral turpitude.
The good faith determination by the Committee of whether the Participant's employment or service was terminated for "Cause" shall be final and binding for all purposes hereunder.
(g) Change of Control. For purposes of this Plan, a "Change of Control" means any one of the following events:
(i) any person or "group" as defined in Section 13(d)(3) of the Exchange Act, but excluding any employee benefit plan or plans of the Company and its Subsidiaries, becomes the beneficial owner, directly or indirectly, of thirty percent (30%) or more of the combined voting power of the Company's outstanding voting securities ordinarily having the right to vote for the election of directors of the Company; provided, however, that, for purposes of this subparagraph (i), any acquisition directly from the Company shall not constitute a Change of Control; or
(ii) the consummation of any merger, consolidation, reorganization or similar event of the Company or any of its Subsidiaries, as a result of which the holders of the voting stock of the Company immediately prior to such merger, consolidation, reorganization or similar event do not directly or indirectly hold at least fifty-one percent (51%) of the aggregate voting power of the capital stock of the surviving entity; or
(iii) the individuals who, as of the Effective Date, constitute the Board of Directors of the Company (the "Board" generally and as of the Effective Date the "Incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board, or in the case of the consummation of a merger or consolidation of the Company, do not constitute or cease to constitute at least two-thirds (2/3) of the board of directors of the surviving company (or in a case where the surviving corporation is controlled, directly or indirectly by another corporation or entity, do not constitute or cease to constitute at least two-thirds (2/3) of the board of such controlling corporation or do not have or cease to have at least two-thirds (2/3) of the voting seats on any body comparable to a board of directors of such controlling entity, or if there is no body comparable to a board of directors, at least two-thirds (2/3) voting control of such controlling entity); provided that any person becoming a director (or, in the case of a controlling non-corporate entity, obtaining a position comparable to a director or obtaining a voting interest in such entity) subsequent to the Effective Date whose election, or nomination for election, was approved by a vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest), shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or
(iv) there is a liquidation or dissolution of the Company or all or substantially all of the assets of the Company have been sold.
The term "Change of Control" shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.
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(h) Code. The term "Code" means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor provision of the Code.
(i) Committee. The term "Committee" shall have the meaning set forth in Section 1.2.
(j) Company. The term "Company" shall have the meaning set forth in Section 1.1.
(k) Effective Date. The term "Effective Date" means the date on which this Plan is approved by shareholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the requirements of Section 422 of the Code, Rule 16b-3 under the Exchange Act (if applicable), applicable requirements under the rules of any securities exchange or automated quotation system on which the Stock may be listed or quoted, and any other laws, regulations and obligations of the Company applicable to the Plan.
(l) Eligible Person. The term "Eligible Person" means any employee, officer or member of the board of directors of the Company or a Subsidiary, or any consultant or other person who performs services for the Company or any Subsidiary, including any prospective employee, officer, member or consultant.
(m) Exchange Act. The term "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute thereto, and the regulations promulgated thereunder.
(n) Exercise Price. The term "Exercise Price" shall have the meaning set forth in Section 2.2.
(o) Fair Market Value. The term "Fair Market Value" means (i) with respect to any property other than shares of Stock, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (ii) with respect to a share of Stock as of any date,
(A) if the principal market for the Stock is a national securities exchange or the NASDAQ stock market, then the "Fair Market Value" as of that date shall be the closing sales price of the Stock on the day that the Award is granted on the principal exchange or market on which the Stock is then listed or admitted to trading;
(B) if sale prices are not available or if the principal market for the Stock is not a national securities exchange and the Stock is not quoted on the NASDAQ stock market, the average between the highest bid and lowest asked prices for the Stock on the day that the Award is granted as reported on the NASDAQ OTC Bulletin Board Service or by the National Quotation Bureau, Incorporated or a comparable service; and
(C) if the day is not a trading day, and as a result, paragraphs (A) and (B) next above are inapplicable, the Fair Market Value of the Stock shall be determined as on the most recent trading day prior to the date the Award is granted. If paragraphs (A) and (B) next above are otherwise inapplicable, then the Fair Market Value of the Stock shall be determined in good faith by the Committee.
(p) Incentive Stock Option. The term "Incentive Stock Option" shall have the meaning set forth in Section 2.1(a).
(q) Independent Director. The term "Independent Director" shall have the meaning set forth in Section 6.1.
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(r) Non-Qualified Stock Option. The term "Non-Qualified Stock Option" shall have the meaning set forth in Section 2.1(a).
(s) Option. The term "Option" shall have the meaning set forth in Section 2.1(a).
(t) Other Stock-Based Award. The term "Other Stock-Based Award" shall have the meaning set forth in Section 3.1(b).
(u) Participant(s). The term "Participant(s)" shall have the meaning set forth in Section 1.2.
(v) Performance Compensation Award. The term "Performance Compensation Award" shall have the meaning set forth in Section 3.1(c).
(w) Performance Goal(s). The term "Performance Goal(s)" means the measures set forth in Section 3.3(a).
(x) Performance Period. The term "Performance Period" means one or more periods of time, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining the granting or vesting of a Performance Compensation Award.
(y) Plan. The term "Plan" shall have the meaning set forth in Section 1.1
(z) Prior Plans. The term "Prior Plans" shall mean the World Fuel Services Corporation 2016 Omnibus Plan, as amended and restated (the "2016 Plan") and the 2006 Omnibus Plan, as amended and restated (the "2006 Plan," together with the 2016 Plan, the "Prior Plans").
(aa) Prior Plan Award. The term "Prior Plan Award" shall mean any award or benefit granted under a Prior Plan, including, without limitation, the grant of any cash or equity-based awards with rights similar to an Award granted hereunder, that is outstanding as of the Effective Date.
(bb) Restricted Stock Award. The term "Restricted Stock Award" shall have the meaning set forth in Section 3.1(d).
(cc) Restricted Stock Unit Award. The term "Restricted Stock Unit Award" shall have the meaning set forth in Section 3.1(e).
(dd) SAR. The term "SAR" shall have the meaning set forth in Section 2.1(b).
(ee) Stock Appreciation Right. The term "Stock Appreciation Right" shall have the meaning set forth in Section 2.1(b).
(ff) Stock Unit Award. The term "Stock Unit Award" shall have the meaning set forth in Section 3.1(f).
(gg) Subsidiary. The term "Subsidiary" means any company during any period in which it is a "subsidiary corporation" (as that term is defined in Section 424(f) of the Code) with respect to the Company.
(hh) Substitute Awards. The term "Substitute Awards" means Awards granted or Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
(ii) Stock. The term "Stock" means shares of common stock, par value $.01 per share, of the Company.
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VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on May 21, 2020. Have your proxy card.
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card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you submitwould like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. WORLD FUEL SERVICES CORPORATION 9800 NORTHWEST 41ST STREET MIAMI, FL 33178 ATTN: CORPORATE SECRETARY VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on May 21, 2020. Have your proxy by Internet or by telephone,card in hand when you do NOT need to mail back your proxy card.
To submit a proxy by mail, mark,call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For Withhold For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the AllAll The Board of Directors recommends you vote FOR all listed nominees in Proposal 1. nominee(s) on the line below. 0 0 0 1. Election of Directors Nominees 01) Michael J. Kasbar 06) John L. Manley 02) Kanwaljit Bakshi 07) Stephen K. Roddenberry 03) Jorge L. Benitez 08) Paul H. Stebbins 04) Sharda Cherwoo 05) Richard A. Kassar The Board of Directors recommends you vote FOR proposals 2, 3 and 4. For 0 0 0 Against 0 0 0 Abstain 0 0 0 2. Approval of the non-binding, advisory vote on executive compensation. 3. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered certified public accounting firm for the 2020 fiscal year. Approval of the World Fuel Services Corporation 2020 Omnibus Plan. 4. NOTE: In their discretion, the proxies are authorized to vote upon any other matter coming before the meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR ALL NOMINEES AND ON ALL OTHER PROPOSALS AS DESCRIBED IN THE PROXY STATEMENT. 0 For address change/comments, mark here. (see reverse for instructions) Please indicate if you plan to attend this meeting Yes 0 No 0 Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000453881_1 R1.0.1.18
World Fuel’s proxy statementImportant Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and annual reportAnnual Report on Form 10-K are available online at www.proxyvote.com.www.proxyvote.com World Fuel Services Corporation 9800 Northwest 41st Street Miami, Florida 33178 This proxy is solicited by the Board of Directors for use at the Annual Meeting of Shareholders on May 22, 2020 at 8:00 AM Eastern Time to be held at our offices located at 9800 Northwest 41st Street, Miami, Florida 33178. The shares of stock you hold in your account will be voted as you specify on the reverse side. If no choice is specified, the proxy will be voted "FOR" the Nominees listed in Proposal 1 and "FOR" Proposals 2, 3 and 4. By signing the proxy, you revoke all prior proxies and appoint each of Michael J. Kasbar and Paul H. Stebbins with full power of substitution, to vote your shares at the Annual Meeting or any adjournments or postponements thereof, with all the powers that you would possess if personally present, upon and in respect of the matters shown on the reverse side, with discretionary authority as to any and all other matters that may properly come before the meeting. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side 0000453881_2 R1.0.1.18
