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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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| West Pharmaceutical Services, Inc. | ||||
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CEO Letter |
Dear Shareholders,
I am pleasedAt West, our mission is to reportimprove patient lives. We do this through the products we offer to our customers—the world's leading pharmaceutical and biotechnology companies. However, supporting patient health means more to us than simply delivering products to the market, especially at this time across the globe as we deal with the COVID-19 pandemic.
Our team of more than 8,000 people across the globe knows that West continuesbehind every product we make, is a patient for whom that product helps deliver life-saving medicines or treatments. This patient-first focus drives our team to build on our important rolepursue excellence in the healthcare industry. Our market-led strategyquality of everything we produce, to offer integrated containmentserve as scientific and delivery solutionstechnical experts in our field, and to operate with integrity every day. As a result, our customers continue to seek West as a supplier of choice, and in 2019, our team's work resulted in another year of strong growth for injectable therapies, tailoredour business.
We launched several new products to address the unique needs of our customers, while offering the best technicalbiologic, generic and scientific support that these products and services require, has once again translated into a year of sustained growth and profitability, as well as healthy shareholder returns.
West manufacturespharmaceutical customers. With more than 41 billion components each year, across 27 manufacturing sites. Two years ago,150 patents issued to West in 2019 alone, we began a process to globalize our operations to ensure we maximize our returns on invested capital and take full advantage of this global footprint to drive improved profitability and better service to customers. Through lean manufacturing, a streamlined supply chain and improved vendor management,know we are already seeing significant improvements from these efforts,making good progress to develop and deliver the next generation of packaging and drug delivery advancements that will drive our future growth. Our scientific and regulatory teams supported our customers throughout the year, by delivering more than 100 technical conference presentations, peer-reviewed articles and book chapters. Operating with more to come. Thisthe highest levels of quality, safety and service is all-the-more impressive when you considera key priority for our team has achieved these results while maintaining best-in-classteams across our global enterprise. We created greater efficiency by further optimizing our manufacturing footprint this past year, and we maintained the industry-leading quality levels and improving our recordable injury rate across the Company—boasting the lowest injury levels in West's history.
We are grateful to our Board of Directors for their support and guidance. Under the leadership of our chairman, Patrick Zenner, they have partnered with our Management team as we continue to refine our strategy, and they have challenged us along the way to ensurewhich we are addressing internal and external risksknown, while managing towardsimproving the safety record for our long-term success. We are fortunate to have a Board rich with diverse experience across a number of industries, with deep insight into the delivery of healthcare.teams.
In 2018,2019, we were proud to be recognized for our commitment to the communities in which we live and work. As will be further detailed in our 20182019 Corporate Responsibility ("CR") Report to(to be published later this year,year) we have made significant improvements across the six pillars of our CR strategy: Compliance and Ethics; Philanthropy; Health and Safety; Diversity and Talent; Environmental Sustainability; and Quality. Our team's success in these areas was noted byNewsweek, which named West to its America's Most Responsible Companies 2020 list, as well as byInvestor's Business Daily, which named West one of its 50 Best ESG (Environmental, Social and Governance) Companies.
Our Board of Directors, led by Chair Patrick Zenner, is integrally engaged in our environmental sustainability efforts, which were recognized by the CPHI with their 2018 Excellencework to continually refine our strategy and in Pharma: Corporate Social Responsibility Award. Our effortsoverseeing how we manage our risks. We are fortunate to support the community through our philanthropic activities also received recognition with the CEO Connection's Mid-Market Social Impact Award.
The team at West is committedhave a board diverse in thought, experience and background, to achieving our vision to serve as the world leaderhelp guide us. As in the integrated containment and delivery of injectable medicines. Weyears past, we have worked to ensure the performance of our team is reflected in their compensation and awards framework and is aligned with the business results we have delivered. The detailed pay-for-performance plans of our executives, which in the past have received more than 9697 percent support from you, our shareholders, are detailed in this Proxy Statement for your review.Statement.
WithAs we look to the support of our Board, and the continued investment of our shareholders,future, we feel confident that we are well-positioned to continue to grow our business, by expanding the products and services we provide to customers, while operating with greater efficiency and embracing technology and digital advances. All of this will result in our ability to more effectively and sustainably fulfill our vision,mission to improve patient lives as we stand by your side during these difficult times. On behalf of West, please stay safe and our everyday commitment to the customers and patients we work to serve.well.
Thank you for your continued support of West.
Regards,
Eric M. Green
President and CEO& Chief Executive Officer
West Pharmaceutical Services, Inc. |
530 Herman O. West Drive
Exton, Pennsylvania 19341
March 22, 201925, 2020
The 2019It is expected that the 2020 Annual Meeting of Shareholders of West Pharmaceutical Services, Inc. will be held at our corporate headquarters on:
Tuesday, May 7, 20195, 2020
9:30 AM, local time
530 Herman O. West Drive
Exton, Pennsylvania 19341
With the global COVID-19 pandemic, and in light of current restrictions on travel and gatherings around the globe, including in the area surrounding our headquarters in Exton as of the date of this letter, West is monitoring whether the 2020 Annual Meeting will be held in person or whether we will use an alternate means of participation in the Meeting. Changes may include a change to the the date, time or venue of the meeting and/or holding a virtual meeting in accordance with Pennsylvania law. Given the fluidity of the situation, we will make a decision to change the closer to the date of the Annual Meeting. The Securities Exchange Commission ("SEC") has announced guidance permitting these changes, as long as they are announced via a press release and publicly filed with the SEC. If West decides to hold a virtual meeting, additional details will be timely provided to enable shareholder participation.
The items of business are:
Shareholders of record of West common stock at the close of business on March 12, 201910, 2020 are entitled to notice of, and to vote at, the meeting and any postponements or adjournments thereof.
| George L. Miller | ||
| Sr. Vice President, General Counsel and Corporate Secretary |
Important Notice Regarding the Internet Availability of Proxy Materials for the Shareholder Meeting on May |
This Notice of Annual Meeting and Proxy Statement ("Notice") and the 20182019 Annual Report on Form 10-K ("20182019 Annual Report") are available on our website at:
investor.westpharma.com/financial-information/annual-reports-and-proxy
Your Vote is Important |
Please vote as promptly as possible electronically via the Internet or by completing, signing, dating and returning the proxy card or voting instruction card.
Table of Contents |
Proxy Summary | 1 | |
Election of Directors | 6 | |
Director Nominations, Skills and Criteria | 6 | |
Board Commitment to Diversity | 7 | |
Board Refreshment and Retirement Age | ||
Board Evaluation Process | 8 | |
Proposal 1—Election of Directors | 9 | |
Director Nominee Biographies | 9 | |
Board and Director Information and Policies | 15 | |
| 15 | |
Chair of the Board of Directors | 15 | |
Committees | 16 | |
The Board's Role in Risk Oversight | 18 | |
Executive Officer Succession Planning | 19 | |
CEO Evaluation Process | 19 | |
Corporate Responsibility | 20 | |
| 20 | |
Communicating with the Board | 21 | |
Director Education and Onboarding | 21 | |
Corporate Governance Documents and Polices | 22 | |
Corporate Governance Principles | 22 | |
Ethics and Code of Business Conduct | 22 | |
Director Independence | ||
Related Person Transactions and Procedures | 23 | |
Political Contributions and Lobbying | 23 | |
Anti-Hedging and Pledging Policies | 23 | |
Share Ownership Goals | ||
Stock Ownership | ||
Director Compensation | ||
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Outstanding Director Stock Awards at Year-End | ||
Director Deferred Compensation Plan at Year-End | ||
Compensation Committee Report | ||
Compensation Discussion and Analysis | ||
Executive Summary: | ||
Governance and Compensation | ||
Say-on-Pay | ||
Executive Compensation Program Design | ||
Factors Used in the Compensation Process | ||
Business Segment Group | ||
Impact of Business Results on our | ||
Incentive Compensation: Important Facts about | ||
Our Annual Incentive Compensation | ||
Financial Measures and Adjustments | ||
Our Long-Term Equity Incentive Compensation | ||
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Other Compensation Practices | ||
Compensation Tables | ||
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Outstanding Equity Awards at Year-End | ||
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Payments on Disability | ||
Payments on Death | 62 | |
Estimated Payments Following Termination | 62 |
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Estimated Additional Severance Payments Table | ||
Payments on Termination in Connection with a Change-in-Control | ||
CEO Pay Ratio | ||
Proposal 2—Advisory Vote to Approve Named Executive Officer Compensation | ||
Proposal 3—Approval of Amendment to our Articles of Incorporation to Increase the Number of Authorized Shares of Common Stock | 67 | |
Independent Auditors and Fees | ||
Audit Committee Report | ||
Proposal | ||
Voting and Other Information |
PROXY SUMMARY 
Proxy Summary |
Below is a summary of important information you will find in this Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
Summary of Shareholder Voting Matters |
Our Board of Directors is soliciting your vote on matters that will be presented at our 20192020 Annual Meeting of Shareholders and at any adjournment or postponement thereof. This Proxy Statement contains information to assist you in voting your shares.
The Notice, the accompanying proxy card or voting instruction card and our 20182019 Annual Report, including our annual report wrap, are being mailed starting on or about March 22, 2019.25, 2020.
| | Recommended | | ||||||||||
| Proposal 1: Election of Directors | Page 9 | ✓ | FOR | |||||||||
Mark A. Buthman | Deborah L. V. Keller | Each Nominee | ||||||||||
| William F. Feehery | Myla P. Lai-Goldman | |||||||||||
| Douglas A. Michels | ||||||||||||
| Eric M. Green | Paolo Pucci | |||||||||||
| Thomas W. Hofmann | ||||||||||||
| Paula A. Johnson | ||||||||||||
| | | | | | | | | | | | | |
| Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation | Page | ✓ | FOR | |||||||||
| | | | | | | | | | | | | |
| Proposal 3: Approval of Amendment to our Amended and Restated Articles of Incorporation to Increase the Number of Authorized Shares of Common Stock from 100 Million to 200 Million | Page 67 | ✓ | FOR | |||||||||
| | | | | | | | | | | | | |
| Proposal 4: Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for | Page | ✓ | FOR | |||||||||
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Our market-led strategy focusing on the containment and delivery of injectable medicines and success in globalizingto globalize our operations is evident in our 2018 performance and is driving our outlookaddress the unique needs of the distinct customer groups we serve with a market-led focus, has delivered another strong year of growth for 2019 and beyond. Thethe Company. Some of the trends we are seeing in the pharmaceutical and biotech industry also supportare driving our business today, and will fuel our long-term growth strategy:strategy, including the following:
Each year, we have seen growing interest and demand for our high-value product offerings, delivery device platforms and our contract-manufacturing services. Customers are also coming to West for our scientific expertise and insight into the regulatory landscape that governs our industry. This demand has translated into positive results for the business. In 2018,2019, we reported:
20192020 Annual Meeting and Proxy Statement | 1
PROXY SUMMARY
As we look to 2019, we expect to grow sales and expand profit margins in line with our long-term financial construct, with full-year 2019 constant-currency organic sales growth in a range between 6% and 8% and full-year 2019 operating profit margin expansion of approximately 100 basis points. Please refer to our Earnings Release filed on February 14, 201913, 2020 on Form 8-K for a full reconciliation of our reported results to the adjusted (non-GAAP)(non-U.S. GAAP) financial measures referred to above.
Long-Term Shareholder Return |
If we examineExamining our results over the past five years, West has consistently delivered against its objectives, posting long-term sales growth and steady EPS improvements. The Company has also outperformed both our peers and the market overall in Total Shareholder Return ("TSR") during this same period.
Looking to the future, we expect West's organic sales growth and margin expansion to be further supported by strong underlying market drivers. West's reputation as a scientific and technical leader in the industry, combined with the breadth and depth of our product and service portfolio as well as our unsurpassed global footprint, allows us to serve as a global partner to customers across the injectable drug and medical device landscape. Our officers, employees and directors are focused on maintaining and growing the important role we play as a leader in the healthcare industry.
Certain forward-looking statements are included in this Proxy Statement. They use such words as "will," "continue," "estimate," "expect," "looking to the future," and other similar terminology. These statements reflect Management's current expectations regarding future events and operating performance and speak only as of the date of this document. These statements are based on Management's beliefs and assumptions, current expectations, estimates, and forecasts. There are many factors that can influence the Company's future results that are beyond the ability of the companyCompany to control or predict. Because of these known or unknown risks or uncertainties, actual results could differ materially from past results and those expressed or implied in any forward-looking statement. For a description of factors that could cause the Company's future results to differ from those expressed in any such forward-looking statements, see Item 1A, entitled "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended December 31, 20182019 and as revised or supplemented by our quarterly reports on Form 10-Q or Form 8-K. Except as required by law or regulation, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.
2 | 20192020 Annual Meeting and Proxy Statement
PROXY SUMMARY
Our Director Nominees |
You are being asked to vote on the directors nominated below. John Weiland, who retired as President and Chief Operating Officer of C. R. Bard, Inc. following its acquisition by Becton, Dickinson and Company in 2017, and who has been a director since 2007 has decided to retire from our Board after 12 years of outstanding service. Mr. Weiland's leadership, first as Chairman of the Compensation Committee, and later as Chairman of the Finance Committee, has been instrumental to our success. Because Mr. Weiland is not standing for reelection, our Board will also be reduced from 11 to 10 members as of his retirement. All directors are elected annually by a majority of votes cast, except in the case of a contested election where the number of nominees exceeds the number of open positions, in which case plurality voting is used. The charts below summarize some key characteristics of the members of our Board of Directors. All data is as of March 22, 2019.25, 2020. Detailed information about each director's background and areas of expertise can be found beginning on page 9.
| NAME | AGE | DIRECTOR SINCE | PRIMARY OCCUPATION | CURRENT COMMITTEE MEMBERSHIP | EXPERIENCE & EXPERTISE | INDEPENDENT | | NAME | AGE | DIRECTOR SINCE | PRIMARY OCCUPATION | CURRENT COMMITTEE MEMBERSHIP | EXPERIENCE & EXPERTISE | INDEPENDENT | | |||||||||||||||||
| Mark A. Buthman | 58 | 2011 | Retired EVP & CFO, Kimberly-Clark | Compensation, Nominating & Corp Governance, Finance |   |  | Mark A. Buthman | 59 | 2011 | Retired EVP & CFO, Kimberly-Clark | Compensation, Nominating & Corp Governance, Finance |   |  | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| William F. Feehery | 48 | 2012 | President, Industrial Biosciences, DowDuPont | Compensation, Audit, Nominating & Corp Governance (Chair) |      | | William F. Feehery | 49 | 2012 | CEO, Certara | Compensation, Audit, Nominating & Corp Governance (Chair) |      | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eric M. Green | 49 | 2015 | President & CEO, West Pharmaceutical Services, Inc. |  | Robert F. Friel | 64 | 2020 | Retired CEO and Chair, PerkinElmer, Inc. | Audit, Finance |  | | |||||||||||||||||||||
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| Thomas W. Hofmann | 67 | 2007 | Retired Sr. VP & CFO, Sunoco, Inc. | Compensation, Audit (Chair) | | | Eric M. Green | 50 | 2015 | President & CEO, West Pharmaceutical Services, Inc. | | |||||||||||||||||||||
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| Paula A. Johnson | 59 | 2005 | President, Wellesley College | Innovation & Technology, Nominating & Corp Governance | | | Thomas W. Hofmann | 68 | 2007 | Retired Sr. VP & CFO, Sunoco, Inc. | Compensation, Audit (Chair) | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deborah L. V. Keller | 56 | 2017 | Principal, Black Frame Advisors, LLC & Retired CEO, Covance Drug Development | Innovation & Technology, Audit, Finance | | | Paula A. Johnson | 60 | 2005 | President, Wellesley College | Innovation & Technology, Nominating & Corp Governance | | | |||||||||||||||||||
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| Myla P. Lai-Goldman | 61 | 2014 | Executive Chair GeneCentric Therapeutics, Inc. | Innovation & Technology (Chair), Finance | | | Deborah L. V. Keller | 57 | 2017 | Principal, Black Frame Advisors, LLC & Retired CEO, Covance Drug Development | Innovation & Technology, Audit, Finance | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Douglas A. Michels | 62 | 2011 | Retired President & CEO, OraSure Technologies, Inc. | Compensation (Chair), Audit | | | Myla P. Lai-Goldman | 62 | 2014 | Executive Chair GeneCentric Therapeutics, Inc. | Innovation & Technology (Chair), Finance | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Paolo Pucci | 57 | 2016 | CEO, ArQule, Inc. | Innovation & Technology, Finance (Chair) | | | Douglas A. Michels | 63 | 2011 | Retired President & CEO, OraSure Technologies, Inc. | Compensation (Chair), Audit | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Patrick J. Zenner | 72 | 2002 | Chairman, West; Retired Pres. & CEO, Hoffmann-La Roche Inc. | Nominating & Corp Governance | | | Paolo Pucci | 58 | 2016 | Retired CEO, ArQule, Inc. | Innovation & Technology, Finance (Chair) | | | |||||||||||||||||||
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| Patrick J. Zenner | 73 | 2002 | Chair, West Pharmaceutical Services; Retired Pres. & CEO, Hoffmann-La Roche Inc. | Nominating & Corp Governance | | | ||||||||||||||||||||||||||
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| Financial | | Healthcare Industry | | International Experience | | Global Operations/ Supply Chain | | Science & Technology | | Marketing | | Mergers & Acquisitions | | Regulatory |
20192020 Annual Meeting and Proxy Statement | 3
PROXY SUMMARY
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| | Corporate Governance Features | | ||||
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| Annual director elections with majority voting in uncontested elections | | |||||
Active shareholder engagement program on corporate governance and compensation matters | ||||||
| Significant risk management oversight by the Board, including an enhanced enterprise risk management process | | ||||
Board is led by an Independent Non-Employee | ||||||
| Board Commitment to Corporate Responsibility ("CR"), including Compliance and Ethics, Philanthropy, Diversity and Inclusion, Health and Safety, Environmental Sustainability and | | ||||
| Effective self-assessment and evaluation procedures that include individual interviews with Board members | | ||||
Annual evaluation of all directors to ensure the right mix of experience and diversity of opinion and background | ||||||
| Robust executive officer and Board succession planning | | ||||
Robust curriculum of topics regularly presented to the Board to aid in their understanding of our business, the markets in which we operate and the Board's responsibilities in respect of all our stakeholders | ||||||
| Maintain and enforce effective executive and board stock ownership guidelines | | ||||
Prohibition on pledging or hedging of securities by members of the Board and executive officers | ||||||
| | | | | | | |
| | Board Governance Activities and Accomplishments | | ||||
| Approved and monitored Management's enterprise strategy | | |||||
Reviewed performance of Chief Executive | ||||||
| Oversaw Management's human resources strategy to create a pipeline of talent to ensure the continuance of first-rate teams | | ||||
Implementation of enhanced Enterprise Risk Management Program | ||||||
| Reviewed the Company's capital allocation strategy, increasing the annual dividend and continuing our strategic share buyback program | | ||||
Oversaw significant improvements in safety and quality | ||||||
| Multiple awards and international recognition of our CR, philanthropic and sustainability efforts | | ||||
| All directors attended more than | | ||||
All directors received greater than 99.4% support from shareholders in 2019 | ||||||
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4 | 20192020 Annual Meeting and Proxy Statement
PROXY SUMMARY
|
| | Executive Compensation Program Features | | ||||
| Strong linkage between pay and performance and support by shareholders regarding our performance metrics, targets and goals as evidenced by | | |||||
Total direct compensation ("TDC"), which is the sum of an officer's base salary, short-term incentive target and long-term incentive target, targeted at the median level by our Compensation Committee | ||||||
| Annual incentive plan ("AIP") based on EPS, | | ||||
Long-term incentive ("LTI") plan utilizing stock options and performance share units based upon return on invested capital ("ROIC") and sales consolidated annual growth rate ("CAGR") to ensure long-term profitable growth and alignment with shareholders' interests | ||||||
| Usage of two comparator groups to ensure pay and performance are aligned, and enable us to attract and retain the best talent | | ||||
Robust share ownership guidelines for all officers and directors | ||||||
| All Change-in-Control ("CIC") agreements for our current officers contain double-trigger provisions requiring termination of the executive following a CIC before payments are made. These payments also | | ||||
Strong incentive compensation recovery (clawback) and anti-hedging and anti-pledging policies | ||||||
| Use of tally sheets, realizable pay analysis, performance metric difficulty analysis and similar tools to ensure our compensation programs remain linked to performance and consistent with Board expectations | | ||||
Engagement with shareholders during the year regarding executive pay and performance issues | ||||||
| | | | | | | |
| | Executive Compensation Actions and Results | | ||||
| Reaffirmed West's compensation philosophy of pay-for-performance that aligns executives' incentive compensation with our performance and with stakeholder interests on both a short- and long-term basis without promoting excessive risk | | |||||
| Conducted | | ||||
Conducted formal: (1) pay-for-performance review of CEO compensation versus peers, and (2) realizable pay analysis, to assess whether Company performance and CEO realizable pay are aligned over a given period | ||||||
| Our | | ||||
Our LTI plan Performance Share Units ("PSUs") for the | ||||||
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20192020 Annual Meeting and Proxy Statement | 5
ELECTION OF DIRECTORS
Election of Directors |
Director Nominations, Skills and Criteria |
Candidates for nomination to our Board are recommended by the Nominating and Corporate Governance Committee ("NCGC") in accordance with the Committee's charter, our Amended and Restated Articles of Incorporation, our Bylaws and our Corporate Governance Principles. All persons recommended for nomination to our Board, regardless of the source of the recommendation, are evaluated by this Committee with the Board determining the final slate of nominees.
The Board and the NCGC consider, at a minimum, the following factors in recommending potential new Board members or the continued service of existing members:
When reviewing nominees, the NCGC considers whether the candidate possesses the qualifications, experience and skills it considers appropriate in the context of the Board's overall composition and needs. The NCGC also values diversity on the Board in the director nominee identification and nomination process.
To assist it with its evaluation of the director nominees for election at the 20192020 Annual Meeting, the NCGC considered the factors listed above and used a skills matrix highlighting the experience of our directors in areas such as industry experience, international experience (including assignments overseas), global operations or supply chain leadership, financial literacy, and independence. InWe routinely evaluate the past two years, weskills needed and have also added skills such as,relating to marketing (including e-commerce), mergers and acquisitions, regulatory and cyber/digital experience, to our skills matrix.in recent years.
The NCGC also reviews annually with the Board the size and composition of the Board and its committees to determine the qualifications and areas of expertise needed to further enhance the composition of the Board. In determining whether to add new directors, we review our skills matrix annually to determine the targeted skills that we believe will most significantly enhance the diversity of experience and expertise on our Board. We balance the current skill sets versus the desired optimal mix of skill sets given their relative importance to the Company.
Board members are expectedWest's mission is to support Management to drive successimprove patient lives by being the world leader in integrated containment and delivery of injectable medicines, which rests on our current strategic plans, which includes:foundation values of: Passion for Customers, Leadership in Quality and One West Team. The pillars of our strategy are:
6 | 20192020 Annual Meeting and Proxy Statement
ELECTION OF DIRECTORS
Board members are expected to oversee and support Management in driving success in our current strategic plans by focusing on following five imperatives that will enable us to prioritize and drive efforts across the strategic pillars:
Under the heading "Director Nominee Biographies," we provide an overview of each nominee's principal occupation, business experience and other directorships of publicly-traded companies, together with the qualifications, experience, key attributes and skills the Committee and the Board believe will best serve the interests of the Board, the Company and our shareholders.
Shareholders who wish to recommend or nominate director candidates must provide information about themselves and their candidates and comply with procedures and timelines contained in our Bylaws. These procedures are described under "2020"2021 Shareholder Proposals or Nominations" in this Proxy Statement.
Board Commitment to Diversity and Inclusion |
Board diversity and inclusion is critical to the success of West. The Board is committed to ensuring its membership has sufficient diversity of experience, skills and personal characteristics to support the long-term success of the Company. As presently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. As noted above, our nomination process and our Board's approach to assessment and evaluation of our nominees support this diversity and inclusion commitment.
Our Corporate Governance Principles include a statement regarding the importance of Board diversity and inclusion to ensure that the director nomination process considers a diverse mix of background, age, gender, sexual orientation, as well as cultural and ethnic composition. Additionally, the NCGC's evaluation of director nominees includes consideration of their ability to contribute to the diversity of personal and professional experiences, opinions, perspectives and backgrounds on the Board.
While we are pleased with the current complement of diverse backgrounds of our directors, we The Board continually assessassesses the size and diversity of the Board. We review our Board skills matrix annually and develop a list of skills and characteristics that we feel would supplement our current diverse mix of experiences and backgrounds of the identified skills include: financial expertise, industry, direct international oversight, mergers and acquisitions, cyber or digital experience and a diverseBoard members, including the Board's gender, ethnic, orand racial background.composition.
We are particularly proud of our leadership in female representation on the Board. One-thirdThirty percent of our independent directors standing for reelection (30%(27% of all directors) are women. Several of our Board members participate in diversity in leadership programs and others are high-profile speakers on issues of diversity and inclusion.
Our Board has overseen efforts by the Company to increase diversity and inclusion among its employee base. Mr. Green's annual objectives include diversity and inclusion as a key metric, and we have also added new positions responsible for diversity. The Board believes this approach enables us to attract and retain diverse high-quality talent. This has culminated in a diversity mission statement which can be foundcontained in our CR Report which is available atwww.westpharma.com/about-west/corporate-responsibility. As part of our diversity mission, we have trained employees at all levels on the importance of diversity and inclusion, introduced affinity groups, accelerated efforts in minority recruiting and modified our culture to increase flexibility and mentoring, which we believe facilitates diversity and inclusion.
The Board has increased its oversight of Management in the area of creating an ethical and sustainable corporate culture, including periodic director education sessions that include culture and engagement topics. The Board firmly believes that it plays a key role in the oversight of West's culture and in holding Management accountable for the creation and stewardship of that culture. Additionally, the Board believes an engaged and empowered workforce contributes significantly to the creation of shareholder value.
2020 Annual Meeting and Proxy Statement | 7
ELECTION OF DIRECTORS
Board Refreshment and Retirement Age |
We review our Board refreshment policiespractices and retirement age annually and continue to monitor broad governance trends in this area. The Board has considered but does not have term limits on the service of our directors, because we believeit believes that term limits may lead to the loss of valuable director insight into our business and operations that is enhanced with continuity.
The Board believes that a diverse mix of long-tenured and new Board members provides a good and appropriate balance of experience to enhance shareholder value. The Board believes that directors provide meaningful, independent oversight and advice at any age. Our Corporate Governance Principles include a mandatory retirement age of 75. This means that a non-employee director must retire on the date of the Annual Meeting of Shareholders immediately following his or her 75th birthday.
An employee director must submit his or her resignation upon the date he or she ceases to be an executive officer of the Company.
2019 Annual Meeting and Proxy Statement | 7
ELECTION OF DIRECTORS
Board Evaluation Process |
Each year the Board and each of its committees review their performance during executive sessions. This review centers around questions directors are asked to contemplate regarding their individual performance and the performance of the Board/Committee. These questions include topics such as contributions made to Board deliberations, the relationship between members, quality of the materials provided, the relationship with Management, contributions to key functions/responsibilities of the Board, and topics that they would like to see added or deleted to meeting agendas.
Additionally, the NCGC assesses the evaluation process annually and makes suggested changesadjusts the process when necessary.desirable improvements are identified. The NCGC reviews several matters, including the issues to focus on in the evaluation and the form and manner of assessment. The NCGC periodically re-assesses its position on self-evaluation.
During the past two years, the chairMembers of the NCGC reachedreach out to each director individually to discuss performance and any concerns and relayedrelay them to the Board using an interview template approved by the NCGC. In 2018, we revised thisThis process to include all members of the NCGC reaching out to members ofassists the full Board to obtainwith obtaining different perspectives, to encourage collecting as muchencourages the collection of candid information as possible and to ensure the properensures a high level of engagement.
We believeThe Board believes this evaluation system, coupled with our strong ChairmanChair of the Board and open-door policy, which encourages sharing of ideas among all directors, makes for a robust process that ensures the Board's effectiveness.
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DIRECTOR NOMINEE BIOGRAPHIES
Proposal 1 — Election of Directors |
Our shareholders are asked to consider ten11 nominees for election to our Board to serve for a one-year term until the 20202021 Annual Meeting of Shareholders, andor until their successors, if any, are elected or appointed, or their earlier death, resignation, retirement, disqualification or removal. As noted above, Mr. Weiland has decided to retire and not stand for reelection, and, therefore, our Board will be reduced from 11 to 10 members. The names of the nominees for director, their current positions and offices, tenure as a Company director, their qualifications and other characteristics are set forth in the biographies below. The table below also lists each nominee's current Board committees, which changed effective February 19, 2019. Their previous committee assignments, including all of 2018 through February 19, 2019, can be found in our 2018 Proxy Statement.committees.
All the nominees are current Company directors and all non-employee directors have been determined by our Board to be independent. Our NCGC reviewed the qualifications of each of the nominees, finding each nominee to possess the required attributes and possessesall nominees collectively to strike the appropriate balance of diversity of knowledge, age, skills, expertise, gender and race, and recommended to our Board that each nominee be submitted to a vote of our shareholders at the Annual Meeting. The Board approved the Committee's recommendation at its meeting on February 19, 2019.18, 2020.
Each of the nominees has agreed to be named and to serve, and we expect each nominee to be able to serve if elected. If any nominee is unable to serve, the NCGC will recommend to our Board a replacement nominee. The Board may then designate the replacement nominee to stand for election. If you voted for the unavailable nominee, your vote will be cast for his or her replacement.
| Mark A. Buthman | ||
| | | |
Age: Committees: | Mr. Buthman retired from Kimberly-Clark Corporation—a global producer of branded products for the consumer, professional and healthcare markets—in December 2015, where he was Executive Vice President and Chief Financial Officer from January 2003 to April 2015. During his 33-year career at Kimberly-Clark, Mr. Buthman held a wide range of leadership roles in finance, strategy and operations, and led or participated in more than 50 acquisitions during his tenure as Chief Financial Officer. Mr. Buthman is a Board member of IDEX Corporation and Vice Relevant Board Skills and Experience Mr. Buthman possesses deep financial and accounting management experience, as well as experience in managing real estate, investor relations, information technology, finance and accounting shared services, and global procurement, from his time at Kimberly-Clark, a Fortune 150 company with significant international operations. He brings this expertise and counsel to the Other public company directorships in the last five years IDEX Corporation | |
20192020 Annual Meeting and Proxy Statement | 9
DIRECTOR NOMINEE BIOGRAPHIES
| William F. Feehery, Ph.D. | ||
| | | |
Age: Committees: | Dr. Feehery Relevant Board Skills and Experience Dr. Feehery currently provides executive leadership as the CEO of a development services company. Dr. Feehery is the only independent member of our Board who currently serves as a CEO, experience we believe significantly enhances our Board capabilities. He also possesses extensive global public company leadership from his time at the DuPont organization, including the direct responsibility for business operations in over 20 countries and leading a global manufacturing business. In addition, Dr. Feehery has considerable technical experience, with a Ph.D. in chemical engineering and over 15 years of experience in the technology industry. He brings this corporate insight, and his technical background, to the Board by serving on three Public company directorships in the last five years None | |
| Robert F. Friel | ||
| | | |
Age: 64 Committees: | Mr. Friel is the former Chair, President and CEO of PerkinElmer, Inc. and a former member of PerkinElmer's board of directors. Mr. Friel recently retired as Chair and CEO of PerkinElmer, Inc., a global business dedicated to serving the diagnostics, life sciences, food and applied markets. He served in this role for more than ten years. During his 20-year career at PerkinElmer, Mr. Friel held roles of increasing responsibility that included Chief Operating Officer, President of the Life and Analytical Sciences Division and Chief Financial Officer. Prior to joining PerkinElmer, Mr. Friel served in several finance-focused senior management positions with AlliedSignal, Inc., now Honeywell International. Relevant Board Skills and Experience Mr. Friel's experience in the healthcare and scientific fields, as part of large, complex, and multinational organizations assists the Board in setting its growth strategy and overseeing operational and financial risks. His extensive experience serving as both the Chair and CEO of a global business focused on improving human health is well-aligned with West's mission and with the pharmaceutical and medical device customers we serve. In addition to the public board memberships listed below, Mr. Friel is a director of New York Life Insurance Company, one of the largest life insurers in the world. His service on this board and others, together with his in-depth finance and tax expertise, as well as his training and education in these fields, makes him a strong contributor to the Board and the two Committees on which he serves. Public company directorships in the last five years Nuvasive, Inc. | |
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DIRECTOR NOMINEE BIOGRAPHIES
| Eric M. Green | ||
| | | |
Age: Committees: | Mr. Green has been our President and Relevant Board Skills and Experience Mr. Green has significant public company experience having served as a corporate officer and member of the senior executive team of Sigma-Aldrich prior to joining the Company. Mr. Green had research and development responsibility and managed a $1.4 billion business unit—the largest at that company. Prior to serving in that role, he held key positions of increasing responsibility, including international sales and operations, corporate strategic planning and country management positions in the UK, Ireland and Canada. As West's President and CEO, Mr. Green is our only non-independent director, and, in addition to the aforementioned experience, brings insight to the Board as the Company's executive leader. Public company directorships in the last five years None | |
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DIRECTOR NOMINEE BIOGRAPHIES
| Thomas W. Hofmann | ||
| | | |
Age: Committees: | Mr. Hofmann retired from Sunoco, Inc.—a diversified energy company—in 2008, where he was Senior Vice President and CFO from January 2002 to December 2008. In that role, he was responsible for managing the accounting, auditing, investor relations and strategic planning, tax and treasury functions of the organization. He also chaired the Company's Capital Management Committee and served as the management liaison to the Audit Committee. Mr. Hofmann served Sunoco in various other senior management roles since joining in 1977. Mr. Hofmann serves on the boards of Fox Chase Cancer Center and Temple University Health Relevant Board Skills and Experience Mr. Hofmann possesses substantial financial, corporate governance and management experience with a global, publicly-traded company. He is well-versed in strategic planning, risk-management and capital-market issues, including acquisitions and divestitures. He brings this comprehensive financial background to his role on the Board, Public company directorships in the last five years
| |
2020 Annual Meeting and Proxy Statement | 11
DIRECTOR NOMINEE BIOGRAPHIES
| Paula A. Johnson, M.D., MPH | ||
| | | |
Age: Committees: | Dr. Johnson has been President of Wellesley College since July 2016. Before joining Wellesley, Dr. Johnson founded and served, beginning in 2002, as the inaugural Executive Director of the Connors Center for Women's Health and Gender Biology, as well as Chief of the Division of Women's Health at Brigham and Women's Hospital. A cardiologist, Dr. Johnson was the Grace A. Young Family Professor of Medicine in the Field of Women's Health—an endowed professorship named in honor of her mother—at Harvard Medical School. She was also Professor of Epidemiology at the Harvard T.H. Chan School of Public Health. Dr. Johnson is the recipient of many awards recognizing her contributions to women's and minority health and is featured as a national leader in medicine by the National Library of Medicine and is a member of the National Academy of Medicine and the American Academy of Arts and Sciences. Relevant Board Skills and Experience Dr. Johnson brings a wealth of leading healthcare expertise to our Board. She is a nationally recognized expert in cardiology and women's and minority healthcare issues. In her role as Executive Director of the Connors Center for Women's Health and Gender Biology and as Chief of the Division of Women's Health at Brigham and Women's Hospital, and a Professor of Medicine at Harvard Medical School and Professor of Epidemiology at the Harvard T.H. Chan School of Public Health, Dr. Johnson built a novel, interdisciplinary research, education, clinical and policy program in women's health whose mission is to improve the health of women and to transform their medical care. She has an extensive background in quality and safety in healthcare and in public health systems. She is a member of our Innovation and Technology and Nominating and Corporate Governance Committees. Public company directorships in the last five years Eaton Vance Corporation | |
2019 Annual Meeting and Proxy Statement | 11
DIRECTOR NOMINEE BIOGRAPHIES
| Deborah L. V. Keller | ||
| | | |
Age: Committees: | Ms. Keller serves as a Principal at Black Frame Advisors, LLC, having recently retired as Relevant Board Skills and Experience Ms. Keller possesses substantial global public company management experience from her time at Covance. After several positions of increasing responsibility in Quality Assurance, Marketing, and Scientific Operations, she also led Covance's European chemistry business, and the Central Laboratories Services business unit, the world's largest provider of laboratory services for clinical trials. She brings her corporate management expertise in the life sciences industry to her role on the Board, serving on the Audit, Finance and Innovation and Technology Committees. Public company directorships in the last five years None | |
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DIRECTOR NOMINEE BIOGRAPHIES
| Myla P. Lai-Goldman, M.D. | ||
| | | |
Age: Committees: | Dr. Lai-Goldman is the Executive Chair of GeneCentric Therapeutics, Inc.—a precision medicine company—where she previously served as Relevant Board Skills and Experience Dr. Lai-Goldman is a recognized author and speaker on clinical diagnostics and has substantial leadership experience at companies like those that our Company serves. Dr. Lai-Goldman spent more than 18 years at Other public company directorships in the last five years Sequenom, Inc. | |
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DIRECTOR NOMINEE BIOGRAPHIES
| Douglas A. Michels | ||
| | | |
Age: Committees: | Mr. Michels retired from OraSure Technologies, Inc.—a leader in the development, manufacture and distribution of oral fluid diagnostic and collection devices and other technologies designed to detect or diagnose critical medical conditions—in March 2018, after serving as President and Relevant Board Skills and Experience Mr. Michels possesses considerable expertise and executive leadership skills in the pharmaceutical, medical device and diagnostic industry, having spent 13 years with OraSure Technologies, Inc. During his tenure, OraSure developed the nation's first FDA-approved over-the-counter home rapid HIV self-test and the first and only FDA-approved rapid hepatitis C test. Mr. Michels brings his in-depth corporate leadership perspective to his role as Chair of the Compensation Committee, and his experience as a former CEO of a public company to his role on the Audit Committee. Other public company directorships in the last five years Tyme Technologies Inc. | |
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DIRECTOR NOMINEE BIOGRAPHIES
| Paolo Pucci | ||
| | | |
Age: Committees: | Mr. Pucci is Relevant Board Skills and Experience Mr. Pucci possesses a wealth of knowledge regarding biopharmaceutical markets Other public company directorships in the last five years ArQule Inc. (through January 2020) | |
2019 Annual Meeting and Proxy Statement | 13
DIRECTOR NOMINEE BIOGRAPHIES
| Patrick J. Zenner | ||
| | | |
Age: Committees: | Mr. Zenner was first elected Relevant Board Skills and Experience Mr. Zenner possesses more than 40 years of experience and expertise in the pharmaceutical industry. Since retiring from Hoffmann-La Roche, Mr. Zenner has devoted his considerable industry expertise and corporate governance knowledge to small and early-stage pharmaceutical and technology companies in various capacities, including board member, As the lead independent director for West, Mr. Zenner has served in Other public company directorships in the last five years ArQule, Inc. (through January 2020) | |
The Board unanimously recommends a vote FOR the election of each of these nominees as directors.
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BOARD AND DIRECTOR INFORMATION AND POLICIES
Board and Director Information and Policies |
Our Board structure reflects our Corporate Governance Principles and commitment to good governance. We believeThe Board believes the governance structure we have created between the Board, its Committees, the Board Chair, the CEO and Management, is supporting the sustainable growth of the Company.
During 2018,2019, our full Board met fivesix times. All of our Board members attended all Board meetings, all but two directors attended all the Board and their assigned Committee meetings, and these two members each attended more than 94%88% of the combined total of all Board and Committee meetings in 2018.2019. Our Board is committed to ensuring that directors attend meetings and that the Board and its Committees devote sufficient time necessary for the effective oversight of the Company and its Management. Additionally, annually during the performance review process, the Board assesses the time commitments for our Board against the time commitments of aeach member's outside positions to ensure there is sufficient time to devote to their duties as a West director.
Our Board also holds regular executive sessions of only independent directors to review, among other things, the Company's strategy and Management's operating plans, the criteria by which our CEO and other senior executives are measured, Management's performance against those criteria and other related issues and to conduct a self-assessment of its performance. Last year, our independent directors held five executive sessions.
All of ourcontinuing directors, other than Mr. Friel, who was appointed in 2020, attended the 20182019 Annual Meeting and all directors that are standing for reelectionelection in 2020 are expected to attend the 20192020 Annual Meeting.
Board Leadership Structure |
The current governance structure of the Board follows:
While the offices of ChairmanChair and CEO are currently separate, the Board takes a flexible approach to the issue of whether the offices of ChairmanChair and CEO should be separate or combined. This approach allows the Board to regularly evaluate whether it is in the best interests of the Company for the CEO or another director to hold the position of Chairman.Chair.
The Board does not currently have a lead independent director, although the Board believes it may be useful and appropriate to designate a lead independent director if the offices of ChairmanChair and CEO are combined in the future.
We believeThe Board believes that the current Board leadership structure is appropriate now because it allows the ChairmanChair to focus on corporate governance and management of the Board's priorities and allows the CEO to focus directly on managing our operations and growing the Company.
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The responsibilities of the ChairmanChair include:
Each independent director may add items to the agenda.
20192020 Annual Meeting and Proxy Statement | 15
BOARD AND DIRECTOR INFORMATION AND POLICIES
Our current Chairman,Chair, Mr. Zenner, has been serving on the Board since 2002, and as our ChairmanChair since 2015. Each year the Board considers the role of the ChairmanChair and who is sitting in that role. We believe Mr. Zenner's experience as a top executive plus independence and history with the Company makes him a valuable asset for the Company, and he provides significant leadership and perspective to our Board.
Committees |
The Board has five standing committees:
From time to time, the Board may form ad hoc committees to address specific situations as they arise. Each committee consists solely of independent directors. All directors may attend any committee meeting, even if he or she is not a member. Our Board Chair and our CEO attend all Board meetings and attend virtually all Committee meetings, unless there is a scheduling conflict. Each standing committee has a written charter, which is posted in the"Investors—Corporate Governance" section of our website atwww.westpharma.com. You may also request a copy of each committee's charter from our Corporate Secretary. Below we set forth the current members of each Committee (as of the date of this Proxy Statement) and its core functions.
Audit Committee |
| Thomas W. Hofmann (Chair) William F. Feehery Robert F. Friel Deborah L. V. Keller Douglas A. Michels | The Audit Committee assists our Board in its oversight of: (1) the integrity of our financial statements; (2) the independence and qualifications of our independent auditors; (3) the performance of our internal audit function and independent auditors; and (4) our compliance with legal and regulatory requirements. In carrying out these responsibilities, the Audit Committee, among other things: • Reviews and discusses our annual and quarterly financial statements with Management and the independent auditors • Manages our relationship with the independent auditors, including having sole authority for their appointment, retention and compensation; reviewing the scope of their work; approving non-audit and audit services; and confirming their independence • Oversees Management's implementation and maintenance of disclosure controls and procedures and internal control over financial reporting • Regularly meets with our Chief Financial Officer, internal auditors, Corporate Controller, Chief Digital and Transformation Officer, Senior Director of Cybersecurity and Chief Compliance Officer to assess financial and cyber risks The Board has affirmatively determined that Mr. Hofmann |
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BOARD AND DIRECTOR INFORMATION AND POLICIES
Compensation Committee |
| Douglas A. Michels (Chair) Mark A. Buthman William F. Feehery Thomas W. Hofmann | The Compensation Committee develops our overall compensation philosophy, and determines and approves our executive compensation programs, makes all decisions about the compensation of our executive officers, reviews our talent management and succession planning for key positions and oversees our cash and equity-based incentive compensation plans. Additional information about the roles and responsibilities of the Compensation Committee can be found under the heading "Compensation Discussion and Analysis." In |
Finance Committee |
| Paolo Pucci (Chair) Mark A. Buthman Robert F. Friel Deborah L. V. Keller Myla P. Lai-Goldman | The Finance Committee reviews proposals made by Management and recommends to the full Board an optimal capital structure of the Company and adjustments to the way capital is allocated and deployed by the Company. The Finance Committee analyzes and makes recommendations to the full Board with respect to potential opportunities for business combinations, acquisitions, mergers, dispositions, divestitures and similar strategic transactions involving the Company. The Finance Committee also evaluates the alignment of proposed strategic transactions with the Company's strategic business plan and oversees the process of reviewing, negotiating, consummating and integrating potential strategic transactions. In |
Innovation and Technology Committee |
| Myla P. Lai-Goldman (Chair) Paula A. Johnson Deborah L. V. Keller Paolo Pucci | The Innovation and Technology Committee provides guidance to our Board on |
Nominating and Corporate Governance Committee |
| William F. Feehery (Chair) Mark A. Buthman Paula A. Johnson Patrick J. Zenner | The Nominating and Corporate Governance Committee identifies qualified individuals to serve as board members; recommends nominees for director and officer positions; reviews our commitment to diversity; determines the appropriate size and composition of our Board and its committees; monitors a process to assess Board effectiveness; reviews related-party transactions; and considers matters of corporate governance. The Committee also reviews and makes recommendations to the Board regarding compensation for non-employee directors and administers director equity-based compensation plans. In |
20192020 Annual Meeting and Proxy Statement | 17
BOARD AND DIRECTOR INFORMATION AND POLICIES
The Board's Role in Risk Oversight |
The Board and its Committees play an active role in overseeing Management's day-to-day responsibility for assessing and managing our risk exposure.
The Board regularly reviews and monitors the risks associated with our enterprise strategy, financial condition and operations and specifically reviews the enterprise risks associated with our five-year plan. In particular, the Board reviews our risk portfolio, confirms that Management has established risk-management processes that are functioning effectively and efficiently and are consistent with our corporate strategy, reviews the most significant risks and determines whether Management is responding appropriately.
The Board performs its risk oversight role by using several different levels of review. Each Board meeting begins with a strategican overview by the CEO that describes the most significant issues, including risks, affecting the Company as well as business updates from each reportable segment. In addition, the Board reviews in detail the business and operations of each reportable business segment quarterly, including the primary risks associated with that segment.
Our Enterprise Risk Management ("ERM") program helps us manage the risks inherent in our business, by gaining a greater understanding and awareness of risks facing the business, ensure risk-appropriate mitigation efforts are in place and regularly monitors and ensures the Company meets or exceeds the expectation of all stakeholders, including investors and regulators.
The ERM program includes a Risk Identification and Management ("RIM") process, crisis management, business continuity and disaster recovery elements, set forth in additional detail inelements. Additionally, during 2019 West created a new senior position responsible for the chart below:
The Board focuses on the overall risks affecting the Company. Each Board Committee has been delegated the responsibility for the oversight of specific risks that fall within its areas of responsibility, as cataloged through the RIM process, including:
Although each Committee is responsible for evaluating certain risks and overseeing the management of those risks, the full Board is regularly informed about those risks through regular Committee reports.
Cybersecurity. The full Board and the Audit Committee both participate inoversees the vital work necessary to understand our cybersecurity risk and oversee the related risk mitigation activities. This has become more critical as we launched a newactivities, including an assessment of the strength of our defenses and processes. The full Board receives regular updates from the Audit Committee and key employees responsible for cybersecurity. The criticality of this work increased with our 2018 launch of an e-commerce website during 2018 and due to the expansion of privacy regulations in Europe.Europe and elsewhere. The Audit Committee reviews cybersecurity risk at every live meeting, holds private sessions with our Chief Digital and Transformation Officer and reviews our
18 | 2019 Annual Meeting and Proxy Statement
BOARD AND DIRECTOR INFORMATION AND POLICIES
Cybersecurity dashboard at all in-person meetings. Additionally, our Senior Director, Infrastructure and Cybersecurity, Senior Director, Internal Audit, and Chief Compliance Officer separately meet with the Committee to provide additional insight into our cybersecurity and privacy strategy and tactics.
Our approach to mitigating cybersecurity risks includes review by third party experts, training for directors (both internally and externally), holding within the Company a global cybersecurity awareness week to cultivate an informed and proactive workforce, and the adoption of the National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity (the "NIST Framework"). The NIST Framework provides a comprehensive framework to developmethod for developing a flexible, repeatable, performance-based and cost-effective approach to identifying and managing cybersecurity risks. We measure ourselves against this frameworkthe NIST Framework to assess our own maturity on cybersecurity.
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BOARD AND DIRECTOR INFORMATION AND POLICIES
Our cybersecurity defenses utilize technologies such as firewalls, intrusion detection, and encryption to ensure the privacy and security of our customers' data, with a dedicated security information and event management team monitoring our applications constantly.
Executive Officer Succession Planning |
One of the primary responsibilities of the Board is to ensure that West has the appropriate managementManagement to execute our long-term strategy. Our Corporate Governance Principles state the Board must plan for succession with respect to the CEO and monitor Management's succession planning for other key executives. In fulfilling this duty, the Board, together with the CEO and Chief Human Resources Officer ("CHRO") reviews at least annually, the development and retention plans of senior managementManagement talent as well as succession plans for the CEO and other senior managementManagement positions.
During these reviews, the Board discusses:
In addition, our CEO has as an annual goal for the development of senior leaders and the creationmaintenance of athe global succession plan for key positions within the Company. Therefore, he preparesTo that end, detailed succession plans and contingency plans in the event that he isthe CEO becomes unable to serve as CEO for any reason including death or disability.are in place. These plans are reviewed annually by the NCGC and discussed with the Board. Finally, throughout the year, Board members are exposed to leadership and pipeline candidates through Management presentations, roundtable discussions, and other informal meetings to assess the depth of our leadership pipeline.
CEO Evaluation Process |
In assessing the performance of our CEO, the independent directors engage in a robust assessment process that is managed throughout the year and culminates in a formal annual performance review. The assessment includes the following:
2019 Annual Meeting and Proxy Statement | 19
BOARD AND DIRECTOR INFORMATION AND POLICIES
Working with the Compensation Committee's independent compensation consultant, the Chair of the Compensation Committee considers all of this information in developing its recommendations for compensation, as discussed below in our "Compensation Discussion and Analysis."
2020 Annual Meeting and Proxy Statement | 19
BOARD AND DIRECTOR INFORMATION AND POLICIES
Corporate Responsibility |
As a leader in our industry, we recognize our responsibility to conduct business in a sustainable manner and strive to be a good corporate citizen. Our CR efforts include six key areas of focus: Compliance and Ethics, Philanthropy, Diversity and Inclusion, Health and Safety, Environmental Sustainability and Quality. During 2018, we engagedWest's Management routinely reviews materials published by our shareholders and key customers and directly engages with these same stakeholders on governance and responsibility topics. We have also received multiple awards for our Corporate Responsibility efforts this important topic, as well as more than 30 key customers.year. Detailed below is a brief overview of our progress. We will report more fullyprogress, which is generally made available in May on our CR accomplishments in our 2018 CR report, whichwebsite atwww.westpharma.com/about-west/corporate-responsibility. Information on that website is expectedupdated periodically and believed to be published in June.true at the time it is posted, but it is not filed and does not constitute part of this Proxy Statement.
Compliance & Ethics. Our Compliance and Ethics standards include holding ourselves to the highest standards of quality, integrity and respect as outlined in our Code of Business Conduct ("COBC"), described below, which is supported by our training program led by our Chief Compliance Officer, and our annual Compliance Week efforts.
Philanthropy. West has long-placed importance in supporting charities, particularly as it relates to children, people with disabilities, healthcare and Science Technology Engineering and Math ("STEM") education in the communities where weour team members live and work. In 2018,2019, charitable giving by the Company, our employees and the Herman O. West Foundation totaled approximately $2.5$2.8 million. Our philanthropic efforts, and particularlyImportantly, we also recorded more than 8,000 hours of volunteerism by our President and CEO's leadership in this area, were recognized by CEO Connection, ateam members across our global organization focused on supporting mid-market CEOs and their shareholders, with their 2018 Social Impact Award.sites.
Diversity and Inclusion. As discussed above, we strive to create and maintain a workplace rich with diverse people, talent and ideas, and to create an inclusive environment for all employees to succeed. We have increased awareness, adopted affirmative action programs to identify any gaps, and strengthened programs and policies, which includes the adoption of our firsta global anti-discrimination and anti-harassment policy in 2018.policy. We also maintain a growing number of employee resource groups to support our culture of respect and inclusion.
Health and Safety. AProviding a healthy and safe environment for our employees is a fundamental rightresponsibility for all people.Management. We have developed and implemented new safety protocols and procedures to create a culture of safety, which incorporates behavior-based training and observations. We consistently aim to have a zero-injury workplace and monitor our progress to that goal, which has resulted in a reduction of injuries over the past threefour years by more than 60%66%. These goals are set using globally-recognized benchmarks included in our CEO's annual performance objectives.
Environmental Sustainability. We strive to be stewards of a sustainable future by factoring environmental considerations into our decision making for raw materials, production processes and distribution methods. OurWe exceeded our emissions, energy and water intensity goals established in 2013 for 2020 have already been exceeded and will be reset them in 2019. West has also continuously improved our rating under the Carbon Disclosure Project about 5% annually since 2013, culminating in our highest rating ever in 2018. We have also received multiple awards for our Corporate Responsibility efforts, which are set forth in more detail on our website atwww.westpharma.com/about-west/corporate-responsibility. The information on that website is updated periodically, and believed to be true at the time it is posted, but it is not filed with and does not constitute part of this Proxy Statement.2019.
Quality. At West, we are committed to safeguarding the health and safety of patients who use our products and services. We provide high-quality products that are designed to be safe and effective for their intended use. Quality product and system controls are designed to ensure compliance with our high standards and applicable cGMPs, ISOFDA current Good Manufacturing Practices, International Organization for Standardization standards and regulatory requirements. West utilizes customer feedback and in-process manufacturing data to improve processes and product performance. The Company continues to deliver industry-leading quality levels year-over-year.every year.
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Our Board considers its relationship with our shareholders to be important to effective corporate governance. To ensure that the Board considers shareholder views on compensation, corporate governance, corporate responsibility and other significant matters, we maintain an active shareholder engagement program. Throughout the year, Management meets with our actively-managed, institutional shareholders, which own a majority of our shares. At every Board meeting, Management discusses topics raised by our shareholders and solicits Board input.
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BOARD AND DIRECTOR INFORMATION AND POLICIES
One area of focus for us and our shareholders is the alignment of pay and performance in a manner that enhances shareholder value. Our shareholders have historically expressed support for our performance goals and metrics.
Additionally, Management heardcontinues to hear our shareholders express support for our corporate governance framework, Board membership and Board policies, including our tenure policies. Shareholder interest in environmental, social and governance matters has led to additional disclosures and progress in those areas with the Board's oversight.
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BOARD AND DIRECTOR INFORMATION AND POLICIES
Communicating with the Board |
You may communicate with the ChairmanChair of the Board or the independent directors as a group by sending a letter addressed to the Board of Directors, c/o Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, Pennsylvania 19341. Communications to a particular director should be addressed to that director at the same address. Our Corporate Secretary maintains a log of all communications received through this process. Communications to specific directors are forwarded to those directors. All other communications are given directly to the ChairmanChair of the Board who decides whether they should be forwarded to a Board committee or to Management for further handling.
Director Education and Onboarding |
The Board believes shareholders are best served by Board members who are well versed in corporate governance principles and other subject matters relevant to board service. The Board arranges for a series of annual educational presentations on its calendar. Also, to encourage continuing director education, all directors may attend any director education programs they consider appropriate to stay informed about developments in corporate governance and the markets we serve. The Company reimburses directors for the reasonable costs of attending director education programs.
The Board also works with Management to ensure that new directors are onboarded through a robust process. The onboarding process includes educational meetings with all officers and other critical members of senior Management who provide insight into the Company's business, strategy and culture, the Board and its Committees, Company policies and fiduciary and legal obligations. All directors have access to online resources maintained by the Company which includes key charters, policies, procedures, principles, corporate governance documents, and similar information. Additionally, all directors are provided access to analyst reports, press releases, and the Company's strategic plan and investor presentations.
20192020 Annual Meeting and Proxy Statement | 21
CORPORATE GOVERNANCE DOCUMENTS AND POLICIES
Corporate Governance Documents and Policies |
Our principal governance documents are our Corporate Governance Principles, Board Committee Charters, director qualification standards, including our Independence Standards, and COBC.Code of Business Conduct. Aspects of our governance documents are summarized below. We encourage our shareholders to read our governance documents, as they present a comprehensive picture of how the Board addresses its governance responsibilities to ensure our vitality and success. The documents are available in the "Investors—Corporate Governance" section of our website atwww.westpharma.com and copies of these documents may be requested by writing to our Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341.
Corporate Governance Principles |
Our Board has adopted Corporate Governance Principles to provide guidance to our Board and its committees on their respective roles, director qualifications and duties, Board and committee composition, organization and leadership. Our Nominating and Corporate Governance Committee reviewed and significantly updated our Corporate Governance Principles to meet best practices in corporate governance during 2017. In 2018,2019, the Committee confirmed that the Corporate Governance Principles address our current and long-term business needs.needs and enhanced our sections on diversity. Our Corporate Governance Principles address, among other things:
Ethics and Code of Business Conduct |
All our employees, officers and directors are required to comply with our COBCCode of Business Conduct as a condition of employment.employment or service. The COBC covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, protection and proper use of our property and information and compliance with legal and regulatory requirements. The Board has adopted a comprehensive Compliance and Ethics Program, which was substantially updated in 2016, and washas been reviewed and reaffirmed in 2017 and 2018subsequent years as meeting the needs of our Company, its shareholders and other stakeholders.
Additionally, the Board adopted a Supply Chain Policy Statement, as required under the laws of the United Kingdom, which are similar to those in California. This Supply Chain Statement indicates West's compliance with various acts and reaffirms our commitment to the Pharmaceutical Supply Chain Initiative ("PSCI"). PSCI supports the efforts of pharmaceutical suppliers to meet industry expectations about ethics, labor, health and safety, environmental and management systems, including a prohibition against the use of forced, bonded or indentured labor. These commitments are also reflected in our Business Partner Code of Conduct. Both codes are available here: www.westpharma.com/about-west/corporate-responsibility/compliance-and-ethics. Susan A. Morris is our Chief Compliance Officer and reports directly to the Audit Committee of the Board on all compliance matters. Ms. Morris trains the Board on compliance matters and delivers regular reports on program developments and initiatives to the Audit Committee and no less than annually to the full Board.
22 | 2020 Annual Meeting and Proxy Statement
CORPORATE GOVERNANCE DOCUMENTS AND POLICIES
Director Independence |
Our Board has adopted a formal set of categorical Independence Standards. The Independence Standards meet or exceed the independence requirements of the NYSE corporate governance listing standards. Under the Independence Standards, a director must have no material relationship with us other than as a director. The Independence Standards specify the criteria for determining director independence, including strict guidelines for directors and their immediate families regarding employment or affiliation with us, members of our senior Management or their affiliates. The full text of the Independence Standards may be found under the "Investors—Corporate Governance" section on our website atwww.westpharma.com.
22 | 2019 Annual Meeting and Proxy Statement
CORPORATE GOVERNANCE DOCUMENTS AND POLICIES
The NCGC undertook its annual review of director independence in February 2019.2020. As a result of this review, the NCGC recommended and the full Board concurred that no revision of the Independence Standards was required. Subsequently, the Board considered whether any relationships described under the Independence Standards between the Company and each individual director existed. The Board affirmatively determined that each of its non-employee directors is independent of the Company and Management as defined under the Independence Standards.
Related Person Transactions and Procedures |
The Board has adopted written policies and procedures relating to the Nominating and Corporate Governance Committee's review and approval of transactions with related persons that are required to be disclosed in proxy statements under SEC regulations. A "related person" includes our directors, officers, 5% shareholders and their immediate family members of these persons.members.
Under the policy,these policies, the NCGC reviews the material facts of all related-person transactions, determines whether the related person has a material interest in the transaction and may approve, ratify, rescind or take other action with respect to the transaction.actions.
In approving a transaction, the Committee will consider, among other factors, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person's interest in the transaction.
The Committee reviews and pre-approves certain types of related person transactions, including certain transactions with companies at which the related person is an employee only, and charitable contributions that would not disqualify a director's independent status. The policy and procedures can be found in the "Investors—Corporate Governance" section of our website,www.westpharma.com.
We have no related person transactions required to be reported under applicable SEC rules.
Political Contributions and Lobbying |
While we encourage directors, officers and employees to become involved in the political process in their individual capacity, including personal contributions to political campaigns, no West employee or director may conduct personal political activity on Company time or use Company funds, property or equipment for political activities. We comply with the laws related to contributing to, directly or indirectly, political organizations and government officials. Under our Corporate Governance Principles, the Board is responsible for overseeing the process used by the Company to ensure the Company's policy prohibiting political contributions is effectively implemented.
The Company made no political contributions in 2018,2019 but does hold membership in recognized and reputable industry groups that may conduct lobbying activities.
Anti-Hedging and Pledging Policies |
We prohibit directors, officers and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, which would allow them to continue to own our common stock, but without the full risks and rewards of ownership. We also prohibit directors, executive officers and other senior employees from engaging in pledging or hypothecating our securities as collateral for a loan without demonstrating to the General Counsel that a director or officer has the financial capacity to repay the loan. It is expected that this exception would be permitted only in exceedingly rare circumstances. No pledging is permitted to cover margin debt. Additionally, no West securities may be held in a margin account by directors or officers because there is a risk of the shares being sold without consent. Directors and officers are prohibited from engaging in short sales or other short-position transactions in West securities as well.
2020 Annual Meeting and Proxy Statement | 23
CORPORATE GOVERNANCE DOCUMENTS AND POLICIES
Share Ownership Goals |
Directors. To encourage significant share ownership by our directors and further align their interests with the interests of our shareholders, directors are expected to acquire within three years of appointment, and to retain during their Board tenure, shares of our common stock equal in value to at least five times their annual retainer. AllThe ten directors elected prior to 2020 meet this requirement, including directors who are still within the initial three-year periodperiod. Mr. Friel, who was appointed in February 2020, has not yet met the ownership goal, but is expected to obtaindo so during the shares.required period.
Officers. Share ownership goals further align an officer's interests with those of our shareholders and encourage a long-term focus. Within five years of attaining their position, all executive officers must acquire shares of common stock with a value equal to designated multiples of their base salary. The Compensation Committee established a goal of six times base salary for the CEO and two times base salary for all other executive officers. A full description of the officer share ownership requirements can be found in our "Compensation Discussion and Analysis."
201924 | 2020 Annual Meeting and Proxy Statement| 23
STOCK OWNERSHIPSTOCK OWNERSHIP
Stock Ownership |
The table below shows the number of shares of our common stock beneficially owned as of March 5, 2019,2020, by each of our directors, each NEO and all current directors and executive officers as a group. For executive officers, in addition to shares owned directly, the number of shares includes: (a) vested shares held in employee participant accounts under our 401(k) plan, Nonqualified Deferred Compensation Plan for Designated Employees ("Employee Deferred Compensation Plan") and Employee Stock Purchase Plan; and, (b) time-vested restricted stock and Restricted Stock Units ("RSUs") held in various incentive plan accounts, unless receipt of those shares has been deferred. For non-employee directors, in addition to shares owned directly, the common stock column includes vested deferred stock and stock-settled stock units awarded under the Nonqualified Deferred Compensation Plan for Non-Employee Directors ("Director Deferred Compensation Plan").
| Name | Common Stock | Options Exercisable Within 60 Days | Percent of Class | Common Stock | Options Exercisable Within 60 Days | Percent of Class | ||||||||||||||||||||||
| Silji Abraham | | 4,572 | | | 2,630 | | | * | | | | 6,197 | | | 7,300 | | | * | | | ||||||||
| Bernard J. Birkett | | 10,256 | | | | | | * | | | | 10,322 | | | 7,296 | | | * | | | ||||||||
| Mark A. Buthman | | 35,799 | | | | | * | | | | 38,222 | | | -0- | | | * | | | |||||||||
| William F. Feehery | | 25,162 | | | | | | * | | | | 26,843 | | | -0- | | | * | | | ||||||||
| Karen A. Flynn | | 25,654 | | | 149,715 | | | * | | | ||||||||||||||||||
| Robert F. Friel | | 244 | | | -0- | | | * | | | ||||||||||||||||||
| Eric M. Green | | 55,852 | | | 356,496 | | | * | | | | 79,337 | | | 512,856 | | | * | | | ||||||||
| Thomas W. Hofmann | | 38,671 | | | | | * | | | | 40,412 | | | -0- | | | * | | | |||||||||
| Paula A. Johnson | | 43,513 | | | | | | * | | | | 45,275 | | | -0- | | | * | | | ||||||||
| Deborah L. V. Keller | | 4,610 | | | | | * | | | | 6,200 | | | -0- | | | * | | | |||||||||
| Myla P. Lai-Goldman | | 13,312 | | | | | | * | | | | 14,940 | | | -0- | | | * | | | ||||||||
| Douglas A. Michels | | 38,867 | | | | | * | | | | 40,608 | | | -0- | | | * | | | |||||||||
| George L. Miller | | 25,376 | | | 72,725 | | | * | | | ||||||||||||||||||
| David A. Montecalvo | | 1,628 | | | 5,013 | | | * | | | | 5,246 | | | 31,216 | | | * | | | ||||||||
| Paolo Pucci | | 4,898 | | | | | * | | | | 6,490 | | | -0- | | | * | | | |||||||||
| John H. Weiland (not standing for reelection) | | 70,539 | | | | | | * | | | ||||||||||||||||||
| Patrick J. Zenner | | 74,371 | | | | | * | | | | 73,920 | | | -0- | | | * | | | |||||||||
| All directors and executive officers as a group (19 persons) | | 548,239 | | | 725,526 | | | | 1.7 | % | | | 451,274 | | | 743,095 | | | | 1.6 | % | | ||||||
| | | | | | | | | | | | | | | | ||||||||||||||
242020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement25
STOCK OWNERSHIP
Based on a review of filings with the SEC, we have determined that the persons listed below hold more than 5% of the outstanding shares of our common stock as of March 5, 2019.6, 2020. Unless otherwise stated, each holder has sole voting and dispositive power over the shares listed.
| Name and Address of Beneficial Owner | Shares | Percent of Class | Shares | Percent of Class | ||||||||||||||
| BlackRock, Inc. 55 East 52nd Street New York, NY 10022 | | 8,158,920 | (2) | | 11.0 | % | | |||||||||||
| The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | | 7,499,113 | (1) | | 10.1 | % | | |||||||||||
| T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202 | | 8,994,963 | (1) | | 12.1 | % | | | 6,830,989 | (3) | | 9.2 | % | | ||||
| The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | | 7,301,588 | (2) | | 9.9 | % | | |||||||||||
| BlackRock, Inc. 55 East 52nd Street New York, NY 10022 | | 6,939,493 | (3) | | 9.4 | % | | |||||||||||
| Franklin Resources, Inc. One Franklin Parkway San Mateo, CA 94403-1906 | | 4,800,130 | (4) | | 6.5 | % | | | 4,445,600 | (4) | | 6.0 | % | | ||||
| | | | | | | | | | | | ||||||||
201926 | 2020 Annual Meeting and Proxy Statement| 25
DIRECTOR COMPENSATIONDIRECTOR COMPENSATION
Director Compensation |
|
Board ofOur Director compensation structure is reviewed annually by the Board of Directors in consultation with Pay Governance LLC ("Pay Governance"), our independent compensation consultant. After this review, it wasthe Board determined that noto increase certain compensation elements effective January 1, 2019. The primary changes were necessarya $10,000 increase in the annual Board membership retainer, a $20,000 increase in the value of the Chair of the Board retainer and a $30,000 value increase in RSUs. The changes were the result of market adjustments to keep us competitive with members of our Business Segment Group (discussed in our Compensation Discussion and Analysis) and to account for the additional time needed as directors' roles have grown. This was the first increase to the fee paid to the Chair of the Board since separating the role from the CEO in 2015. Additionally, by increasing the annual RSU grant value more than the cash retainer (18.8% vs. 12.5%), we slightly increased the ratio of at-risk equity-based elements to fixed income. Lastly, the Chair's additional award, which had historically been subject to an annual election by the Chair to receive as cash or quarterly-vesting restricted shares, was revised to automatically be paid 50% in cash and 50% in an increase to the Chair's annual RSU award vesting annually. This change was made to codify the receipt of equity based on the historical split and to harmonize the equity awards that directors receive. The revised compensation structure with respect to 2018. The structure that was in effect for all of 2018 is set forth below.
Compensation Item | Amount | Amount | ||||||
Annual Retainers and Chair Fees | | | | | ||||
Board membership | | $ | 80,000 | | | $ | 90,000 | |
Chairman of the Board | | 100,000* | | |||||
Chair of the Board | | 120,000* | | |||||
Audit Committee Chair | | 20,000 | | | 20,000 | | ||
Compensation Committee Chair | | 20,000 | | | 20,000 | | ||
All Other Committee Chairs | | 10,000 | | | 10,000 | | ||
Restricted Stock Units | | 160,000 | | |||||
RSUs | | 190,000 | | |||||
| | | | | | | | ||
The following table shows the total 20182019 compensation of our non-employee directors. Robert F. Friel was not appointed a Director until February 2020, and, therefore had no compensation or stock outstanding during 2019. His 2020 compensation and stock will be reported in next year's Annual Proxy Statement.
20182019 Non-Employee Director Compensation
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||||||
Mark A. Buthman | | | 100,000 | | | 160,074 | | | 18,837 | | | 278,911 | | | | 90,000 | | | 189,991 | | | 26,796 | | �� | 306,787 | | ||||||||||||
William F. Feehery | | | 90,000 | | | 160,074 | | | 13,318 | | | 263,392 | | | | 100,000 | | | 189,991 | | | 18,853 | | | 308,844 | | ||||||||||||
Thomas W. Hofmann | | | 80,000 | | | 160,074 | | | 20,757 | | | 260,831 | | | | 110,000 | | | 189,991 | | | 28,700 | | | 328,691 | | ||||||||||||
Paula A. Johnson | | | 90,000 | | | 160,074 | | | 26,926 | | | 277,000 | | | | 90,000 | | | 189,991 | | | 33,730 | | | 313,721 | | ||||||||||||
Deborah L. V. Keller | | | 80,000 | | | 160,074 | | | 1,731 | | | 241,805 | | | | 90,000 | | | 189,991 | | | 3,871 | | | 283,862 | | ||||||||||||
Myla P. Lai-Goldman | | | 80,000 | | | 160,074 | | | 6,793 | | | 246,867 | | | | 100,000 | | | 189,991 | | | 10,215 | | | 300,206 | | ||||||||||||
Douglas A. Michels | | | 100,000 | | | 160,074 | | | 20,525 | | | 280,599 | | | | 110,000 | | | 189,991 | | | 28,843 | | | 328,834 | | ||||||||||||
Paolo Pucci | | | 80,000 | | | 160,074 | | | 2,160 | | | 242,234 | | | | 100,000 | | | 189,991 | | | 4,081 | | | 294,072 | | ||||||||||||
John H. Weiland | | | 90,000 | | | 160,074 | | | 38,305 | | | 288,379 | | |||||||||||||||||||||||||
John H. Weiland* | | | 31,648 | | | -0- | | | 204,402 | | | 236,050 | | |||||||||||||||||||||||||
Patrick J. Zenner | | | 130,000 | | | 210,074 | | | 32,560 | | | 372,634 | | | | 150,000 | | | 249,963 | | | 44,328 | | | 444,291 | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||
2020 Annual Meeting and Proxy Statement | 27
DIRECTOR COMPENSATION
Fees Earned or Paid in Cash |
The amounts in the "Fees Earned or Paid in Cash" column are retainers earned for serving on our Board, its committees and as committee chairs and Chairman,Chair, as applicable. All annual retainers are paid quarterly. In 2019, we moved from paying in arrears to paying current, and, therefore, continuing directors received two payments in the first quarter—one related to the fourth quarter of 2018 and one for the current quarter. This change did not result in any increase in compensation earned overall with respect to 2019, and merely affected timing. For Mr. Zenner this amount includes his cash fees for serving as ChairmanChair of the Board. The amounts are not reduced to reflect elections to defer fees under the Director Deferred Compensation Plan. During 2018,2019, Mr. Buthman Ms. Kellerdeferred 100% of his fees, and Mr. Michelsno other deferred 100%any of their fees.
Stock Awards |
The amounts in the "Stock Awards" column reflect the grant date fair value of stock-settled RSU awards made in 20182019 and the grant date fair value isas determined under Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718. In 2018,2019, each continuing non-employee director was awarded 1,8241,561 RSUs, with a grant date fair market value of $87.76$121.40 per share based on the closing price of our common stock on the award date, May 1, 2018.7, 2019. These awards had a grant date fair value of approximately $160,000.$190,000. For a discussion on RSU grant date fair value, refer to Note 1314 of the consolidated financial statements in our 20182019 Annual Report.
RSUs are granted on the date of our Annual Meeting and fully vest on the date of the next Annual Meeting so long as a director remains on the Board as of that date. Generally, all unvested grants of equity forfeit upon termination. However, if a director
26 | 2019 Annual Meeting and Proxy Statement
DIRECTOR COMPENSATION
retires during the calendar year that he or she reaches our mandatory retirement age, the award will vest on a monthly basis through retirement.
Stock-settled RSUs are distributed upon vesting, unless a director elects to defer the award under the Director Deferred Compensation Plan. In 2018,2019, all directors elected to defer their RSU awards, except for Mr. Weiland who did not defer.awards. All awards are distributed as shares of common stock, as described below. When dividends are paid on common stock, additional shares are credited to each director's deferred stock account as if those dividends were used to purchase additional shares.
For Mr. Zenner, this column also includes the 584 shares of restricted stock494 RSUs received out of the portion of his $100,000 Chairman's$60,000 Chair's annual retainer, which he elected to receive 50%that is payable in stock.RSUs as described above. The restricted stock,RSUs, which had a grant date fair value of $85.62$121.40 per share, vests 25% per quarter and was equivalent to approximately 50% of his Chairman's retainer, or $50,000.will vest 100% at the 2020 Annual Meeting assuming he remains in service as a director through that date. These restricted sharesRSUs are issued and outstanding, and, therefore,also earn dividends. They are not eligible to be deferred or credited to the Director Deferred Compensation Plan. The remainder of this retainer was paid in cash.dividend equivalents.
The table below shows the number of outstanding stock awards held by each director at year-end. No directors have any outstanding options. Mr. Friel was not appointed a director until 2020 and, therefore, had not outstanding stock awards on December 31, 2019.
Outstanding Director Stock Awards at Year-End 20182019
Board Member | Unvested Restricted Stock Awards (#) | Vested Annual Stock Awards (#) | Unvested Annual Deferred Stock and Stock-Settled RSU (#) | Total Outstanding Stock Awards (#) | Unvested Restricted Stock Awards (#) | Vested Annual Stock Awards (#) | Unvested Annual Deferred Stock and Stock-Settled RSU (#) | Total Outstanding Stock Awards (#) | ||||||||||||||||||||||||||||||||||
Mark A. Buthman | | | 0 | | | 33,918 | | | 1,829 | | | 35,747 | | | | | -0- | | | 36,615 | | | 1,568 | | | 38,183 | | | ||||||||||||||
William F. Feehery | | | 0 | | | 23,297 | | | 1,829 | | | 25,126 | | | | | -0- | | | 25,248 | | | 1,568 | | | 26,816 | | | ||||||||||||||
Thomas W. Hofmann | | | 0 | | | 36,787 | | | 1,829 | | | 38,616 | | | | | -0- | | | 38,803 | | | 1,568 | | | 40,371 | | | ||||||||||||||
Paula A. Johnson | | | 0 | | | 41,622 | | | 1,829 | | | 43,451 | | | | | -0- | | | 43,662 | | | 1,568 | | | 45,230 | | | ||||||||||||||
Deborah L. V. Keller | | | 0 | | | 2,775 | | | 1,829 | | | 4,604 | | | | | -0- | | | 4,626 | | | 1,568 | | | 6,194 | | | ||||||||||||||
Myla P. Lai-Goldman | | | 0 | | | 11,464 | | | 1,829 | | | 13,293 | | | | | -0- | | | 13,357 | | | 1,568 | | | 14,925 | | | ||||||||||||||
Douglas A. Michels | | | 0 | | | 36,982 | | | 1,829 | | | 38,811 | | | | | -0- | | | 30,640 | | | 1,568 | | | 32,208 | | | ||||||||||||||
Paolo Pucci | | | 0 | | | 3,062 | | | 1,829 | | | 4,891 | | | | | -0- | | | 4,915 | | | 1,568 | | | 6,483 | | | ||||||||||||||
John H. Weiland | | | 0 | | | 68,610 | | | 1,829 | | | 70,439 | | | ||||||||||||||||||||||||||||
John H. Weiland* | | | -0- | | | 49,230 | | | -0- | | | 49,230 | | | ||||||||||||||||||||||||||||
Patrick J. Zenner | | | 292 | | | 58,141 | | | 1,829 | | | 60,262 | | | | | 248 | | | 60,215 | | | 1,568 | | | 62,031 | | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
All Other Compensation |
The amounts in the "All Other Compensation" column are Dividend Equivalent Units ("DEUs") credited to accounts under the Director Deferred Compensation Plan and a $3,000$1,500 charitable donationdonations made by Paula Johnson, which waswere matched by the Company's foundation. Additionally, for Mr. Weiland, this amount includes a retirement gift with a fair market value of $16,000
28 | 2020 Annual Meeting and Proxy Statement
DIRECTOR COMPENSATION
and a distribution under the Director Deferred Compensation Plan upon the end of his service of 1,646 shares with a per-share value of $121.40 and a total fair market value of $199,824.
Director Deferred Compensation Plan |
All non-employee directors may participate in the Director Deferred Compensation Plan, which permits participants to defer all or a part of their annual cash compensation until their Board service terminates. Deferred fees may be credited to a "stock-unit" account that is deemed invested in our common stock or to an account that earns interest at the prime rate of our principal commercial bank. Stock-unit accounts are credited with DEUs based on the number of stock units credited on the dividend record date.
The value of a director's account balance is distributed on termination of Board service. The value of a director's stock-unit account is determined by multiplying the number of units credited to the account by the fair market value of our common stock on the termination date.
RSUs that a director elects to defer (and all shares of deferred stock) are distributed in shares of stock. Pre-2014 stock units may be distributed in cash in lieu of stock, if a director made an election in 2013. All post-2013 stock units are only distributable in stock. Partial shares are distributed in cash.
Directors may receive their distribution as a lump sum or in up to ten annual installments. Separate elections apply to amounts earned and vested before January 1, 2005 and amounts earned and vested after December 31, 2004, which solely applies to Mr. Zenner. If a director elects the installment option, the cash balance during the distribution period will earn interest at the prime rate of our principal commercial bank and deferred stock and stock-settled units will be credited with DEUs until paid.
The following table summarizes the amounts credited to each Director Deferred Compensation Plan account as of December 31, 2018:2019: All values on the following table are determined by multiplying the number of stock units or shares of deferred stock, as
2019 Annual Meeting and Proxy Statement | 27
DIRECTOR COMPENSATION
applicable, by $98.03,$150.33, the fair market value of a share of stock on December 31, 2018.2019. A portion of the stock units reported below may relate to deferred compensation that has previously been reported in the "Fees Earned or Paid in Cash" column for the year the underlying compensation was earned by the director. Mr. Friel had no balance in the Director Deferred Compensation Plan on December 31, 2019.
Director Deferred Compensation Plan at Year-End 20182019
Board Member | Cash-Settled Stock Units Value ($) | Vested Stock—Settled Unit and Deferred Stock Value ($) | Unvested Deferred Stock and RSU Value ($) | Total Account Balance ($) | Cash-Settled Stock Units Value ($) | Vested Stock— Settled Unit and Deferred Stock Value ($) | Unvested Deferred Stock and RSU Value ($) | Total Account Balance ($) | ||||||||||||||||||||||||||||||||||
Mark A. Buthman | | | 0 | | | 3,325,029 | | | 179,278 | | | 3,504,307 | | | | | -0- | | | 5,504,354 | | | 235,777 | | | 5,740,131 | | | ||||||||||||||
William F. Feehery | | | 0 | | | 2,283,811 | | | 179,278 | | | 2,463,089 | | | | | -0- | | | 3,795,473 | | | 235,777 | | | 4,031,250 | | | ||||||||||||||
Thomas W. Hofmann | | | 0 | | | 3,606,186 | | | 179,278 | | | 3,785,464 | | | | | -0- | | | 5,833,237 | | | 235,777 | | | 6,069,014 | | | ||||||||||||||
Paula A. Johnson | | | 0 | | | 4,080,214 | | | 179,278 | | | 4,259,492 | | | | | -0- | | | 6,563,648 | | | 235,777 | | | 6,799,425 | | | ||||||||||||||
Deborah L. V. Keller | | | 0 | | | 271,989 | | | 179,278 | | | 451,267 | | | | | -0- | | | 695,383 | | | 235,777 | | | 931,160 | | | ||||||||||||||
Myla P. Lai-Goldman | | | 0 | | | 1,123,806 | | | 179,278 | | | 1,303,084 | | | | | -0- | | | 2,007,978 | | | 235,777 | | | 2,243,755 | | | ||||||||||||||
Douglas A. Michels | | | 815,464 | | | 2,809,871 | | | 179,278 | | | 3,804,613 | | | | | 1,256,595 | | | 4,606,150 | | | 235,777 | | | 6,098,522 | | | ||||||||||||||
Paolo Pucci | | | 0 | | | 300,188 | | | 179,278 | | | 479,466 | | | | | -0- | | | 738,836 | | | 235,777 | | | 974,614 | | | ||||||||||||||
John H. Weiland | | | 2,017,036 | | | 4,708,773 | | | 179,278 | | | 6,905,087 | | | | | 2,187,884 | | | 7,400,694 | | | -0- | | | 9,588,578 | | | ||||||||||||||
Patrick J. Zenner | | | 0 | | | 5,699,565 | | | 179,278 | | | 5,878,843 | | | | | -0- | | | 9,052,119 | | | 272,989 | | | 9,325,108 | | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
282020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement29
COMPENSATION COMMITTEE REPORT
Compensation Committee Report |
Set forth below is the Compensation Discussion and Analysis, which outlines West's executive compensation programs and policies and how such policies are used to align executive compensation with business performance and shareholder return. This section describes our executive compensation programs for 2018,2019, the compensation decisions made under those programs and the factors considered by the Committee in making those decisions.
In performing its governance function, the Compensation Committee has reviewed and discussed with Management the "Compensation Discussion and Analysis." Based on its review and discussion with Management, the Compensation Committee recommended to the Board, and the Board approved, the inclusion of the "Compensation Discussion and Analysis" in this Proxy Statement and in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2019.
Douglas A. Michels, Chair Mark A. Buthman William F. Feehery Thomas W. Hofmann | ||
201930 | 2020 Annual Meeting and Proxy Statement| 29
Compensation Discussion and Analysis |
The 20182019 Compensation Discussion and Analysis describes and provides disclosure about the objectives and policies underlying our executive compensation program. It details the compensation for each of our Named Executive Officers ("NEOs") and the factors considered by the Committee when making compensation decisions. The NEOs for 20182019 are as follows:
Executive Summary: |
West's long-term business strategy includes growing and expanding our products and services to meet the unique needs of our customer groups, operating with excellence to drive efficient utilization of our global manufacturing footprint and building the capabilities of our team to address current and future business needs. This strategy will drivedrives our long-term financial construct to grow revenuesales by six to eight percent annually, and achieve improved profitability year-over-year, in turn creating a sustainable business that will meet the needs of our customers, patients, shareholders, and employees. Our five-year Total Shareholder Return ("TSR")TSR through December 31, 2019 was 207%.
Highlights of our 20182019 performance include the following:
Our strategy to globalize our operations and address the unique needs of the distinct customer groups we serve with a market-led focus, has delivered another strong year of growth for the Company. Some of the trends we are seeing in the pharmaceutical and biotech industry are driving our business today, and will fuel our long-term growth strategy, including the following:
Each year, we have seen growing interest and demand for our high-value product offerings, delivery device platforms and our contract-manufacturing services. Customers are also coming to West for our scientific expertise and insight into the regulatory landscape that governs our industry. This demand has translated into positive results for the business. In 2019, we reported:
In 2018, we continued to make strategic investments to drive the future growth for our business:
The foregoing discussion is qualified by the information contained in the performance graph in our 20182019 Annual Report, on Form 10-K and the "Financial Measures and Adjustments" section beginning on page 4142 of this Proxy Statement.Statement and our non-U.S. GAAP reconciliation set forth in the Form 8-K filed February 13, 2020.
302020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement31
COMPENSATION DISCUSSION AND ANALYSIS
Note:
20182019 Committee Actions and Rationale
| | Executive Compensation Actions & Results | | ||||
| Reaffirmed West's compensation philosophy of pay-for-performance that aligns executives' incentive compensation with Company performance and stakeholder interests on both a short- and long-term basis, without promoting excessive risk | | |||||
Further refined the Company's AIP to drive stronger alignment with our business | ||||||
| Reaffirmed continuation of the two-comparator group approach used for executive and director pay and pay-for-performance benchmarking | |||||
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Governance and Compensation |
Executive Compensation Philosophy
Our compensation philosophy is to provide competitive executive pay opportunities tied to our short-term and long-term success. This overriding pay-for-performance approach enables us to attract, motivate and retain the type of executive leadership that will help us achieve our strategic objectives and realize increased shareholder value. To achieve these goals, we have adopted the following program objectives:
201932 | 2020 Annual Meeting and Proxy Statement| 31
Best Practices that Support Our Executive Compensation Philosophy
The Compensation Committee oversees the governance, design and administration of our executive compensation programs and evaluates these programs against competitive practices, legal and regulatory developments and corporate governance trends.
We continue to incorporate leading design and governance practices into our compensation programs.
| What We Do | | What We Don't Do | | |||||
✓ Target ✓ Provide ✓ Conduct realizable-pay-for-performance analyses of our CEO compensation and use tally sheets to provide additional information on the appropriateness and function of our executive pay ✓ Incorporate in our CIC agreements a "double-trigger" feature requiring termination of employment ✓ Require executive officers to meet West stock ownership guidelines and to take a portion of their annual incentive bonus in West shares until ownership guidelines are met ✓ Cancellation or recovery of incentive compensation based on achievement of specified financial results that are the subject of a subsequent restatement or
✓ Engage with an independent consultant to review compensation programs and decisions | ✗ No hedging, pledging or engaging in any derivatives trading with respect to our common stock ✗ No repricing or exchange of awards without shareholder approval ✗ No individual severance agreements for executive officers other than CEO ✗ No ✗ No guaranteed incentive payouts ✗ No accelerated vesting of equity awards for executive officers ✗ No above-market returns on deferred compensation plans
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Say-on-Pay |
Each year, we hold a shareholder "Say-on-Pay" advisory vote to assess the support for the compensation of our NEOs as disclosed in our Proxy Statement. In 2018,2019, our Say-on-Pay proposal received more than 96%almost 98% support, consistent with each of the previous three years.
322020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement33
COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation Program Design |
The specific elements of West's executive compensation programs are:
| | | | | | | | | | | | | | | | | |
| Element | | Objective | | Type | | Key Features | | |||||||||
| Base Salary | Fair and competitive compensation to attract, retain and reward executive officers by providing a fixed level of cash compensation tied to experience, skills and capability relative to the market | Cash | • Annual cash compensation that is not at risk • Targeted at the 50th percentile of our compensation comparator groups, with variations based on experience, skills and other factors • Reviewed annually with adjustments considered based on level of pay relative to the market, individual and Company performance | |||||||||||||
| | | | | | | | | | | | | | | | | |
| Short-Term Annual Incentive | Focuses executives on annual results by rewarding them for achieving key budgeted financial targets Links executives' incentives with those of shareholders by promoting profitable growth Helps retain executives by providing market-competitive compensation | Cash | • Annual cash incentive based on achievement of key business metrics: • Annual award payouts may vary from 0% to 150% of the targeted award based on achievement • Threshold performance required to achieve payment is 85% of target performance goal | |||||||||||||
| | | | | | | | | | | | | | | | | |
| Long-Term Incentive Compensation (100% Equity) | Aligns executives' interests with those of shareholders by linking compensation with long-term Company and stock price performance that benefits our employees and shareholders Serves as both an incentive and retention vehicle for executives through multi-year Promotes a balance of longer-term risk and reward, without encouraging unnecessary or unreasonable risk taking | Annual PSU Grant (50% of long-term incentive compensation award fair market value ("FMV")) | • PSUs are settled three years from the grant date based on business results over a three-year performance period • PSUs (inclusive of DEUs) are paid in shares of Company common stock upon vesting • The number of shares (inclusive of accrued DEUs) that may be earned over the performance period is based on achievement against target of two equally weighted measures—Sales CAGR and ROIC—and can range from 0% to 200% of the target award • Threshold performance required to achieve payment is 70% for each target performance metric | |||||||||||||
| | | | | | | | | | | | | | | | | |
| Annual Nonqualified Stock Option Grant | • Annual awards vest in four equal annual installments and expire 10 years from the grant date • Option exercise prices • DEUs are not provided on options | |||||||||||||||
| | | | | | | | | | | | | | | | | |
| Time-Vesting Restricted Stock Units and Retention Options | • Typically, only used to attract talented executives who are foregoing compensation from prior employer • Provides a retention tool for new executives, provides an immediate ownership stake in the Company and alignment with shareholders through an incentive to increase the stock value | |||||||||||||||
| | | | | | | | | | | | | | | | | |
201934 | 2020 Annual Meeting and Proxy Statement| 33
| | | | | | | | | | | | | | | | | |
| Element | | Objective | | Type | | Key Features | | |||||||||
| Retirement | Attracts and retains executives by providing a level of retirement income and retirement savings in a tax-efficient manner | Retirement Plan | • Provides retirement income for eligible participants based on years of service and earnings up to U.S. Internal Revenue Code ("Code") limits • Provides a defined-benefit plan to pre-2017 hires that transitioned to a cash-balance plan formula in 2007, which was frozen in December 2018 • Replaced with a non-elective defined contribution amount to our 401(k) Plan in January 2019 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| Supplemental Executive Retirement Plan, "SERP" | • Previously provided retirement income, on a nonqualified basis, in excess of Code limits on the same basis as the Retirement Plan • Eligibility was frozen for the SERP in 2017 and benefit accrual ceased in 2018 | |||||||||||||||
| | | | | | | | | | | | | | | | | |
| 401(k) Plan | • Qualified 401(k) plan that provides participants the opportunity to defer taxation on a portion of their income, up to Code limits, and receive a match of 100% on the first 3% and 50% on the next 2% and, in some cases, a non-elective Company contribution | |||||||||||||||
| | | | | | | | | | | | | | | | | |
| Employee Deferred Compensation Plan | • Extends, on a nonqualified basis, the 401(k) plan deferrals in excess of Code limits on the same terms and permits deferral of AIP and PSU awards • Executives may elect to defer up to 100% of their annual cash compensation | |||||||||||||||
| | | | | | | | | | | | | | | | | |
| Other Compensation | Perquisites and Other Benefits | •
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Pay Mix
The chart below illustrates the percentage weighting of each compensation vehicleelement that comprises the 20182019 target TDC for the CEO and the average for the other NEOs.
342020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement35
COMPENSATION DISCUSSION AND ANALYSIS
Factors Used in the Compensation Process |
Compensation Committee
The Compensation Committee (or the "Committee" in this section of the Proxy Statement) reviews and approves the compensation elements and the compensation targets for each of our executive officers. The Compensation Committee also makes determinations with respect to the AIP as it relates to our executive officers, including the approval of annual performance goals and subsequent full-year achievement against those goals. It administers all elements of the Company's LTI plan, and approves the benefits offered to executive officers. Compensation decisions for the CEO are reviewed and approved by the full Board of Directors.
The Committee uses its judgment in making decisions about individual compensation elements and total compensation for our NEOs. This judgment is informed by competitive market data but primarily is focused on each NEO's performance against his or her individual performance objectives, as well as the Company's overall financial performance and the financial performance of the function or areas of operational responsibility for each NEO.
In making its decisions, and with guidance from our independent compensation consultant, Pay Governance, the Committee uses several resources and tools, including competitive market information, compensation trends within our comparator groups, where available, and realizable pay versus performance analysis.
The Committee also reviews "tally sheets" for each of our executive officers as one of the tools to help assess the alignment of NEO pay with our performance and compensation philosophy. The tally sheets include salary, equity and non-equity incentive compensation and the value of compensation that would be paid in various termination scenarios. The tally sheets help the Committee to understand the magnitude and interplay of the various components of our compensation programs.
Finally, the Compensation Committee evaluates the Company's compensation programs on an annual basis to ensure that our plans do not induce or encourage excessive risk-taking by participants.
Management
Our CEO and CHROChief Human Resources Officer annually review with the Compensation Committee the performance of each executive officer and recommend to the Committee annual merit salary adjustments and any changes in annual or long-term incentive opportunities or payouts for these officers, except for the CEO. The Committee considers Management's recommendations along with data and recommendations presented by Pay Governance.
The CHRO serves as the liaison between the Compensation Committee and Pay Governance, providing internal data on an as needed basis so that Pay Governance can produce comparative analyses for the Compensation Committee. In addition, the Company's Human Resources, Finance and LegalLaw Departments support the work of the Compensation Committee by providing information, answering questions and responding to various requests of Committee members as required.
Independent Compensation Consultant
The Committee has engaged Pay Governance as its independent consultant to assist the Committee in evaluating the executive compensation program. The consultant provides no services to us other than advice to the Committee on executive compensation matters (including CIC matters) and to our Nominating and Corporate Governance Committee on director compensation. In 2018,2019, the Compensation Committee reaffirmed Pay Governance to be independent from the Company under the applicable NYSE and SEC regulations.
During 2018,2019, Pay Governance performed the following tasks for the Committee:
201936 | 2020 Annual Meeting and Proxy Statement| 35
External Benchmarking
In support of our compensation philosophy, we reference the median compensation values of two compensation comparator groups, which we refer to as the "Business Segment Group" and the "Broad Talent Market Group." Data from both the Business Segment Group (which generally is applicable to the CEO and CFO) and Broad Talent Market Group are used to determine competitive pay practices for our CEO and executive officers in a wholistic manner.
The Business Segment Group is composed of public companies with operational and customer characteristics similar tolike our own business operations. These companies initially are identified by Pay Governance and then approved by the Committee with input from Management based on the following criteria: (1) size (approximately one-half to two times our annual revenues)sales); (2) industry (healthcare equipment/supplies, industrial manufacturing and life sciences tools/services); and (3) operating structure such as:
The Broad Talent Market Group is a larger and broader sampling of size-appropriate companies that participate in the Willis Towers Watson annual executive compensation database. Unlike the Business Segment Group, the Compensation Committee does not select individual members of the Broad Talent Market Group. Companies within the Broad Talent Market Group have annual revenues between 500 million and four billion U.S. Dollars and operate in industries that are similar, but not identical to our own industry. Industries included are: Chemicals and Gases; Electrical and Scientific Equipment and Components; Medical Supplies and Equipment; and, Pharmaceutical and Biotechnology.
Given our size and business portfolio, it is challenging to identify a robust sample of appropriate market compensation peers that fit conventional criteria. Therefore, we believe that using a balance of business and talent market references that reflect companies with which we compete for business and capital, and more broadly, those with which we compete for talent, provides the Committee with decision-quality data and context, and reasonably represents our labor market for executive talent.
Below is a chart that lists each company included in the 20182019 Business Segment Group and some key data the Committee considered in making the selection for inclusion. The sales data below are generally from 20172019 public annual reports with respect to each company, with market capitalization data as of December 31, 2018.2019. All amounts are in millions of U.S. Dollars.
| Company | Industry | Revenue | % of Non U.S. Revenue | Market Capitalization | |||||||||||
| AptarGroup, Inc. (ATR) | | Materials | | | $ | 2,469 | | 73% | | | $ | 6,427 | | | |
| Catalent Inc (CTLT) | | Pharmaceuticals | | | $ | 2,075 | | 54% | | | $ | 5,948 | | | |
| CONMED Corporation (CNMD) | | Healthcare Equipment and Services | | | $ | 796 | | 37% | | | $ | 2,000 | | | |
| The Cooper Companies, Inc. (COO) | | Healthcare Equipment and Services | | | $ | 2,139 | | 42% | | | $ | 2,002 | | | |
| DENTSPLY SIRONA Inc. (XRAY) | | Healthcare Equipment and Services | | | $ | 3,993 | | 63% | | | $ | 9,565 | | | |
| Edwards Lifesciences Corp (EW) | | Healthcare Equipment and Services | | | $ | 2,963 | | 45% | | | $ | 37,125 | | | |
| Gerresheimer AG (GXI.DE) | | Pharmaceuticals, Biotechnology and Life Sciences | | | $ | 1,406 | | 73% | | | $ | 2,379 | | | |
| Haemonetics Corporation (HAE) | | Healthcare Equipment and Services | | | $ | 903 | | 43% | | | $ | 4,315 | | | |
| IDEXX Laboratories, Inc. (IDXX) | | Healthcare Equipment and Services | | | $ | 1,970 | | 20% | | | $ | 18,066 | | | |
| Avanos Medical (AVNS)* | | Healthcare Equipment and Services | | | $ | 612 | | 23% | | | $ | 2,063 | | | |
| Integer Holdings Corp (ITGR) | | Healthcare Equipment and Services | | | $ | 1,462 | | 42% | | | $ | 2,634 | | | |
| Invacare Corporation (IVC) | | Healthcare Equipment and Services | | | $ | 966 | | 56% | | | $ | 173 | | | |
| ResMed Inc. (RMD) | | Healthcare Equipment and Services | | | $ | 2,066 | | 0% | | | $ | 14,073 | | | |
| Steris PLc (STE) | | Healthcare Equipment and Services | | | $ | 2,600 | | 26% | | | $ | 10,208 | | | |
| Teleflex Inc (TFX) | | Healthcare Equipment and Services | | | $ | 2,146 | | 45% | | | $ | 12,778 | | | |
| Varian Medical Systems (VAR) | | Healthcare Equipment and Services | | | $ | 2,668 | | 51% | | | $ | 12,061 | | | |
| WEST | | Healthcare Equipment and Services | | | $ | 1,599 | | 54% | | | $ | 7,591 | | | |
| Company | Industry | Sales | Market Capitalization | ||||||||
| AptarGroup, Inc. (ATR) | | Materials | | $ | 2,765 | | | $ | 7,544 | | |
| Catalent Inc. (CTLT) | | Pharmaceuticals | | $ | 2,463 | | | $ | 7,758 | | |
| CONMED Corporation (CNMD) | | Healthcare Equipment and Services | | $ | 860 | | | $ | 2,440 | | |
| The Cooper Companies, Inc. (COO) | | Healthcare Equipment and Services | | $ | 2,533 | | | $ | 16,275 | | |
| DENTSPLY SIRONA Inc. (XRAY) | | Healthcare Equipment and Services | | $ | 3,986 | | | $ | 13,777 | | |
| Edwards Lifesciences Corp (EW) | | Healthcare Equipment and Services | | $ | 3,723 | | | $ | 40,289 | | |
| Gerresheimer AG (GXI.DE) | | Pharmaceuticals, Biotechnology and Life Sciences | | $ | 1,549 | | | $ | 2,348 | | |
| Haemonetics Corporation (HAE) | | Healthcare Equipment and Services | | $ | 904 | | | $ | 6,021 | | |
| IDEXX Laboratories, Inc. (IDXX) | | Healthcare Equipment and Services | | $ | 2,213 | | | $ | 23,560 | | |
| Avanos Medical (AVNS) | | Healthcare Equipment and Services | | $ | 687 | | | $ | 2,001 | | |
| Integer Holdings Corp (ITGR) | | Healthcare Equipment and Services | | $ | 1,215 | | | $ | 2,714 | | |
| Invacare Corporation (IVC) | | Healthcare Equipment and Services | | $ | 972 | | | $ | 183 | | |
| ResMed Inc. (RMD) | | Healthcare Equipment and Services | | $ | 2,340 | | | $ | 17,217 | | |
| Steris Plc. (STE) | | Healthcare Equipment and Services | | $ | 2,620 | | | $ | 12,258 | | |
| Teleflex Inc (TFX) | | Healthcare Equipment and Services | | $ | 2,448 | | | $ | 15,449 | | |
| Varian Medical Systems (VAR) | | Healthcare Equipment and Services | | $ | 2,919 | | | $ | 12,480 | | |
| WEST | | Healthcare Equipment and Services | | | | | | | | ||
362020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement37
COMPENSATION DISCUSSION AND ANALYSIS
Executive Officer Stock Ownership Guidelines
Within five years of appointment, Officers are expected to acquire shares of West common stock with a value equal to the following:
| CEO | | Other NEOs | | |||||
| 6 times base salary | 2 times base salary | |||||||
| | | | | | | | | |
In 2018,2019, the Compensation Committee reviewed and updated the ownership guidelines to further clarify and align to market practice. The Committee reviewed peer group guidelines and consulted with Pay Governance to identify market practice. The following illustrates the type of equity holdings that count towards stock ownership requirements:
| What Counts | | What Does Not Count | | |||||
✓ 100% of West shares owned personally or by members of the immediate family sharing the same household ✓ 100% of vested shares of West stock held in a qualified or non-qualified deferred compensation plan ✓ 60% of unvested RSUs ✓ Unrestricted bonus stock, not a part of matching contributions but subject to matching contribution holding requirements | ✗ Unvested stock options and PSUs ✗ Unexercised, vested stock options ✗ Restricted bonus stock subject to matching contribution holding requirements | |||||||
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Until individual share ownership goals are met, executives will receive 25% of their annual bonus in West stock. If after five years the required share ownership has still not been met, the officer must holdretain 100% of net shares resulting from any equity award vesting or stock option exercise and will have 50% of their annual bonus paid in stock.
As of December 31, 2018, other than Ms. Flynn2019, Mr. Green and the now-retired Mr. Federici, neither the CEO nor the other NEOs had yetMiller have met thetheir holding requirements;requirements. Mr. Birkett, Mr. Montecalvo, and Mr. Abraham have not; however, all are within the five-yeartheir 5-year attainment period. Mr. Green is targeted to meet the guideline in 2019. Mr. Montecalvo has until 2021 to meet the guidelines, and Mr. Birkett and Mr. Abraham each have until 2023.
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We have designed our compensation programs to align the pay of our senior executives with both short-term and long-term financial results and the performance of our stock. As such, the majority of pay for our CEO and other NEOs is performance-based and is impacted by our financial results and stock price performance. During 2018, 17%2019, 16% of Mr. Green's TDCTotal Direct Compensation was variable based on short-term business performance and 66%68% was based on long-term goals. For our other executives, approximately 23%22% of their TDC was variable based on short-term business performance and 42%44% was based on long-term goalsgoals.
AsAbove target achievement of financial metrics for 2019, resulted in a result ofpayout greater than 100% for our short-term incentive plan, while below target financial performance in 2018, we paid out less than 100% on bothresults from the first two years of our short- and long-term incentive plans.plan generated a payout below 100%.
Our AIP paid out at 93.1%123.8% of target for the Corporate plan due to above target achievement in all three metrics, driven primarily by a 11.2% overachievement of the Operating Cash Flow target, and at 93.8% and 87.3% for7.2% overachievement of the Commercial and Global Operations plans, respectively, as our results were slightly behind target for all performance metrics. Specifically, our constant-currency sales growth of 5.6% was lower than our annual growth expectation of between 6% to 8%. Also, the mix of products sold favored our Contract-Manufactured Products segment, which generates a lower profit margin than our Proprietary Products Segment, and ultimately resulted in below target consolidated gross profit and earnings per share.EPS target.
Our LTI plan is equally based on achieving sales CAGR on sales and ROIC targets. The payout for the 2016-182017-19 performance period was 49.39%82.61% as ourboth targets fell short of the target. The sales CAGR for this period was 6.55% (versusachieved 84.9% of the 8.10% target resulting in a target of 9.80%)74.8% payout factor, which is weighted 50% (contributing 37.40% to the payout), and did not meet the minimum thresholdour ROIC for payout on 50%this period achieved 94.3% of the target award. Our ROIC for this performance period was 12.21% versusof 13.4% resulting in a target of 12.30%90.42% payout factor, which is also weighted 50% (contributing 45.21% to the payout).
2019 Annual Meeting and Proxy Statement38 | 372020 Annual Meeting and Proxy Statement
Incentive Compensation: Important Facts about our Incentive Targets |
As in previous years, the Compensation Committee evaluates and decides upon the appropriate financial measures to be considered in determining compensation payouts using the following principles:
We continually test the robustness of our incentive targets and performance payout curves. The setting of our performance payout curves considers the following:
The Compensation Committee annually reviews the target setting process to ensure adherence to our principles. This analysis is aided by a retrospective review of our performance compared to that of our competitors and is performed annually by the Board's independent compensation consultant, Pay Governance.
For 2018,2019, we measured the following key financial metrics:
| | | | | | | | | | | | | |
| | Plan | | | | Financial Metric | | | | Rationale | | | |
| | | | | | | | | | | | | |
| | | | Earnings per Share | | | A comprehensive measure of income and provides an emphasis on profitable growth while focusing managers on expense control | | |||||
| | | | | | | | | | | | | |
| | | | Consolidated | | | Provides a clear line-of-sight target for all members of our executive officer team as we strive to create value by growing our sales | | |||||
| | | | | | | | | | | | | |
| | AIP | | | Operating Cash Flow | | | Provides a focus on generating cash in the short term to fund operations, research and capital projects and focuses managers on cash generation | | ||||
| | | | | | | | | | | | | |
| | | | Consolidated Gross Profit | | | Provides focus on targeting efforts on higher value product growth and improving operating efficiencies in our production facilities | | |||||
| | | | | | | | | | | | | |
| | | LTI | | | | Sales Compounded Annual Growth Rate | | | | Provides an objective measure of | | |
| | | | | | | | | | | | | |
| | | | | | | Return on Invested Capital | | | | Drives efficient and disciplined deployment of capital | | |
| | | | | | | | | | | | | |
Note: All metrics are measured at actual foreign currency exchange ("FX") rates except for Consolidated Revenue,Net Sales, which is measured at budget FX rates to remove the impact of currency fluctuations and allow for a year-to-year comparison.
382020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement39
COMPENSATION DISCUSSION AND ANALYSIS
Our Annual Incentive Compensation |
Target Setting |
At the beginning of each year, the Compensation Committee and the Board review and approve West's annual business objectives and set the metrics and weightings for the annual incentive program to reflect current business priorities. These objectives translate to targets for West and for each business unit for purposes of determining the target funding of the AIP. Performance against business objectives determines the actual total funding pool for the year, which can vary from 0% to 150% of total target incentives for all executives.
Our reported results may be adjusted when comparing to AIP targets for unusual events outside the control of managementManagement including changes in accounting standards, tax regulations and currency devaluations. We may also exclude certain transactions such as material acquisition or disposition costs including restructuring charges particularly if these items were not included in the performance target. All adjustments are reviewed with and approved by the Compensation Committee. For 2018,2019, the adjustments made were:
Target Awards |
The target annual incentive awards for our NEOs are set as a percentage of base salary. Target awards are reviewed annually to ensure alignment with our compensation philosophy to targetof targeting each compensation element and TDC at the market median. Variances from this goal are based on an evaluation of competitive market data, internal equity considerations and individual performance. Our payout curve is structured to reflect our philosophy that Management should be rewarded for meeting or exceeding goals and payouts should diminish or are withheld when targets are missed.
The formula to determine each NEO's AIP total potential payment is as follows:
201940 | 2020 Annual Meeting and Proxy Statement| 39
The payout factor is a pre-established multiplier that corresponds, on a sliding scale, to the achievement percentage of the AIP target objective so that if actual performance is less than target, the multiplier decreases on a sliding scale based on the achievement percentage and is based on the following chart:
| Achievement % | Payout factor | ||||||
| <85% | | | 0 | | | ||
| 85% | | | 50.0 | % | | ||
| 95% | | | 83.3 | % | | ||
| 100% | | | 100.0 | % | | ||
| 105% | | | 116.7 | % | | ||
| 110% | | | 133.3 | % | | ||
| ³115% | | | 150.0 | % | | ||
| | | | | ||||
Achievement that falls between any two achievement percentages is straight-line interpolated. The Compensation Committee has discretion to positively or negatively adjust payoutpayouts to account for exceptional circumstances.
The Compensation Committee reviews the AIP scoring, and adjustments made thereto and approves the AIP funding level.
2018 earnedEarned incentives paid in 2020 with respect to 2019 results for each ofmetric for our NEOs, isall of whom participate in the Corporate metrics AIP, are shown below:
| Plan | NEO | Metric | | Weight | | Target | | Performance | | % Target Achieved | | % Payout | | Earned Incentive | Metric | | Weight | | Target | | Performance | | % Target Achieved | | % Payout | | Earned Incentive | |||||||||||||||||
| Corporate | Eric M. Green | Consolidated Revenue | 20.0 | % | $ | 1,726.1 | $ | 1,701.3 | 98.6 | % | 95.3 | % | 93.1 | % | Consolidated Revenue | 20.0 | % | $ | 1,805.8 | $ | 1,860.2 | 103.0 | % | 110.0 | % | 123.8 | % | |||||||||||||||||
| Bernard J. Birkett | EPS | 60.0 | % | $ | 2.57 | $ | 2.50 | 97.3 | % | 91.0 | % | EPS | 60.0 | % | $ | 2.89 | $ | 3.10 | 107.2 | % | 124.0 | % | ||||||||||||||||||||||
| William J. Federici Silji Abraham | Operating Cash Flow | 20.0 | % | $ | 293.1 | $ | 290.8 | 99.2 | % | 97.3 | % | Operating Cash Flow | 20.0 | % | $ | 332.2 | $ | 369.5 | 111.2 | % | 137.3 | % | ||||||||||||||||||||||
| Commercial—Global | Karen A. Flynn | Consolidated Revenue | | 50.0 | % | $ | 1,726.1 | $ | 1,701.3 | | 98.6 | % | | 95.3 | % | | 93.8 | % | ||||||||||||||||||||||||||
| | EPS | | 40.0 | % | $ | 2.57 | $ | 2.50 | | 97.3 | % | | 91.0 | % | | | ||||||||||||||||||||||||||||
| | Operating Cash Flow | | 10.0 | % | $ | 293.1 | $ | 290.8 | | 99.2 | % | | 97.3 | % | | | ||||||||||||||||||||||||||||
| Global Operations | David A. Montecalvo | Consolidated Gross Profit | 40.0 | % | $ | 584.5 | $ | 545.4 | 93.3 | % | 77.6 | % | 87.3 | % | ||||||||||||||||||||||||||||||
| Consolidated Revenue | 10.0 | % | $ | 1,726.1 | $ | 1,701.3 | 98.6 | % | 95.3 | % | ||||||||||||||||||||||||||||||||||
| EPS | 30.0 | % | $ | 2.57 | $ | 2.50 | 97.3 | % | 91.0 | % | ||||||||||||||||||||||||||||||||||
| Operating Cash Flow | 20.0 | % | $ | 293.1 | $ | 290.8 | 99.2 | % | 97.3 | % | ||||||||||||||||||||||||||||||||||
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402020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement41
COMPENSATION DISCUSSION AND ANALYSIS
Financial Measures and Adjustments |
EPS growth for AIP purposes differs from the EPS reported in our Earnings Release under U.S. GAAP and is best explained by reconciling the results used for calculating AIP payments to U.S. GAAP and the Earnings Release. A reconciliation of the financial measures used for the AIP to our Earnings Release financials allows for a meaningful comparison. The following table contains unaudited reconciliations of 20182019 U.S. GAAP Consolidated Revenues,Net Sales, OCF and Reported DilutedReported-diluted EPS to Adjusted Revenue,Net Sales, Adjusted OCF, and Adjusted DilutedAdjusted-diluted EPS for AIP purposes relating to the 20182019 AIP Performance Metrics and Achievement Table above. There were no other adjustments.
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| Reported Diluted EPS(1) | $ | 2.74 | ||||||
| Reported-diluted EPS(1) | $ | 3.21 | ||||||
Restructuring and related charges | 0.08 | 0.04 | ||||||
Argentina currency devaluation charge | 0.02 | |||||||
Tax law changes | (0.03 | ) | ||||||
| Adjusted Diluted EPS per Earnings Release | $ | 2.81 | ||||||
Gain on restructuring-related sale of assets | (0.02 | ) | ||||||
Tax recovery | (0.04 | ) | ||||||
Pension settlement | 0.04 | |||||||
Argentina currency devaluation | 0.01 | |||||||
| Adjusted-diluted EPS per Earnings Release | $ | 3.24 | ||||||
Tax Benefit Stock Compensation(2) | (0.19 | ) | (0.14 | ) | ||||
Tax rate reduction(2) | (0.12 | ) | ||||||
| Adjusted Diluted EPS for AIP purposes | $ | 2.50 | ||||||
| Adjusted-diluted EPS for AIP purposes | $ | 3.10 | ||||||
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| Operating Cash Flow (in millions) | $ | 288.6 | $ | 367.2 | ||||
Restructuring & related charges | 2.2 | 2.3 | ||||||
| Adjusted OCF for AIP purposes | $ | 290.8 | $ | 369.5 | ||||
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| Consolidated Revenue (in millions) | $ | 1,717.4 | ||||||
| Consolidated Net Sales (in millions) | $ | 1,839.9 | ||||||
Foreign-exchange impact vs. budget | (16.1 | ) | 23.2 | |||||
| Adjusted Revenue for AIP purposes | $ | 1,701.3 | ||||||
Impact of South Korea acquisition | (3.3 | ) | ||||||
| Adjusted Net Sales for AIP purposes | $ | 1,859.8 | ||||||
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Our Long-Term Equity Incentive Compensation |
Target Setting |
The targets for West's PSUs are set at the beginning of each three-year performance period, taking into accountconsidering West's financial model shared with investorsguidance and the annual budget as approved by the Board. At the end of the three-year period, the score is calculated based on results against the predetermined targets equally weighted. We use CAGR and ROIC as our performance measures for determining PSU payouts. Each metric is weighted equally because we believe sales CAGR and ROIC are equally important in creating shareholder value over the long-term.
The metrics, goals and weightings for the performance period 2018—20202019-21 are:
Metric | Threshold | Target | Maximum (200%) | Threshold | Target | Maximum | ||||||||||||||||||||||||
CAGR | | | 4.90 | % | | 7.00 | % | | 10.50 | % | | | | 4.90 | % | | 7.00 | % | | 10.50 | % | | ||||||||
ROIC | | | 9.45 | % | | 13.5 | % | | 20.25 | % | | | | 9.45 | % | | 13.5 | % | | 20.25 | % | | ||||||||
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201942 | 2020 Annual Meeting and Proxy Statement| 41
Target Awards |
LTI compensation opportunities for our executives, including the NEOs, are entirely equity-based. Each NEO's annual target award is split into two equal amounts, which are then used to determine the number of stock options and PSUs awarded to the executive. The value of each stock option is determined under the Black-Scholes valuation method. The value of each PSU is determined by our stock price at the grant date. The actual or realized value of these awards in future years will vary from this target amount based on share price, ROIC and Sales CAGR performance over time. Please refer to Note 1314 of our annual reportAnnual Report on Form 10-K for a complete discussion of our stock-based compensation.
The use of stock options is intended to align our executives' longer-term interests with those of our shareholders because options deliver value to the executive only when and to the extent that share price exceeds the exercise price of the option. Therefore, options provide a strong performance-based link between shareholder value and executive pay.
PSUs entitle the recipient to receive common shares based on achievement of three-year sales CAGR and ROIC targets.targets, which, if achieved, will have resulted in strong returns for our shareholders.
The value of each NEO's long-term grant is determined by the Committee based on its review of peer-group market data, the executive's role and responsibilities, his or her impact on our results, advancement potential, retention considerations and, in principle, is targeted to the market median.
Performance Share Units |
The number of shares earned under the PSUs is based on achievement of sales CAGR and ROIC targets. Each PSU award agreement contains a target payout for the recipient. The number of shares an executive earns at the end of a performance period is calculated by multiplying the target number of PSUs awarded at the beginning of the period times the applicable "payout factor" for each performance metric by the weighting for that performance metric.
| Performance Achievement (% of Target) | Payout factor | ||||||||
| | <70 | % | | | 0 | | | ||
| | 70 | % | | | 50 | % | | ||
| | 85 | % | | | 75 | % | | ||
| | 100 | % | | | 100 | % | | ||
| | 110 | % | | | 120 | % | | ||
| | 125 | % | | | 150 | % | | ||
| | ³150 | % | | | 200 | % | | ||
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The Compensation Committee approves the determination of actual achievement relative to pre-established targets and the number of PSUs is adjusted up or down from 0% to 200% based on the approved actual achievement. The Committee reserves the right to negatively or positively adjust payouts under exceptional circumstances.
Equity Award Grant Practices |
Under the Committee's equity-based awards policy and procedures, equity awards to NEOs normally are made once per year. The Company's policy on equity grants contains rules on determining (1) the grant date of equity awards (at least two business days following the release of our annual results for the preceding fiscal year) and (2) the exercise price of stock options granted by the Committee (which must be at least equal to the closing price of our stock on the grant date).
422020 Annual Meeting and Proxy Statement | 2019 Annual Meeting and Proxy Statement43
COMPENSATION DISCUSSION AND ANALYSIS
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In the first quarter of each year, the Compensation Committee meets to determine CEO and Executive Officers' pay decisions for base salary, AIP and LTI award grants reflecting both prior year performance and appropriate positioning versus the representative peer group(s).
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Our compensation strategy supports West's business imperatives. It is designed to ensure:
Pay decisions were made in the context of our financial performance relative to our goals while also taking into account (1) the organizational transformation made in 2016 from a regional, product-led management approach to a market-led globally integrated enterprise, and (2) the steps taken to strengthen West's position for the future.
2019 Compensation Decisions for our CEO |
The Chair of the Compensation Committee works directly with the Committee's Compensation Consultant to provide a decision-making framework for use by the Committee in determining incentive plan payouts and setting target compensation opportunities for the CEO. This framework considers, among other things:
Mr. Green's overall compensation decisions were made in the context of the Company's financial performance relative to the approved goals, his continued progression as CEO and the peer group market data.
44 | 2020 Annual Meeting and Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
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| | President and Chief Executive Officer: Eric M. Green In role since April 2015 | | ||
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• Continued the transformation of the Company to operate as a market-led organization, and spearheaded the globalization and optimization of the Company's operations • Delivered full-year • Expanded operating cash flow to •
• Directed capital • Drove geographic expansion in emerging markets with •
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• Base Salary: The • AIP Target Opportunity: 105%, flat from 2017, representing target opportunity of •
• LTI Award for For | ||||
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2019 Annual Meeting and Proxy Statement | 43
COMPENSATION DISCUSSION AND ANALYSIS
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The Compensation Committee also approved the compensation recommendations put forward by the CEO for the following NEOs, noting overall performance against business objectives in the year, both qualitative and quantitative. The compensation level of each NEO was reviewed based on the representative peer group and the external survey data. Based on the Committee's targeted pay positioning, the evaluation of each NEO's performance, and the external market data on competitive pay levels provided by Pay Governance, the Committee made the following decisions.
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44 | 2019 Annual Meeting and Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
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20192020 Annual Meeting and Proxy Statement | 45
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | |
| | Senior Vice President and Chief Hired | | ||
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•
• Developed • Served as key liaison to external auditor, PwC, and to the Audit and Finance Committees ensuring strong working relationships • Co-led effort to increase West's stake in Daikyo Seiko Ltd. from 25% to 49% • Brought new talent to the Finance Team to broaden, deepen and strengthen capabilities and expertise • Educated broad employee base around the business' financial results to boost business acumen and drive disciplined financial management across the | ||||
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• Base Salary: • AIP Target Opportunity: •
• LTI Award for
per Mr. For | ||||
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| | In role since November 2015 | | ||
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Managed contract negotiations on key business deals: increased ownership to 49% of Daikyo Seiko Ltd. and acquisition of South Korean distributor, GIS Korea • Oversaw Enterprise Risk Management Program, aligning Company's crisis management and business continuity plans, and establishing a new team to oversee the program in its entirety • Drove Corporate Responsibility (CR) Program, establishing new goals to align with U.N. Global Compact and U.N. Sustainable Development Goals. CR Program recognized with several industry awards including Investor Business Daily (Best ESG Companies) & Newsweek (Most Responsible Companies), and earning better scores from ratings services, such as • Achieved significant improvements in team member safety, establishing the Company's first Safety Week and • Managed the | ||||
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• Base Salary: • AIP Target Opportunity: 65% of base salary, flat from 2018, representing a target opportunity of $286,000 • 2019 AIP Payout (paid in February 2020): $354,068 representing 123.8% of target • LTI Award for the 2019–21 Performance Period: $600,000 grant date fair value award—flat from 2018 and split 50% stock options and 50% PSUs. Starting with 2019 LTI awards, the Committee defined "qualifying retirement" for Mr. Miller, as earning five years of service. Qualifying retirement for LTI awards permits recipients, including Mr. Miller, to continue to vest and stock options will retain the original expiration date provided he remains employed through October 1 of the year of grant. This revised definition does not apply to his LTI awards made prior to 2019. This decision was made in consideration for Mr. Miller's overall experience including his pre-West service and significant contributions to West. For 2019, at target, 67% of Mr. Miller's pay was at risk and subject to attainment of specific performance goals. | ||||
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46 | 2020 Annual Meeting and Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | |
| | Senior Vice President and Chief Operations and Supply Chain Officer: David A. Montecalvo In role since September 2016 | | ||
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| 2019 Performance Highlights • Delivered Global Operations and Supply Chain plan which saw significant improvements in safety for team members (15% improvement); continuous improvement in quality and service metrics for customers; and exceeded cost reduction objectives • Delivered 2019 consolidated gross margin expansion of 110 basis points. • Achieved Contract Manufactured-Products market unit gross margin of 14.8% and developed a plan to continue further margin expansion for this market unit in 2020 • Successful implementation of site consolidation plan from 28 plants to 25 at 2019 year-end • Initiated the modernization of the Company's manufacturing practices across the enterprise to incorporate more automation and digital technologies, which will fuel future growth • Executed a company-wide Lean Training Program that led to significant savings and is driving more collaborative, consistent and efficient working practices across the enterprise | ||||
| | | | | |
| 2019 Compensation Decisions • Base Salary: 4.9% increase, raising base to $425,000 from $405,000 • AIP Target Opportunity: 65% of base salary, flat from 2018, representing a target opportunity of $276,250 • 2019 AIP Payout (paid in February 2020): $341,998 representing 123.8% of target • LTI Award for the 2019–21 Performance Period: $400,000 grant date fair value award—flat from 2017 and split 50% stock options and 50% PSUs For 2019, at target, 65% of Mr. Montecalvo's pay was at risk and subject to attainment of specific performance goals. | ||||
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| | | | | |
| | Senior Vice President, Chief Digital and Transformation Officer: Silji Abraham Hired February 26, 2018 | | ||
| | | | | |
| 2019 Performance Highlights • Executed West's digital transformation across three key pillars: external experience, internal experience and the digitization of our products • Improved the external experience for customers with improvements to our e-commerce and knowledge center offerings, leading to a 22% increase in traffic to our website • Upgrading all of West's internal systems to drive more consistent and effective management of business—achieving cost savings while delivering an enhanced internal experience for our team members • Partnered with Research & Development and Operations to add digital tools and capabilities to improve business performance of products and manufacturing processes to better serve customers • Opened West's first Digital Technology Center in Bangalore to undertake digitization across internal and external experiences and product platforms in a sustainable manner, hired more than 200 people to staff the new site • Enhanced enterprise cybersecurity infrastructure and programming to better manage risk | ||||
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| 2019 Compensation Decisions • Base Salary: $410,000 • AIP Target Opportunity: 65% of base salary, prorated based on Mr. Abraham's period of employment in 2018 • 2019 AIP Payout (paid in February 2020): $340,388 representing 123.8% of target when accounting for proration and adjusted 115% to reflect performance during the year. The adjustment reflects Mr. Abraham's success in quickly developing and executing a strategy for the digitization of West during his short tenure and significantly reducing the function's operating expense • LTI Award for the 2019–21 Performance Period: $400,000, split 50% stock options and 50% PSUs as provided to other recently hired officers and required to off-set loss of equity from previous employer For 2019, at target, 62% of Mr. | ||||
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2020 Annual Meeting and Proxy Statement | 47
COMPENSATION DISCUSSION AND ANALYSIS
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| | Former Senior Vice President and Chief Commercial Officer: Karen A. Flynn In role since February 2016; Retired December 2019 | | ||
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| 2019 Performance Highlights In December 2019, Ms. Flynn announced her retirement from West effective as of December 31, 2019 after more than 26 years with West. Having led the business through an extraordinary period of growth, she stepped down at a time when the organization is strong and poised for the future. As a result of her retirement, we appointed two internal candidates to lead two distinct components of the Commercial organization: Commercial Products & Emerging Markets and Global Market Units & Commercial Solutions. This new organizational structure will allow more focus and enable us to continue to grow our business in Prior to her announced retirement, Ms. Flynn delivered on full-year 2019 net sales growth of 6.9% for the Proprietary Products Business Unit and helped to generate double-digit organic sales growth of High Value Products and full-year 2019 net sales growth of 7.9% for our Contract-Manufactured Products Segment. This performance was taken into consideration while setting her 2019 compensation. | ||||
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| 2019 Compensation Decisions • Base Salary: 2.0% increase, raising base • AIP Target Opportunity: 70% of base salary, flat from 2017, representing target opportunity of •
• LTI Award for For 2019, at target, 68% of Ms. Flynn's pay was at risk and subject to attainment of specific performance goals. Given | ||||
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4648 | 20192020 Annual Meeting and Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
Other Compensation Practices |
Post-Employment Compensation Arrangements
During 2018,2019, NEOs hired on or before January 1, 2017 (Mr. Green, Ms. Flynn, Mr. MontecalvoMiller and Mr. Federici)Montecalvo) participated in our defined benefit retirement plan and all NEOs were eligible to participate in our defined contribution retirement plan for all employees. In addition to the standard benefits available to all eligible employees, we maintain nonqualified retirement plans in which these executives participate in the same capacity as eligible salaried employees.
All tax-qualified defined benefit plans have a maximum compensation limit and a maximum annual benefit, which limits the benefit to participants whose compensation exceeds these limits. The nonqualified retirement plans offered by the Company provide benefits to key salaried employees, including each NEO, using the same benefit formulas as the tax-qualified plans but without regard to the compensation limits and maximum benefit accruals for tax-qualified plans.
We also provide our NEOs with benefits upon termination in various circumstances, as described under "Estimated Payments Following Termination" and "Payments on Termination in Connection with a Change-in-Control" sections below.
We believe that our existing arrangements help executives remain focused on our business in the event of a threat or occurrence of a CICchange in control and encourage them to act in the best interests of the shareholders in assessing and implementing a transaction. With regard to Mr. Green's severance arrangement, we believe severance pay is necessary to attract and retain a quality CEO candidate and that the benefits of securing a release of claims, cooperation and non-disparagement provision from Mr. Green upon an involuntary termination are significant.
Beginning withThe Company's CIC agreements entered into after 2010, the Company eliminateddo not include excise tax gross-ups and single-triggers under these typeswhere benefits would be paid without a termination of agreements. With Mr. Federici's retirement, no remaining current agreement includes an excise tax gross-up or permits payment in the event of voluntary termination without good reason. All currentemployment. Additionally, our CIC agreements include a cutback in payments and benefits if the NEO would be in a more favorable after-tax position and provide that no benefits are payable upon a voluntary resignation that is not due to "good reason."
Mr. Green has a separate employment agreement that contains many provisions similar provisions to those contained in the CIC,form of Change in Control Agreement for other officers, but also includes other terms and conditions that resulted from negotiations relating to compensation and termination.
The terms and conditions of all these agreements are described in more detail in the Compensation Tables section of this Proxy Statement.
Personal Benefits
The benefits provided to our NEOs are generally the same as or consistent with those provided to our other salaried employees. However, upon hire, Mr. Birkett, an Irish citizen, was provided tax planning and preparation reimbursement up to $15,000 per year (not subject to gross-up). This was due to a unique challenge regarding his change from an expatriate package at his prior employer to a local hire at West as well as complications due to the relocation of a non-U.S. citizen.
Retention Cash
Occasionally, the Committee pays signing and retention bonuses in cash. These bonuses may have repayment obligations. The primary purpose of these payments is to replace equity or cash payments a new officer will forfeit from his/her former employer upon joining West.
Realizable Pay Analysis
The Committee works with Pay Governance to review pay granted and realizable by the CEO in the context of West's performance. Realizable pay is calculated using actual bonuses earned, end of period stock values and in-the-money value of stock options granted during the year. It takes a retrospective look at pay versus performance. The analysis showed that there was a high correlation between the realizable pay earned by our CEO and the Company's performance as measured by TSR,total shareholder return, sales CAGR, ROIC and similar financial metrics compared to other members in our Business Segment Group. The Committee determined this analysis is consistent with its pay-for-performance philosophy and that our incentive plans are operating as intended.
Risk Considerations in Our Compensation Programs
The Committee, in consultation with our internal auditor and our independent compensation consultant, has reviewed our compensation policies and practices for our officers and employees and concluded that any risks arising from these policies and
2020 Annual Meeting and Proxy Statement | 49
COMPENSATION DISCUSSION AND ANALYSIS
programs are not reasonably likely to have a material adverse effect on the Company. The Committee believes that the mix and design of the elements of our compensation program are appropriate and encourage executive officers and key employees to strive to achieve goals that benefit the Company and our shareholders over the long term.
2019 Annual Meeting and Proxy Statement | 47
COMPENSATION DISCUSSION AND ANALYSIS
Our compensation policies and procedures are applied uniformly to all eligible participants. By targeting both company-wide and business-unit performance goals in our annual bonus plans and long-term compensation, we believe we have allocated our compensation between base salary and short- and long-term target opportunities in a way that does not encourage excessive risk-taking by our employees.
Policy on Hedging and Pledging
We prohibit directors, officers and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, which would allow them to continue to own our common stock, but without the full risks and rewards of ownership. We also prohibit directors, NEOs and other senior employees from engaging in pledging, short sales or other short-position transactions in our common stock.
Impact of Tax and Accounting Treatment
The Compensation Committee selects compensation vehicles that will, in its view, create the best link between pay and performance. Generally, the accounting and tax treatments of executive compensation has not been a significant factor in the Compensation Committee's decisions regarding the amounts or types of compensation paid. Our programs have been designed where appropriate and consistent with our compensatory goals to maximize deductibility under applicable tax law.law unless it conflicts with our compensatory goals. The Committee also considers the impact of changes to accounting regulations and tax law, such as the Tax Cut and Jobs Act of 2017, when reviewing elements of compensation, including equity and other performance-based awards.
4850 | 20192020 Annual Meeting and Proxy Statement
COMPENSATION TABLES
Compensation Tables |
The following tables, narrative and footnotes discuss the compensation of the NEOs during 2018.2019.
| Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Awards ($) | | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value & Nonqualified Deferred Compensation Earnings(2) ($) | | All Other Compensation | Total | Year | Salary ($) | Bonus(1) ($) | Stock Awards ($) | | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value & Nonqualified Deferred Compensation Earnings(2) ($) | | All Other Compensation | Total | ||||||||||||||||||
| Eric M. Green | 2018 | 879,615 | - | 1,776,454 | 1,750,014 | 865,132 | 64,977 | 42,621 | 5,378,813 | 2019 | 935,769 | — | 2,100,020 | 2,100,017 | 1,228,406 | 51,963 | 117,513 | 6,533,687 | ||||||||||||||||||||||||
| President & Chief Executive | 2017 | 824,038 | - | 1,526,814 | 1,500,071 | 748,808 | 95,660 | 61,172 | 4,756,563 | 2018 | 879,615 | — | 1,776,454 | 1,750,014 | 865,132 | 64,977 | 42,621 | 5,378,813 | ||||||||||||||||||||||||
| Officer | 2016 | 749,039 | - | 1,026,285 | 1,000,020 | 738,575 | 70,066 | 64,142 | 3,648,127 | 2017 | 824,038 | — | 1,526,814 | 1,500,071 | 748,808 | 95,660 | 61,172 | 4,756,563 | ||||||||||||||||||||||||
| Bernard J. Birkett | 2018 | 279,231 | 390,000 | 1,312,465 | | 312,529 | 190,511 | | - | | 319,060 | 2,803,796 | 2019 | 564,385 | 91,667 | 383,257 | | 375,003 | 491,362 | | — | | 35,208 | 1,940,882 | ||||||||||||||||||
| SVP, CFO & | | | | | | | | | | | | | 2018 | 279,231 | $390,000 | 1,312,465 | | 312,529 | 190,511 | | | | 319,060 | 2,803,795 | ||||||||||||||||||
| Treasurer Finance | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| George L. Miller(3) | 2019 | 438,154 | — | 351,848 | 300,002 | 354,068 | 5,444 | 42,906 | 1,492,422 | |||||||||||||||||||||||||||||||||
| Sr VP General Counsel | 2018 | 426,000 | — | 351,916 | 299,968 | 256,222 | 47,499 | 24,844 | 1,406,449 | |||||||||||||||||||||||||||||||||
| & Corporate Secretary | 2017 | 409,808 | — | 356,496 | 300,029 | 226,320 | 47,280 | 27,753 | 1,367,686 | |||||||||||||||||||||||||||||||||
| Silji Abraham | 2019 | 421,000 | — | 240,645 | | 200,002 | 340,388 | | — | | 35,104 | 1,237,139 | ||||||||||||||||||||||||||||||
| SVP & Chief Digital | 2018 | 339,038 | $68,333 | 599,972 | | 199,985 | 241,552 | | | | 42,640 | 1,491,520 | ||||||||||||||||||||||||||||||
| & Transf Officer | | | | |||||||||||||||||||||||||||||||||||||||
| David A. Montecalvo | 2018 | 401,461 | - | 407,135 | 400,037 | 264,290 | 30,296 | 16,392 | 1,519,611 | 2019 | 421,923 | — | 211,244 | 200,002 | 341,998 | 10,591 | 37,728 | 1,223,485 | ||||||||||||||||||||||||
| SVP Global Operations | 2017 | 377,846 | - | 202,251 | 199,923 | 166,399 | 27,403 | 140,522 | 1,114,344 | 2018 | 401,461 | — | 407,135 | 400,037 | 264,290 | 30,296 | 16,392 | 1,519,612 | ||||||||||||||||||||||||
| & Supply Chain | ||||||||||||||||||||||||||||||||||||||||||
| Karen A. Flynn | 2018 | 492,692 | - | 350,044 | | 350,003 | 260,014 | | 16,029 | | 28,446 | 1,497,228 | ||||||||||||||||||||||||||||||
| SVP & Chief | 2017 | 469,615 | - | 500,069 | | 499,952 | 281,904 | | 112,801 | | 38,306 | 1,902,647 | ||||||||||||||||||||||||||||||
| & Supple Chain | 2017 | 377,846 | — | 202,251 | 199,923 | 166,399 | 27,403 | 140,522 | 1,114,344 | |||||||||||||||||||||||||||||||||
| Karen A. Flynn(4) | 2019 | 503,462 | — | 350,072 | | 350,003 | 437,633 | | 102,936 | | 45,264 | 1,789,369 | ||||||||||||||||||||||||||||||
| Former SVP & Chief | 2018 | 492,692 | — | 350,044 | | 350,003 | 260,014 | | 16,029 | | 28,446 | 1,497,228 | ||||||||||||||||||||||||||||||
| Commercial Officer | 2016 | 439,881 | - | 350,027 | | 350,005 | 309,960 | | 91,642 | | 27,162 | 1,568,677 | 2017 | 469,615 | — | 500,069 | | 499,952 | 281,904 | | 112,801 | | 38,306 | 1,902,647 | ||||||||||||||||||
| Silji Abraham(4) | 2018 | 339,038 | 68,333 | 599,972 | 199,985 | 241,552 | - | 42,640 | 1,491,520 | |||||||||||||||||||||||||||||||||
| SVP & Chief Digital | ||||||||||||||||||||||||||||||||||||||||||
| & Transformation Officer | ||||||||||||||||||||||||||||||||||||||||||
| William J. Federici(5) | 2018 | 491,062 | - | 350,044 | | 350,003 | 339,978 | | 89,626 | | 24,597 | 1,645,310 | ||||||||||||||||||||||||||||||
| Former SVP, CFO | 2017 | 535,462 | - | 349,990 | | 350,045 | 340,424 | | 270,150 | | 31,333 | 1,877,404 | ||||||||||||||||||||||||||||||
| & Treasurer | 2016 | 517,264 | - | 350,027 | | 350,005 | 375,244 | | 249,457 | | 21,616 | 1,863,613 | ||||||||||||||||||||||||||||||
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20192020 Annual Meeting and Proxy Statement | 4951
COMPENSATION TABLES
Stock Awards |
Stock Awards Grant Date Fair Value (Target) 2016-182017-19
| | 2018 | 2017 | 2016 | | 2019 | 2018 | 2017 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | PSU Awards ($) | Incentive Shares ($) | RSU Awards ($) | PSU Awards ($) | Incentive Shares ($) | PSU Awards ($) | Incentive Shares ($) | PSU Awards ($) | Incentive Shares ($) | PSU Awards ($) | Incentive Shares ($) | RSU Awards ($) | PSU Awards ($) | Incentive Shares ($) | ||||||||||||||
| Eric M. Green | | 1,750,042 | | 26,412 | | — | | 1,500,039 | | 26,774 | | 999,984 | | 26,301 | | $2,100,020 | | — | | $1,750,042 | | $26,412 | | — | | $1,500,039 | | $26,774 |
| Bernard J. Birkett | | 312,549 | | — | | 999,915 | | — | | — | | — | | — | | $375,084 | | $8,173 | | $312,549 | | — | | $999,915 | | — | | — |
| George L. Miller | | $300,047 | | — | | $300,115 | | $0 | | $0 | | $299,991 | | $56,505 | ||||||||||||||
| Silji Abraham | | $200,100 | | $40,545 | | $199,991 | | — | | $399,981 | | — | | — | ||||||||||||||
| David A. Montecalvo | | 399,974 | | 7,161 | | — | | 200,078 | | 2,173 | | — | | — | | $200,100 | | $11,145 | | $399,974 | | $7,161 | | — | | $200,078 | | $2,173 |
| Karen A. Flynn | | 350,044 | | — | | — | | 500,069 | | | | 350,027 | | — | | $350,072 | | — | | $350,044 | | — | | — | | $500,069 | | |
| Silji Abraham | | 199,991 | | — | | 399,981 | | — | | — | | — | | — | ||||||||||||||
| William J. Federici | | 350,044 | | — | | — | | 349,990 | | — | | 350,027 | | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PSU and Incentive Share terms and conditions are described in the "Compensation Discussion and Analysis" section of this Proxy Statement. Each share is valued as of the grant date. The table below shows the maximum payout for PSU awards made in 2019, 2018 2017 and 2016.2017.
Stock Awards PSU Grant Date Maximum Value 2016-182017-19
| Name | 2018 ($) | 2017 ($) | 2016 ($) | 2019 ($) | 2018 ($) | 2017 ($) | ||||||||||||||
| Eric M. Green | | 3,500,083 | | 3,000,078 | | 1,999,968 | | | 4,200,040 | | 3,500,083 | | 3,000,078 | | ||||||
| Bernard J. Birkett | | 625,098 | | — | | — | | | 750,168 | | 625,098 | | — | | ||||||
| George L. Miller | | 600,094 | | 600,229 | | 599,982 | | |||||||||||||
| Silji Abraham | | 400,199 | | 399,981 | | — | | |||||||||||||
| David A. Montecalvo | | 799,947 | | 400,155 | | — | | | 400,199 | | 799,947 | | 400,155 | | ||||||
| Karen A. Flynn | | 700,088 | | 1,000,138 | | 700,010 | | | 700,143 | | 700,088 | | 1,000,138 | | ||||||
| Silji Abraham | | 399,981 | | — | | — | | |||||||||||||
| William J. Federici | | 700,088 | | 699,979 | | 700,010 | | |||||||||||||
| | | | | | | | | | | | | | | | ||||||
5052 | 20192020 Annual Meeting and Proxy Statement
COMPENSATION TABLES
Option Awards |
The amounts in the "Option Awards" column reflect the grant date fair value in each year, computed according to FASB ASC Topic 718. We use the Black-Scholes option pricing model to calculate grant date fair value based on the following assumptions for the named recipients:
Option Awards FASB ASC Topic 718
| | Jun 21, 2018 | | Feb 26, 2018 | | Feb 20, 2018 | | Feb 21, 2017 | | Sept 26, 2016 | | Feb 23, 2016 | | Feb 19, 2019 | | Jun 21, 2018 | | Feb 26, 2018 | | Feb 20, 2018 | | Feb 21, 2017 | ||||||||||||||
Expected Life (Years) | 5.6 | 5.6 | 5.6 | 5.9 | 5.9 | 5.9 | 5.6 | 5.6 | 5.6 | 5.6 | 5.9 | ||||||||||||||||||||||||
Rick-Free Interest Rate | | 2.63% | | 2.64% | | 2.68% | | 2.05% | | 1.25% | | 1.35% | | 2.34% | | 2.63% | | 2.64% | | 2.68% | | 2.05% | |||||||||||||
Dividend Yield | 0.89% | 0.74% | 0.71% | 0.72% | 0.70% | 0.94% | 0.66% | 0.89% | 0.74% | 0.71% | 0.72% | ||||||||||||||||||||||||
Expected Volatility | | 20.71% | | 19.69% | | 19.69% | | 19.90% | | 19.60% | | 20.40% | | 22.46% | | 20.71% | | 19.69% | | 19.69% | | 19.90% | |||||||||||||
Black-Scholes Value | $22.51 | $19.01 | $19.95 | $17.94 | $13.89 | $11.53 | $24.51 | $22.51 | $19.01 | $19.95 | $17.94 | ||||||||||||||||||||||||
Recipients | | Birkett | | Abraham | | Green Federici Flynn Montecalvo | | Green Federici Flynn Montecalvo | | Montecalvo | | Green Federici Flynn | | All NEOs | | Birkett | | Abraham | | Green Montecalvo Miller Flynn | | Green Montecalvo Miller Flynn | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For a more detailed discussion of the assumptions used to calculate grant date fair value for our options, refer to Note 1314 to the consolidated financial statements included in our 20182019 Annual Report.
Non-Equity Incentive Plan Compensation |
The amounts in the "Non-Equity Incentive Plan Compensation" column are AIP awards made with respect to 20182019 performance. AIP awards are paid in cash, except participants may elect to have up to 100% paid in Company common stock on a pre-tax or after-tax basis.
Mr. Green, Mr. Miller, and Ms. Flynn and Mr. Federici each hadelected to receive their awards paid in cash.
Mr. Birkett, Mr. MontecalvoAbraham and Mr. AbrahamMontecalvo all elected to receive 25% of their after-tax bonus award in stock. The table below details theMr. Birkett, Mr. Abraham, and Mr. Montecalvo received 541, 370, and 373 shares granted as of March 1, 2019respectively based on a per-share grantpurchase price of $106.14.$156.49.
The values of these shares are not included in this column, but will be included in our 2020 Proxy Statement in the "Stock Awards" column, and, if deferred, will also be reflected in next year's "Nonqualified Deferred Compensation Table."
| NEO | Shares Granted | Grant Date Fair Market Value | Restricted Incentive Shares Granted | Grant Date Fair Market Value | |||||||||
| Bernard J. Birkett | | 308 | | $32,691 | | 77 | | $8,173 | | ||||
| David A. Montecalvo | | 421 | | $44,685 | | 105 | | $11,145 | | ||||
| Silji Abraham | | 382 | | $40,545 | | 95 | | $10,083 | | ||||
| | | | | | | | | | | ||||
20192020 Annual Meeting and Proxy Statement | 5153
COMPENSATION TABLES
All Other Compensation |
The amounts in the "All Other Compensation" column consist of: (1) for all NEOs, the total of the Company matching contributions made in 20182019 on cash deferrals to the Employee Deferred Compensation Plan and 401(k) plan;plan and any non-elective contributions made on behalf of employees who exceed the applicable Code limits; (2) Company-paid life insurance premiums; (3) DEUs credited in 20182019 on unearned PSUs (assuming a 100% performance level) and unvested time-vesting restricted stock or RSUs, whether or not those awards have been deferred; (4) reimbursements for tax gross-up related to the valueassistance services included in Mr. Birkett's offer of a retirement gift and relocation expenses; (5) the value of the retirement gift; and (6) reimbursement of relocation expenses.employment; no amounts were grossed up for taxes.
The table below shows a breakdown of the total amount shown in the "All Other Compensation" column of the 20182019 Summary Compensation Table.
Components of All Other Compensation—20182019
Name | Defined Contribution Plan Company Contributions ($) | Life Insurance ($) | Dividends & Dividend Equivalents ($) | Tax Reimburstments | Other | Relocation Expenses ($) | Total ($) | Defined Contribution Plan Company Contributions ($) | Life Insurance ($) | Dividends & Dividend Equivalents ($) | Other | Total ($) | ||||||||||||||||||||||||||||||||||||||||||
Eric M. Green | | | 11,000 | | | 504 | | | 31,117 | | | 0 | | | 0 | | | 0 | | | 42,621 | | | | 65,227 | | | 546 | | | 51,740 | | | -0- | | 117,513 | | |||||||||||||||||
Bernard J. Birkett | | | 6,981 | | | 252 | | | 3,360 | | | 132,325 | | | 0 | | | 176,142 | | | 319,060 | | | | 19,600 | | | 546 | | | 3,950 | | | 11,112 | | 35,208 | | |||||||||||||||||
George L. Miller | | | 32,115 | | | 467 | | | 10,324 | | | -0- | | 42,906 | | |||||||||||||||||||||||||||||||||||||||
Silji Abraham | | | 31,077 | | | 448 | | | 3,579 | | | -0- | | 35,104 | | |||||||||||||||||||||||||||||||||||||||
David A. Montecalvo | | | 10,833 | | | 385 | | | 5,174 | | | 0 | | | 0 | | | 0 | | | 16,392 | | | | 31,786 | | | 442 | | | 5,499 | | | -0- | | 37,728 | | |||||||||||||||||
Karen A. Flynn | | | 19,708 | | | 484 | | | 8,254 | | | 0 | | | 0 | | | 0 | | | 28,446 | | | | 34,104 | | | 541 | | | 10,619 | | | -0- | | 45,264 | | |||||||||||||||||
Silji Abraham | | | 13,246 | | | 318 | | | 2,901 | | | 10,185 | | | 0 | | | 15,990 | | | 42,640 | | ||||||||||||||||||||||||||||||||
William J. Federici | | | 11,000 | | | 504 | | | 7,253 | | | 2,641 | | | 3,199 | | | 0 | | | 24,597 | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||
5254 | 20192020 Annual Meeting and Proxy Statement
COMPENSATION TABLES
The following table provides information on stock options and PSUs granted to our NEOs in 2018.2019.
| | | | Estimated Future Payout Under Non-Equity Incentive Plan Awards (AIP)(1) | Estimated Future Payout Under Equity Incentive Plan Awards( 2) | All Other Stock Awards: Number of Stock or | All Other Options Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock and Option | | | | Estimated Future Payout Under Non-Equity Incentive Plan Awards (AIP)(1) | Estimated Future Payout Under Equity Incentive Plan Awards( 2) | All Other Stock Awards: Number of Stock or | All Other Options Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock and Option | |||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Units (#)(3) | Options (#) | Awards ($/sh) | Awards ($)(4) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Units (#)(3) | Options (#) | Awards ($/sh) | Awards ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||
Eric M. Green | | 2/20/2018 | | 464,625 | | 929,250 | | 1,393,875 | | | | | | | | | | 2/19/2019 | | 496,125 | | 992,250 | | 1,488,375 | | | | | | | | | ||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | | | 9,762 | | 19,523 | | 39,046 | | | | | 1,750,042 | | | 2/19/2019 | | | | | 10,243 | | 20,486 | | 40,972 | | | | | 2,100,020 | | |||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | 284 | | | | 26,412 | | | 2/19/2019 | | | | | | | | | 85,680 | | 102.51 | | 2,100,017 | | ||||||||||||||||||||||||||||||||||||||
Bernard J. Birkett | | 2/19/2019 | | 198,450 | | 396,900 | | 595,350 | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| | 2/19/2019 | | | | | | | | 1,830 | | 3,659 | | 7,318 | | | | | | | | 375,084 | | |||||||||||||||||||||||||||||||||||||||||||||
| | 3/1/2019 | | | | | | | | | | | | | | 77 | | | | | | 8,173 | | |||||||||||||||||||||||||||||||||||||||||||||
| | 2/19/2019 | | | | | | | | | | | | | | | | 15,300 | | 102.51 | | 375,003 | | |||||||||||||||||||||||||||||||||||||||||||||
George L. Miller | | 2/19/2019 | | 143,000 | | 286,000 | | 429,000 | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | | 87,720 | | 89.64 | | 1,750,014 | | | 2/19/2019 | | | | | 1,464 | | 2,927 | | 5,854 | | | | | 300,047 | | ||||||||||||||||||||||||||||||||||||
Bernard J. Birkett | | 6/21/2018 | | 192,500 | | 385,000 | | 577,500 | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| | 2/19/2019 | | | | | | | | | 12,240 | | 102.51 | | 300,002 | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Silji Abraham | | 2/19/2019 | | 137,475 | | 274,950 | | 412,425 | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| | 6/21/2018 | | | | | | | | 1,549 | | 3,097 | | 6,194 | | | | | | | | 312,549 | | | 2/19/2019 | | | | | | | | 976 | | 1,952 | | 3,904 | | | | | | | | 200,100 | | ||||||||||||||||||||||
| | 6/21/2018 | | | | | | | | | | | | | | 9,908 | | | | | | 999,915 | | | 3/1/2019 | | | | | | | | | | | | | | 382 | | | | | | 40,545 | | ||||||||||||||||||||||
| | 6/21/2018 | | | | | | | | | | | | | | | | 13,884 | | 100.92 | | 312,529 | | | 2/19/2019 | | | | | | | | | | | | | | | | 8,160 | | 102.51 | | 200,002 | | ||||||||||||||||||||||
David A. Montecalvo | | 2/20/2018 | | 131,625 | | 263,250 | | 394,875 | | | | | | | | | | 2/19/2019 | | 138,125 | | 276,250 | | 414,375 | | | | | | | | | ||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | | | 2,231 | | 4,462 | | 8,924 | | | | | 399,974 | | | 2/19/2019 | | | | | 976 | | 1,952 | | 3,904 | | | | | 200,100 | | |||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | 77 | | | | 7,161 | | | 3/1/2019 | | | | | | | | 105 | | | | 11,145 | | |||||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | | 20,052 | | 89.64 | | 400,037 | | | 2/19/2019 | | | | | | | | | 8,160 | | 102.51 | | 200,002 | | |||||||||||||||||||||||||||||||||||||
Karen A. Flynn | | 2/20/2018 | | 173,250 | | 346,500 | | 519,750 | | | | | | | | | | | | | | | | | 2/19/2019 | | 176,750 | | 353,500 | | 530,250 | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | 1,953 | | 3,905 | | 7,810 | | 0 | | | | | | 350,044 | | | 2/19/2019 | | | | | | | | 1,708 | | 3,415 | | 6,830 | | | | | | | | 350,072 | | ||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | | | | | | | | | 17,544 | | 89.64 | | 350,003 | | | 2/19/2019 | | | | | | | | | | | | | | | | 14,280 | | 102.51 | | 350,003 | | ||||||||||||||||||||||
Silji Abraham | | 2/26/2018 | | 133,250 | | 266,500 | | 399,750 | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/26/2018 | | | | | 1,160 | | 2,319 | | 4,638 | | | | | 199,991 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/26/2018 | | | | | | | | 4,638 | | | | 399,981 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/26/2018 | | | | | | | | | 10,520 | | 86.24 | | 199,985 | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
William J. Federici | | 2/20/2018 | | 202,875 | | 405,750 | | 608,625 | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | 1,953 | | 3,905 | | 7,810 | | 0 | | | | | | 350,044 | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | 2/20/2018 | | | | | | | | | | | | | | | | 17,544 | | 89.64 | | 350,003 | | |||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
20192020 Annual Meeting and Proxy Statement | 5355
COMPENSATION TABLES
The following table contains information on the current holdings of stock options, unearned PSUs, RSUs and restricted stock held by our NEOs on December 31, 2018.2019.
| | Option Awards(1) | Stock Awards | | Option Awards(1) | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | Restricted Stock/RSUs(2) | Bonus Incentive Awards(3) | PSUs(4)—Equity Incentive Plan Awards | | | | | | | Restricted Stock/RSUs(2) | Bonus Incentive Awards(3) | PSUs(4)—Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options UnExercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Number of Bonus Incentive Shares or Units That Have Not Vested (#) | Market Value or Payout Value of Unearned Shares or Units or Other Rights That Have Not Vested ($) | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value or Payout Value of Unearned Shares or Units or Other Rights That Have Not Vested ($) | | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options UnExercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Number of Bonus Incentive Shares or Units That Have Not Vested (#) | Market Value or Payout Value of Unearned Shares or Units or Other Rights That Have Not Vested ($) | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value or Payout Value of Unearned Shares or Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eric M. Green(5) | | | | | | | | | | | | 13,394 | | | 1,312,984 | | | 1,039 | | | 101,853 | | | 54,799 | | | 5,371,987 | | | | | | | | | | | | | 13,459 | | | 2,023,251 | | | 1,045 | | | 157,021 | | | 58,495 | | | 8,793,534 | | ||||||||||||||||||||||||||||||||||||||||
Hire Grant 1 | | 4/24/2015 | | | 93,897 | | | 70,423 | | | 57.38 | | | 4/24/2025 | | | | | | | | | | | | | | | 4/24/2015 | | | 93,897 | | | 70,423 | | | 57.38 | | | 4/24/2025 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Hire Grant 2 | | 4/24/2015 | | | 53,996 | | | 0 | | | 57.38 | | | 4/24/2025 | | | | | | | | | | | | | | | 4/24/2015 | | | 53,996 | | | | | 57.38 | | | 4/24/2025 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
Hire Grant 3 | | 4/24/2015 | | | 59,862 | | | 19,954 | | | 57.38 | | | 4/24/2025 | | | | | | | | | | | | | | | 4/24/2015 | | | 79,816 | | | | | 57.38 | | | 4/24/2025 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
| | 2/23/2016 | | | 43,366 | | | 43,366 | | | 59.64 | | | 2/23/2026 | | | | | | | | | | | | | | | 2/23/2016 | | | 65,049 | | | 21,683 | | | 59.64 | | | 2/23/2026 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
| | 2/21/2017 | | | 20,904 | | | 62,712 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | | 2/21/2017 | | | 41,808 | | | 41,808 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | 0 | | | 87,720 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | | 2/20/2018 | | | 21,930 | | | 65,790 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
| | 2/19/2019 | | | | | 85,680 | | | 102.51 | | | 2/19/2029 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bernard J. Birkett(6) | | | | | | | | | | | | | | | | | 9,934 | | | 973,841 | | | 0 | | | 0 | | | 3,105 | | | 304,399 | | | | | | | | | | | | | | | | | | 7,487 | | | 1,125,485 | | | 77 | | | 11,615 | | | 6,792 | | | 1,020,997 | | ||||||||||||||||||||||||||||||
| | 6/21/2018 | | | 0 | | | 13,884 | | | 100.92 | | | 6/21/2028 | | | | | | | | | | | | | | | | | | | | | 6/21/2018 | | | 3,471 | | | 10,413 | | | 100.92 | | | 6/21/2028 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
David A. Montecalvo(7) | | | | | | | | | | | | 1,411 | | | 138,365 | | | 102 | | | 9,999 | | | 9,021 | | | 884,282 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/19/2019 | | | | | | 15,300 | | | 102.51 | | | 2/19/2029 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
George L. Miller(7) | | | | | | | | | | | | | | | | -0- | | | -0- | | | 9,963 | | | 1,497,723 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hire Grant 1 | | 11/19/2015 | | | 15,724 | | | | | 62.30 | | | 11/19/2025 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hire Grant 2 | | 11/19/2015 | | | 7,860 | | | | | 62.30 | | | 11/19/2025 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/23/2016 | | | 19,515 | | | 6,505 | | | 59.64 | | | 2/23/2026 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/21/2017 | | | 8,362 | | | 8,362 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | 3,759 | | | 11,277 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/19/2019 | | | | | 12,240 | | | 102.51 | | | 2/19/2029 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Silji Abraham(8) | | | | | | | | | | | | | | | | | 3,120 | | | 469,065 | | | 383 | | | 57,622 | | | 4,299 | | | 646,242 | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/26/2018 | | | 2,630 | | | 7,890 | | | 86.24 | | | 2/26/2028 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/19/2019 | | | | | | 8,160 | | | 102.51 | | | 2/19/2029 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David A. Montecalvo(9) | | | | | | | | | | | | 1,418 | | | 213,215 | | | 208 | | | 31,322 | | | 8,894 | | | 1,337,032 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 9/26/2016 | | | 8,094 | | | 2,698 | | | 71.79 | | | 9/26/2026 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 9/26/2016 | | | 5,396 | | | 5,396 | | | 71.79 | | | 9/26/2026 | | | | | | | | | | | | | | | 2/21/2017 | | | 5,572 | | | 5,572 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
| | 2/21/2017 | | | 2,786 | | | 8,358 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | | 2/20/2018 | | | 5,013 | | | 15,039 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | 0 | | | 20,052 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | | 2/19/2019 | | | | | 8,160 | | | 102.51 | | | 2/19/2029 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
Karen A. Flynn | | | | | | | | | | | | | | | | | 0 | | | 0 | | | 179 | | | 17,547 | | | 15,938 | | | 1,562,405 | | | | | | | | | | | | | | | | | | | | | | | | -0- | | | -0- | | | 13,447 | | | 2,021,524 | | ||||||||||||||||||||||||||||||
| | 7/24/2012 | | | 20,982 | | | 0 | | | 25.15 | | | 7/24/2022 | | | | | | | | | | | | | | | | | | | | | 7/24/2012 | | | 20,982 | | | | | | 25.15 | | | 7/24/2022 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/19/2013 | | | 26,338 | | | 0 | | | 29.56 | | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | | 2/19/2013 | | | 26,338 | | | | | | 29.56 | | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/24/2014 | | | 14,465 | | | 0 | | | 47.34 | | | 2/24/2024 | | | | | | | | | | | | | | | | | | | | | 2/24/2014 | | | 14,465 | | | | | | 47.34 | | | 2/24/2024 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 9/29/2014 | | | 15,528 | | | 0 | | | 44.95 | | | 9/29/2024 | | | | | | | | | | | | | | | | | | | | | 9/29/2014 | | | 15,528 | | | | | | 44.95 | | | 9/29/2024 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/23/2015 | | | 22,080 | | | 7,360 | | | 54.14 | | | 2/23/2025 | | | | | | | | | | | | | | | | | | | | | 2/23/2015 | | | 29,440 | | | | | | 54.14 | | | 2/23/2025 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 10/20/2015 | | | 1,875 | | | 625 | | | 55.42 | | | 10/20/2025 | | | | | | | | | | | | | | | | | | | | | 10/20/2015 | | | 2,500 | | | | | | 55.42 | | | 10/20/2025 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/23/2016 | | | 15,178 | | | 15,178 | | | 59.64 | | | 2/23/2026 | | | | | | | | | | | | | | | | | | | | | 2/23/2016 | | | 22,767 | | | 7,589 | | | 59.64 | | | 2/23/2026 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/21/2017 | | | 4,878 | | | 14,634 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | | | | | | | | 2/21/2017 | | | 9,756 | | | 9,756 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/21/2017 | | | 2,089 | | | 6,267 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | | | | | | | | 2/21/2017 | | | 4,178 | | | 4,178 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/20/2018 | | | 0 | | | 17,544 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | | | | | | | | 2/20/2018 | | | 4,386 | | | 13,158 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
Silji Abraham(8) | | | | | | | | | | | | 4,658 | | | 456,597 | | | 0 | | | 0 | | | 2,329 | | | 228,299 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/26/2018 | | | 0 | | | 10,520 | | | 86.24 | | | 2/26/2028 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William J. Federici | | | | | | | | | | | | | | | | | 0 | | | 0 | | | 0 | | | 0 | | | 14,122 | | | 1,384,394 | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/22/2011 | | | 68,494 | | | 0 | | | 20.43 | | | 2/22/2021 | | | | | | | | | | | | | | | | | | | | | 2/19/2019 | | | 0 | | | 14,280 | | | 102.51 | | | 2/19/2029 | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | 2/21/2012 | | | 81,968 | | | 0 | | | 21.22 | | | 2/21/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | 2/19/2013 | | | 57,068 | | | 0 | | | 29.56 | | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 3/26/2013 | | | 4,036 | | | 0 | | | 32.19 | | | 3/26/2023 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/24/2014 | | | 33,751 | | | 0 | | | 47.34 | | | 2/24/2024 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/23/2015 | | | 25,761 | | | 8,587 | | | 54.14 | | | 2/23/2025 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/23/2016 | | | 15,178 | | | 15,178 | | | 59.64 | | | 2/23/2026 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/21/2017 | | | 4,878 | | | 14,634 | | | 83.47 | | | 2/21/2027 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2/20/2018 | | | 0 | | | 17,544 | | | 89.64 | | | 2/20/2028 | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
56 | 2020 Annual Meeting and Proxy Statement
COMPENSATION TABLES
and reinvested as additional stock subject to the same vesting requirements as the underlying shares. The market value of all restricted shares and RSUs is based on the closing price of our common stock on December 31, 20182019 of $98.03.
54 | 2019 Annual Meeting and Proxy Statement$150.33.
COMPENSATION TABLES
20192020 Annual Meeting and Proxy Statement | 5557
COMPENSATION TABLES
|
The following table provides information about the value realized by our NEOs on the exercise of stock options and vesting of stock awards and units during 2018. Mr. Birkett, Mr. Montecalvo and Mr. Abraham did not exercise2019. None of the NEOs exercised any options or have any stock vest in 2018.2019.
20182019 Option Exercises and Stock Vested Table
| | | Option Awards | Stock Awards | | Stock Awards | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | ||||||||||||||||||
| Name | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | ||||||||||||||||||||||||
| Eric M. Green | | | 0 | | | 0 | | | 27,774 | | | 2,987,457 | | | | | 8,430 | | | 864,159 | | | ||||||||||
| Bernard Birkett | | | 2,490 | | | 303,902 | | | ||||||||||||||||||||||||
| George L. Miller | | | 9,102 | | | 1,243,308 | | | ||||||||||||||||||||||||
| Silji Abraham | | | 1,555 | | | 161,344 | | | ||||||||||||||||||||||||
| David A. Montecalvo | | | 1,048 | | | 107,430 | | | ||||||||||||||||||||||||
| Karen A. Flynn | | | 20,458 | | | 1,900,544 | | | 5,461 | | | 507,873 | | | | | 2,951 | | | 302,507 | | | ||||||||||
| William J. Federici | | | 127,662 | | | 9,352,464 | | | 6,372 | | | 592,596 | | | ||||||||||||||||||
| | | | | | | | | | | | | | | | ||||||||||||||||||
2015-172016-18 PSU and 2018 RSU Vesting
Name | | PSUs Earned | Dividends Equivalents Paid on PSU Payouts | RSUs Earned | Dividends Equivalents Earned | | PSUs Earned | Dividends Equivalents Paid on PSU Payouts | RSUs Earned | Dividends Equivalents Earned | ||||||||||||||||||||||||||||||||
Eric M. Green | | | 14,309 | | | 260 | | | 9,850 | | | 179 | | | | | 8,281 | | | 149 | | | — | | | — | | | ||||||||||||||
Bernard Birkett | | | — | | | — | | | 2,477 | | | 13 | | | ||||||||||||||||||||||||||||
George L. Miller | | | 2,484 | | | 45 | | | 6,421 | | | 152 | | | ||||||||||||||||||||||||||||
Silji Abraham | | | — | | | — | | | 1,546 | | | 9 | | | ||||||||||||||||||||||||||||
David A. Montecalvo | | | 1,033 | | | 15 | | | — | | | — | | | ||||||||||||||||||||||||||||
Karen A. Flynn | | | 5,353 | | | 108 | | | 0 | | | 0 | | | | | 2,899 | | | 52 | | | — | | | — | | | ||||||||||||||
William J. Federici | | | 6,245 | | | 127 | | | 0 | | | 0 | | | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
5658 | 20192020 Annual Meeting and Proxy Statement
COMPENSATION TABLES
|
Qualified Retirement Plan |
Until December 31, 2006, we maintained a final average pay defined benefit pension plan, which calculated retirement benefits for all salaried participants as a percentage of average annual earnings. Effective January 1, 2007, each participant's accrued benefit under the Retirement Plan's pension formula was frozen, and the pension benefits related to service on or after January 1, 2007 for all existing and new participants are expressed as a "cash balance" type formula. Under the cash balance approach, an allocation is made at the end of each calendar year (or on employment termination, if earlier) to a participant's hypothetical cash balance account. The allocation is determined by the age of the participant and the percentage of annual compensation for that age band pursuant to the basic cash balance formula.
For participants who have attained minimum age and service requirements, an additional annual allocation is made to their accounts to replace all or part of the benefit for participants who were participating in the Retirement Plan on December 31, 2006 ("transition benefit"). The transition benefit percentage ceased on December 31, 2018. The transition benefit was applicable only to employees who were actively employed on December 31, 2006 and the allocation percentage was based on the age of the participant on that date. The transition benefit for Mr. Federici was 8.0%. All other continuing NEOs were not eligible to receive the transition benefit because they were not employed on December 31, 2006.
Each year, the balance in the hypothetical account will be credited with interest at a rate equal to the average 30-Year Treasury Bond Rate for November of the year prior to the year the interest is credited or 3.3%, if greater.
In general, the compensation used for determining a participant's benefits under the retirement plan consists of base salary, overtime, annual incentive awards (paid in cash or stock) and other cash remuneration, plus a participant's contributions to our 401(k) plan.
We froze pay and transition credits to the Retirement Plan as of December 31, 2018. Only interest credits will continue to accrue on previously accrued benefits for eligible participants on January 1, 2019 and beyond. No employees hired on or after January 1, 2017 are eligible for the Retirement Plan. In lieu of the Retirement Plan benefits, we have made enhancements to our 401(k) plan, including a non-elective contribution, which is currently 3% of a participant's compensation, subject to applicable Code limits.limits and vesting requirements.
Normal retirement age under the Retirement Plan is 65. Participants with ten years of service may retire and commence payment of their frozen benefits upon reaching age 55, with reduced benefits based on their age at the retirement date. A participant may begin distribution of his or her cash balance benefits on employment termination, without regard to age or years of service, but will forego future interest credits.
The benefit that each participant will receive at retirement will be the sum of the accrued benefit under the old pension formula as of December 31, 2006, plus the amount allocated to the participant's cash-balance account. A participant vestsAll NEOs that participate in his or her combined benefit upon completing three years of service.the Retirement Plan are vested.
Supplemental Executive Retirement Plan |
20182019 IRS requirements limit the compensation that can be used to calculate a participant's benefit under a qualified retirement plan to $275,000$280,000 and the annual benefit is limited to $220,000.$225,000. The SERP benefits are substantially equal to the difference between the total benefit accrued under the Retirement Plan and the amount of benefit the Retirement Plan is permitted to provide under the statutory limits on benefits and earnings. The benefits are unfunded and paid out of our general assets. SERP benefits (other than interest credit accruals) froze in a similar manner to the freeze to the Retirement Plan in January 2019.
The SERP provides for benefits accrued on or after January 1, 2005 to be payable in a lump sum on the date that is six months following termination of employment. Benefits accrued before that date are payable at the same time and in the same form as under the Retirement Plan. SERP benefits may be reduced to reflect early commencement of benefits before age 65. The SERP was closed to new entrants effective January 1, 2017.
20192020 Annual Meeting and Proxy Statement | 5759
COMPENSATION TABLES
20182019 Pension Benefits Table
The following table shows the present value of accumulated pension benefits that each U.S.-based NEO is eligible to receive under our Retirement Plan and the SERP. Mr. Birkett and Mr. Abraham are not eligible for and did not accrue benefits under the Retirement Plan or SERP.
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||||||||
Eric M. Green | | Retirement Plan | | 3 | | | $ | 53,523 | | | $ | — | | | | Retirement Plan | | 5 | | | $ | 63,687 | | | $ | — | | | ||
| | SERP | | 3 | | | $ | 220,107 | | | $ | — | | | | SERP | | 5 | | | $ | 261,906 | | | $ | — | | | |||
| | | | | | | | | | | | | | | | | | | | ||||||||||||
| | | | | $ | 273,630 | | | $ | — | | | | | | | $ | 273,630 | | | $ | — | | | |||||||
| | | | | | | | | | $ | — | | | |||||||||||||||||
David A. Montecalvo | | Retirement Plan | | 2 | | | $ | 45,448 | | | $ | — | | | ||||||||||||||||
George L. Miller | | Retirement Plan | | 4 | | | $ | 63,810 | | | $ | — | | | ||||||||||||||||
| | SERP | | 2 | | | $ | 25,816 | | | $ | — | | | | SERP | | 4 | | | $ | 66,650 | | | $ | — | | | ||
| | | | | | | | | | | | | | | | | | | | ||||||||||||
| | | | | | | $ | 71,264 | | | $ | — | | | | | | | | | $ | 130,460 | | | $ | — | | | ||
| | | | | | | $ | — | | | |||||||||||||||||||||
Karen A. Flynn | | Retirement Plan | | 33 | | | $ | 442,545 | | | $ | — | | | ||||||||||||||||
David A. Montecalvo | | Retirement Plan | | 3 | | | $ | 52,202 | | | $ | — | | | ||||||||||||||||
| | SERP | | 33 | | | $ | 173,699 | | | $ | — | | | | SERP | | 3 | | | $ | 29,653 | | | $ | — | | | |||
| | | | | | | | | | | | | | | | | | | | ||||||||||||
| | | | | $ | 616,244 | | | $ | — | | | | | | | $ | 81,855 | | | $ | — | | | |||||||
William J. Federici | | Retirement Plan | | 15 | | | $ | 619,928 | | | $ | — | | | ||||||||||||||||
Karen A. Flynn | | Retirement Plan | | 34 | | | $ | 523,563 | | | $ | — | | | ||||||||||||||||
| | SERP | | 15 | | | $ | 1,290,491 | | | $ | — | | | | SERP | | 34 | | | $ | 195,617 | | | $ | — | | | ||
| | | | | | | | | | | | | | | | | | | | ||||||||||||
| | | | | | | $ | 1,910,419 | | | $ | — | | | | | | | | | $ | 719,180 | | | $ | — | | | ||
| | | | | | | | | | | | | | | | | | | | ||||||||||||
| Interest Rate | Post-retirement Mortality Assumption | |||
| | | |
5860 | 20192020 Annual Meeting and Proxy Statement
COMPENSATION TABLES
|
The Employee Deferred Compensation Plan allows highly compensated employees to defer up to 100% of salary and cash bonus. Deferred cash contributions may be invested in a selection of investment options that mirror the funds available under our 401(k) plan.
With respect to employee contributions made before 2019, we matched them at the rate of 100% of the first 3% of salary deferrals, plus 50% of the next 2%, and employer matching contributions are 100% vested. Matching contributions ceased effective January 1, 2019. A non-elective contribution is also made on behalf of participants who exceed the applicable Code limits. Before 2019, participants were eligible to defer payout of annual bonus shares. We contributed one restricted incentive share for each four bonus shares deferred. PSUs remain eligible for deferral.
Incentive shares will vest on the fourth anniversary of the date of contribution or will vest pro rata on retirement, death or disability, if earlier. During the time these awards are deferred, they are deemed invested in our common stock and receive additional credits for DEUs. All deferred stock awards are distributed in shares of common stock.
Amounts deferred in any year, except for matching contributions on cash contributions, will be distributed automatically in a lump sum five years after the year of deferral. A participant may choose to defer these amounts to another date or until termination. Matching contributions are only distributed on termination. Participants may elect to receive distributions on termination in a cash or stock lump sum or up to ten annual installments.
Information regarding NEO's account balances in the Employee Deferred Compensation Plan is below. Mr. Birkett, Mr. Montecalvo and Mr. Abraham did not participate in this plan in 2018.2019.
20182019 Nonqualified Deferred Compensation Table
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals Distributions ($) | Aggregate Balance at Last FYE ($)(4) | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals Distributions ($) | Aggregate Balance at Last FYE ($)(4) | ||||||||||||||||||||||||||||||||||||||||||
Eric M. Green | | | 0 | | | 0 | | | 4,826 | | | 0 | | | 160,337 | | | | | -0- | | | -0- | | | 21,577 | | | -0- | | | 90,657 | | | ||||||||||||||||||
Bernard J. Birkett | | | 45,151 | | | 85 | | | 2,528 | | | -0- | | | 48,884 | | | |||||||||||||||||||||||||||||||||||
George L. Miller | | | 791,504 | | | 54,662 | | | 905,084 | | | -0- | | | 3,481,964 | | | |||||||||||||||||||||||||||||||||||
Silji Abraham | | | 42,100 | | | 1,281 | | | 9,242 | | | -0- | | | 87,705 | | | |||||||||||||||||||||||||||||||||||
David A. Montecalvo | | | 0 | | | 0 | | | 8,783 | | | 0 | | | 65,975 | | | | | -0- | | | -0- | | | -0- | | | -0- | | | -0- | | | ||||||||||||||||||
Karen A. Flynn | | | 95,111 | | | 8,708 | | | 18,516 | | | 44,595 | | | 967,747 | | | | | 25,173 | | | -0- | | | 67,525 | | | 93,733 | | | 457,435 | | | ||||||||||||||||||
William J. Federici | | | 0 | | | 0 | | | 27,469 | | | 0 | | | 2,339,903 | | | |||||||||||||||||||||||||||||||||||
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Each current NEO has long-term disability coverage, which is available to all eligible U.S. employees. The coverage provides full salary continuation for six months and thereafter up to 60% of pay with a $25,000 monthly limit. Eligible U.S. employees will earn cash balance pay credits until 2019. Employees who are vested in our Retirement Plan also receive continued medical coverage while on disability. Deferred compensation is payable according to the executive's election. Outstanding unvested stock options granted annually under our LTIP would be forfeited and outstanding vested stock options would be exercisable for the term of the option. Outstanding PSUs and unvested incentive shares would be forfeited when an employee becomes disabled. Lastly, the special retention stock, RSUs and options granted upon hire to Mr. Green, Mr. Birkett, Mr. Abraham and Mr. Montecalvo will vest upon disability.
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COMPENSATION TABLES
Each current U.S.-based NEO has group life insurance benefits that are available to all eligible U.S. employees. The benefit is equal to one times payyear's salary with a maximum limit of $500,000, plus any supplemental life insurance elected and paid for by the NEO. Deferred compensation is payable according to the executive's election on file. Outstanding unvested stock options granted annually under our LTIP, PSUs and incentive shares would be forfeited, and outstanding vested stock options would become exercisable for the term of the option.
The special retention stock, RSUs and / or options granted to Mr. Green, Mr. Montecalvo, Mr. Birkett and Mr. Abraham upon hire will also vest upon death.
We have an agreement with Mr. Green that entitles him to severance benefits on certain types of employment terminations not related to a CIC. All other NEOs are not covered by an employment agreement or a general severance plan and any severance benefits payable to them under similar circumstances would be determined by the Committee in its sole discretion.
Mr. Green |
Mr. Green has an employment agreement that entitles him to continuation of his salary and welfare benefits at active employee rates for a period of 12 months, if he is terminated involuntarily other than for "Cause" or the Company gives notice to Mr. Green that it will not renew the term of his employment under the agreement. Mr. Green's employment agreement does not entitle him to severance payments or continued benefits if his employment is terminated for Cause or because of his death or disability (except as described above).
The restricted stock and stock options that Mr. Green received as an enticement award (but not any other restricted stock or stock options granted) will vest: (1) in the event of his termination other than for Cause, or (2) due to Good Reason.
"Cause" means any willful failure by Mr. Green to perform his duties or responsibilities or comply with any valid and legal directives of the Board; act of fraud; embezzlement; theft or misappropriation of the funds of the Company by Mr. Green; or Mr. Green's admission to or conviction of a felony or any crime involving moral turpitude, fraud, embezzlement, theft or misrepresentation; Mr. Green's engagement in dishonesty, illegal conduct or misconduct that is materially injurious to the Company; Mr. Green's breach of any material obligation of any written agreement with the Company; or a material violation of a rule, policy, regulation or guideline imposed by the Company or a regulatory body.
"Good Reason" means a material diminution in Mr. Green's base salary; a material reduction in Mr. Green's duties, authority or responsibilities; or the relocation of Mr. Green's principal place of employment in a manner that lengthens his one-way commuting distance by fifty (50) or more miles.
The obligation to pay severance pay is contingent on execution of a release and other customary provisions, including compliance with non-competition, non-solicitation and confidentiality obligations contained in the agreement.
Other NEOs |
The RSUs that Mr. Montecalvo,Birkett, Mr. BirkettAbraham and Mr. AbrahamMontecalvo received as retention awards will vest: (1) in the event of termination other than for Cause or (2) due to Good Reason. The definitions of "Cause" and "Good Reason" are substantially the same for all three awards.
"Cause" means (i) an act or acts of dishonesty taken by an NEO, (ii) repeated failure by an NEO to perform his or her duties and obligations as thosean employee, which are demonstrably willful and deliberate on the NEO's part and which are not remedied after the receipt of written notice from the Company, (iii) the NEO's conviction of a felony, or (iv) the NEO's intentional breach of the COBC, which is materially and demonstrably injurious to the Company.
"Good Reason" means the occurrence of any of the following without the NEO's consent: (1) a material diminution in the NEO's base salary; (2) a material reduction in the NEO's duties, authority or responsibilities relative to the NEO's duties, authority, and responsibilities in effect immediately prior to such reduction; or (3) the relocation of the NEO's principal place of employment in a manner that applylengthens by fifty (50) or more miles the NEO's one-way commuting distance to the NEO's place of employment; provided that a termination shall only be for Good Reason if: (a) within forty-five (45) calendar days of the initial existence of Good Reason, the NEO provides written notice of Good Reason to the Company; (b) the Company does not remedy said Good Reason within thirty (30) calendar days of its receipt of such notice; and (c) the NEO terminates employment within sixty (60) calendar days after the expiration of such 30-day remedy period.
Mr. Green.Miller does not have any outstanding RSUs which would entitle him to additional severance benefits. Ms. Flynn separated from service effective December 31, 2019.
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COMPENSATION TABLES
The table below reflects amounts that eligible executives would receive on termination of employment for certain reasons, other than following a CIC. No NEO will receive any enhanced benefit because of a termination for cause.Cause. The amounts do not include amounts payable through a plan or arrangement that is generally applicable to all salaried employees, including equity acceleration values to the extent they apply to all LTIP participants.
Name | Event | Cash Severance | Continuation of Welfare Benefits(1) | Vesting of Unvested Equity | Total | Event | Cash Severance | Continuation of Welfare Benefits(1) | Vesting of Unvested Equity | Total | ||||||||||||||||||||||||||||||
Eric M. Green | | Involuntary (no Cause) or Good Reason | | $ | 885,000 | | | $ | 16,080 | | | $ | 12,001,883 | | | $ | 12,902,963 | | | Involuntary (no Cause) or Good Reason | | | 945,000 | | | 17,406 | | | -0- | | | 962,406 | | |||||||
| | Death or Disability | | 0 | | | 0 | | | 12,001,883 | | | 12,001,883 | | |||||||||||||||||||||||||||
Bernard J. Birkett | | Involuntary (no Cause), Good Reason, Death or Disability | | 0 | | | 0 | | | 1,318,365 | | | 1,318,365 | | | Involuntary (no Cause) or Good Reason | | | -0- | | | -0- | | | 1,125,485 | | | 1,125,485 | | |||||||||||
David A. Montecalvo | | Involuntary (no Cause), Good Reason, Death or Disability | | 0 | | | 0 | | | 1,246,470 | | | 1,246,470 | | | Involuntary (no Cause) or Good Reason | | | -0- | | | -0- | | | 213,215 | | | 213,215 | | |||||||||||
Karen A. Flynn | | Involuntary (no Cause), Good Reason, Death or Disability | | 0 | | | 0 | | | 2,361,431 | | | 2,361,431 | | ||||||||||||||||||||||||||
Silji Abraham | | Involuntary (no Cause), Good Reason, Death or Disability | | 0 | | | 0 | | | 808,927 | | | 808,927 | | | Involuntary (no Cause) or Good Reason | | | -0- | | | -0- | | | 469,065 | | | 469,065 | | |||||||||||
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We have entered into agreements with each of our U.S.-based NEOs, as well as certain other of our officers, which provide the benefits described below on qualifying terminations of employment in connection with or within two years following a CIC.
All currently employed NEOs except Mr. Green have CIC Agreements that are substantially similar and include the following:
The severance payments are payable in monthly installments and if the executive is a key employee at the time of his termination, payments will be delayed six months to the extent required by applicable tax law.
Employment terminations that entitle these executives to receive the severance benefits under a CIC consist of: (1) resignation following a constructive termination of his employment; or (2) employment termination other than due to death, disability, continuous willful misconduct or normal retirement. These terminations must occur within two years after a CIC.
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COMPENSATION TABLES
To receive the severance benefits under the agreement, an executive must agree not to be employed by any of our competitors or compete with us in any part of the United States for up to two years following employment termination for any reason and execute a release of claims in favor of the Company.
Mr. Green has a separate employment agreement, with change-in-control provisions that are substantially similar to the provisions contained in the other NEO agreements except for the following:
2020 Annual Meeting and Proxy Statement
| 63
COMPENSATION TABLES
Definitions used in the CIC Agreements |
The definitions below apply to all agreements, except as specifically noted above for Mr. Green above.Green.
Definition of "Change-in-Control." For each agreement, a CIC includes any of the following:
Definition of "Cause." Cause generally includes:
Definition of "Constructive Termination." A "Constructive Termination" generally includes any of the following actions taken by the Company without the executive's written consent following a CIC:
62 | 2019 Annual Meeting and Proxy Statement
COMPENSATION TABLES
Estimated Benefits on Termination Following a Change-in-Control |
The following table shows potential payments to our NEOs if their employment terminates following a CIC under existing contracts, agreements, plans or arrangements. The amounts assume a December 31, 20182019 termination date and use the closing price of our common stock as of that date, $98.03.$150.33. Based on current assumptions, Mr. Montecalvo'sBirkett's and Mr. Miller's benefit amountamounts would be reduced $475,222by $550,214 and $111,971 respectively to put himthem in a better after-tax position than hethey would have been in had hethey received the full payout and paid the applicable golden parachute excise tax. All the values in the table
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COMPENSATION TABLES
are in U.S. Dollars. As Mr. FedericiMs. Flynn has terminated employment with the Company, and no payments could be made under hisher CIC agreement, heshe is not included in the table below.
| Name | Aggregate Severance Pay(1) | PSU Acceleration(2) | Vesting of Restricted Stock RSUs(3) | Vesting of Stock Options(4) | Parachute Exercise Tax Impact(5) | Welfare Benefits Continuation(6) | Outplacement Assistance(7) | Total | Aggregate Severance Pay(1) | PSU Acceleration(2) | Vesting of Restricted Stock RSUs(3) | Vesting of Stock Options(4) | Parachute Exercise Tax Impact(5) | Welfare Benefits Continuation(6) | Outplacement Assistance(7) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eric M. Green | | | $ | 3,171,095 | | | $ | 3,701,221 | | | $ | 1,312,984 | | $ | 6,987,703 | | | — | | | $ | 50,899 | | | $ | 50,000 | | | $ | 15,273,902 | | | | $ | 3,784,897 | | | $ | 6,051,841 | | | $ | 2,180,273 | | $ | 19,397,545 | | | — | | | $ | 52,693 | | | $ | 50,000 | | | 31,517,247 | | |||||||||
| Bernard J. Birkett | | | 1,870,000 | | | 304,383 | | | 973,841 | | 0 | | | — | | | 51,072 | | | 50,000 | | | 3,249,296 | | | | $ | 1,515,021 | | | $ | 1,020,997 | | | $ | 1,137,100 | | $ | 1,246,152 | | | $ | (550,214 | ) | | $ | 52,693 | | | $ | 50,000 | | | 4,471,749 | | |||||||||||||||
George L. Miller | | | $ | 1,398,008 | | | $ | 949,415 | | | $ | — | | $ | 2,418,740 | | | $ | (111,971 | ) | | $ | 52,510 | | | $ | 50,000 | | | 4,756,702 | | |||||||||||||||||||||||||||||||||||||||
| David A. Montecalvo | | | 1,336,500 | | | 676,603 | | | 138,365 | | 431,520 | | | $ | (475,222 | ) | | 50,619 | | | 50,000 | | | 2,208,385 | | | | $ | 1,378,580 | | | $ | 971,341 | | | $ | 244,538 | | $ | 1,887,373 | | | — | | | $ | 37,460 | | | $ | 50,000 | | | 4,569,291 | | |||||||||||||||
| Karen A. Flynn | | | 1,683,000 | | | 977,653 | | | 0 | | 1,383,858 | | | — | | | 50,852 | | | 50,000 | | | 4,145,363 | | ||||||||||||||||||||||||||||||||||||||||||||||
| Silji Abraham | | | 1,353,000 | | | 228,312 | | | 456,597 | | 124,030 | | | — | | | 750 | | | 50,000 | | | 2,212,689 | | | | $ | 1,329,104 | | | $ | 646,242 | | | $ | 526,686 | | $ | 1,064,438 | | | — | | | $ | 1,043 | | | $ | 50,000 | | | 3,617,513 | | ||||||||||||||||
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Applicable SEC rules require the disclosure of our median employee's pay and the ratio of that pay to our CEO's pay. Mr. Green'sOur CEO pay ratio and the underlying compensation and employee count data are reasonable estimates calculated consistent with applicable SEC guidance governing use of estimates, adjustments, and statistical sampling permitted by the SEC. Our median employee was identified in 2018 and we used this same employee to calculate our CEO pay ratio for 2019, as indicatedpermitted by the SEC regulations, because there has been no change in our 2018 Summary Compensation Table was $5,378,813 andemployee population or employee compensation arrangements that we believe would significantly impact our median employee's pay calculated in the same manner was $39,392. The ratio of Mr. Green's pay to our median worker's pay as determined under applicable SEC rules, therefore, is 137:1.disclosure for 2019.
In determining our median employee, we used "base pay" as our compensation definition, which we then calculated as annual base pay based on a reasonable estimate of hours worked during 20182019 for hourly workers, and upon salary levels for the remaining employees. We did not utilize cost-of-living adjustments. We annualized pay for those who commenced work during 2018.2019. We used a valid statistical sampling methodology to identify the base pay for the median worker. In addition, in selecting the median worker, as permitted by applicable SEC regulations, we used our global employment roster as of November 30, 2018, but excluded all employees in the following countries (with the number of employees excluded in parentheses): Australia (4), Argentina (6), Colombia (6), Italy (8), Spain (6), India (79), Israel (120), and Puerto Rico (178). As of November 30, 2018, total number of employees was 7,881, with U.S. employees totaling 3,421 and foreign employees totaling 4,460.
Our CEOMr. Green's 2019 pay, as indicated in our 2019 Summary Compensation Table was $6,479,661 and our median employee's pay calculated in the same manner was $49,229. The ratio and the underlying compensation and employee count data are reasonable estimates calculated consistent withof Mr. Green's pay to our median worker's pay as determined under applicable SEC guidance governing use of estimates, adjustments, and statistical sampling permitted by the SEC.rules, therefore, is: 133:1.
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PROPOSAL 2
Proposal 2 — Advisory Vote to Approve Named Executive Officer Compensation |
At our 20182019 Annual Meeting, our advisory vote on executive pay was approved by 96.6%97.9% of the votes cast. The Board of Directors and its Compensation Committee believed this to be a confirmation that our executive pay accurately and appropriately rewards performance. Previously, a majority of our shareholders approved holding an advisory vote on executive compensation annually. Therefore, we are seeking an advisory vote approving executive compensation again this year.
As described more fully in the "Compensation Discussion and Analysis" section, our executive compensation program is designed to provide competitive executive pay opportunities tied to our short-term and long-term success and attract, motivate and retain the type of executive leadership that will help us achieve our strategic goals. The Compensation Committee continually reviews the compensation programs for our NEOs to ensure they achieve the desired goals of aligning our executive compensation structure with our shareholders' interests and current market practices.
This vote is advisory and not binding on the Company, the Board and the Compensation Committee. However, the Board and the Compensation Committee are interested in the opinions expressed by our shareholders on this proposal and will consider the outcome of the vote when making future compensation decisions for the NEOs. We encourage shareholders to review the Compensation Discussion and Analysis section of this Proxy Statement, for details regarding our executive compensation program.
Accordingly, the following resolution will be submitted for a shareholder vote at the 20192020 Annual Meeting:
"RESOLVED, That the shareholders of West Pharmaceutical Services, Inc. (the 'Company') approve, on an advisory basis, the compensation of the Company's Named Executive Officers, as disclosed in this Proxy Statement pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative disclosures."
The Board unanimously recommends a vote FOR the approval, on an advisory basis, of the Company's
Named Executive Officer compensation, as stated in the above resolution.
6466 | 20192020 Annual Meeting and Proxy Statement
PROPOSAL 3
Proposal 3 — Approval of Amendment to our Amended and Restated Articles of Incorporation to Increase the Number of Authorized Shares of Common Stock |
Our Amended and Restated Articles of Incorporation currently authorize the issuance of up to 100 million shares of common stock, par value $0.25 per share. As of our record date, March 10, 2020, approximately 73.8 million shares were issued and outstanding. Additionally, as detailed under Item 12 of our 2019 Annual Report, we have approximately 7.2 million shares reserved for issuance under our various incentive and benefit plans. As a result, approximately 19 million shares of common stock remain available for future issuance.
The Board believes that it is in the best interests of the Company, its shareholders and other stakeholders under Pennsylvania law, to increase the number of authorized shares of common stock available for issuance to 200 million in order to provide the Company with greater flexibility in managing the Company, and ensure the ability of the Board of Directors to respond efficiently and effectively to any corporate needs that arise.
Increasing the number of authorized shares of common stock would give us additional resources and flexibility in several ways:
Having additional shares available for issuance will avoid the potential delays and expense of calling and holding a special meeting of shareholders to increase the number of authorized shares of common stock. In addition to increased costs, such delays could make it impossible for the Company to complete a desired transaction, financing or stock grant.
It is worth noting that we currently have no specifically planned acquisition, recapitalization, financing opportunity and we also have no understandings, agreements or commitments to issue common stock or reserve additional shares under any agreement or equity compensation plan. However, other than stock splits, our authorized shares have not increased for more than 20 years despite the significantly increased complexity in our business, increased number of employees being hired, increased equity pool for awards to attract the best talent, a general increase in the complexity of financing ongoing operations and the potential for inorganic growth.
Our share usage (measured as a percentage of issued shares versus authorized shares) exceeds the share usage of every member of our Business Segment Group, based on publicly available data as of the end of 2019. This usage is more than double the average and median of the usage by our Business Segment Group. Our Business Segment Group has six times as many shares available for issuance on average (and almost four times as many when measured against the median of the Business Segment Group). We are requesting doubling the number of shares authorized to avoid having to make additional requests in the near future. Even with the proposed 100 million share increase, our usage rate and number of shares available for issuance will still be less than the average and median of our Business Segment Group.
If the proposed amendment to our Amended and Restated Articles of Incorporation is approved by a majority of our shareholders, the additional shares may be used for all the purposes set forth in our Articles, and may be issued for such consideration and at such times as the Board determines, subject to the rights of shareholders to approve certain transactions under the Articles, applicable SEC rules and the rules of the New York Stock Exchange. The authorization of additional shares of common stock does not by itself, however, have any effect on the rights of present shareholders. These shares shall be part of our existing class of common stock and, if issued, enjoy the same rights and privileges as other shares of common stock. The
2020 Annual Meeting and Proxy Statement | 67
PROPOSAL 3
issuance of these shares, however, for corporate purposes other than a stock split or stock dividend could have a dilutive effect on ownership and voting rights of shareholders at the time of issuance.
If the Company's shareholders approve the proposed amendment to the Amended and Restated Articles of Incorporation, the number of authorized shares of common stock will be increased to 200 million and the Board will have the right to issue, subject to limitations under the law and the Amended and Restated Articles of Incorporation, these additional shares. The amendment will be immediately effective upon approval and filing with the Pennsylvania Department of State Corporation Bureau.
The Board unanimously recommends a vote FOR the amendment to our Amended and Restated Articles of Incorporation to Increase the Authorized Shares of Stock.
68 | 2020 Annual Meeting and Proxy Statement
INDEPENDENT AUDITORS AND FEES
Independent Auditors and Fees |
Fees Paid to PricewaterhouseCoopers LLP |
The following table presents fees for audit and other services provided by PwC for 20182019 and 2017.2018. All the services described in the following fee table were approved in conformity with the Audit Committee's pre-approval process, and the de minimis exception discussed below.
Type of Fees | 2018 | 2017 | 2019 | 2018 | ||||
Audit Fees | $2,459,651 | $2,127,000 | $2,628,724 | $2,459,651 | ||||
Audit-Related Fees | 67,116 | 196,799 | 15,040 | 67,116 | ||||
Tax Fees | 105,240 | 150,404 | 45,545 | 105,240 | ||||
All Other Fees | 9,500 | 9,500 | 11,650 | 9,500 | ||||
| | | | | | | | | |
Total | $2,641,507 | $2,483,703 | $2,700,959 | $2,641,507 | ||||
| | | | | | | | | |
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services |
Our Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the Company's independent registered public accounting firm. As part of this responsibility, the Audit Committee has establishedrevised its practices in 2019 to delegate authority to our Chief Financial Officer, Mr. Birkett, to, with the Audit Committee Chair's approval, engage PwC to perform services of less than $10,000 so long as the provision of those services would not impact the independence of PwC. Additionally, the Committee requires that Mr. Birkett report at each meeting regarding the nature and amount of any such services that we have retained. This revised process preserves independence with our registered public accounting firm, while permitting Management the flexibility to use that firm for non-audit fees and services. Subject to a policy to pre-approve all audit and permissiblede minimis exception for non-audit services providedset forth in applicable rules of the SEC, all other services performed by the independent registered public accounting firm subject to de minimis exceptions for non-audit services set forth in the applicable rules of the SEC. Prior to engagement for the next year's audit, Management will submitand related fees are submitted to the Audit Committee a list of services and related fees expected to be rendered by the independent registered public accounting firm during that yearin advance for pre-approval by the Committee.its approval. Those services must fall within one of the four following categories:categories discussed below.
Audit Fees include fees for audit work performed on the financial statements and internal control over financial reporting, and work that generally only the independent registered public accounting firm can reasonably be expected to provide, including statutory audits or financial audits for our subsidiaries or affiliates; services associated with SEC registration statements; periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters, consents); and assistance in responding to SEC comment letters.
Audit-Related Fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are traditionally performed by the independent registered public accounting firm, including due diligence related to potential business acquisitions/divestitures, financial statement audits of employee benefit plans and special procedures required to meet certain regulatory requirements.
Tax Fees include fees for all services, except those specifically related to the audit of the financial statements, which are performed by the independent registered public accounting firm's tax personnel and may include tax advice, tax analysis and compliance, and review of income and other tax returns.
All Other Fees are fees for those services not captured in any of the above three categories. The percentage of fees in this category that were approved by the Audit Committee under the de minimis exception was less than 1% of the total fees for 2018.2019.
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AUDIT COMMITTEE REPORT
Audit Committee Report |
The Audit Committee reviewed the Company's financial-reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. PwC, the Company's independent registered public accounting firm for 2019,2020, is responsible for expressing its opinion on the conformity of the Company's audited financial statements with generally accepted accounting principles and on the effectiveness of the Company's internal control over financial reporting.
The Audit Committee has reviewed and discussed with Management and PwC the audited financial statements for the year ended December 31, 2018,2019, Management's assessment of the effectiveness of the Company's internal control over financial reporting and PwC's evaluation of the Company's internal control over financial reporting.
The Audit Committee has discussed with PwC the matters that are required to be discussed by Statement on Auditing Standards No. 61 (Communication With Audit Committees), as amended (AICPA, Professional Standards, Vol. I AU §380), as adopted bypursuant to the Public Company Accounting Oversight Board in Rule 3200T.Board's Auditing Standard No. 131—Communications with Audit Committees. PwC has provided to the Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding PwC's communications with the Audit Committee concerning independence and the Committee has discussed with PwC that firm's independence from the Company.
The Audit Committee also considered whether the independent registered public accounting firm's provision of non-audit services to the Company is compatible with the auditor's independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its Management. Based on the considerations and discussions referred to above, the current members of the Audit Committee recommended to the Board that the audited financial statements for the year ended December 31, 20182019 be included in the Company's 20182019 Annual Report on Form 10-K.
Thomas W. Hofmann, Chair William F. Feehery Robert F. Friel (New member as of February 2020) Deborah L. V. Keller Douglas A. Michels | ||
6670 | 20192020 Annual Meeting and Proxy Statement
PROPOSAL 34
Proposal |
The Audit Committee is responsible for the appointment, compensation, retention, evaluation and oversight of the Company's independent registered public accounting firm. This Committee annually evaluates the independent registered public accounting firm's qualifications, performance and independence and assesses whether to continue to retain the firm or select a different firm.
As part of this review, the Audit Committee reviews PwC's capabilities and costs.costs, including consideration of non-audit fees and services. Based on this review, the Audit Committee has determined that PwC has performed well, in a cost-effective manner, has a long-standing institutional memory, acts independently of Management, and provides critical input to the Audit Committee. The Committee also considers the impact of changing auditors when assessing whether to retain the current auditor. Therefore, the Audit Committee has appointed PwC as our independent registered public accounting firm for 2019.2020. Although shareholder approval for this appointment is not required, the Audit Committee and our Board are submitting the selection of PwC for ratification to obtain the views of shareholders and as a matter of good corporate governance. If the appointment is not ratified, the Audit Committee will reconsider whether or not to retain PwC. Representatives of PwC will be present at the 20192020 Annual Meeting to answer questions and will have the opportunity to make a statement if they desire.
The Board unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopersPricewaterhouse Coopers LLP as our independent registered public accounting firm for 2019.2020.
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VOTING AND OTHER INFORMATION
Voting and Other Information |
Shareholders Entitled to Vote |
All shareholders of record of our common stock, par value $.25 per share, at the close of business on March 12, 2019,10, 2020, are entitled to receive the Notice and to vote their shares at the meeting. As of that date, 73,737,47973,844,575 shares of our common stock were outstanding. Each share is entitled to one vote on each matter properly brought to the meeting.
How You Can Vote |
If you are a registered shareholder, you may vote at the Annual Meeting by delivering a proxy card in person or you may cast your vote in any of the following ways:
If the meeting is held virtually, West will endeavor to permit voting by electronic means during the course of the meeting in accordance with applicable Pennsylvania law, SEC guidance and NYSE rules. This method of voting, if applicable, will be communicated separately by the Company.
If you hold shares of the Company in "Street name,Name," please follow the voting instructions of the financial institution at which you have an account holding shares of the Company.
Deadline for Voting. Mailed proxy and voting instruction cards must be received before the meeting. If you are a registered shareholder and attend the meeting, you may deliver your completed proxy card in person.person, if physical meeting location and the law permits. "Street name"Name" shareholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares. The deadline for voting by telephone orwww.proxyvote.com is 11:59 PM Eastern Time on May 6, 2019.4, 2020.
How Your Shares Will Be Voted |
In each case, for registered shareholders, your shares will be voted as you instruct. If you return a signed proxy card, but do not provide voting instructions, your shares will be voted FOR each of the proposals. You may revoke or change your vote any time before the proxy is exercised by filing with our Corporate Secretary a notice of revocation or a duly executed proxy bearing a later date. Attendance at the meeting will not by itself revoke a previously granted proxy. If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the "beneficial owner" of shares held in "Street name." Please refer to "Broker Voting and Votes Required" below to determine how these shares will be counted for each proposal.
Plan Participants. Any shares you may hold in the West Pharmaceutical Services, Inc. 401(k) Plan or the West Contract Manufacturing Savings and Retirement Plan have been added to your other holdings on your proxy card.
Your completed proxy card serves as voting instructions to the trustee of those plans. You may direct the trustee how to vote your plan shares by submitting your proxy vote for those shares, along with the rest of your shares, by Internet, phone or mail, all as described on the enclosed proxy card.
If you do not instruct the trustee how to vote, your plan shares will be voted by the trustee in the same proportion that it votes shares in other plan accounts for which it received timely voting instructions.
Broker Voting and Votes Required |
For holders in "Street Name," the Notice would have been made available to you by your broker, bank or other holder of record who is considered the shareholder of record of those shares. As the beneficial owner, you may direct your broker, bank or other holder of record on how to vote your shares by using the proxy card included in the materials made available to you or by
72 | 2020 Annual Meeting and Proxy Statement
VOTING AND OTHER INFORMATION
following their instructions for voting on the Internet. A broker non-vote occurs when a broker or other nominee that holds shares for another does not vote on a particularan item because the nominee does not have discretionary voting authority for that item and has not received instructions from the owner of the shares. Although there is no controlling precedent under Pennsylvania law
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VOTING AND OTHER INFORMATION
regarding the treatment of broker non-votes in certain circumstances, we intend to apply the principles outlined in the table below:
| Proposal | Votes Required | Treatment of Abstentions and Broker Non-Votes | Broker Discretionary Voting | |||
| Proposal 1 –Election of Directors | As this is an uncontested election, the number of votes for a director must exceed the number of votes against a director | Abstentions and broker non-votes will not be | No | |||
| Proposal 2 –Advisory Vote to Approve Named Executive Officer Compensation | Majority of the shares present and entitled to vote on the proposal in person or represented by proxy | Abstentions will have the effect of negative votes and broker non-votes will not be | No | |||
| Proposal 3 – Approval of Amendment to our Amended and Restated Articles of Incorporation to Increase Authorized Shares of Common Stock from 100 Million to 200 Million | Majority of the shares present and entitled to vote on the proposal in person or represented by proxy | Abstentions will have the effect of negative votes and broker non-votes will not be considered in determining the outcome of the proposal | No | |||
| Proposal 4 – Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for | Majority of the shares present and entitled to vote on the proposal in person or represented by proxy | Abstentions and broker non-votes will have the effect of negative votes | Yes | |||
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Proxy Solicitation. We have not retained Georgeson LLC, a proxy solicitation company, with respect to the proxy being solicited by this Proxy Statement.Statement and expect to pay $8,500 for the solicitation services plus related fees and expenses.
Quorum |
We must have a quorum to conduct business at the 20192020 Annual Meeting. A quorum consists of the presence at the meeting either in person or represented by proxy of the holders of a majority of the outstanding shares of our common stock entitled to vote. For the purpose of establishing a quorum, abstentions, including brokers holding customers' shares of record who cause abstentions to be recorded at the meeting, and broker non-votes are considered shareholders who are present and entitled to vote, and count toward the quorum.
Electronic Availability of Proxy Statement and Annual Report |
We are pleased to be distributing our proxy materials to certain shareholders via the Internet under the "notice and access" approach permitted by the rules of the SEC. This method conserves natural resources and reduces our costs of printing and mailing while providing a convenient way for shareholders to review our materials and vote their shares.
On March 22, 2019,25, 2020, we mailed a "Notice of Internet Availability" to participating shareholders, which contains instructions on how to access the proxy materials on the Internet.
If you would like to receive a printed copy of our proxy materials, we will send you one free of charge. Instructions for requesting such materials are included in the Notice.
This Proxy Statement and our 20182019 Annual Report are available at:
http://investor.westpharma.com/financial-information/annual-reports-and-proxy
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VOTING AND OTHER INFORMATION
Mailings to Multiple Shareholders at the Same Address |
We have adopted a procedure called "householding" for making the Proxy Statement and the 20182019 Annual Report available. Householding means that shareholders who share the same last name and address will receive only one copy of the materials, unless we are notified that one or more of these shareholders wishes to continue receiving additional copies.
We will continue to make a proxy card available to each shareholder of record. If you prefer to receive multiple copies of the proxy materials at the same address, please contact us in writing or by telephone: Corporate Secretary, West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341, (610) 594-3319.
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VOTING AND OTHER INFORMATION
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During the last fiscal year, due to administrative processing and delays by the Company, directors Douglas Michels, Deborah Keller and Mark Buthman each filed a single late Form 4 in December 2018. No officers filed any late Forms 4 in 2018.
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Our financial statements for the year ended December 31, 20182019 are included in our 20182019 Annual Report, which we will make available to shareholders at the same time as this Proxy Statement. Our 20182019 Annual Report and this Proxy Statement are posted on our website athttp://investor.westpharma.com/phoenix.zhtml?c=118197&p=irol-reportsannual and are available from the SEC at its website atwww.sec.gov and are posted on our website athttp://investor.westpharma.com/financial-information/annual-reports-and-proxy. If you do not have access to the Internet or have not received a copy of our 20182019 Annual Report, you may request a copy of it or any exhibits thereto without charge by writing to our Corporate Secretary at West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341.
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Under SEC rules, if a shareholder wants us to include a proposal in our Proxy Statement and form of proxy for presentation at the 20202021 Annual Meeting, the proposal must be received by us at our principal executive offices by November 26, 201925, 2020 and comply with the procedures of Rule 14a-8 under the Securities Exchange Act of 1934.
The proposal should be sent to the attention of the Corporate Secretary in writing: West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341; or by telephone: (610) 594-3319.
Our Bylaws set forth procedures that a shareholder must follow to nominate persons for election as directors or to introduce an item of business at an annual meetingAnnual Meeting of shareholders. Nominations for director nominees or an item of business to be conducted must be submitted in writing to the Corporate Secretary of the Company at our executive offices and should be mailed by certified mail, return receipt requested. We must receive the notice of your intention to introduce a nomination or to propose an item of business at our 20202021 Annual Meeting not less than 90 days prior to the anniversary date of this year's Annual Meeting. If, however, we fail to disclose the date of next year's meeting at least 21 days in advance, we must receive your notice within seven days following the announcement of the meeting (but in no event, later than four days before the meeting date).
The nomination must contain information about the nominees as specified in our Bylaws. The notice must include information specified in our Bylaws, including information concerning the nominee or proposal, as the case may be, and information about the shareholder's ownership of and agreements related to our shares.
Except as otherwise required by law, the ChairmanChair of the meeting may refuse to allow the transaction of any business, or to acknowledge the nomination of any person, not made in compliance with our Bylaws. You may obtain a copy of our Bylaws by contacting our Corporate Secretary at West Pharmaceutical Services, Inc., 530 Herman O. West Drive, Exton, PA 19341.
Other Matters |
Management is not aware of any other matters that will be presented at the 20192020 Annual Meeting, and our Bylaws do not allow proposals to be presented at the meeting unless they were properly presented to us before February 8, 2019.7, 2020. However, if any other matter that requires a vote is properly presented at the meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, in their own discretion.
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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 6, 20194, 2020 for shares held directly and by 11:59 P.M. Eastern Time on May 2, 20191, 2020 for shares held in a Plan. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. WEST PHARMACEUTICAL SERVICES, INC. C/O BROADRIDGE P.O. BOX 1342 BRENTWOOD, NY 11717 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically 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. 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 6, 20194, 2020 for shares held directly and by 11:59 P.M. Eastern Time on May 2, 20191, 2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E58257-P19764E89660-TBD KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. WEST PHARMACEUTICAL SERVICES, INC. The Board of Directors recommends you vote FOR the following: 1. Election of Directors; Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Mark A. Buthman The Board of Directors recommends you vote FOR proposals 2, 3 and 3.4. 1b. William F. Feehery For Against Abstain ! ! ! ! ! ! 1c. Eric M. GreenRobert Friel 2. Advisory vote to approve named executive officer compensation; To approve an amendement to Article 5 of our Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock from 100 million to 200 million; and 1d. Eric M. Green 3. 1e. Thomas W. Hofmann ! ! ! 4. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019. 1d. Thomas W. Hofmann 3. 1e.2020. 1f. Paula A. Johnson 1g. Deborah L. V. Keller NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1f. Deborah L. V. Keller 1g.1h. Myla P. Lai-Goldman 1h.1i. Douglas A. Michels 1i.1j. Paolo Pucci 1j.1k. Patrick J. Zenner 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
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E58258-P19764E89661-TBD WEST PHARMACEUTICAL SERVICES, INC. 530 Herman O. West Drive Exton, Pennsylvania 19341 This proxy is solicited by the Board of Directors The undersigned hereby appoints George L. Miller and Ryan M. Metz as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of common stock of West Pharmaceutical Services, Inc., held of record by the undersigned on March 12, 2019,10, 2020, at the Annual Meeting of Shareholders to be held on May 7, 20195, 2020 or any postponement or adjournment thereof. The Annual Meeting of Shareholders will be held at 9:30 AM EDT, on May 7, 20195, 2020 at 530 Herman O. West Drive, Exton, Pennsylvania 19341. This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this Proxy will be voted FOR Proposals 1, 2, 3 and 3.4. Continued and to be signed on reverse side
*** Exercise Your Right to Vote *** Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 5, 2020. WEST PHARMACEUTICAL SERVICES, INC. You are receiving this communication because you hold shares in the company named above. This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of WEST PHARMACEUTICAL SERVICES, INC. C/O BROADRIDGE P.O. BOX 1342 BRENTWOOD, NY 11717 the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). We encourage you to access and review all of the important information contained in the proxy materials before voting. proxy materials and voting instructions. E89663-[TBD] See the reverse side of this notice to obtain Meeting Information Meeting Type:Annual Meeting For holders as of:March 10, 2020 Date: May 5, 2020Time: 9:30 AM EDT Location: 530 Herman O.West Drive Exton, Pennsylvania 19341
Before You Vote How to Access the Proxy Materials How To Vote Please Choose One of the Following Voting Methods E89664-[TBD] Vote In Person: Many shareholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares. Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow (located on the following page) available and follow the instructions. Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. XXXX XXXX XXXX XXXX Proxy Materials Available to VIEW or RECEIVE: NOTICE AND PROXY STATEMENTANNUAL REPORT How to View Online: Have the information that is printed in the box marked by the arrow(located on the following page) and visit: www.proxyvote .com. How to Request and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request: 1) BY INTERNET:www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3) BY E-MAIL*:sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked by the arrow(located on the following page) in the subject line. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before April 21, 2020 to facilitate timely delivery. XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX
The Board of Directors recommends you vote FOR the following: 1.Election of Directors; Nominees: The Board of Directors recommends you vote FOR proposals 2, 3 and 4. 1a. Mark A. Buthman 2. Advisory vote to approve named executive officer compensation; 1b. William F. Feehery 3. To approve an amendment to Article 5 of our Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock from 100 million to 200 million; and 1c. Robert Friel 1d. Eric M. Green 1e. Thomas W. Hofmann 4. To ra ti fy th e ap p oi nt me nt of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020. 1f. Paula A. Johnson 1g. Deborah L. V. Keller NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1h. Myla P. Lai-Goldman 1i. Douglas A. Michels 1j. Paolo Pucci 1k. Patrick J. Zenner E89665-[TBD] Voting Items
E89666-[TBD]
WEST PHARMACEUTICAL SERVICES, INC. Annual Meeting of Shareholders BALLOT The undersigned hereby votes, as designated below, all the shares of common stock of West Pharmaceutical Services, Inc. held of record by the undersigned on March 10, 2020, at the Annual Meeting of Shareholders to be held on May 5, 2020. This Ballot when properly executed will be voted in the manner directed herein by the undersigned shareholder. Please mark your votes as in this example. Proposal 1 - Election of 11 Directors For Against Abstain Nominees: Mark A. Buthman William F. Feehery Robert Friel Eric M. Green Thomas W. Hofmann Paula A. Johnson Deborah L. V. Keller Myla P. Lai-Goldman Douglas A. Michels Paolo Pucci Patrick J. Zenner Proposal 2 – Advisory Vote to Approve Named Executive Officer Compensation For Against Abstain Proposal 3 – Approval of Amendment to Article 5 of our Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock from 100 million to 200 million For Against Abstain
Proposal 4 – Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the 2020 Year For Against Abstain PRINT NAME: Please print name exactly as it appears on the records of the Company’s registrar and transfer agent. SIGNATURE(S) DATE Please sign exactly as your name appears above. When signing as attorney, executor, administrator, trustee, guardian, or in any other representative capacity, please so indicate.
