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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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WOLVERINE WORLD WIDE, INC.
(Name of Registrant as Specified In Its Charter)
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LETTER TO STOCKHOLDERSSHAREHOLDERS
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
March 12, 2014
28, 2017
Dear Stockholder,Fellow Shareholders,
You are invitedI am pleased to attend the 2014invite you to join me, our Board of Directors, members of Wolverine Worldwide's senior management team, and your fellow shareholders at Wolverine Worldwide's 2017 Annual Meeting of Stockholders,Shareholders on Wednesday, April 23, 2014,Thursday, May 4, 2017, at Wolverine Worldwide’s10:00 a.m. EDT, at the Company's headquarters in Rockford, Michigan. The attachedProxy Statement andNotice of 2017 Annual Meeting of Shareholders provide you with information regarding the business to be conducted. There are a number of proposals for you to consider. Your vote is important, so please be sure to do so – whether online, by phone, or by mail with the enclosed proxy or voting instruction card.
2016 was a year of great progress for our Company, with our Board of Directors and senior management team focused on addressing the dynamic and fast-changing consumer marketplace through a prioritization on innovation and growth, omnichannel transformation, and operational excellence. We opened a new design and innovation center, reorganized our European, Canadian, Apparel and Accessories, and Direct-to-Consumer businesses, and restructured our credit facility, while delivering nearly $300 million in operating cash flow, reducing year-end inventories by 25%, and, most importantly, delivering 32.9% in total shareholder return, performance at the 91st percentile of our peer group. Our strong performance has continued into 2017, with 14.0% year-to-date total shareholder return through the March 13, 2017 record date for this year's annual meeting.
TheIn addition, since our last annual meeting, will beginthe Compensation Committee engaged a new independent executive compensation consultant, and members of our Board of Directors and senior management team redoubled efforts to speak with an introductionshareholders to better understand your perspectives on important governance and compensation matters. Of primary importance this past year, following the disappointing results of management attendeesour 2016 say-on-pay vote, was discussing our executive compensation program with shareholders and directors, followed by votingdetermining how to best demonstrate responsiveness to your concerns. We reached out to shareholders holding nearly two-thirds of our outstanding shares and held meetings, most of them in person, with more than half of these shareholders, including each shareholder who accepted our invitation. Joseph Gromek, the Chair of our Compensation Committee, led these meetings, which focused not only on our executive compensation program, but also on the matters set forthCompany's governance protocols and publicly-announced strategic initiatives. The details of this outreach effort and the changes made by the Compensation Committee in the accompanying Notice of Annual Meeting andresponse to shareholder feedback are discussed throughout this Proxy Statement and within the Compensation Discussion and Analysis, but, in summary, we:
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 1 |
We greatly value the conversation we have had with our shareholders. We appreciate that this is an ongoing dialogue and look forward to continuing the conversation before, at, and after our 2017 Annual Meeting.
Sincerely,
David T. Kollat
Lead Independent Director
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Page 2 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
NOTICE OF 2017 ANNUAL MEETING OF SHAREHOLDERS
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
March 28, 2017
To our Shareholders:
We invite you to attend Wolverine Worldwide's Annual Meeting of Shareholders at the Company's headquarters located at 9341 Courtland Drive, N.E., Rockford, Michigan 49351, on Thursday, May 4, 2017, at 10:00 a.m. EDT. At the annual meeting, the shareholders will vote on the following items:
Shareholders of record as of March 13, 2017 can vote at the meeting and any other business matters properly brought beforeadjournment of the meeting. The meeting will adjourn
This Notice of 2017 Annual Meeting of Shareholders, Proxy Statement, proxy or voting instruction card and Annual Report for a presentationour fiscal year ended December 31, 2016 are being mailed or made available to shareholders starting on the Company’s business operations, and then resume for a report on the voting.
or about March 28, 2017.
Whether or not you plan to attend, you can ensure that your shares are represented at the meeting by promptly voting and submitting your proxy by telephone or through the Internet,internet, or by completing, signing, dating and returning your proxy formcard in the enclosed envelope.
Sincerely,
Blake W. Krueger
Chairman
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NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS
10:00 a.m., April 23, 2014
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
March 12, 2014
To our Stockholders:
We invite you to attend Wolverine Worldwide’s Annual Meeting of Stockholders at the Company’s headquarters located at 9341 Courtland Drive, N.E., Rockford, Michigan, on Wednesday, April 23, 2014, at 10:00 a.m. Eastern Daylight Time. The annual meeting will begin with an introduction of management attendees and directors, after which stockholders will:
(1)vote on the election of the four director nominees named in the proxy statement for three-year terms expiring in 2017;
(2)vote on an amendment to the Certificate of Incorporation to increase the number of authorized shares of Common Stock;
(3)vote on the ratification of the Audit Committee’s appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2014;
(4)vote on an advisory resolution approving compensation for the Company’s named executive officers; and
(5)transact other business that may properly come before the meeting.
The meeting will adjourn for a presentation on the Company’s business operations, then resume for a report on the voting results. You can vote at the meeting and any adjournment of the meeting if you were a stockholder of record on March 3, 2014.
By Order of the Board of Directors
Brendan M. Gibbons
Senior Vice President, General Counsel and Secretary
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 4, 2017.
Timothy E. Foley
Assistant Secretary
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Wolverine Worldwide Notice of | | | Page 3 |
2014 PROXY STATEMENT
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Table of ContentsMEETING INFORMATION
We areWolverine World Wide, Inc. ("Wolverine Worldwide" or the "Company") is furnishing you this proxy statement and enclosed proxy card in connection with the solicitation of proxies by theits Board of Directors of Wolverine World Wide, Inc. (“Wolverine Worldwide” or the “Company”) to be used at the Annual Meeting of StockholdersShareholders of the Company.Company occurring on May 4, 2017 at the Company's corporate headquarters in Rockford, Michigan (the "Annual Meeting"). Distribution of this proxy statement and enclosed proxy card to stockholdersshareholders is scheduled to begin on or about March 12, 2014.
28, 2017.
You can ensure that your shares are voted at the meetingAnnual Meeting by submitting your instructions by telephone or through the Internet, or by completing, signing, dating, and returning your proxy form in the enclosed envelope. Submitting your instructions or proxy by any of these methods will not affect your right to attend and vote at the meeting. We encourage stockholdersAnnual Meeting. The Company encourages shareholders to submit proxies in advance. A stockholdershareholder who gives a proxy may revoke it at any time before it is exercised by voting in person at the annual meeting,Annual Meeting, by delivering a subsequent proxy, or by notifying the inspectors of election in writing of such revocation. In order to vote any shares at the meetingAnnual Meeting that are held for you in a brokerage, bank, or other institutional account, you must obtain a proxy from that entity and bring it with you to hand in with your ballot.
References to “2013”"2016" or “fiscal year 2013”"fiscal 2016" in this proxy statement are to the Company’sCompany's fiscal year endingended December 28, 2013,31, 2016, unless otherwise noted in the text. References to “2014”"2017" or “fiscal year 2014”"fiscal 2017" in this proxy statement are to the Company’sCompany's fiscal year ending January 3, 2015,December 30, 2017, unless otherwise noted in the text.
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Page 4 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
2017 PROXY STATEMENT
Table of Contents |
Letter to Shareholders | 1 | |
Notice of 2017 Annual Meeting of Shareholders | 3 | |
Meeting Information | 4 | |
Proxy Statement Summary | 7 | |
Summary of Shareholder Voting Matters | 7 | |
Proposal 1 – Election of Directors for Terms Expiring in 2020 | 7 | |
Board Highlights | 8 | |
Board is Composed of Directors with the Right Mix of Skills and Experiences | 8 | |
Corporate Governance Highlights | 9 | |
Proposal 2 – Advisory Vote to Approve NEO Compensation | 10 | |
Our Brand Portfolio | 10 | |
Strategic Focus | 10 | |
Key 2016 Accomplishments and Financial Highlights | 11 | |
Shareholder Engagement | 11 | |
Compensation Philosophy – Pay at Risk | 12 | |
Compensation Best Practices | 13 | |
Corporate Governance | 14 | |
Board of Directors | 14 | |
Board Composition | 14 | |
Director Nominations | 15 | |
Board Self-Assessment | 16 | |
Risk Oversight | 16 | |
Code of Business Conduct and Accounting and Finance Code of Ethics | 17 | |
Shareholder Communications Policy | 17 | |
Proposal 1 – Election of Directors for Terms Expiring in 2020 | 18 | |
Directors with Terms Expiring in 2020 | 19 | |
Directors with Terms Expiring in 2018 | 23 | |
Directors with Terms Expiring in 2019 | 26 | |
Board Leadership | 30 | |
Director Independence | 30 | |
Board Committees, Meetings and Meeting Attendance | 31 | |
Audit Committee | 31 | |
Compensation Committee | 32 | |
Governance Committee | 32 | |
Non-Employee Director Compensation in Fiscal Year 2016 | 33 | |
Non-Employee Director Stock Ownership Guidelines | 35 | |
Securities Ownership of Officers and Directors and Certain Beneficial Owners | 36 | |
Five Percent Shareholders | 36 | |
Stock Ownership by Management and Others | 37 | |
A Letter From Our Compensation Committee | 38 | |
Compensation Discussion and Analysis | 39 | |
Summary | 39 | |
Compensation Philosophy and Objectives | 39 | |
Shareholder Outreach | 39 | |
Strategic Priorities | 41 | |
Compensation Decisions in Context: Key 2016 Accomplishments and Financial Highlights | 42 | |
Compensation Overview | 42 | |
Year-Over-Year Change in CEO Pay | 43 | |
CEO Annual Bonus/TSR Analysis | 44 | |
2016 Compensation Program Overview | 45 | |
Long-Term Incentive Program Mix | 45 | |
Pay at Risk | 46 | |
Compensation Best Practices | 46 | |
Compensation Discussion and Analysis in Detail | 47 | |
2016 Compensation Program Overview | 47 | |
Setting Targets | 47 | |
Base Salary | 47 | |
Annual Bonus | 48 | |
Performance Bonus | 48 | |
Individual Performance Bonus | 49 | |
2017 Annual Bonus Plan Update | 51 | |
Long-Term Incentive Compensation | 52 | |
Performance Shares | 52 | |
2016 Performance Share Awards | 53 | |
Stock Option Grants and Restricted Stock Awards | 54 | |
2017 Long-Term Incentive Plan Update | 54 | |
Benefits | 54 | |
Retirement, Deferred Compensation and Welfare Plans | 54 | |
Perquisites | 55 | |
Post-Employment Compensation | 55 | |
Compensation Setting Process | 56 | |
Setting Targets | 56 | |
Competitive Philosophy and Competitive Market Data | 56 | |
Peer Group | 56 | |
New 2017 Peer Group | 57 | |
CEO Role | 57 | |
Compensation Consultant Role | 57 | |
Other Compensation Policies and Practices | 58 | |
NEO Stock Ownership Guidelines | 58 | |
Stock Hedging and Pledging Policies | 58 | |
Clawback Policy | 58 | |
Impact of Accounting and Tax Treatments on Compensation | 58 | |
Compensation Committee Report | 59 | |
Summary Compensation Table | 60 | |
Grants of Plan-Based Awards in Fiscal Year 2016 | 62 | |
Outstanding Equity Awards at 2016 Fiscal Year-End | 64 | |
Option Exercises and Stock Vested in Fiscal Year 2016 | 68 | |
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 5 |
2017 PROXY STATEMENT
Pension Plans and 2016 Pension Benefits | 69 | |
Qualified Pension Plan | 69 | |
Supplemental Executive Retirement Plan | 69 | |
Pension Benefits in Fiscal Year 2016 | 70 | |
Nonqualified Deferred Compensation | 71 | |
Nonqualified Deferred Compensation | 71 | |
Potential Payments Upon Termination or Change in Control | 72 | |
Benefits Triggered by Termination for Cause or Voluntary Termination | 72 | |
Benefits Triggered by Termination Other Than for Cause or for Good Reason | 72 | |
Benefits Triggered Upon a Change in Control | 73 | |
Benefits Triggered by Retirement, Death or Permanent Disability | 74 | |
Description of Restrictive Covenants that Apply During and After Termination of Employment | 75 | |
Estimated Payments on Termination or Change in Control | 75 | |
Proposal 2 – Advisory Resolution To Approve Executive Compensation | 78 | |
Proposal 3 – Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation | 79 | |
Proposal 4 – Ratification of Appointment of Independent Registered Public Accounting Firm | 80 | |
Audit Committee Report | 81 | |
Independent Registered Public Accounting Firm | 83 | |
Proposal 5 – Approval of Amended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan) | 84 | |
Overview | 84 | |
Purpose of the Plan | 84 | |
Summary of the Plan | 85 | |
Amendment and Termination | 87 | |
Vote Required and Board Recommendation | 87 | |
Related Party Matters | 88 | |
Certain Relationships and Related Transactions | 88 | |
Related Person Transactions Policy | 88 | |
Additional Information | 89 | |
Shareholders List | 89 | |
Director and Officer Indemnification | 89 | |
Section 16(a) Beneficial Ownership Reporting Compliance | 89 | |
Shareholder Proposals for Inclusion in Next Year's Proxy Statement | 89 | |
Other Shareholder Proposals for Presentation at Next Year's Annual Meeting | 89 | |
Voting Securities | 90 | |
Conduct of Business | 90 | |
Vote Required for Election and Approval | 90 | |
Voting Results of the Annual Meeting | 91 | |
Attending the Annual Meeting | 91 | |
Manner for Voting Proxies | 91 | |
Revocation of Proxies | 91 | |
Solicitation of Proxies | 91 | |
Delivery of Documents to Shareholders Sharing an Address | 91 | |
Access to Proxy Statement and Annual Report | 92 | |
Appendix A – Amended any Restated Executive Short Term Incentive Plan (Annual Bonus Plan) | A-1 | |
Appendix B – Forward-Looking Statements and Non-GAAP Reconciliation Table | B-1 |
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Page 6 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
This summary highlights key information that can be found in greater detail elsewhere in this Proxy Statement. This summary does not contain all of the information that shareholders should consider, and shareholders should read the entire Proxy Statement before voting.
SUMMARY OF SHAREHOLDER VOTING MATTERS
Shareholders are being asked to vote on the following matters at the 2017 Annual Meeting of Shareholders:
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| PROPOSAL | BOARD VOTE RECOMMENDATION | PAGE REFERENCE | ||||||||
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| 1. | Election of Directors for Terms Expiring in 2020 | FOR each Nominee | 18 | |||||||
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| 2. | Advisory Resolution Approving NEO Compensation | FOR | 78 | |||||||
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| 3. | Frequency of Future Advisory Votes on Executive Officers Compensation to be Every Year | EVERY ONE YEAR | 79 | |||||||
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| 4. | Ratification of Ernst & Young LLP as Auditor for Fiscal Year 2017 | FOR | 80 | |||||||
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| 5. | Approval of the Amended & Restated Executive Short-Term Incentive Plan (Annual Bonus Plan) | FOR | 87 | |||||||
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PROPOSAL 1 – ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 2020
The stockholdersCompany's Board consists of 11 directors. The Company's By-Laws establish three classes of directors, with each class being as nearly equal in number as possible and serving three-year terms.
The Board has nominated four directors for election at the Annual Meeting, as outlined in the table below. Each director has been nominated to serve for a three-year term expiring at the annual meeting of shareholders to be held in 2020.The Board recommends that shareholders vote "FOR" each of the nominees named below.
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| Age | Director Since | Independent | Other Public Directorships | Committees | Proposed Term Expiration | |||||||||||
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| William K. Gerber Managing Director, Cabrillo Point Capital | 63 | 2008 | ✓ | AK Steel Holding Corporation | Audit (Chair) Compensation | 2020 | ||||||||||
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| Blake W. Krueger Chairman, CEO & President of Wolverine World Wide, Inc. | 63 | 2006 | None | None | 2020 | |||||||||||
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| Nicholas T. Long Retired CEO of MillerCoors LLC | 58 | 2011 | ✓ | None | Compensation Governance | 2020 | ||||||||||
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| Michael A. Volkema Chairman of Herman Miller, Inc. | 61 | 2005 | ✓ | Herman Miller, Inc. | Audit Governance (Chair) | 2020 | ||||||||||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 7 |
The following pie charts illustrate key characteristics of the Company's Board:
Board is Composed of Directors with the Right Mix of Skills and Experiences
The following chart lists the important experiences and attributes that the Company's Directors possess:
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 8 |
Corporate Governance Highlights
Wolverine Worldwide is committed to a governance structure that provides strong shareholder rights and meaningful accountability:
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✓ Highly independent Board (All Non-Management Directors) and Committees ✓ Lead Independent Director with clearly defined role ✓ Majority voting with director resignation policy ✓ No supermajority vote requirements ✓ Shareholder right to act by written consent | ✓ Annual Board and Committee self-evaluations ✓ Robust Board and executive succession planning, including annual written director nominee evaluations ✓ Long-standing commitment toward diversity ✓ Director onboarding orientation program ✓ Active shareholder engagement practices | |||||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 9 |
PROPOSAL 2 – ADVISORY VOTE TO APPROVE NEO COMPENSATION
For a more detailed discussion of compensation matters, please reference the CD&A beginning on page 39. While the outcome of this proposal is non-binding, the Board and Compensation Committee will consider the outcome of the vote when making future compensation decisions.The Board recommends that shareholders vote "FOR" the advisory vote to approve named executive officer compensation.
Wolverine Worldwide has a portfolio of brands organized into four key operating groups as illustrated below:
In 2016, the Company launched the WOLVERINE WAY FORWARD, an enterprise-wide initiative to transform the Company in light of the fast-changing retail environment. The WOLVERINE WAY FORWARD includes the following key components:
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| | Innovation & Growth | | Operational Excellence | | Portfolio Management | | People & Teams | | ||||||||
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• Building great brands through product innovation and compelling marketing • Relentless focus on the consumer • Consumer-centric product innovation • Demand creation initiatives • Deep focus on digital connection, specifically eCommerce and social media • International expansion | • Healthier supply chain, with improved speed to market • Omnichannel transformation focused on aggressively growing highly profitable eCommerce business and right-sizing underperforming store fleet • Faster, more efficient structure • Aggressive goal to achieve 12% adjusted operating margin by the end of 2018 | • Focus on core, go-forward brands that provide the biggest growth and profit opportunities • Identify strategic alternatives for non-core, underperforming businesses • Strategic, value-creating acquisitions | • Amazing place to work • Build the best team and talent pipeline • Modern skillset • Investment in enhanced learning and development initiatives | |||||||||||||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 10 |
Key 2016 Accomplishments and Financial Highlights
Key 2016 financial highlights and accomplishments against the Company's strategic priorities are below.
| Financial Highlights | Business Accomplishments | |
• Delivered 32.9% total shareholder return for 2016, performance in the top decile of companies in its peer group • Generated operating cash flow for the year of $296.3 million, up $80.8 million or 37.5% versus the prior year • Reduced year-end inventory by 25% against a corporate objective to reduce overall inventory by 12% • Delivered revenue of $2.495 billion, in line with original guidance • Delivered reported diluted 2016 EPS of $0.89, compared to $1.20 in 2015; adjusted diluted EPS of $1.36; and, on a constant currency basis, $1.52 compared to $1.45 in 2015 • Returned value to shareholders through $0.24 per share cash dividends and approximately $62 million in share repurchases | • Progressed in our omnichannel transformation – closing 101 stores in 2016 while investing in eCommerce; additional 110 store closures anticipated for early 2017 • Refinanced debt, expecting to result in $30 million of interest savings through 2020 • Reorganized European, Canadian, Apparel and Accessories, and Direct-to-Consumer businesses • Opened new design and innovation center • Drove considerable efficiencies through supply chain improvements, including consolidation of factory base |
The Company's Board and management team were disappointed with the results of the 2016 say-on-pay vote, which failed to receive majority shareholder support. In response, the Compensation Committee and full Board undertook a thorough review of the Company's compensation program in order to determine how best to respond to shareholders. Since the 2016 annual meeting, the Company's Compensation Committee Chair has reached out to shareholders representing nearly two-thirds of its outstanding shares and has held meetings with more than half of these shareholders, mostly in person. The Company met with every shareholder who accepted its invitation to engage, and the Company's Compensation Committee Chairman, Joseph Gromek, led each of the meetings. After aggregating all shareholder feedback and sharing it with the full Board, the Compensation Committee made significant changes to the executive compensation program. The feedback received and the changes made in response are discussed in greater detail in the CD&A Summary beginning on page 39. Some highlights are summarized below:
| What we heard: | What we did: | |
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• A desire to further strengthen the link between Company performance and NEO compensation | • Reallocated LTI pay mix to be more heavily weighted towards performance units – 2017 CEO mix is 70% performance stock units and 30% time-vested restricted stock units • Paid 0% on the CEO's "individual performance bonus," resulting in an overall 2016 annual bonus payout of 58% of target • Reduced 2017 CEO long-term incentive equity grants by $500,000 compared to 2016 | |
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• An appreciation for the Company's publicly announced aggressive operating margin goal and a desire for NEO compensation to be tied to it | • Incorporated an adjusted operating margin performance modifier into the 2017 annual bonus plan to link NEO compensation to the execution of Company goals | |
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• Our use of multiple, separate financial metrics (revenue, pretax income, EPS, and BVA) could be complimented with a relative performance metric | • Added a TSR performance modifier (vs. Russell 3000 Consumer Discretionary Index) to the 2017-2019 performance share unit program | |
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• An observation that select companies in our peer group had grown too large to serve as adequate comparators | • Adopted a new peer group, removing companies that had grown too large and adding other companies to provide greater revenue alignment with the peer group median | |
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• An opportunity to improve certain governance practices | • Implemented "double-trigger" equity vesting for 2017 grants • Engaged a new independent compensation consultant in 2016 |
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 11 |
Compensation Philosophy – Pay at Risk
The Company's compensation philosophy is to align the interests of NEOs and shareholders by placing a significant portion of the compensation awarded to its NEOs generally, and the CEO in particular, at-risk (performance shares and annual bonus) and variable (restricted stock and, prior to 2017, stock options). The Compensation Committee believes this incentivizes superior business, stock price and financial performance and aligns the interests of executives with those of shareholders.
The below graphic illustrates the percentage of at-risk and variable target compensation for the CEO and the average of the other NEOs:
CEO 2016 vs. 2017 Target Total Compensation
Note: 2017 CEO equity grants were reduced by $500,000 compared to 2016 to respond to shareholders concerns regarding our 2016 say-on-pay vote. This one-time reduction is not reflected in the graphic above.
Other NEO 2016 vs. 2017 Target Total Compensation (Average)
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 12 |
The below graphic illustrates the CEO's actual annual performance bonus compared to his target opportunity over the last three years and demonstrates the Company's pay-for-performance compensation philosophy in action – there is a clear link between Company TSR performance and annual bonus achievement over these periods. The CEO's target annual bonus opportunity has not increased over the past three years and was not increased in 2017.
CEO 3-Year Target & Actual Bonus
(in $000s)
| What we do | What we do not do | |
✓ Vast majority of pay is at-risk or variable, i.e., performance-based or equity-based or both ✓ Stringent share ownership requirements (6x base salary for CEO) ✓ Broad-based clawback policy ✓ Significant vesting horizon for equity grants ✓ Double-trigger equity acceleration (for grants in 2017 and beyond) | ✗ No dividends or dividend equivalents on unearned performance shares/units ✗ No repricing or replacing of underwater stock options ✗ No overlapping metrics ✗ No excessive or unnecessary perquisites ✗ No hedging, pledging, or short sales of Company stock |
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 13 |
2017 PROXY STATEMENT
Corporate Governance |
Wolverine Worldwide is committed to the highest level of corporate governance, and the Board has adopted its Corporate Governance Guidelines to strengthen management accountability and promote long-term shareholder interests. These governance practices include:
✓ Highly independent Board (All Non-Management Directors) and Committees ✓ Lead Independent Director with clearly defined role ✓ Majority voting with director resignation policy ✓ No supermajority vote requirements ✓ Shareholder right to act by written consent | ✓ Annual Board and Committee self-evaluations ✓ Robust Board and executive succession planning, including annual written director nominee evaluations ✓ Long-standing commitment toward diversity ✓ Director onboarding orientation program ✓ Active shareholder engagement practices |
The shareholders elect the directors whoto serve on the Company's Board of Directors (the “Board”"Board of Directors" or “Board of Directors”"Board") to oversee Company management.. The Board delegates authority tooversees the management of the business by the Chief Executive Officer (“CEO”("CEO") and senior management to pursue the Company’s mission and oversees the CEO’s and senior management’s conduct of the Company’s business.management. In addition to its general oversight function, the Board reviews and assesses the Company’s strategic and business planning and senior management’s approach to addressing significant risks, and hasBoard's additional responsibilities including,include, but are not limited to, the following:
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» reviewing the Company’s financial objectives and major corporate plans, business strategies and actions;
» providing
management»
»assessing whether adequate monitoring administration of the policies and procedures are in place to safeguard the integrity of the Company’sCompany's business operations and financial reporting and to promote compliance with applicable laws and regulations and monitoring management’s administration of those policies and procedures.
The Company expects directors to attend every meetingfollowing charts illustrate Key Board characteristics:
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Page 14 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
BOARD COMPOSITIONContents
2017 PROXY STATEMENT
The Board prides itself on its ability to recruit and retain directors who have the highesthigh personal and professional integrity and have demonstrated exceptional ability and judgment andto effectively serve the stockholders’shareholders' long-term interests. Wolverine Worldwide seeksThe Board believes that its directors, including the nominees for election as directors at the Annual Meeting, have these characteristics and valuable skills that provide the Company with the variety and depth of knowledge, judgment and strategic vision necessary to achieve diversityprovide effective oversight of the Company.
To help accomplish this, and to assist in succession planning, the Board, at the recommendation of the Governance Committee, has identified specified skills and attributes it desires its Board membership by assembling a Board that has a broad rangemembers to possess. The below graphic lists these skills and attributes and indicates which of the directors possess each. As shown, these skills expertise, knowledge and contacts to benefitattributes are well represented within the Board.
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| | Totals | Krueger | Kollat | Boromisa | Boswell | Divol | Gerber | Gromek | Lauderback | Long | O'Donovan | Volkema | ||||||||||||||||
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| Active Executive | 3 | ✓ | | | ✓ | ✓ | | | | | | | | |||||||||||||||
| Brand Building | 9 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
| Current or Former CEO | 5 | ✓ | | | | | | ✓ | | ✓ | ✓ | ✓ | | |||||||||||||||
| Digital/eComm/IT | 4 | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||
| Diversity | 3 | | | | ✓ | ✓ | | | ✓ | | | | | |||||||||||||||
| Finance | 9 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
| Footwear/Apparel | 6 | ✓ | ✓ | | | | ✓ | ✓ | ✓ | | ✓ | | | |||||||||||||||
| Global Supply Chain | 4 | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||
| International Business | 11 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | |||||||||||||||
| Marketing | 10 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
| Public Company Governance | 8 | ✓ | ✓ | | | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | |||||||||||||||
| Retail | 6 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||
2014 PROXY STATEMENT
the Company’s business. This goal is incorporatedBoard members in the Company’s Corporate Governance Guidelines.context of the current make-up of the Board. The Board, with the assistance of the Governance Committee, annually assesses the current composition of the Board considering diversity across many dimensions. As set forth in the Company's Corporate Governance Guidelines, which are posted on its website, this assessment addresses the above-referred skills and attributes and the individual performance, experience, age and skills of each director.
The Board andBoard's Governance Committee use this assessment when defining the criteria for a director search.
The Board’s Governance Committee actsserves as its nominating committee. The Governance Committee, in anticipation of upcoming director elections and other potential or expected Board vacancies, searches forevaluates qualified individuals and recommends candidates for director openings to the full Board. At the Company’s expense, theThe Governance Committee may retain a search firm or other external parties to assist it in identifying candidates. The Committee delegates day-to-day management and oversight of the external parties to the CEOcandidates, and the Company’s Human Resources leadership. Governance Committee has the sole authority to approve the search firm's fees and retention terms, and to terminate the firm if necessary.
The Governance Committee considers candidates suggested by directors, senior management and stockholders, and evaluates all candidates in the same manner. Stockholdersor shareholders. Shareholders may recommend individuals as potential director candidates by communicating with the Governance Committee through one of the Board communication mechanisms described under the heading “Stockholder"Shareholder Communications Policy.” Stockholders" Shareholders that wish to nominate a director candidate must comply with the procedures set forth in the by-lawsCompany's By-Laws, which are posted on the Company’sits website. Ultimately, upon the recommendation of the Governance Committee, the Board selects the Companydirector nominees for election at each annual meeting.
As stated in the Company’s Corporate Governance Guidelines, Wolverine Worldwide seeks to achieve diversity in its Board membership by assembling a group of directors who have a broad range of skills, expertise, knowledge and contacts to benefit the Company’s business. The Governance Committee and In selecting director nominees, the Board annually assessconsiders candidates' performance as a director (which is assessed through an anonymous written peer evaluation), personal and professional integrity, ability and judgment, and likelihood to be effective, in conjunction with the current make-upother nominees and directors, in serving the long-term interests of the Board, considering diversity across many dimensions, and the Committee uses this assessment when defining the criteria for a director search. The Committee, along with the Board, assesses the effectiveness of the diversity objective when reviewing the Board composition. Among other things, the Board has determined that it is important to have individuals with one or a combination of the following skills and experiences on the Board:
»FOOTWEAR, APPAREL AND RETAIL EXPERIENCE. The Company’s business focuses on the global marketing and sale of footwear and apparel, both in wholesale and retail markets. The Company has identified expanding its apparel and retail businesses as two important growth initiatives. The Board believes it is important to have directors with experience in the footwear, apparel and retail industries to provide insights into these and other areas that are critical to the Company’s success.
»LEADERSHIP EXPERIENCE. The Board believes that directors with significant leadership experience, including Chief Executive Officer experience, provide it with special insights, including organization development and leadership practices, and individuals with this experience help the Company identify and develop its own leadership talent. They demonstrate a practical understanding of organizations, process, strategy, risk management and the methods to drive change and growth. These individuals also provide the Company with a valuable network of contacts and relationships.
»GLOBAL EXPERIENCE. The Company’s products are marketed in approximately 200 countries and territories, reflecting the global nature of its business. In fiscal year 2013, approximately 26% of the Company’s revenues came from outside the U.S. and more than 98% of the Company’s products were sourced from outside the U.S. Directors familiar with the challenges and opportunities faced by a global business add value to the Board.
»FINANCE EXPERIENCE. The Company uses financial metrics in managing its overall operations and the operations of its business units. The Company and its stockholders value accurate and insightful financial tracking and reporting. The Board seeks directors that understand finance and financial reporting processes, including directors who qualify as audit committee financial experts. Experience as members of audit committees of other boards of directors also gives directors insight into best audit committee practices.
»PUBLIC AND PRIVATE COMPANY EXPERIENCE. The Company has been listed on the NYSE since 1965. Although the Company’s brand leaders operate as part of a public company, management expects them to drive growth in their business units using the entrepreneurial spirit of private company leadership. The Board believes it is important to have directors who are familiar with the regulatory requirements and environment for publicly traded companies, and to have directors who have experience applying an entrepreneurial focus to building a company or business unit.
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2014 PROXY STATEMENT
»GOVERNMENT EXPERIENCE. A portion of the Company’s business involves government contracting, and the Company interacts with domestic and foreign governments routinely. The Board recognizes the importance of working constructively with governments around the world and believes it is helpful to have directors who have experience working in or with government.
shareholders. The Governance Committee also considers an individual’scandidates' relative skills, attributes, background and characteristics, their exemplification of the highest standards of personal and professional integrity,characteristics; independence under NYSEapplicable New York Stock Exchange ("NYSE") listing standards and the Company’sCompany's Director Independence Standards,Standards; potential contributionto contribute to the composition and culture of the Board,Board; and ability and willingness to actively participate in the Board and committee meetings and to otherwise devote sufficient time to Board duties.
2017 PROXY STATEMENT
As part of an annual self-assessment, each director evaluates the performance of the Board, and any committee on which he or she serves, across a number of dimensions. Mr. Kollat, as the Lead Independent Director working with the Governance Committee, reviews the Board self-assessment with directors following the end of each fiscal year, and conducts individual director interviews at the end of each year. Committee Chairpersons review the committee self-assessments with their respective committee members and discuss them with the Board. In addition, the Governance Committee, working with the Lead Independent Director, develops and implements guidelines for evaluating all directors standing for nomination and re-election.
The Corporate Governance Guidelines (including the Director Independence Standards), the Charter for each Board standing committee (Audit, Compensation and Governance), the Company's Certificate of Incorporation, By-Laws, Code of Business Conduct, and its Accounting and Finance Code of Ethics all are available on the Wolverine Worldwide website at:http://www.wolverineworldwide.com/investor-relations/corporate-governance/
The Board and applicable committees annually review these and other key governance documents.
The Board oversees the Company's risk management and mitigation activities with a focus on the most significant risks facing the Company, including strategic, operational, financial, and legal compliance risks. This oversight is conducted through presentations by and discussions with the CEO, Chief Financial Officer ("CFO"), General Counsel, Chief Information Officer, brand and department leaders and other members of management. The Vice President of Internal Audit and Risk Compliance coordinates management's day-to-day risk management and mitigation efforts, and reports directly to the Audit Committee.
The Vice President of Internal Audit and Risk Compliance reviews with the Audit Committee periodically, and with the full Board annually, management's related assessment and mitigation strategies. In addition to the above processes, the Board has delegated risk management and mitigation oversight responsibilities to its standing committees, which meet regularly to review and discuss specific risk topics that align with their core responsibilities.
The Company reviewed its compensation policies and practices to assess whether they are reasonably likely to have a material adverse effect on the Company. As part of this review, the Company compiled information about the Company's incentive plans, including reviewing the Company's compensation philosophy, evaluating key incentive plan design features and reviewing historic payout levels and pay mix. With assistance from Company management and its independent compensation consultant, the Compensation Committee reviewed the executive compensation program, and managers from the Company's human resources and legal departments reviewed the non-executive compensation programs.
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2017 PROXY STATEMENT
CODE OF BUSINESS CONDUCT AND ACCOUNTING AND FINANCE CODE OF ETHICS
The Board has adopted a Code of Business Conduct for the Company's directors, officers and employees. The Board also has adopted an Accounting and Finance Code of Ethics ("Accounting and Finance Code") that focuses on the financial reporting process and applies to the Company's CEO, CFO and Corporate Controller.
The Company discloses amendments to or waivers from its Code of Business Conduct affecting directors or executive officers and amendments to or waivers from its Accounting and Finance Code on its website at:www.wolverineworldwide.com/investor-relations/corporate-governance/
SHAREHOLDER COMMUNICATIONS POLICY
Shareholders and other interested parties may send correspondence to the Board, the non-employee directors as a group, a specific Board committee or an individual director (including the Lead Director) in the manner described below.
The General Counsel will provide a summary and copies of all correspondence (other than solicitations for services, products or publications) as applicable at each regularly scheduled meeting.
Communications may be sent via email through various links on our website atwww.wolverineworldwide.com/investor-relations/corporate-governance/or by regular mail c/o Senior Vice President, General Counsel and Secretary, Wolverine World Wide, Inc., 9341 Courtland Drive, N.E., Rockford, Michigan 49351.
The General Counsel will alert individual directors if an item warrants a prompt response from the individual director prior to the next regularly scheduled meeting. Items warranting a prompt response, but not addressed to a specific director, will be routed to the applicable committee Chairperson.
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2017 PROXY STATEMENT
Proposal 1 – Election of |
Wolverine Worldwide’sThe Company's Board consists of 1211 directors. The Company’s Amended and Restated By-laws (the “By-laws”) divide the Board intoCompany's By-Laws establish three classes of directors, with each class being as nearly equal in number as possible. Each class serves apossible and serving three-year term of office.terms. At each annual meeting, the term of one class expires. The Company’s Corporate Governance Guidelines state that a director must retire and resign from the Board at the Annual Meeting of Stockholders following his or her 72nd birthday, subject to the Board waiving this requirement under exceptional circumstances. The Board has nominated four directors for election at the annual meeting to be held on April 23, 2014:Annual Meeting: William K. Gerber, Blake W. Krueger, Nicholas T. Long, and Michael A. Volkema. Each director ishas been nominated to serve for a three-year term expiring at the annual meeting of stockholdersshareholders to be held in 20172020 or until his or her successor, if any, has been elected and is qualified. Alberto L. Grimoldi and Shirley D. Peterson are both 72 years of age and are expected to retire as of the date of the Annual Meeting. Upon the Board’s acceptance of their respective offers to retire, the number of Directors will be reduced to reflect their retirement.
Messrs. Gerber, Long and Volkema are independent directors, as determined by the Board under the applicable rules for companies whose securities are traded on the New York Stock Exchange (“NYSE”)NYSE listing standards and the Company’sCompany's Director Independence Standards. Each director nominee currently serves on the Board and the stockholdersBoard. The shareholders elected Messrs. Gerber, Krueger, Long and Volkema at the Company’s 2010Company's 2014 annual meeting. Mr. Long was appointed to the Board in July 2011. meeting by affirmative vote of at least 98% of shares voted.
The Company is not aware of any nominee who will be unable to or will notunwilling to serve as a director. However, if a nominee is unable to serve or is otherwise unavailable for election, the incumbent directors may or may not select a substitute nominee. If the directors select a substitute nominee, the proxy holder will vote the shares represented by all valid proxies for the substitute nominee (unless you give other instructions)instructions are given).
The biographies of the four nominees and the other directors of the Company are printed below, along with a discussion of the above-describedexperience and skills and qualifications forof each director. Following the biographies is a chart that summarizes the skills and qualifications of the nominees and directors.
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Directors with Terms |
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WILLIAM K. GERBER | ||||||
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Mr. Gerber is Managing Director of Cabrillo Point Capital LLC, a private investment fund. He has held that position since 2008. From 1998 to 2007, Mr. Gerber was Executive Vice President and Chief Financial Officer of Kelly Services, Inc., a publicly traded global staffing solutions company with operations in more than 35 countries. During the preceding five years, Mr. Gerber was, but no longer is, a director of Kaydon Corporation.
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Footwear, Apparel and Retail Experience – Served for 15 years in leadership positions with L Brands, Inc. (formerly Limited Brands, Inc.), a publicly traded multinational apparel and retail company, in addition to service as a director of the Company.
Leadership Experience – Served for 24 collective years in leadership roles for L Brands, Inc. and Kelly Services, Inc., both publicly traded companies, including as Chief Financial Officer of Kelly Services, Inc.
Global Experience – Served for 24 collective years as a senior executive for L Brands, Inc. and Kelly Services, Inc., both multinational companies, and service for more than five years as a director for the Company.
Finance Experience – Served for 10 years as Chief Financial Officer of Kelly Services, Inc. where he was responsible for investor relations, mergers and acquisitions and purchasing in addition to core Chief Financial Officer functions; and served for 15 years in various finance roles, including Vice President, Finance, and Vice President, Corporate Controller, for L Brands, Inc.
Public and Private Company Experience – Service as a director of AK Steel Holding Company, an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products, and Kaydon Corporation, a publicly traded company that designed and manufactured custom-engineered products, including 20 collective years of experience serving as a member of the audit committees of AK Steel Holding Corporation, Kaydon Corporation, and the Company, and experience as the chair of the audit committees of the Company, AK Steel Holding Corporation and Kaydon Corporation.
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BLAKE W. KRUEGER | ||||||
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Mr. Krueger is Chairman of Wolverine Worldwide, a position he assumed in January 2010, and Chief Executive Officer and President of Wolverine Worldwide, positions he assumed in April 2007. From October 2005 until April 2007, Mr. Krueger served as President and Chief Operating Officer of Wolverine World Wide, Inc. From 2004 to October 2005, he served as Executive Vice President and Secretary of Wolverine Worldwide and President of the Heritage Brands Group. From 2003 to 2004, Mr. Krueger served as Executive Vice President and Secretary of Wolverine Worldwide and President of the Company’s Caterpillar Footwear Group. He also previously served as Executive Vice President, General Counsel and Secretary of Wolverine Worldwide with various responsibilities including the human resources, retail, business development, accessory licensing, mergers and acquisitions, and legal areas.
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Experience and Skills: | ||||||
Leadership Experience – Service for more than 15 years in senior leadership roles with the Company with responsibilities for operational and staff areas of the business, including brand, manufacturing and sourcing operations, and corporate governance, legal, human resources and mergers and acquisitions, and service for seven years as Chief Executive Officer.
Global Experience – Service for more than 15 years in senior leadership roles with the Company, including seven years as Chief Executive Officer with responsibility for international operations.
Public and Private Company Experience – Service for more than 15 years with the Company, including seven years as Chief Executive Officer and eight years as a director, and as a director of Bissell, Inc., a privately held vacuum cleaner and floor care product manufacturing company; and served as a director of Professionals Direct, Inc., a then publicly traded insurance company.
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NICHOLAS T. LONG | ||||||
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Mr. Long has been Chief Executive Officer of MillerCoors LLC (“MillerCoors”), a joint venture between two publicly traded beverage companies, since 2011. From 2008 to 2011, Mr. Long served as President and Chief Commercial Officer of MillerCoors. From 2007 to 2008, Mr. Long served as Chief Executive Officer of Miller Brewing Company, a beverage company, and he served as Chief Marketing Officer of Miller Brewing Company from 2005 to 2007. Prior to joining Miller Brewing Company, Mr. Long spent 17 years in various senior leadership positions at The Coca-Cola Company, a beverage company, including Vice President of Strategic Marketing Global Brands, Vice President Strategic Marketing Research and Trends, President of Coca-Cola’s Great Britain and Ireland Division and President of the Northwest Europe Division.
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Leadership Experience – Service for more than 20 years as a senior executive in the beverage industry, including experience in senior leadership positions with The Coca-Cola Company and Miller Brewing Company and as Chief Executive Officer of MillerCoors LLC.
Global Experience – Served in senior leadership positions with multinational companies, including management responsibility for Northwest Europe while with The Coca-Cola Company, and as a member of the 12-person Executive Committee of SABMiller, a global brewer.
Public and Private Company Experience – Service as Chief Executive Officer of a joint venture formed by two publicly traded beverage companies, and served in senior leadership positions with The Coca-Cola Company, a multinational publicly traded company, and Miller Brewing Company, a domestic subsidiary of SABMiller plc, a multinational publicly traded company.
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MICHAEL A. VOLKEMA | ||||||
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Mr. Volkema has been Chairman of Herman Miller, Inc., a publicly traded multinational furniture manufacturer, since 2000. Mr. Volkema became President and Chief Executive Officer of Herman Miller in 1995 and held those positions until 2003 and 2004, respectively. Mr. Volkema has more than 30 collective years of experience on public company boards, including 13 years as Chairman of the Board at Herman Miller, Inc., and including service on the compensation and audit committees of boards of publicly traded companies. Mr. Volkema also is a director at Milliken & Company, a privately held, innovation-based company serving textile, chemical, and floor covering markets.
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Experience and Skills: | ||||||
Leadership Experience –Service for more than 20 years in senior leadership positions with Herman Miller, Inc., a publicly traded multinational company, including nine years as Chief Executive Officer and 13 years as Chairman.
Global Experience – Service for more than 20 years in senior leadership positions and as a director of Herman Miller, Inc., a publicly traded multinational company, in addition to experience as a director of the Company.
Public and Private Company Experience – Service for more than 30 collective years on public and private company boards, including as Chairman of the Board for 13 years at Herman Miller, Inc., a publicly traded corporation, service as a director of Milliken & Company, a privately held company, including nine collective years of experience serving on compensation committees and five collective years of experience serving on audit committees of boards of publicly traded companies.
BOARD RECOMMENDATION
The Board recommends that you vote “FOR”"FOR" the election of the above nominees for terms expiring in 2017.2020.
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ROXANE DIVOL | 44 | ||||||
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Mr. Grimoldi has been Chairman of Grimoldi, S.A., a manufacturer and retailer of footwear and accessories, since 1986. Mr. Grimoldi also was a member of the Advisory Board of Ford Motor Company Argentina, a multinational automotive company; Vice Chairman of Banco Privado de Inversiones, S.A., an investment bank; and in Argentina, Undersecretary of Foreign Trade, Undersecretary of Economics and Labor, Secretary of Industry and a member of the board of the Central Bank of Argentina.
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Footwear, Apparel and Retail Experience – Service for more than 25 years in the footwear and retail industries, including as Chairman of Grimoldi S.A.
Leadership Experience – Service for more than 25 years as Chairman of a publicly traded Argentinean company and service in senior leadership positions of the Argentine government including as Undersecretary of Foreign Trade, Undersecretary of Economics and Labor, Secretary of Industry.
Global Experience – Service for more than 25 years as Chairman of an Argentinean company, more than 19 years as director of the Company, and served as a member of the Advisory Board of Ford Motor Company Argentina, a multinational company.
Finance Experience – Service as a member of the Advisory Board of Ford Motor Company Argentina, a multinational company, Vice Chairman of an investment bank, Banco Privado de Inversiones, S.A., as well as leadership and finance experience from government service in Argentina as Undersecretary of Foreign Trade, Undersecretary of Economics and Labor, Secretary of Industry and a member of the board of the Central Bank of Argentina.
Public and Private Company Experience – Service as Chairman of Grimoldi S.A., a publicly traded company, for more than 25 years and as a director of the Company for more than 19 years.
Government Experience – Service as Argentina’s Undersecretary of Foreign Trade, Undersecretary of Economics and Labor, Secretary of Industry and a member of the board of the Central Bank of Argentina.
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JOSEPH R. GROMEK | ||||||
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From 2003 until his retirement in 2012, Mr. Gromek served as President, Chief Executive Officer and a director of The Warnaco Group, Inc., a publicly traded company. Mr. Gromek also served as Chief Executive Officer of Brooks Brothers, Inc. from 1995 until 2002. Mr. Gromek also is a director of Stanley M. Proctor Company and J. McLaughlin, both privately held companies. He is currently the Chairman of the Board of Tumi, Inc., a publicly traded company featuring the leading global brand of premium travel, business and lifestyle products and accessories.
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Leadership Experience – Served in leadership positions at several companies, including as Chief Executive Officer at two apparel companies. Global Experience – Served as the Chief Executive Officer of two multinational companies, Brooks Brothers, Inc. and The Warnaco Group.
Public and Private Company Experience – Service as a director of three publicly traded companies, The Children’s Place Retail Store, Inc., a children’s clothing retail company, Tumi, Inc., a wholesaler and retailer of luxury travel, business and lifestyle accessories, and the Company; service as a director of Stanley M. Proctor Company, a privately held company; service as a director of J. McLaughlin, a privately held retail company; service as Chief Executive Officer of The Warnaco Group, Inc. and Brooks Brothers, Inc. and as Chairman of the Board of Tumi, Inc.
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BRENDA J. LAUDERBACK
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, a footwear wholesaler and distributor. She previously was the President of the Wholesale Division of U.S. Shoe Corporation, a footwear manufacturer and distributor, a position that included responsibility for offices in China, Italy and Spain, and she was a Vice President/General Merchandise Manager of Dayton Hudson Corporation (now Target Corporation), a retail company. During the preceding five years, Ms. Lauderback also was, but no longer is, a director of Big Lots, Inc., a retail company. | ||||||
a restaurant company, and Select Comfort Corporation, a bed manufacturer and retailer, and as a director of Wolverine Worldwide, she also has extensive experience with public company governance and related matters. | |||||||||
From 1995 until her retirement in 1998, Ms. Lauderback was President of the Wholesale and Retail Group of Nine West Group, Inc., a footwear wholesaler and distributor. She previously was the President of the Wholesale Division of U.S. Shoe Corporation, a footwear manufacturer and distributor, a position that included responsibility for offices in China, Italy and Spain, and was a Vice President/General Merchandise Manager of Dayton Hudson Corporation, a retailer (now Target Corporation). During the preceding five years, Ms. Lauderback also was, but no longer is, a director of Irwin Financial Corporation, a publicly traded bank holding company.
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Footwear, Apparel and Retail Experience – Served for more than 25 years in the retail industry and more than 20 years in the footwear, apparel, and accessories industry, including senior leadership positions with Nine West Group, Inc., U.S. Shoe Corporation and Dayton Hudson Corporation.
Leadership Experience – Served in senior leadership positions for two publicly traded companies and service for more than 50 collective years on publicly traded company boards, including Big Lots, Inc., a retail company, Denny’s Corporation, a restaurant company, and Select Comfort Corporation, a bed manufacturer and retailer, and as a director of the Company.
Public and Private Company Experience – Service for more than 50 collective years on publicly traded company boards, including 28 collective years of experience serving on audit committees and 31 collective years of experience serving on governance committees, and chair of three governance committees of boards of publicly traded companies.
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From 1995 until her retirement in 2000, Ms. Peterson served as President of Hood College in Frederick, Maryland. Prior to serving as President of Hood College, Ms. Peterson also served as Commissioner of the Internal Revenue Service and Assistant Attorney General of the Tax Division for the U.S. Department of Justice, and had 20 years in private law practice as a tax attorney with the law firm Steptoe & Johnson LLP. During the preceding five years, Ms. Peterson also was, but no longer is, a director of Champion Enterprises, Inc., a factory-built modular home manufacturer.
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Leadership Experience – Served as President of Hood College, as Commissioner of the Internal Revenue Service, and for 20 years in private law practice, including as a Partner of Steptoe & Johnson LLP.
Public and Private Company Experience – Service for more than 40 collective years on publicly traded company boards, including AK Steel Holding Corporation, an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products, and The Goodyear Tire & Rubber Company, a multinational developer, manufacturer, marketer and distributor of tires, rubber-related chemicals, and operator of commercial truck service and tire retreading centers and tire and auto service center outlets, and more than 30 collective years of experience serving on publicly traded company audit committees, more than 35 collective years of experience serving on publicly traded company governance committees, and an additional 13 years of experience serving on the governance committee of a mutual fund complex.
Government Experience – Served as Commissioner of the Internal Revenue Service and Assistant Attorney General of the Tax Division for the U.S. Department of Justice.
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JEFFREY M. BOROMISA
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Mr. Boromisa was Executive Vice President of Kellogg International, President of Latin America; Senior Vice President of Kellogg Company, a global food manufacturing company, and a member of Kellogg Company’s Global Leadership Team from 2004 through his retirement in May 2009. From 2007 until 2008, Mr. Boromisa served as Executive Vice President of Kellogg International, President of Asia Pacific and Senior Vice President of the Kellogg Company. From 2004 through 2006, he was Senior Vice President and Chief Financial Officer of Kellogg Company. In 2002, Mr. Boromisa was promoted to Senior Vice President, Corporate Controller and Chief Financial Officer of Kellogg International. Mr. Boromisa served as Vice President and Corporate Controller of Kellogg Company from November 1999 until 2002. In 1997, he was promoted to Vice President – Purchasing of Kellogg North America, and from 1981 to 1997, served Kellogg Company in various financial positions. Mr. Boromisa also is a director at Haworth International, Inc., a privately held, multinational, office furniture design and manufacturing company.
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Footwear, Apparel and Retail Experience – Service for more than seven years as a director of the Company.
Leadership Experience – Served in senior roles involving executive management, brand management, marketing and international operations, for more than 25 years at Kellogg Company, a publicly traded multinational company.
Global Experience – Served in senior leadership positions at Kellogg Company, responsible for Latin American and Asia Pacific operations.
Finance Experience – Served as Chief Financial Officer and in various other senior finance roles at Kellogg Company.
Public and Private Company Experience – Served in senior leadership roles at Kellogg Company, a publicly traded multinational company, and serves as a director of Haworth International, Inc., a privately held company.
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GINA R. BOSWELL
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Since 2011, Ms. Boswell has been Executive Vice President, Personal Care for Unilever PLC / Unilever N.V., a global food, personal care, and household products company whose products are sold in more than 190 countries and include such well-known global brands as Dove, Lipton and Hellman’s. From 2008 to 2011, Ms. Boswell served as President, Global Brands, for The Alberto-Culver Company, a consumer goods company. Ms. Boswell has held numerous other senior leadership positions with other leading global companies, including Avon Products, Inc., Ford Motor Company, and Estee Lauder Companies, Inc.
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Leadership Experience – Served in numerous senior leadership positions with leading global companies including Unilever PLC / Unilever N.V., The Alberto-Culver Company, Avon Products, Inc., Ford Motor Company and Estee Lauder Companies, Inc.
Global Experience – Served in global leadership roles at The Alberto-Culver Company, Avon Products, Inc., Ford Motor Company and Estee Lauder Companies, Inc.
Finance Experience – Currently Chair of ManpowerGroup Inc.’s audit committee.
Public and Private Company Experience – Served in senior leadership roles at publicly traded companies, most recently at Unilever PLC / Unilever N.V. Service as a public company director with ManpowerGroup Inc. and Applebee’s International, Inc.
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DAVID T. KOLLAT
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Career Highlights: |
, a company specializing in research and management consulting for retailers and consumer goods manufacturers, since 1987. In addition to his marketing and management experience as Chairman and President of 22, Inc., Mr. Kollat served for 11 years in senior leadership positions at L Brands, Inc. (formerly Limited Brands, Inc.), a publicly traded, multinational apparel and retail company, including as Executive Vice President, Marketing, President of Victoria's Secret Direct, and as a member of its executive committee. Mr. Kollat is Lead Independent Director of Wolverine Worldwide, a position he has held since 2007. Mr. Kollat has been a director of L Brands, Inc. since 1976 and a director of Select Comfort Corporation, a bed manufacturer and retailer, since 1994. During the preceding five years, Mr. Kollat was, but no longer is, a director of Big Lots, Inc., a publicly traded retail company. | ||||||
Experience and Skills: | |||||||
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Mr. Kollat has been Chairman and President of 22, Inc., a company specializing in research and management consulting for retailers and consumer goods manufacturers, since 1987. In addition to his marketing and management experience as Chairman and President of 22, Inc., Mr. Kollat has 11 years of experience as Executive Vice President, Marketing, and a member of the executive committee of L Brands, Inc. (formerly Limited Brands, Inc.), a publicly traded multinational apparel and retail company, and three years at L Brands, Inc. as President of Victoria’s Secret Direct. In 2009 and again in 2012 prior to Mr. Kollat’s re-nomination as a director, the Board decided to waive the Company’s age 72 resignation requirement for Mr. Kollat, allowing him to serve additional terms ending in 2013 and 2016, respectively. Mr. Kollat is Lead Director of Wolverine Worldwide. Mr. Kollat has been a director of L Brands, Inc. since 1976 and a director of Select Comfort Corporation since 1994. During the preceding five years, Mr. Kollat was, but no longer is, a director of Big Lots, Inc., a publicly traded retail company.
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Footwear, Apparel and Retail Experience – Service for more than 20 years as a director of the Company, for more than 25 years as a consultant to retailers and consumer goods manufacturers, and continuing service as a director of L Brands, Inc.; and served for more than 11 years in senior leadership roles at L Brands, Inc.
Leadership Experience – Service as a director of two publicly traded companies, L Brands, Inc. and Select Comfort Corporation, in addition to service as a director of the Company, and served as a director of Big Lots, Inc. and served for more than 11 years in senior leadership roles at L Brands, Inc.
Finance Experience – Has 16 collective years serving on audit committees and 11 collective years serving on finance committees of publicly traded companies.
Public and Private Company Experience – Has more than 90 collective years serving on public company boards, including 16 years of experience on audit committees, 22 years of service on compensation committees, 12 years of service on governance committees and 11 years of service on finance committees.
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TIMOTHY J. O'DONOVAN
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| Select Business Experience: | Board Committees: | Other Public Directorships: | |||
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Experience and Skills: | |||||||
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Mr. O’Donovan is a former Chairman of the Board of Wolverine Worldwide and served in that position from April 2005 through December 2009. In April 2007, Mr. O’Donovan retired as Chief Executive Officer of Wolverine Worldwide, a position that he held since April 2000. Mr. O’Donovan served Wolverine Worldwide as its Chief Executive Officer and President from April 2000 until April 2005, and as Chief Operating Officer and President from 1996 until April 2000. Prior to 1996, Mr. O’Donovan held various positions with the Company, including Executive Vice President of Wolverine Worldwide. During the preceding five years, Mr. O’Donovan was, but no longer is, a director of Kaydon Corporation.
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Footwear, Apparel and Retail Experience – Service for more than 40 years in various positions with the Company, including seven years as Chief Executive Officer with responsibilities for all aspects of the business, including brand leadership, apparel and accessories development, footwear wholesale, retail business development, international operations, mergers and acquisitions, manufacturing and sourcing; and two years of service as non-executive Chairman of the Board.
Leadership Experience – Service for more than 40 years in a variety of positions with the Company, including seven years as Chief Executive Officer.
Global Experience – Service for more than 40 years in a variety of positions at the Company, including seven years as Chief Executive Officer, with responsibility for all aspects of the business, including international operations.
Finance Experience – Service in various roles with the Company responsible for financial operations, including seven years as Chief Executive Officer, and service for seven years on the audit committee of a publicly traded company.
Public and Private Company Experience – Service for more than 30 collective years on the boards of the Company, SpartanNash Company, a publicly traded company in the food distribution industry, and Kaydon Corporation and as lead director of Kaydon Corporation and SpartanNash Company.
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n indicates the director has that skill or qualification.
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The Board oversees the Company’s risk management and mitigation activities directly through presentations by and discussions with the CEO, Chief Financial Officer (“CFO”), General Counsel, brand and department leaders, and other members of management. The Vice President of Internal Audit and Risk Compliance coordinates management’s day-to-day risk management and mitigation processes, and reports directly to the CFO and also reports directly to the Audit Committee. The Vice President of Internal Audit and Risk Compliance reviews with the Audit Committee quarterly and with the full Board annually management’s risk assessments and mitigation strategies for
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significant risks. In addition to the above processes, the Board has delegated the following risk management and mitigation oversight responsibilities to its standing committees, which meet regularly to review and discuss risk topics and then report to the full Board:
» The Audit Committee oversees the Company’s risk policies and processes relating to its financial statements and financial reporting processes, credit risks, and liquidity risks. The Committee also reviews the Company’s policies and systems with respect to risk assessment and risk management. The Committee discusses with management and the independent auditors significant risks or exposures and the steps taken by management to resolve them. The Committee oversees the Company’s procedures for the receipt, retention and treatment of complaints relating to accounting and auditing matters and oversees the Company’s management of legal and regulatory compliance systems.
» The Compensation Committee monitors the risks associated with management resources; organization structure;
succession planning, hiring, development and retention processes; and reviews and evaluates what effects the Company’s compensation structure may have on risk decisions.
»The Finance Committee advises and assists the Board with respect to Company policies and practices relating to the management of certain financial matters delegated by the Board to the Finance Committee.
»The Governance Committee oversees risks related to the Company’s governance structure and processes and risks arising from related person transactions.
RISK CONSIDERATIONS IN COMPENSATION PROGRAMS
The Company reviewed its employee compensation programs to assess whether any of those programs included incentives that created risks likely to have a material adverse impact on the Company. As part of this review, the Company compiled information about the Company’s incentive plans, including reviewing the Company’s compensation philosophy, evaluating key incentive plan design features, and reviewing historic payout levels and pay mix. The Compensation Committee reviewed the executive compensation programs, with management’s assistance, and managers from the Company’s human resources and legal departments reviewed the non-executive compensation programs.
The Company’sCompany's CEO currently also serves as the Chairman of the Board. Since 1993, the Company has had ana lead independent Lead Directordirector who functions in many ways similar to how an independent Chairman would function.Chairman. This long-established structure provides the Board with independent oversight of the CEO’sCEO's leadership. The Board believes that it should decideOn an annual basis, the independent directors consider the appropriate leadership structure, including whether to separate the roles of Chairman and CEO, based upon the Company’s circumstances at the timeBoard and considers the Board’s leadershipCompany's then-current circumstances. The independent directors believe that its current structure as part of the succession planning process. The Company’s business currently focuses on the development of its footwear, apparel and retail business. Because the Company does not operate multiple, unrelated businesses and given the size of the Company, the Board believes that separating the Chairman and CEO rolesis appropriate at this time, would add unnecessary complexity toand set the organization structure without adding materially to Board oversight offollowing enumurated responsibilities for the CEO function. The Company’slead independent directors annually select an independent Lead Director. As outlined in the Corporate Governance Guidelines, the duties of the Lead Director include:director:
» reviewing and approving the agenda and scheduling for Board and committee meetings;
» overseeing and approving information sent to the Board;
» presiding over executive sessions and having the authority to call executive sessions;
» serving
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The Board annually assesses the independence of all directors. No director qualifiesTo qualify as “independent” unless"independent," the Board must affirmatively determinesdetermine that the director is independent under the Company’sCompany's Director Independence Standards, andwhich are modeled after the listing standards of the NYSE. Under the Company’s Director Independence Standards, and in conformity with theNYSE listing standards, of the NYSE, the Board has determined that ten10 of the Company’s twelveCompany's 11 directors are independent. For over 16 years, Wolverine Worldwide hasOnly Mr. Krueger, the Company's CEO, is not had more than two active or former management employees as directors.independent. All of the Board’sBoard's committees are comprised entirely of independent directors. The non-managementindependent directors generally meet periodically each year in executive session. The Board believes that this structure provides for meaningful and effective oversight of management by the non-management directors.
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session at each regularly scheduled meeting.
The Director Independence Standards define an “Independent Director”"Independent Director" as a director who the Board determines otherwise has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company), and who:
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2014 PROXY STATEMENT
exceeds the lesser of $250,000 or 10% of the other company’s consolidated gross revenues;
»does not have an immediate family member who is an executive officer of, another company that has made payments to, or received payments from, Wolverine Worldwide for property or services in an amount which, in any of the pastlast three fiscal years, exceeds the greater of $1,000,000 or 2% of the other company’scompany's consolidated gross revenues;revenues
»is not an executive officer, trustee or board member of a tax exempt organization to which Wolverine Worldwide has
made in the past three fiscal years contributions that, in any single fiscal year, exceeded the greater of $50,000 or 2% of the non-profit organization’s, foundation’s or educational institution’s consolidated gross revenues; or
»haswhichthat the Board determines is material.material
“Immediate Family Member” covers spouses, parents, children, siblings, in-laws, and any person (other than domestic employees) sharing the household of any director, nominee for director, executive officer, or significant stockholder of a company.
BOARD COMMITTEES, MEETINGS AND MEETING ATTENDANCE
The following table identifiesBoard has three standing committees: Audit, Compensation and Governance. Each committee meets periodically throughout the current membersyear, and reports its recommendations to the Board. The Company expects directors to attend every meeting of the Board and its standingthe committees on which they serve and to attend the annual meeting of shareholders. In 2016, all directors then serving on the Board attended the 2016 Annual Meeting of Shareholders, and all directors attended at least 75% of the meetings of the Board (6 meetings in 2016) and the number of meetings the Boardcommittees on which they served. All directors are typically invited to and eachattend all committee held in 2013.meetings.
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Each committee annually evaluates its performance to determine its effectiveness. The Board has determined that all committee members are "independent" as defined by NYSE listing standards. Furthermore, each Audit Committee member is “independent” as defined by NYSE rules and the Sarbanes-Oxley Act of 2002, as applicable to audit committee members, and that all satisfysatisfies the NYSE “financial literacy”"financial literacy" requirement. In addition, the Board has determined that Mr. Boromisa and Mr. Gerber are “audit"audit committee financial experts”experts" under Securities and Exchange Commission (“SEC”("SEC") rules. The Audit Committee:
» represents and assists the Board in fulfilling its oversight responsibility regarding the Company’s financial statements and the financial reporting process, the Company’s internal control over financial reporting, the performanceEach committee's charter, with a complete list of the internal audit functionduties and responsibilities is available on the independent auditors, the qualifications and independence of the independent auditors, the annual independent audit of the Company’s financial statements and internal control over financial reporting, the Company’s compliance with legal and regulatory requirements, and the Company’s policies and systems with respect to risk assessment and risk management;Company's website athttp://www.wolverineworldwide.com/investor-relations/corporate-governance/.
» appoints, retains (subject to ratification by the Company’s stockholders), compensates, oversees, evaluates and, if appropriate, terminates the independent auditors;
» approves in advance all audit and permissible non-audit services to be provided by the independent auditors and establishes policies and procedures for the engagement of the independent auditors to provide audit and permissible non-audit services;
» annually reviews the performance, effectiveness, objectivity and independence of the independent auditors and the Company’s internal audit function;
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Non-Employee Director Compensation |
The Company's non-employee director compensation philosophy is to pay compensation competitive with compensation paid by companies of similar size, in similar industries and with whom Wolverine Worldwide competes for director candidates. The Governance Committee, with input from management and from the Compensation Committee's independent compensation consultant, reviewed director compensation and compared it to market data, including a comparison to director compensation for the Company's Peer Group, as defined on page 56, and to that of companies in the 2014-2015 National Association of Corporate Director Compensation Report. Based on this review non-employee director compensation for 2016 did not change from 2015 levels. The following table provides information concerning the compensation of the Company's non-employee directors for fiscal year 2016. Mr. Krueger receives compensation for his services as the Company's CEO and President, but does not receive any additional compensation for his service as a director or chairman.
Fees Paid in Cash | | | Cash Amounts Voluntarily Deferred | | | Cash Amounts Deferred Through Annual Equity Retainers | | Fees Earned or Paid in Cash1 | | Option Awards2 | | Total | ||||||||||||||
Boromisa | $97,000 | + | - | + | $70,000 | = | $167,000 | + | $50,002 | = | $217,002 | |||||||||||||||
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Boswell | $82,000 | + | - | + | $70,000 | = | $152,000 | + | $50,002 | = | $202,002 | |||||||||||||||
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Divol | $21,250 | + | $63,750 | + | $70,000 | = | $155,000 | + | $50,002 | = | $205,002 | |||||||||||||||
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Gerber | $117,000 | + | - | + | $70,000 | = | $187,000 | + | $50,002 | = | $237,002 | |||||||||||||||
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Gromek | - | + | $109,000 | + | $70,000 | = | $179,000 | + | $50,002 | = | $229,002 | |||||||||||||||
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Kollat | $130,000 | + | - | + | $92,000 | = | $222,000 | + | $63,002 | = | $285,002 | |||||||||||||||
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Lauderback | $78,375 | + | $26,125 | + | $70,000 | = | $174,500 | + | $50,002 | = | $224,502 | |||||||||||||||
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Long | $94,000 | + | - | + | $70,000 | = | $164,000 | + | $50,002 | = | $214,002 | |||||||||||||||
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O'Donovan | $70,000 | + | - | + | $70,000 | = | $140,000 | + | $50,002 | = | $190,002 | |||||||||||||||
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Volkema | - | + | $104,500 | + | $70,000 | = | $174,500 | + | $50,002 | = | $224,502 | |||||||||||||||
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Name | Option Awards Outstanding at December 31, 2016 (#) | Name | Option Awards Outstanding at December 31, 2016 (#) | |||||
Boromisa | 75,191 | Kollat | 85,129 | |||||
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Boswell | 35,644 | Lauderback | 65,321 | |||||
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Divol | 30,911 | Long | 51,551 | |||||
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Gerber | 62,773 | O'Donovan | 69,083 | |||||
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Gromek | 81,701 | Volkema | 46,235 | |||||
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2017 PROXY STATEMENT
The following table shows the non-employee director compensation program for 2016:
| | Compensation Plan for 2016 | |||||||||
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| Component | | Cash | Options1 | Stock Units2 | ||||||
Newly Appointed or Elected Director | $0 | Number of options equal to $65,000, determined using the Black-Scholes method. | ||||||||
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| Annual Director Fee | $70,000 | Number of options equal to $50,000, determined using the Black-Scholes method. | Number of stock units with a value equal to $70,000, determined by dividing the dollar amount by the closing market price of the Company's common stock on the grant date. Units are credited to the Amended and Restated Outside Directors' Deferred Compensation Plan, described below. | |||||||
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| Audit Committee Annual Fee | $15,000 | |||||||||
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| Audit Committee Chairperson Annual Fee | $20,000 | |||||||||
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| Compensation Committee Annual Fee | $12,000 | |||||||||
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| Compensation Committee Chairperson Annual Fee | $15,000 | |||||||||
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| Governance Committee Annual Fee | $12,000 | |||||||||
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| Governance Committee Chairperson Annual Fee | $15,000 | |||||||||
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| Lead Director Annual Fee | In lieu of the standard Annual Director Fee, the Lead Director was paid a Cash Retainer of $130,000. | In lieu of the standard stock option grant, the Lead Director received a number of stock options equal to $63,000, calculated in the same manner as the standard grant. | In lieu of the standard stock unit grant, the Lead Director received stock units with a value equal to $92,000, calculated and credited in the same manner as the standard grant. | |||||||
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The Company also:
Deferred Compensation Plan. The Company's Amended and Restated Outside Directors' Deferred Compensation Plan (the "Deferred Compensation Plan") is a supplemental nonqualified deferred compensation plan for non-employee directors. A separate non-employee director deferred compensation plan applies to benefits accrued under that plan before January 1, 2005. The Deferred Compensation Plan
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permits all non-employee directors to voluntarily defer, at their option, 25%, 50%, 75% or 100% of their director fees. The Company establishes a book account for each non-employee director and credits the director's account with the annual equity retainer amount as described above and with a number of stock units equal to the amounts voluntarily deferred, each divided by the closing market price of common stock on the payment/deferral date. The Company also credits director accounts with dividend equivalents on amounts previously deferred in the form of additional stock units. The amounts credited to director accounts are treated as if invested in Wolverine Worldwide common stock. The number of stock units held in director accounts is set forth under the "Stock Ownership By Management and Others" table below.
Upon a director's termination of service, or such later date as a director selects, the Company distributes the stock units in the director's book account in shares of Wolverine Worldwide common stock in either a single, lump-sum distribution or annual installment distributions over a period of up to 20 years (10 years under the plan for benefits accrued before January 1, 2005). The Company converts each stock unit to one share of Wolverine Worldwide common stock.
Upon a "change in control," the Company distributes to the director, in a single, lump-sum distribution, Wolverine Worldwide common stock in a number of shares equal to the stock units credited to a director's book account. The Deferred Compensation Plan defines "change in control" as any of the following:
NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP GUIDELINES
Each non-employee director must attain (and maintain) a minimum stock ownership level (including owned shares, the in-the-money value of stock options, and stock units under the Directors' Deferred Compensation Plan) equal to six times the non-employee director annual cash retainer prior to being able to gift or sell any Company stock. During 2016, all non-employee directors were in compliance with these guidelines.
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Securities Ownership of Officers and Directors and Certain Beneficial Owners |
The following table sets forth information about those holders known by Wolverine Worldwide to be the beneficial owners of more than five percent of Wolverine Worldwide's outstanding shares of common stock as of March 13, 2017:
Amount and Nature of Beneficial Ownership of Common Stock | ||||||||||||
Name and Address of Beneficial Owner | Sole Voting Power | Sole Investment Power | Shared Voting Power | Shared Investment Power | Total Beneficial Ownership | Percent of Class4 | ||||||
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BlackRock, Inc.1 | 11,417,003 | 11,646,668 | - | - | 11,646,668 | 12.0% | ||||||
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Janus Capital Management LLC2 | 7,094,347 | 7,094,347 | 26,059 | 26,059 | 7,120,406 | 7.3% | ||||||
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The Vanguard Group3 | 128,438 | 7,959,136 | 11,475 | 134,678 | 8,093,814 | 8.3% | ||||||
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STOCK OWNERSHIP BY MANAGEMENT AND OTHERS
The following table sets forth the number of shares of common stock beneficially owned as of March 13, 2017, by each of the Company's directors and named executive officers and all of the Company's directors and executive officers as a group:
| Amount and Nature of Beneficial Ownership of Common Stock1 | |||||||||||||
| Deferred Stock Units, Sole Voting and/or Investment Power2,3 | Shared Voting or Investment Power4 | Stock Options5 | Total Beneficial Ownership | Percent of Class6 | ||||||||
Jeffrey M. Boromisa | 58,901 | 27,972 | 69,083 | 155,956 | * | ||||||||
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Gina R. Boswell | 9,481 | - | 35,644 | 45,125 | * | ||||||||
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Roxane Divol | 13,350 | - | 30,911 | 44,261 | * | ||||||||
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William K. Gerber | 38,061 | - | 58,773 | 96,834 | * | ||||||||
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Joseph R. Gromek | 104,443 | - | 81,701 | 186,144 | * | ||||||||
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Michael Jeppesen | 161,448 | - | 105,112 | 266,560 | * | ||||||||
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David T. Kollat | 300,776 | - | 79,021 | 379,797 | * | ||||||||
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Blake W. Krueger | 1,363,761 | 50,000 | 971,345 | 2,385,106 | 2.44% | ||||||||
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Brenda J. Lauderback | 58,996 | - | 59,213 | 118,209 | * | ||||||||
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Nicholas T. Long | 16,678 | - | 51,551 | 68,229 | * | ||||||||
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Timothy J. O'Donovan | 617,431 | - | 69,083 | 686,514 | * | ||||||||
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Michael D. Stornant | 153,917 | - | 140,364 | 294,281 | * | ||||||||
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Michael A. Volkema | 58,417 | - | 46,235 | 104,652 | * | ||||||||
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Richard J. Woodworth | 126,907 | - | 58,279 | 185,186 | * | ||||||||
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James D. Zwiers | 163,732 | 161,003 | 259,041 | 583,776 | * | ||||||||
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All directors and executive officers as a group (15 people) | 3,246,299 | 238,975 | 2,115,356 | 5,600,630 | 5.65% | ||||||||
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| | | | Restricted Units | Performance Units | |||
| | Krueger | | 69,196 | | 159,926 | | |
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| | Jeppesen | | 13,100 | | 19,649 | | |
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| | Stornant | | 15,570 | | 23,355 | | |
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| | Woodworth | | 14,643 | | 21,965 | | |
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| | Zwiers | | 15,548 | | 23,321 | | |
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2017 PROXY STATEMENT
A LETTER FROM OUR COMPENSATION COMMITTEE
Dear Shareholders,
As members of the Wolverine Worldwide Compensation Committee, two of our most important responsibilities are to ensure that our executive compensation program pays for performance and aligns with the interests of our shareholders. The disappointing outcome of our 2016 say-on-pay vote was a signal by our shareholders that you took issue with some aspects of our executive compensation program, and we were determined to understand your perspectives on this program and committed to making constructive changes in response.
To accomplish this, the Committee launched a direct shareholder engagement initiative and retained a new independent executive compensation consultant to help us assess our current plans and programs. Since the Company's 2016 annual meeting, we have reached out to shareholders representing nearly two-thirds of our outstanding shares and had conversations with more than half of these shareholders – meeting with every shareholder who accepted our invitation. Our Committee Chairman Joseph Gromek led this effort and was present for all of the conversations we had with our investors. The purpose of these meetings was twofold – to gain a better understanding of the specific shareholder concerns with our executive compensation program and to also get feedback on a number of changes to the program that the Committee was considering.
After aggregating the shareholder feedback, sharing it with the full Board and deliberating as a Committee, we made significant changes to our executive compensation program and took targeted actions to reduce the CEO's 2016 and 2017 compensation. These changes reflect the thoughtful and constructive insights we received from our shareholders and are summarized below:
We have listened to shareholder concerns and have taken significant steps to address them and improve the Company's overall compensation program. We are committed to the ongoing evaluation and improvement of our executive compensation program to further enhance alignment with the interests of our shareholders. We welcome the opportunity to engage and encourage you to reach out with any questions or concerns related to our program. Correspondence can be addressed to the Compensation Committee care of the Corporate Secretary, as set forth on page 17 of this proxy statement.
Sincerely,
The Wolverine Worldwide Compensation Committee
Joseph R. Gromek (Chairman), Jeffrey M. Boromisa, William K. Gerber, Nicholas T. Long
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Compensation Discussion |
| The Company's Compensation Discussion and Analysis ("CD&A") provides an overview and analysis of the executive compensation for the Company's named executive officers ("NEOs"). For 2016, the Company's NEOs were: | ||
Blake W. Krueger | Chairman, Chief Executive Officer and President | |
Michael Jeppesen | President, Wolverine Heritage Group and Global Operations Group | |
Michael D. Stornant | Senior Vice President, Chief Financial Officer and Treasurer | |
Richard J. Woodworth | President, Wolverine Boston Group | |
James D. Zwiers | President, Wolverine Outdoor & Lifestyle Group (in 2016); | |
| Assumed new role as Executive Vice President in February 2017 | ||
Compensation Philosophy and Objectives
The Company's compensation philosophy is to provide executives with a competitive compensation package that is heavily weighted towards at-risk (performance shares and annual bonus) and variable (restricted stock and, prior to 2017, stock options) compensation in order to encourage superior business, stock price and financial performance over the short and longer term and to closely align the interests of the Company's NEOs with those of its shareholders. The Compensation Committee (the "Committee") oversees the Company's executive compensation program.
The executive compensation program has four primary objectives:
The Company's say-on-pay proposal received insufficient support at the 2016 annual meeting. Since that meeting, the Company reached out to shareholders representing nearly two-thirds of its outstanding shares and had conversations with more than half of these shareholders. The Compensation Committee Chairman Joseph Gromek led this effort, was present for all of these conversations, and solicited and received direct feedback from shareholders on what drove their 2016 say-on-pay vote and what changes the Committee could make to address these concerns. The feedback was shared with the full Board and significant changes were made in response to the feedback.
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 39 |
2014 PROXY STATEMENT
» annually obtains and reviewsBelow is a list of the independent auditors’ internal quality control report and other reports required by applicable rules, regulations and standards;
» annually obtains and reviews the independent auditors’ report regarding the auditors’ independence;
» annually assesses auditor independence;
» discusseskey themes heard during Mr. Gromek's conversations with the internal audit staffshareholders and the independent auditorsCommittee's actions in response, with additional details provided below the overall scope and plans for their respective audits;chart:
» receives, reviews and discusses reports from management, the internal finance and auditing staff and the independent auditors regarding the adequacy and effectiveness of the Company’s internal control over financial reporting;
» receives, reviews and discusses reports from management regarding the adequacy and effectiveness of the Company’s disclosure controls and procedures;
» oversees the Company’s risk policies and processes relating to its financial statements and financial reporting processes, credit risks and liquidity risks;
» discusses with management and the independent auditors significant risks or exposures and steps taken by management to mitigate them;
» meets separately, periodically with management, internal audit staff, the independent auditors and the General Counsel;
» reviews and discusses with the independent auditors matters required to be discussed by the independent auditors under Accounting Standard No. 16, as adopted by the Public Company Accounting Oversight Board and amended from time to time;
» meets to review with management and the Company’s independent auditors the Company’s interim and annual audited financial statements, including disclosures in Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are included in the Company’s Quarterly reports on Form 10-Q and Annual Reports on Form 10-K;
» recommends to the Board whether the Company’s audited financial statements should be included in the company’s Annual Report on Form 10-K;
» establishes and oversees procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, auditing or federal securities law matters, and for the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting, auditing or federal securities law matters;
» reviews with management and the independent auditors the Company’s earnings press releases and financial information and earnings guidance provided by the Company to analysts and rating agencies;
» oversees the preparation of the audit committee report required by the SEC rules to be included in the Company’s proxy statement for the annual meeting of stockholders;
» establishes the Company’s hiring policies for employees and former employees of the independent auditors;
» engages consultants and advisors at the expense of the Company to assist the Committee as it deems necessary in the performance of its functions, including having the sole authority to retain and terminate any consultants and advisors and to approve all fees and other retention terms and receiving appropriate funding, as determined by the Committee, from the Company for payment of compensation to any such consultants and advisors;
» oversees the Company’s legal and regulatory compliance systems and reviews the Company’s codes of conduct and programs to monitor compliance with such codes;
» at least annually receives a report on the Company’s compliance programs, and reviews and discusses the implementation and effectiveness of the Company’s compliance programs with the General Counsel, who has the authority to communicate promptly and directly to the Audit Committee and the Board, about reports that involve actual and alleged violations of law or the Company’s codes of conduct; and
» conducts and discusses with the Board an annual performance evaluation of the Committee, including the Committee’s adherence to its Charter.
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| | TOPIC | | WHAT WE HEARD FROM SHAREHOLDERS | | WHAT WE DID IN RESPONSE | | ||||||
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| CEO "bridge grants" | • Concerns over the one-time "bridge grants" awarded to the CEO in 2015 intended to bring his compensation to peer group median | • The Company understands shareholders' concerns in this area, and these CEO awards were not repeated in 2016 or 2017 | ||||||||||
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| Pay for performance | • Desire to see a greater link between the Company's stated strategic and financial goals and its compensation program, and to see relative performance measures used | • Incorporated an adjusted operating margin modifier into the 2017 annual bonus plan and a 3-year relative TSR modifier into the 2017-2019 performance unit plan | ||||||||||
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| CEO pay in light of Company performance | • Notwithstanding positive 2016 total shareholder return (TSR), the CEO's compensation appeared high relative to peers in light of three-year TSR | • Despite very strong 2016 TSR, the Committee reduced the CEO's 2017 total long-term incentive grants by $500,000 | ||||||||||
• Paid $0 on the individual performance objectives portion of his 2016 annual bonus despite actual performance in excess of that | ||||||||||||
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| Pay mix | • Preference to shift the long-term incentive mix to a heavier weighting on performance share units, the most at-risk pay element | • Beginning in 2017, the Company no longer utilizes stock options and increased from 40% to 70% the percentage of CEO long-term compensation that is granted as performance share units; other NEOs' performance share units now make up 60% of the total long-term incentive opportunity | ||||||||||
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| Peer group | • Some concern that select peers within the 2015 peer group were significantly larger than the Company | • The Company adopted a new 2017 peer group to create better alignment from a size perspective. The Company is now above the median of the new peer group as measured by market capitalization and enterprise value | ||||||||||
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| Compensation consultant | • Some independence concerns that the compensation consultant performed other services for the Company | • For this reason and to provide a fresh perspective on the Company's compensation programs, the Committee appointed a new independent compensation consultant in 2016 | ||||||||||
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| Change in control equity acceleration | • Desire to see the Company move away from single-trigger vesting of equity awards upon a change in control | • 2017 equity award change in control provisions provide for double-trigger acceleration upon a change in control | ||||||||||
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Wolverine Worldwide Notice of | | | Page |
Near the end of 2016, Wolverine Worldwide announced a holistic, enterprise-wide business initiative designed to transform the Company to compete and win in the fast-changing global consumer retail environment — the WOLVERINE WAY FORWARD. It includes four critical components:
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| | Innovation & Growth | | Operational Excellence | | Portfolio Management | | People & Teams | |||||||||
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• Building great brands through product innovation and compelling marketing • Relentless focus on the consumer • Consumer-centric product innovation • Demand creation initiatives • Deep focus on digital connection, specifically eCommerce and social media • International expansion | • Healthier supply chain, with improved speed to market • Omnichannel transformation focused on aggressively growing highly profitable eCommerce business and right-sizing underperforming store fleet • Faster, more efficient structure • Aggressive goal to achieve 12% adjusted operating margin by the end of 2018 | • Focus on core, go-forward brands that provide the biggest growth and profit opportunities • Identify strategic alternatives for non-core, underperforming businesses • Strategic, value-creating acquisitions | • Amazing place to work • Build the best team and talent pipeline • Modern skillset • Investment in enhanced learning and development initiatives | |||||||||||||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 41 |
Compensation Decisions in Context: Key 2016 Accomplishments and Financial Highlights
The Company performed well in 2016, despite broad-based slowing of consumer demand, destabilizing geopolitical events, the continued strengthening of the U.S. dollar, over-stored U.S. retail sector, and other macroeconomic factors that combined to create a volatile consumer retail environment around the world and a challenging year for companies in the retail, footwear, apparel and consumer soft goods industries, as well as companies with significant international footprints. Notwithstanding this, however, the Company finished 2016 with significant accomplishments against its strategic priorities outlined above.
Despite a solid year in the face of macroeconomic and industry headwinds, NEO compensation was below target on a number of measures and the Compensation Committee took additional actions, including:
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 42 |
Year-Over-Year Change in CEO Pay
The graphic below presents the year-over-year change in the CEO's pay as disclosed in the Summary Compensation Table (SCT) on page 60, without impact of change in pension value. As shown, the year-over-year change in CEO's pay decreased from 2015 to 2016 by $2,342,955 or 23%.
Total CEO Pay*
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 43 |
The below graphic shows the CEO's actual annual bonus compared to his target opportunity over the last three years and demonstrates a clear link between Company TSR performance and annual bonus achievement over these periods:
CEO 3-Year Target & Actual Bonus
(in $000s)
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 44 |
2016 Compensation Program Overview
The Company's executive compensation program consists of base salary, annual bonus, long-term incentive compensation, and benefits. A breakdown of base salary, annual performance bonus, and long-term incentive compensation is illustrated below:
| ELEMENT | COMPONENT | METRICS | WHAT THE PAY ELEMENT REWARDS | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | |
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Base | • Cash | • Fixed amount based on responsibilities, experiences and market data | • Scope of core responsibilities, years of experience, and potential to affect the Company's overall performance | |||||||||||
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| | | | | | | | | | | | | | | |
Annual | • Company/Business Unit Cash Bonus • Individual Cash Bonus | • 85% Revenue and adjusted pretax earnings • 15% Specific individualized performance targets | • Achieving specific corporate business and/or divisional objectives over which the NEO has reasonable control • Achieving specific personal objectives | |||||||||||
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| �� | ||||||||||||||
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Long-Term | • Performance shares • Time-based stock options and restricted stock | • Uses the following performance metrics (weighted as indicated) • 65% Adjusted earnings per share • 35% Adjusted business value-added | • Balances focus on near-term profitability with longer-term shareholder value creation • Achieving long-term corporate objectives • Driving long-term shareholder value • Continued, long-term employment at Wolverine Worldwide | |||||||||||
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Long-Term Incentive Program Mix
Based on shareholder feedback during the Committee's outreach, the Committee decided to modify the mix of vehicles used for long-term incentive compensation in 2017 and going forward. Beginning in 2017, the long-term incentive program does not utilize stock options and reflects a mix of 70% performance share units and 30% time-vested restricted share units for the CEO. For other NEOs, the 2017 mix changed to 60% performance share units and 40% time-vested restricted share units. This change is intended to strengthen the Company's pay-for-performance philosophy, create stronger alignment with shareholders and simplify the compensation program.
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 45 |
Under the Company's compensation program, a significant portion of the compensation awarded to the NEOs generally, and to the CEO in particular, is at-risk (contingent upon the attainment of various pre-established short and long-term financial goals) and variable (contingent on the performance of the Company's stock price). NEO compensation that is significantly at-risk and variable, incentivizes superior business, stock price and financial performance and aligns the interests of executives with those of shareholders.
The following graphic shows the percentage of at-risk and variable target compensation of the CEO and the average of the other NEOs:
CEO 2016 vs. 2017 Target Total Compensation
Note: 2017 CEO equity grants were reduced by $500,000 compared to 2016 to respond to shareholder concerns regarding our 2016 say-on-pay vote. This one-time reduction is not reflected in the graphic above.
Other NEO 2016 vs. 2017 Target Total Compensation
| What we do | What we do not do | |
✓ Vast majority of pay is at-risk or variable, i.e., performance-based or equity-based or both ✓ Stringent share ownership requirements (6x base salary for CEO) ✓ Broad-based clawback policy ✓ Significant vesting horizon for equity grants ✓ Double-trigger equity acceleration (for grants in 2017 and beyond) | ✗ No dividends or dividend equivalents on unearned performance shares ✗ No repricing or replacing of underwater stock options ✗ No overlapping metrics ✗ No excessive or unnecessary perquisites ✗ No hedging, pledging, or short sales of Company stock |
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 46 |
2017 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS IN DETAIL
2016 Compensation Program Overview
Compensation CommitteeSetting Targets
Each February, the Committee recommends (and the independent directors approve) target compensation for the CEO for the upcoming year after considering the latest available information, including the Company's TSR and other business and financial performance, information provided by the Company's compensation consultant regarding executive compensation trends and compensation paid to other chief executive officers of companies in the comparative peer group, and information provided by management on recent Company performance and future business and financial outlook. The Committee's goal is to set the CEO's compensation in-line with the anticipated market median compensation for that year.
Given the significant weight the Company's executive compensation program places on at-risk and variable compensation, the compensation realized by the CEO and NEOs can be significantly affected, both positively and negatively, by performance against the various operational and financial performance metrics pre-established by the Committee and by the performance of the Company's stock price. The Board and Committee believe such a compensation program aligns the interests of the CEO and other NEOs with the interests of the shareholders.
The Company's executive compensation program consists of four primary elements: base salary, annual bonus, long-term incentive compensation and benefits. These elements are described in greater detail below.
As part of approving an NEO's base salary, the Committee considers a variety of factors including individual responsibilities, experience, skills, and potential to affect Wolverine Worldwide's overall performance, as well as market surveys and peer group information. The Committee considers these compensation factors subjectively, and no single factor or combination of factors was determinative in setting base salaries for any NEO.
Based on the above factors, the Committee approved the 2016 base salaries for the NEOs as noted in the following table. The Committee held CEO salary flat for the third year in a row (and held it flat again in 2017). Mr. Jeppesen's increase reflects, in part, the fact that he took on significant additional responsibility as President of the Wolverine Heritage Group in 2016. Mr. Woodworth's increase reflects, in part, his promotion from a brand president to a brand group president in 2016.
Name | 2016 Base Salary | 2015 Base Salary | ||
Krueger | $1,150,000 | $1,150,000 | ||
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Jeppesen | $575,000 | $530,000 | ||
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Stornant | $550,000 | $520,000 | ||
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Woodworth | $550,000 | $488,632 | ||
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Zwiers | $645,000 | $628,000 | ||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 47 |
2017 PROXY STATEMENT
In 2016, each NEO had the opportunity to earn annual cash incentive compensation ("annual bonus"), consisting of two parts, a performance bonus and an individual performance bonus:
| Key Factors | 2016 Company Metrics | |||
| Performance Bonus 85% of Total | • Based on performance measured against Company and/or business unit performance criteria established at the beginning of the fiscal year • Payout determined by comparing performance against four performance levels set for each pre-set criterion: threshold (50% payout), target (100% payout), goal (150% payout) and stretch (200% payout) | • Revenue (35%) • Adjusted pretax earnings (65%) | ||
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| Individual Performance Bonus 15% of Total | • Measured against individual performance criteria • Each NEO's payout was determined by comparing individual performance against specific individual criteria set at the beginning of 2016 • Payouts can range from 0% to 200% depending on the NEO's performance against individual performance objectives | • Vary by each NEO | ||
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A percentage of each NEO's 2016 base salary was set as the annual bonus target percentage (the "Target Bonus Percentage"). The Target Bonus Percentage represents the percentage of each NEO's base salary that could be earned as annual incentive compensation at a "target" performance level (100% payout) for each of the performance bonus and individual bonus. Generally, the Committee sets higher Target Bonus Percentages for individuals with greater influence on business strategy, profit or sales. This puts a larger percentage of an NEO's total potential cash compensation "at-risk," in line with the NEO's ability to influence these factors.
The Committee selected fiscal year 2016 revenue and adjusted pretax earnings as metrics for the annual bonus because it believes a strong correlation exists between performance on these financial measures and increases in shareholder value.
Messrs. Krueger and Stornant had significant influence on the Company's overall business performance and, accordingly, their respective performance bonus opportunity (85% of their total annual bonus opportunity) is based on the Company performance criteria only. Messrs. Jeppesen, Woodworth and Zwiers were directly responsible for specific business units and exert a significant influence on those business units in particular, in addition to influencing Company performance. Accordingly, for each of these NEOs, a larger percentage of their overall annual bonus opportunity was based on business unit performance, with a smaller percentage based on the Company's performance, as reflected in the table on page 51.
As shown in the table below, the Committee also set four performance levels for each criterion: threshold (25% payout), target (100% payout), goal (150% payout) and stretch (200% payout). The Committee set the revenue and pretax earnings goals for these performance levels following a review of the Company's operating plan, historical performance, and industry and macroeconomic conditions. The performance targets, though lower than 2015 targets, were set aggressively in light of the difficult industry and macroeconomic conditions discussed in the "Compensation Decisions in Context: Key 2016 Accomplishments and Financial Highlights" section, as evidenced by only a 68% payout on revenue performance that met the Company's original revenue guidance for the year.
| Company Performance Level | in millions | ||||
| | | | | | |
| (% of Target Payout)1 | Revenue2,3 | Pretax Earnings2,3 | |||
| Threshold (25%) | $2,344 | $164.1 | |||
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| Target (100%) | $2,608 | $193.6 | |||
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| Goal (150%) | $2,701 | $209.4 | |||
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| Stretch (200%) | $2,796 | $225.7 | |||
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Page 48 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
2017 PROXY STATEMENT
For each business unit, the Committee sets the goals at substantially similar levels of difficulty as the goals for the Company and with a similar degree of difficulty as in prior years. The below table shows historical weighted performance levels achieved by the business units using these performance criteria for the years for which a meaningful comparison can be made.
| Historical Group Performance1 | ||||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | ||||||
| Sourcing/Owned Manufacturing/Leathers | Between target and goal | Between goal and stretch | Between target and goal | Between target and goal | Between threshold and target | |||||
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| Wolverine Boston Group | Between threshold and target | Below threshold | Below threshold | Between threshold and target | N/A | |||||
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| Wolverine Heritage Group | Between threshold and target | Below threshold | Between target and goal | Between threshold and target | Below threshold | |||||
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| Wolverine Outdoor & Lifestyle Group | Between threshold and target | Between target and goal | Between target and goal | Between target and goal | Below threshold | |||||
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In February 2017, the Committee certified actual 2016 performance compared to the performance levels for the Company and business unit criteria. The Company's fiscal year 2016 revenue was approximately $2.495 billion, which was between threshold and target level. The Company's adjusted pretax earnings for fiscal year 2016 were $181.0 million, which was between threshold and target level. The weighted average results for the applicable performance criterion are shown in the below table:
| 2016 Performance | Overall Weighted Payout by Group | |||
| Sourcing/Owned Manufacturing/Leathers | Between target and goal | 129% | ||
| | | | | |
| Wolverine Boston Group | Between threshold and target | 45% | ||
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| Wolverine Outdoor & Lifestyle Group | Between threshold and target | 52% | ||
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| Wolverine Heritage Group | Between threshold and target | 28% | ||
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| Wolverine Worldwide | Between threshold and target | 68% | ||
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For 2016, the Company paid the NEOs the following amounts relating to the performance bonus.
| Name | Performance Bonus Opportunity (as a % of an NEO's Target Percentage) | Performance Bonus Percentage Earned1 | Performance Bonus Paid1,2 | ||||
| Krueger | 0 - 200% | 68% | $831,376 | ||||
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| Jeppesen | 0 - 200% | 88% | $229,888 | ||||
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| Stornant | 0 - 200% | 68% | $173,299 | ||||
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| Woodworth | 0 - 200% | 53% | $123,655 | ||||
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| Zwiers | 0 - 200% | 57% | $172,529 | ||||
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At the same time Target Bonus Percentages are set, the CEO approves measurable personal objectives for each NEO's individual bonus, other than for himself. The CEO submits, and the Committee approves, the CEO's personal objectives. Such measurable personal objectives may include goals such as executing strategies supporting the Company's vision, developing employees, growing new business initiatives and driving operational excellence. Performance is evaluated by the CEO (or, in the case of the CEO, by the Committee and other independent
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 49 |
2017 PROXY STATEMENT
directors) based on qualitative and quantitative factors. Summaries of the specific personal objectives for each NEO are outlined in the table below:
| NEO | 2016 Personal Objectives | |
| Krueger | People, Growth, Strategy, Innovation, Cash Flow | |
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| Jeppesen | Strategy, Organization, Cash Flow, Supply Chain, Product Development, Talent, Growth – Heritage Group | |
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| Stornant | Maximize Shareholder Value, Cash Flow, People, Growth | |
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| Woodworth | Inventory, Culture, Talent, Growth | |
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| Zwiers | Brands' Sales Growth, Inventory, People | |
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Each personal objective is given a rating from "does not achieve" to "far exceeds," with weighted performance ratings and payouts consistent with the following table:
| Personal Objectives Rating | | 2016 Payout Level | ||
| Far Exceeds | 200% | |||
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| Exceeds | 150% | |||
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| Achieves | 100% | |||
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| Achieves Most But Not All | 65% | |||
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| Does Not Achieve | 0% | |||
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The CEO recommended, and the Committee approved, the 2016 cumulative weighted personal objectives scores and payout levels for each of the NEOs other than himself. The Committee and the other independent directors of the Board met with the CEO at the end of the year to evaluate his performance against his personal objectives. The Committee determined the cumulative weighted personal objectives score for the CEO and recommended to the independent directors of the Board the CEO's payout level. The individual bonus payout for each NEO other than the CEO, as shown in the accompanying table, was determined by multiplying the bonus percentage achieved by 15% (representing the percentage of the individual bonus to the total annual bonus opportunity) of the Target Bonus Percentage. The Committee used negative discretion to reduce the CEO's individual performance bonus to $0 in response to shareholder feedback received in its engagement efforts.
Name | 2016 Individual Bonus Opportunity (as a % of an NEO's Target Percentage) | Personal Objectives Rating | 2016 Individual Bonus Percentage Achieved | 2016 Individual Bonus Paid | |||||
Krueger | 0 - 200% | Achieves most but not all | 65% | $0 | |||||
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Jeppesen | 0 - 200% | Achieves | 100% | $46,129 | |||||
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Stornant | 0 - 200% | Achieves most but not all | 65% | $29,215 | |||||
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Woodworth | 0 - 200% | Achieves | 100% | $41,161 | |||||
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Zwiers | 0 - 200% | Achieves most but not all | 65% | $34,430 | |||||
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Page 50 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
2017 PROXY STATEMENT
Consistent with the 2015 bonus opportunity, each NEO's total annual bonus opportunity for 2016 ranged from 0% to 200% of Target Bonus Percentage. The accompanying table shows the total aggregate annual incentive compensation payout earned by each NEO for 2016, as well as the portion of that aggregate number that is attributable to the performance bonus and individual bonus.
| | Annual Bonus Compensation Component as a Percentage of Target Bonus Performance | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Performance Bonus Percentage By Company or Business unit as a Percentage of Target Bonus Percentage | ||||||||||||||||||||||||||||||||||||||||||
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| | 2016 Target Percentage | | Total Individual Performance Bonus as a Percentage of Target Percentage | | Company1 | | Wolverine Outdoor & Lifestyle Group2 | | Wolverine Boston Group3 | | Wolverine Heritage Group | | Sourcing4 | | Owned Manufacturing4 | | Leathers4 | | 2016 Performance Bonus | | 2016 Individual Performance Bonus | | Total 2016 Actual Annual Bonus Compensation | | % of 2016 Actual Incentive Target | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||
Krueger | 125 | % | | 15 | % | | 85 | % | | | | | | | | | | | | | $ | 831,376 | $ | 0 | $ | 831,376 | 58 | % | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jeppesen5 | 55 | % | | 15 | % | | 40 | % | | | | | | 10 | % | | 20 | % | | 10 | % | | 5% | $ | 229,888 | $ | 46,129 | $ | 276,017 | 90 | % | ||||||||||||
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Stornant | 50 | % | | 15 | % | | 85 | % | | | | | | | | | | | | | $ | 173,299 | $ | 29,215 | $ | 202,514 | 68 | % | |||||||||||||||
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Woodworth | 40 | % | | 15 | % | | 30 | % | | | | 55 | % | | | | | | | | | $ | 123,655 | $ | 41,161 | $ | 164,816 | 60 | % | ||||||||||||||
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Zwiers | 55 | % | | 15 | % | | 30 | % | | 55 | % | | | | | | | | | | | $ | 172,529 | $ | 34,430 | $ | 206,959 | 59 | % | ||||||||||||||
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Based on feedback from shareholders and to create even stronger alignment between NEO compensation and the Company's strategic objectives, the Committee added adjusted operating margin to the 2017 annual bonus plan as a modifier to adjust, up or down, the calculated payments generated using the following metrics:
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 51 |
2017 PROXY STATEMENT
Long-Term Incentive Compensation
In 2016, each NEO had the opportunity to earn long-term incentive compensation reflected as a mix of performance shares and time-based stock options and restricted stock awards.
| Key Factors | Performance Share Metrics1 | |||
| Performance Shares | • Performance shares are based on performance criteria covering three-year periods • Awards balance focus on near-term profitability with longer-term shareholder value creation | • Fully diluted adjusted EPS (65%) • Adjusted Business Value Added ("BVA")2 (35%) | ||
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| Time-Based Stock Options and Restricted Stock Awards | • Encourages employee retention and rewards increases in stock price | |||
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The Committee believes EPS is a key metric that plays an important role in driving shareholder value and that it further aligns the interests of the NEOs with other shareholders. The Committee believes that BVA is useful for determining incentive compensation because it ties the income statement (profit delivery) to the balance sheet (effective asset utilization) and does not focus on one to the exclusion of the other. The Committee further believes that focusing NEOs' interests on increasing BVA aligns their interests more closely with shareholder interests. The use of both EPS and BVA balances the NEOs' focus on near-term profitability with longer-term shareholder value; these measures received positive shareholder feedback during the Committee's shareholder outreach. The Committee weighted EPS 65% and BVA 35% when determining the overall performance level.
The Committee has chosen to provide long-term incentives in these forms because they incentivize and motivate different behaviors. Performance shares reward the achievement of key business criteria. Time-based stock options encourage employee retention and only reward employees if the stock price appreciates after the grant. Time-based restricted stock encourages employee retention by providing some level of value to executives who remain employed during the vesting period. Restricted stock also supports an ownership culture and thereby encourages executives to take actions that are best for the Company's long-term success.
The following table lists performance levels set by the Committee for performance share awards granted for the 2014-2016 performance period (and, for Mr. Krueger, a 2015-2016 performance period) the vesting of which occurred on February 8, 2017 following the Committee's certification of 2014-2016 financial results. The performance share grant to Mr. Krueger for the 2015-2016 performance period was subject to EPS and BVA performance targets set at levels consistent with the EPS and BVA levels that remained outstanding under his original performance share grant for the 2014-2016 period, as well as an additional requirement that the Company's aggregate 2015 and 2016 revenue exceed $5.1 billion.
Performance level | Cumulative EPS for the 2014-2016 period1 | Cumulative BVA for the 2014-2016 period1 (in millions) | ||
Threshold (50%) | $4.61 | $343.8 | ||
| | | | | |
Target (100%) | $5.13 | $381.4 | ||
| | | | | |
Goal (150%) | $5.67 | $407.2 | ||
| | | | | |
Stretch (200%) | $6.12 | $449.4 | ||
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In February 2017, the Committee evaluated the Company's performance for the 2014-2016 performance period (and, in addition, for Mr. Krueger, the 2015-2016 performance period) against these criteria set forth in the table above and certified that the Company's performance on both the EPS and BVA criteria fell between threshold and target performance levels for both periods (and, for Mr. Krueger, that the Company's aggregate 2015-2016 revenue exceeded $5.1 billion). The Committee weighted the EPS attainment ($4.96; 84% of target performance) at 65% and the BVA attainment ($361.3 million; 73% of target performance) at 35%, resulting in a weighted average performance of 80%. The vesting of the number of shares is shown for each NEO in the accompanying table. In calculating the number of shares that vest, the Company uses the stock price on the date of the grant, which results in the NEOs bearing the risk of stock price performance during the performance period.
The following table lists the number of shares that vested for each NEO under the 2014-2016 performance share grant (and also, for Mr. Krueger, with respect to his 2015-2016 award):
Name | | Shares Vesting (#) | ||
Krueger | 67,870 | |||
| | | | | |
Jeppesen | 9,328 | |||
| | | | | |
Stornant | 5,326 | |||
| | | | | |
Woodworth | 8,923 | |||
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Zwiers | 10,464 | |||
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In the beginning of 2016, the Committee evaluated each NEO's long-term incentive target payout opportunity expressed as a percentage of base salary that would apply to the grant of performance shares for the 2016-2018 period. Determining that these opportunities remained set at appropriate levels, the Committee made no changes to the 2016-2018 target percentage from those in effect for the 2015-2017 performance period. The number of performance shares granted to the NEOs for the 2016-2018 performance period is set forth in the "Grants of Plan-Based Awards" table below and approximates the estimated maximum bonus payout the NEO could earn for the period. Like performance shares granted for the 2015-2017 performance period, performance shares are eligible to vest based on achievement of constant-currency EPS goals (weighted 65%) and constant-currency BVA goals (weighted 35%). An NEO may earn none, some or all of the performance shares granted, depending on Company performance against the EPS and BVA targets and base salary and target bonus percentage over the three-year performance period.
Name | | 2016-2018 Target Percentage | 2015-2017 Target Percentage | | |||||||
Krueger | | | 200% | | | | 200% | | | ||
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Jeppesen | | | 55% | | | | 55% | | | ||
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Stornant | | | 55% | | | | 55% | | | ||
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Woodworth | | | 55% | | | | 55% | | | ||
| | | | | | | ||||||
Zwiers | | | 55% | | | | 55% | | | ||
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The Company accrues, but does not pay, any dividends on any performance shares during the performance period. Once the Committee certifies the Company's performance compared to the pre-determined performance criteria, the restrictions on some, all, or none of the performance shares awarded to each NEO will lapse at that time, and the NEO will receive accrued dividends only on the shares actually earned.
The Committee goes through a rigorous process in setting three-year EPS and BVA performance targets, including a careful review of the Company's prior year business and financial performance, current year operating plan and future expectations. To achieve target level EPS and BVA for the 2016-2018 performance period, the Company would need to achieve compounded annual EPS and BVA growth over the
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2017 PROXY STATEMENT
most recently completed fiscal year's actual results in the mid- and low-single digit range, respectively, with double-digit compounded annual growth required on both EPS and BVA to achieve stretch performance.
Stock Option Grants and Restricted Stock Awards
The accompanying table reflects the grant-date value of the regular, annual service-based restricted stock award and stock option grant to each NEO. Except for Messrs. Stornant and Woodworth, who both received promotions between the time of the 2015 and 2016 grants, the value of awards was the same as in 2015.
Name | | Time-vested Restricted Stock | Time-vested Stock Options | |
Krueger | | $2,085,000 | | $1,390,000 |
| | | | | |
Jeppesen | | $255,000 | | $170,000 |
| | | | | |
Stornant | | $348,000 | | $232,000 |
| | | | | |
Woodworth | | $316,200 | | $210,800 |
| | | | | |
Zwiers | | $316,200 | | $210,800 |
| | | | | |
A stock option's exercise price is set at the closing market price of the Company's common stock on the grant date. The Committee generally grants annual equity awards at its regularly scheduled February meeting, and the independent directors of the Board approve equity grants to the CEO generally on the same day that the Committee meets. Stock option grants vest in equal annual installments over three years. The restrictions on restricted stock awards typically lapse 25% on the third and fourth anniversaries of grant and 50% on the fifth anniversary.
Approximately 60% of the combined value of the regular annual restricted stock and stock option grant awarded to each NEO in 2016 was in the form of restricted stock and 40% was in the form of stock options. These were the same approximate percentages as in 2015 and in each of the past five years.
In addition to the annual equity grants described above, Messrs. Stornant, Jeppesen, and Zwiers each received a retention grant of 20,000 shares of restricted stock and Mr. Woodworth received a retention grant of 5,000 shares of restricted stock. The retention grants were made, in part, to maintain stability within senior management in light of recent turnover. Mr. Jeppesen also received a grant of 10,000 shares for assuming additional responsibilities as President of the Wolverine Heritage Group, in addition to his continuing as President of the Global Operations Group. Restrictions on these shares lapse 25% on the third and fourth anniversary of grant and 50% on the fifth anniversary.
2017 Long-Term Incentive Plan Update
Based on feedback from shareholders and to create even greater alignment with shareholders, the Compensation Committee decided to add a three-year relative Total Shareholder Return ("TSR") modifier to the 2017-2019 performance unit grant. TSR will be benchmarked relative to the Russell 3000 Consumer Discretionary Index. The number of shares that vest, if any, will be increased by 25% for top-quartile TSR performance and will decrease by 25% for bottom-quartile relative TSR performance.
The Committee stopped granting options beginning with 2017 long-term incentive compensation. The Committee also shifted NEO long-term incentive compensation to a much heavier weighting on performance units (70% for the CEO and 60% for other NEOs), the Company's most at-risk pay element, and adjusted the vesting schedule of restricted stock units to four years (options had previously vested over three years and restricted stock over five years). The Committee also implemented a "double-trigger" equity vesting for all 2017 equity grants.
Retirement, Deferred Compensaton and Welfare Plans
The NEOs participate in Wolverine Worldwide's medical and dental plans and receive life and disability insurance. In 2016, Messrs. Krueger, Jeppesen, Stornant and Zwiers also participated in the Wolverine Worldwide Employees' Pension Plan (a defined benefit plan) and the
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2017 PROXY STATEMENT
Wolverine World Wide, Inc. 409A Supplemental Executive Retirement Plan (an unfunded, non-qualified plan). For a description of the benefits under Wolverine Worldwide's retirement plans, see "Pension Plans and 2016 Pension Benefits" below.
All of full-time employees of the Company in the United States, including the NEOs, are also eligible to participate in one of Wolverine's 401(k) Plans (the "401(k) Plan"). Pursuant to the 401(k) Plan, employees, including the NEOs, may elect to defer a portion of their salary and receive a Company match of up to 3% of salary for 2016 (4.5% for those who do not participate in the Pension Plan), subject to limits set forth in the Internal Revenue Code of 1986, as amended. In 2016, the Company adopted the Wolverine Worldwide Executive Deferred Compensation Plan (the "Deferred Compensation Plan"). This plan allows executives and other eligible senior employees of the Company to elect to defer a portion of their eligible compensation. Wolverine Worldwide may, but need not, credit a participant with an additional discretionary Company contributions. No discretionary Company contributions were made in 2016. The Company adopted the Deferred Compensation Plan as a retention and recruitment tool to facilitate retirement savings and provide financial flexibility for key employees, and because many of the companies with which we compete for executive talent provide similar plans to their key employees. For a description of the benefits under the Deferred Compensation Plan, see "Nonqualified Deferred Compensation" below.
The Company provides limited perquisites to NEOs. The Company feels the perquisites that are provided round out a competitive total compensation package for each NEO. For details on perquisites, see footnote 6 to the "Summary Compensation Table" on pages 60-61.
Each NEO is party to an Executive Severance Agreement that provides for certain payments and benefits upon termination of employment after a change in control of Wolverine Worldwide. The Board believes Executive Severance Agreements will promote management to actively pursue a business transaction that is in the best interests of the shareholders, even if it could ultimately result in his or her job elimination, and promotes management stability during the transition period accompanying a change in control. Each NEO is eligible to receive compensation if his employment is terminated within two years (Messrs. Jeppesen, Stornant, Woodworth and Zwiers) or three years (Mr. Krueger) following a change in control of Wolverine Worldwide. Even following a change in control, an NEO does not receive payment under the Executive Severance Agreement if his employment terminates:
NEOs may also be eligible under Wolverine Worldwide's retirement plans or equity plans to receive certain payments and benefits upon termination of employment or in connection with a change in control. The Committee believes that accelerated vesting upon a change in control is appropriate in some circumstances because, by protecting a significant component of the NEO's total compensation, the acceleration of equity vesting (1) mitigates potential conflicts of interest that might arise between the NEOs and the shareholders, and (2) serves as a substantial incentive for those NEOs to obtain the highest possible value for the shareholders if the Company becomes an acquisition target. The Committee also retains the discretion to modify the accelerated vesting.
Mr. Krueger is also party to a 2007 Separation Agreement under which he receives certain payments and benefits if the Company terminates his employment, even if not following a change in control, other than for "cause" or if he terminates his employment for "good reason." The Committee determined upon appointing Mr. Krueger as CEO that, given the Company's strategic initiatives the Board had asked him to lead, it was appropriate for the Company to enter into a separation arrangement. You will find information on benefits payable to Mr. Krueger and each other NEO and the specific elements comprising the payments and benefits under the Separation Agreement, Executive Severance Agreements, and other retirement and equity plans of Wolverine Worldwide, in the "Potential Payments Upon Termination or Change in Control" section of this proxy statement.
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2017 PROXY STATEMENT
The Committee goes through a rigorous process in setting performance targets, including a careful review of the Company's prior year business and financial performance, current year operating plan, and future expectations. The Committee engages with management in this process over several months leading up to setting final annual bonus and three-year performance targets in February. The rigor of this process is demonstrated by the below-target annual bonus payout for 2016, a year in which the Company met its original revenue and adjusted earnings per share guidance and delivered TSR of 32.9%, putting it in the top decile of its peer group.
Competitive Philosophy and Competitive Market Data
When making compensation recommendations and decisions, the Committee considers the CEO's assessment of the performance of each NEO, other than himself; the performance of the individual and the individual's respective business unit or function; the scope of the individual's responsibilities, years of experience with the Company (or in similar positions with other companies), skills and knowledge; market compensation data; market and economic conditions; Company performance; retention considerations; and Wolverine Worldwide's compensation philosophy (collectively, the "compensation factors"). The Committee considers these compensation factors both subjectively and objectively, and no single factor or combination of factors is determinative. With respect to CEO compensation, the Committee seeks to set compensation in line with the anticipated market median for a given year.
The Compensation Committee terminated its engagement with Willis Towers Watson in 2016, at which time it selected and engaged another independent compensation consultant, Frederic W. Cook & Co. ("FW Cook"), to provide services beginning in September 2016. The Committee uses market surveys and Peer Group information provided by its compensation consultant as market reference points. The Committee also considers information the Company learns through recruiting NEOs and the experience levels and responsibilities of NEOs prior to joining the Company as reference points in setting NEO compensation.
As part of its competitive data review in connection with determining 2016 compensation, the Committee considered information presented by Willis Towers Watson based on publicly-disclosed Peer Group information and on three published compensation surveys: (1) 2015 Towers Watson Data Services Survey Report on Top Management Compensation – Retail and Wholesale Trade Industry Cut, (2) 2015 Towers Watson Compensation Database Executive Database – Retail/Wholesale Executive Database, and (3) 2015 US Mercer Benchmark Database, Executive – General, Retail Industry Cut.
The Committee, with input from Willis Towers Watson (the Committee's former independent compensation consultant), established the following peer group for use in setting 2016 NEO compensation (the "Peer Group"). In determining the Peer Group, the Committee considers each potential peer company's industry, channels of distribution, revenue and market capitalization. The Company also considers the typicality of a company's pay practices, excluding companies whose chief executive may not receive market compensation because of a founder relationship, family ownership position, or other similar relationships.
The following companies comprised the 2016 Peer Group, which is consistent with the 2015 peer group:
| | | | | | | |
Aéropostale, Inc.Inc. | Chico's FAS, Inc. | Foot Locker, Inc. | Williams-Sonoma, Inc. | |||
| | | | | | | |
American Eagle Outfitters Inc. | Coach, Inc. | Genesco Inc. | ||||
| | | | | | | |
Ascena Retail Group, Inc. | Deckers Outdoor Corporation | Guess?, Inc. | ||||
| | | | | | | |
Caleres, Inc. | Dick's Sporting Goods, Inc. | Hanesbrands Inc. | ||||
| | | | | | | |
Carter's, Inc. | DSW Inc. | PVH Corp. | ||||
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2017 PROXY STATEMENT
In 2017, as part of its annual compensation review and in response to some shareholder concerns, the Committee evaluated each peer company and decided to adopt a new peer group for 2017 and going forward. The changes to the group ultimately create greater alignment of Company revenues with those of the peer group median through the removal of several larger companies. The following adjustments to the peer group were made for 2017 and going forward:
| | | |
REMOVED: | Aéropostale, Dick's Sporting Goods, PVH Corp., Williams-Sonoma | |
| | | |
ADDED: | Express, G-III Apparel Group, Kate Spade, Skechers, The Children's Place | |
| | | |
Within the framework of the Company's executive compensation program, the CEO recommends the level of base salary, annual bonus, long-term incentive compensation, equity awards and other compensation components for his direct reports, including the other NEOs. The CEO bases his recommendation upon his assessment of the compensation factors applicable to each NEO. The CEO considers these compensation factors both objectively and subjectively, and no single factor is determinative. The Committee discusses these recommendations with the CEO prior to setting the compensation for each NEO, other than the CEO. The Committee, however, ultimately determines all compensation for NEOs other than the CEO, whose compensation is determined by the independent directors as a whole.
FW Cook was engaged as the Committee's independent compensation consultant in September 2016, and reports directly to the Committee (as Willis Towers Watson previously did). The Committee determines the scope of engagement and may replace the consultant or hire additional consultants at any time. The Committee has evaluated Willis Towers Watson's and FW Cook's independence under the rules established by the NYSE and has determined that each Compensation Committee member is “independent”both firms are "independent" as defined by NYSE rules,rules. In addition, the Committee has evaluated whether the engagement of either firm raised any conflicts of interest and has determined that no such conflicts of interest exist.
At the Committee's invitation, a representative of FW Cook generally attends all Committee meetings and also communicates with the Committee Chair and management regularly between meetings. However, the Committee makes all decisions regarding NEO compensation. FW Cook provides various executive compensation services to the Committee pursuant to a consulting agreement with the Committee. Generally, these services include advising the Committee on the principal aspects of the Company's executive compensation program, evolving industry practices, and providing market information and analysis regarding the competitiveness of the Company's program design.
During 2016, FW Cook performed the following specific services:
» assists the Board in discharging its responsibilities relating to executive compensation and fulfilling its responsibilities relating to Wolverine Worldwide’s compensation and benefit programs and policies;
» oversees the overall compensation structure, policies and programs
The Company did not pay FW Cook any fees for services other than compensation structure establishes appropriate incentivesconsulting but did pay such fees to Willis Towers Watson, its former consultant. The total fees the Company paid to Willis Towers Watson for managementexecutive compensation services to the Committee in
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2017 PROXY STATEMENT
2016 were $369,261. Towers Watson also was engaged by Wolverine Worldwide in 2016 to perform actuarial services, pension plan consulting and employees;
» oversees the risks associated with management resources, organization structure,risk and succession planning, hiring, development and retention processes, and oversees the assessmentfinancial services that are not part of the risks associatedexecutive and non-employee director compensation services provided to the Committee. These services were performed on an interim and annual basis for financial reporting purposes. The total annual expense for this work was approximately $296,454. The total fees the Company paid to Willis Towers Watson were $665,715. Willis Towers Watson's revenue for its 2016 fiscal year was $7.9 billion.
Other Compensation Policies and Practices
NEO Stock Ownership Guidelines
Each NEO, as well as each non-employee director, must attain (and maintain) a minimum stock ownership level (including owned shares, a certain level of performance shares and restricted shares, and the in-the-money value of vested stock options) prior to being able to gift or sell any Company stock. During 2016, each NEO was in compliance with these guidelines.
Covered Positions | Guideline | |
CEO | | 6x Annual Base Salary |
| | | |
Other NEOs | | 2x Annual Base Salary |
| | | |
Non-employee Directors | | 6x Annual Cash Retainer |
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Stock Hedging and Pledging Policies
Under the Company’s compensation structure, policies and programs;
» administers and makes recommendations with respect to incentive compensation plans, including stock incentive plans;
» assesses the results of the Company’s most recent advisory vote on executive compensation;
» reviews and approves corporate and personal goals and objectives relevant to CEO compensation, evaluates the performance of the CEO in light of these goals and objectives, and, together with the other independentCompany's Insider Trading Policy, all directors, approves the compensation of the CEO based on the evaluation;
» oversees the evaluation of other appointed corporate officers and other executives,employees are prohibited from engaging in any hedging transactions involving Company securities beneficially owned by them. The Company also considers it inappropriate for any such person to engage in speculative transactions in the Company's securities, including short sales, publicly traded options, margin accounts and reviewspledges and approves their compensation;standing and limit orders. Also, all directors, officers and other employees are prohibited from pledging Company securities as collateral for a loan.
» makesThe Company has adopted a clawback policy which empowers the Board or a committee of the Board to seek recovery of specified incentive compensation received by executive officers under specific circumstances where there is a material restatement of the Company's financial results that would have led to a lower level of incentive compensation payout.
Impact of Accounting and Tax Treatments on Compensation
Section 162(m) of the Internal Revenue Code provides that publicly held companies may not deduct compensation paid to the CEO and the three next most highly-paid executive officers (other than the CFO) in excess of $1,000,000 annually, with certain exceptions for qualified "performance-based" compensation. Wolverine Worldwide has designed its Annual Bonus Plan and stock incentive grantsplans to permit the grant or payment of certain awards that are intended to qualify as "performance-based" compensation for purposes of Section 162(m). The Company is asking its shareholders to approve the material terms of the Amended and determinesRestated Executive Short-Term Incentive Plan, consistent with the termsrequirements of the performance-based compensation exemption under Section 162(m). Wolverine Worldwide, however, does not require all of its compensation programs, including programs under the plans listed above, to be fully deductible under Section 162(m) because Wolverine Worldwide believes it is important to preserve flexibility in administering compensation programs in a manner designed to promote varying corporate goals. Wolverine Worldwide has and conditionsin the future may continue to pay compensation that does not qualify as performance-based compensation.
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Table of any equity compensation or stock incentive arrangements;Contents
2017 PROXY STATEMENT
Compensation Committee Report |
» reviewsThe Committee has reviewed and discussesdiscussed with management Wolverine Worldwide’sthe information provided under the heading "Compensation Discussion and Analysis." Based on this review and discussion, the Committee recommended to the Board of Directors that the Company include the Compensation Discussion and Analysis section in this proxy statement and related disclosures requiredincorporate it by reference into the SEC rules and recommends to the Board whether such disclosures should be included in the annual report and proxy statement;Company's Annual Report on Form 10-K.
Respectfully submitted,
» oversees the preparation of the compensation committee report required by the SEC rules to be included in the annual report and proxy statement;Joseph R. Gromek (Chairperson),
Jeffrey M. Boromisa,
William K. Gerber,
Nicholas T. Long
» reviews and approves the design of benefit plans pertaining to executives;
» reviews and recommends employment agreements and severance arrangements for executives, including change in control provisions, plans or agreements;
» establishes stock ownership guidelines for directors and executive officers and monitors compliance with the guidelines;
» considers and recommends to the Board the frequency of the Company’s advisory vote on executive compensation;
» engages consultants and advisors at the expense of the Company to assist the Committee as it deems necessary in the performance of its functions, having the sole authority to retain and terminate and obtain the advice of any consultants and advisors and to approve all fees and other retention terms, and receiving appropriate funding, as determined by the Committee, from the Company for payment of compensation to any such consultants and advisors;
» appoints, determines compensation for and oversees the work of any consultants and advisors retained by the Committee and oversees compliance with any applicable requirements relating to the independence of such consultants or advisors;
» at least annually, assesses whether the work of compensation consultants involved in determining or recommending executive or director compensation has raised any conflict of interest that is required to be disclosed in the Company’s annual report and proxy statement; and
» conducts and discusses with the Board an annual performance evaluation of the Committee, including the Committee’s adherence to its Charter.
Compensation Committee Interlocks and Insider Participation. During fiscal year 2013,2016, none of the members of the Compensation Committee was an officer or employee of the Company, was a former officer of the Company, nor had a relationship with the Company requiring disclosure as a related party transaction under Item 404 of Regulation S-K of the Securities Act of 1933. None of the Company’sCompany's executive officers served on the compensation committee or board of directors of another entity whose executive officer(s) served as a director on the Company’sCompany's Board or on the Compensation Committee.
See the"Compensation Discussion and Analysis" section for more information regarding the Compensation Committee's processes and procedures.
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20142017 PROXY STATEMENT
The Board has determined that each Finance Committee member is “independent” as defined by NYSE rules. The Finance Committee:
» provides assistance to the Board in reviewing and evaluating management’s assessment of the Company’s cash needs and cash flow performance, management’s evaluation of the capital markets and other options to assist in addressing capital needs, and management’s recommendations with respect to those options;
» reviews and makes recommendations to the Board with respect to the Company’s capital structure and liquidity, including credit facilities, as well as proposed debt, equity and other securities issuances and guarantees;
» reviews and makes recommendations to the Board with respect to the Company’s current and future compliance with debt covenant requirements;
» reviews and makes recommendations to the Board with respect to the Company’s exposure to short- and long-term financial risks and management’s strategies, plans and procedures to manage such risks, including its hedging strategies;
» at least annually, reviews and approves on behalf of the Company and its applicable subsidiaries, the Company’s decision
to enter into swaps that are exempt from applicable clearing and trade execution requirements, and, at least annually and more often as may be deemed necessary or appropriate, review and discuss with management applicable Company policies governing the use of swaps subject to the “end-user exception” under regulations established by the Commodity Futures Trading Commission;
» reviews and makes recommendations to the Board with respect to financial risks facing the Company, as may be requested by the Board;
» engages consultants and advisors at the expense of the Company to assist the Committee as it deems necessary in the performance of its functions. The Committee shall have sole authority to retain and terminate any consultants and advisors and to approve all fees and other retention terms; and
» conducts and discusses with the Board an annual performance evaluation of the Committee, including the Committee’s adherence to its Charter.
The Board has determined that each Governance Committee member is “independent” as defined by NYSE rules. The Governance Committee:
» assists the Board in fulfilling its responsibilities on matters and issues related to the Company’s corporate governance practices;
» in conjunction with the Board, establishes qualification standards for membership on the Board and its committees;
» establishes procedures for the consideration of candidates for the Board recommended for the Committee’s consideration by the Company’s stockholders;
» leads the search for individuals qualified to become members of the Board, reviews the qualifications of candidates for election to the Board and assesses the contributions and independence of incumbent directors eligible to stand for reelection to the Board;
» selects and recommends to the Board the Company’s nominees for election or reelection by the stockholders at the annual meeting, and fills vacancies and newly created directorships on the Board;
» develops and recommends to the Board corporate governance guidelines, reviews the guidelines on an annual basis, and recommends any changes to the guidelines as necessary;
» periodically reviews the Board’s leadership structure as part of the succession planning process and recommends changes to the Board as appropriate, and makes recommendations to the independent directors regarding the appointment of the Lead Director;
» establishes and recommends to the Board guidelines, in accordance with applicable rules and regulations, to be applied when assessing the independence of directors;
» considers applicable rules, regulations and disclosure obligations regarding the presence of an “audit committee financial expert” on the Audit Committee and recommends to the Board actions to address such requirements;
Summary Compensation Table |
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| Name and Principal Position | Year | | Salary1 | | Bonus | | Stock Awards2 | | Option Awards3 | | Non-Equity Incentive Plan Compensation4 | | Change in Pension Value and Nonqualified Deferred Compensation Earnings5 | | All Other Compensation6 | | Total | | Total (excluding pension) | | |||||||||||||
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| Blake W. Krueger | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Chairman, CEO | 2016 | $1,150,000 | - | $4,385,006 | $1,389,999 | $831,376 | $2,391,996 | $34,958 | $10,183,335 | $7,791,339 | |||||||||||||||||||||||
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| and President | 2015 | $1,150,000 | - | $6,992,678 | $1,392,843 | $525,254 | $24,899 | $32,928 | $10,118,602 | $10,093,703 | |||||||||||||||||||||||
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| 2014 | $1,183,654 | $440,249 | $4,383,045 | $1,394,846 | $1,631,132 | $5,499,286 | $18,847 | $14,551,059 | $9,051,773 | ||||||||||||||||||||||||
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| Michael Jeppesen | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| President, Heritage | 2016 | $559,135 | - | $1,150,937 | $170,001 | $276,017 | $364,635 | $27,636 | $2,548,361 | $2,183,726 | |||||||||||||||||||||||
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| Group and Global | 2015 | $526,539 | - | $576,588 | $170,352 | $430,029 | $114,395 | $22,057 | $1,839,960 | $1,725,565 | |||||||||||||||||||||||
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| Operations Group | |||||||||||||||||||||||||||||||||
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| Michael D. Stornant | |||||||||||||||||||||||||||||||||
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| Senior Vice President, | 2016 | $544,808 | - | $1,011,716 | $232,000 | $202,514 | $553,651 | $29,248 | $2,573,937 | $2,020,286 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CFO, Treasurer and | 2015 | $403,538 | $266,649 | $630,606 | $159,033 | $93,533 | $412,331 | $26,710 | $1,992,400 | $1,580,069 | |||||||||||||||||||||||
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| Chief Accounting Officer | |||||||||||||||||||||||||||||||||
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| Richard J. Woodworth | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| President, Wolverine | 2016 | $548,820 | - | $732,269 | $210,801 | $164,816 | $13,889 | $39,952 | $1,710,547 | $1,696,658 | |||||||||||||||||||||||
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| Boston Group | |||||||||||||||||||||||||||||||||
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| James D. Zwiers | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Executive Vice | 2016 | $642,058 | - | $1,037,522 | $210,801 | $206,959 | $734,223 | $37,331 | $2,868,894 | $2,134,671 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| President (President, | 2015 | $624,539 | - | $697,004 | $211,232 | $390,773 | $17,604 | $33,897 | $1,975,049 | $1,957,445 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Wolverine Outdoor & | 2014 | $627,577 | - | $803,213 | $210,567 | $478,608 | $795,787 | $17,856 | $2,933,608 | $2,137,821 | |||||||||||||||||||||||
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| Lifestyle Group for 2016) | |||||||||||||||||||||||||||||||||
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Name | | Service-based Restricted Stock Value | | Performance Share Value | | Total | ||||
Krueger | $2,084,998 | $2,300,008 | $4,385,006 | |||||||
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Jeppesen | $814,397 | $336,540 | $1,150,937 | |||||||
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Stornant | $678,198 | $333,519 | $1,011,716 | |||||||
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Woodworth | $398,750 | $333,519 | $732,269 | |||||||
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Zwiers | $646,400 | $391,122 | $1,037,522 | |||||||
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Page 60 | | | Wolverine Worldwide Notice of |
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20142017 PROXY STATEMENT
» reviews
» oversees risks relatedthe accumulated benefits under the Wolverine Worldwide Employees' Pension Plan ("Pension Plan") and Wolverine World Wide, Inc. 409A Supplemental Executive Retirement Plan ("SERP") for Messrs. Krueger, Jeppesen, Stornant and Zwiers, and benefits under the Stride Rite Retirement Income Plan for Mr. Woodworth. The amounts in the table were determined using assumptions consistent with those used in Wolverine Worldwide's Consolidated Financial Statements for each respective year. See the "Pension Plans and 2016 Pension Benefits" section starting on page 69.
» annually reviews the compensation of directors for service on the Board and committees and makes recommendations to the Board regarding such compensation;
» recommends to the Board key executives to serve as corporate officers;
» annually reviews and makes recommendations to the Board concerning the structure, composition and functioningaccounts of the Board and its committees and recommends to the Board directors to serve as committee members and chairpersons;
» reviews and recommends to the Board retirement and other tenure policies for directors;
» reviews directorships in other public companies heldNEOs under Wolverine Worldwide's 401(k) plans, payments made by or offered to directors and senior officers of the Company;
» reviews and assesses channels through which the Board receives information, and the quality and timeliness of information received;
» develops and recommends to the Board for its approval an annual self-evaluation processWolverine Worldwide for the Boardpremiums on certain life insurance policies, tax and its committees,estate planning services, health care reimbursements and, oversees the evaluation process;
» engages consultants and advisors at the expense of the Company to assist the Committee as it deems necessaryin one instance, a car allowance, in the performance of its functions, including havingamounts listed in the sole authority to retain and terminate any consultants and advisors and to approve all fees and other retention terms; and
» conducts and discusses with the Board an annual performance evaluation of the Committee, including the Committee’s adherence to its Charter.
Name Krueger Jeppesen Stornant Woodworth Zwiers 401(k) Match Tax and Estate Planning Health �� Life Insurance Premiums Car Allowance $7,950 $7,560 $15,533 $3,915 - $7,950 - $18,898 $788 - $7,950 - $18,268 $3,030 - $11,925 $6,201 $14,051 $775 $7,000 $7,950 $7,560 $18,898 $2,924 -
The Board has adopted a Code of Conduct & Compliance for the Company’s directors, officers and employees. The Board also has adopted an Accounting and Finance Code of Ethics (“Accounting and Finance Code”). This Accounting and Finance Code focuses on the financial reporting process and applies to the Company’s CEO, CFO and Corporate Controller.
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STOCKHOLDER COMMUNICATIONS POLICY
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| Wolverine Worldwide Notice of | | | Page 61 |
20142017 PROXY STATEMENT
Wolverine Worldwide’s director compensation philosophy is to pay compensation competitive with compensation paid by companies of similar size in the same industries and with whom Wolverine Worldwide competes for director candidates. Each year, the Governance Committee, with input from management and from Towers Watson, reviews director compensation and compares it to market data, including a comparison to director compensation data for the 2013 Peer Group, as defined on page 36. The following table provides information concerning each grant of an award made to the compensation of the Company’s non-employee directors for itsNEOs in fiscal year 2013. Mr. Krueger receives compensation for his services as the Company’s CEO and President, but does not receive any additional compensation for his services as a director. Except as otherwise specified, share and per share data within this proxy statement have been adjusted to reflect the two-for-one stock split in the form of a stock dividend which was paid on November 1, 2013 to stockholders of record as of October 1, 2013.2016:
| Fees Paid in |
| Cash Amounts |
| Cash Amounts |
| Fees Earned or |
| Option |
| Total |
|
Boromisa | $123,000 | + | - | + | $65,000 | = | $188,000 | + | $45,000 | = | $233,000 |
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Boswell | - | + | - | + | - | = | - | + | $65,000 | = | $65,000 |
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Gerber | $108,000 | + | - | + | $65,000 | = | $173,000 | + | $45,000 | = | $218,000 |
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Grimoldi | - | + | $65,000 | + | $65,000 | = | $130,000 | + | $45,000 | = | $175,000 |
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Gromek | - | + | $108,500 | + | $65,000 | = | $173,500 | + | $45,000 | = | $218,500 |
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Kollat | $120,000 | + | - | + | $86,000 | = | $206,000 | + | $59,000 | = | $265,000 |
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Lauderback | $80,250 | + | $26,750 | + | $65,000 | = | $172,000 | + | $45,000 | = | $217,000 |
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Long | $83,000 | + | - | + | $65,000 | = | $148,000 | + | $45,000 | = | $193,000 |
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O’Donovan | $65,000 | + | - | + | $65,000 | = | $130,000 | + | $45,000 | = | $175,000 |
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Peterson | $92,000 | + | - | + | $65,000 | = | $157,000 | + | $45,000 | = | $202,000 |
|
Volkema | - | + | $96,500 | + | $65,000 | = | $161,500 | + | $45,000 | = | $206,500 |
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| Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | | Estimated Future Payouts Under Equity Incentive Plan Awards2 | | | | | ||||||||||||||||||||||||||||||||
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| Name | Award Type | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | All Other Stock Awards: Number of Shares of Stock or Units3 (#) | | All Other Option Awards: Number of Securities Underlying Options4 (#) | | Exercise or Base Price of Option Awards5 ($/Share) | | Grant Date Fair Value of Stock and Option Awards6 ($) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| Krueger | Annual Bonus | $718,750 | $1,437,500 | $2,875,000 | |||||||||||||||||||||||||||||||||||
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| FY16-FY18 Performance Shares | 02/10/16 | 69,655 | 139,310 | 320,701 | $2,300,008 | ||||||||||||||||||||||||||||||||||
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| Stock Options | 02/10/16 | 425,076 | $16.51 | $1,389,999 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock | 02/10/16 | 126,287 | $2,084,998 | ||||||||||||||||||||||||||||||||||||
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| Jeppesen | Annual Bonus | $153,762 | $307,524 | $615,048 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY16-FY18 Performance Shares | 02/10/16 | 10,192 | 20,384 | 42,563 | $336,540 | ||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options | 02/10/16 | 51,988 | $16.51 | $170,001 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock | 02/10/16 | 35,445 | $585,197 | ||||||||||||||||||||||||||||||||||||
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| Restricted Stock | 07/13/16 | 10,000 | $229,200 | ||||||||||||||||||||||||||||||||||||
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| Stornant | Annual Bonus | $149,822 | $299,644 | $599,289 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY16-FY18 Performance Shares | 02/10/16 | 10,101 | 20,201 | 42,179 | $333,519 | ||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options | 02/10/16 | 70,948 | $16.51 | $232,000 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock | 02/10/16 | 41,078 | $678,198 | ||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Woodworth | Annual Bonus | $137,205 | $274,410 | $548,820 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY16-FY18 Performance Shares | 02/10/16 | 10,101 | 20,201 | 42,179 | $333,519 | ||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options | 02/10/16 | 64,465 | $16.51 | $210,801 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock | 02/10/16 | 24,152 | $398,750 | ||||||||||||||||||||||||||||||||||||
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| Zwiers | Annual Bonus | $176,566 | $353,132 | $706,263 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY16-FY18 Performance Shares | 02/10/16 | 11,845 | 23,690 | 49,465 | $391,122 | ||||||||||||||||||||||||||||||||||
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| Stock Options | 02/10/16 | 64,465 | $16.51 | $210,801 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Restricted Stock | 02/10/16 | �� | 39,152 | $646,400 | |||||||||||||||||||||||||||||||||||
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Name | Option Awards Outstanding at | Name | Option Awards Outstanding at |
Boromisa | 63,852 | Lauderback | 55,970 |
Boswell | 8,941 | Long | 24,848 |
Gerber | 46,100 | O’Donovan | 42,380 |
Grimoldi | 74,512 | Peterson | 55,970 |
Gromek | 54,998 | Volkema | 26,200 |
Kollat | 77,150 |
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Wolverine Worldwide Notice of |
20142017 PROXY STATEMENT
The following table shows
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The Company also:
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2014 PROXY STATEMENT
Management directors do not receive an annual cash or equity retainer or director stock option grant.
Deferred Compensation Plan. In 2008, Wolverine Worldwide adopted the Amended and Restated Outside Directors’ Deferred CompensationStock Incentive Plan of 2013 (the “Deferred Compensation Plan”). The Deferred Compensation"Stock Incentive Plan is a supplemental nonqualified deferred compensation planof 2013") for non-employee directors. A separate non-employee director deferred compensation plan applies to benefits accrued under that plan before January 1, 2005. The Deferred Compensation Plan permits all non-employee directors to defer, at their option, 25%, 50%, 75% or 100% of their director fees. The Company establishes a book account for each non-employee director and treats deferred compensation as if invested in Wolverine Worldwide common stock. The Company credits the director’s account with the annual equity retainer amount described above and with a number of stock units equal to the amounts deferred, each divided by the closing market price of common stock on the payment date. The Company also credits director accounts with dividend equivalents in the form of additional stock units.
Upon a director’s termination of service, or such later date as a director selects, the Company distributes the stock units in the director’s book account in shares of Wolverine Worldwide common stock. The distribution is a single, lump-sum payment or annual installment payments over a period of up to 20 years (10 years under the plan for benefits accrued before January 1, 2005). The Company converts each stock unit to one share of Wolverine Worldwide common stock.
Upon a “change in control,” the Company distributes to the director, in a single lump sum payment, Wolverine Worldwide common stock in a number of shares equal to the stock units credited to a director’s book account. The Deferred Compensation Plan defines “change in control” as:
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NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP GUIDELINES
Wolverine Worldwide has stock ownership guidelines that require that each non-employee director maintain a stock ownership level equal to five times the non-employee director cash retainer. Stock units under the Deferred Compensation Plan count toward the ownership requirements. Stock options do not count toward the ownership requirement. These guidelines further align the interests of the directors with the stockholders. Each non-employee director must meet the ownership requirement by2016-2018 performance period. Following the end of the fifth year after heapplicable performance period, restrictions may lapse on some, all or she becomes subject to the guidelines. All non-employee directors who have been Wolverine Worldwide directors for at least five years meet the ownership requirement.
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2014 PROXY STATEMENT
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The following table sets forth information about those holders known by Wolverine Worldwide to be the beneficial owners of more than five percent of Wolverine Worldwide’s outstanding shares of common stock as of March 3, 2014:
Amount and Nature of Beneficial Ownership of Common Stock |
| ||||||||||
Name and Address |
| Sole Voting |
| Sole |
| Shared Voting |
| Total |
| Percent |
|
BlackRock, Inc.1 40 East 52nd Street New York, NY 10022 |
| 8,345,822 |
| 8,633,428 |
| 0 |
| 8,633,428 |
| 8.52% |
|
FMR LLC2 245 Summer Street Boston, MA 02210 |
| 18,400 |
| 5,894,788 |
| 0 |
| 5,894,788 |
| 5.82% |
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Janus Capital Management LLC3 151 Detroit Street Denver, CO 80206 |
| 10,357,035 |
| 10,357,035 |
| 647,120 |
| 11,004,155 |
| 10.86% |
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The Vanguard Group, Inc.4 100 Vanguard Boulevard Malvern, PA 19355 |
| 141,232 |
| 6,086,487 |
| 134,732 |
| 6,221,219 |
| 6.14% |
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2014 PROXY STATEMENT
STOCK OWNERSHIP BY MANAGEMENT AND OTHERS
The following table sets forth the number of shares of common stock beneficially owned as of March 3, 2014, by eachnone of the Company’s director nominees, directors and named executive officers and allperformance shares depending upon the Company's achievement of the Company’s directors and executive officers as a group:
|
| Amount and Nature of Beneficial Ownership of Common Stock1 |
| ||||||||
|
| Sole Voting |
| Shared Voting or |
| Stock Options4 |
| Total |
| Percent |
|
Jeffrey M. Boromisa |
| 4,000 |
| - |
| 63,852 |
| 67,852 |
| * |
|
Gina R. Boswell |
| - |
| - |
| 8,941 |
| 8,941 |
| * |
|
William K. Gerber |
| 6,000 |
| - |
| 46,100 |
| 52,100 |
| * |
|
Donald T. Grimes |
| 178,750 |
| - |
| 96,108 |
| 274,858 |
| * |
|
Alberto L. Grimoldi |
| 48,874 |
| - |
| 26,200 |
| 75,074 |
| * |
|
Joseph R. Gromek |
| 35,000 |
| - |
| 54,998 |
| 89,998 |
| * |
|
David T. Kollat |
| 215,344 |
| - |
| 67,098 |
| 282,442 |
| * |
|
Blake W. Krueger |
| 919,685 |
| 75,012 |
| 293,176 |
| 1,287,873 |
| 1.25% |
|
Michael Jeppesen |
| 92,853 |
| - |
| 23,347 |
| 116,200 |
| * |
|
Brenda J. Lauderback |
| 10,200 |
| - |
| 38,618 |
| 48,818 |
| * |
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Pamela L. Linton |
| 102,832 |
| - |
| 152,725 |
| 255,557 |
| * |
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Nicholas T. Long |
| - |
| - |
| 24,848 |
| 24,848 |
| * |
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Timothy J. O’Donovan |
| 713,208 |
| 59,772 |
| 42,380 |
| 815,360 |
| * |
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Shirley D. Peterson |
| 3,000 |
| - |
| 55,970 |
| 58,970 |
| * |
|
Michael A. Volkema |
| 10,000 |
| - |
| 26,200 |
| 36,200 |
| * |
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James D. Zwiers |
| 258,911 |
| 21,972 |
| 203,102 |
| 483,985 |
| * |
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All directors and executive officers as a group (18 people) |
| 2,680,553 |
| 156,756 |
| 1,336,664 |
| 4,173,973 |
| 4.07% |
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2014 PROXY STATEMENT
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The Board proposes to amend the Fourth Article of the Company’s Certificate of Incorporation to increase the Company’s authorized capital stock from 162,000,000 shares, of which 160,000,000 are shares of common stock, $1.00 par value per share (“Common Stock”), to 322,000,000 shares, of which 320,000,000 would be shares of Common Stock. The purpose of the amendment is to provide additional shares for possible future issuance.
As of March 3, 2014, there were 101,337,689 authorized shares of Common Stock issued and outstanding, excluding 383,709 shares of treasury stock. If all outstanding stock options were exercised, there would have been approximately 108,298,412 shares of Common Stock issued and outstanding as of March 3, 2014. A significant number of the Company’s existing authorized shares were used in connection with the two-for-one stock split in the form of a stock dividend paid on November 1, 2013.
The Board believes that it is advisable to have additional authorized shares of Common Stock available to give the Company the ability to react quickly to opportunities. Although the Board has no present plans, proposals, arrangements or commitments for the issuance of any of the additional shares that would be authorized upon approval of this amendment, such shares would be available for possible future stock splits and stock dividends, public or private offerings of Common Stock or securities convertible into Common Stock, awards made under employee benefit plans, equity-based acquisitions and other corporate purposes that might be proposed. If the Company’s authorized capital stock is not increased, as of March 3, 2014, it would have approximately only 39,884,377 shares available for such uses due to the number of shares outstanding, outstanding stock options and shares reserved under existing equity plans.
All of the additional shares resulting from the increase in the Company’s authorized Common Stock would be of the same class with the same dividend, voting and liquidation rights as the shares of Common Stock presently outstanding. The Company’s authorized capital stock also includes, and will continue to include without increase, 2,000,000 shares of preferred stock, none of which is currently outstanding. Stockholders have no preemptive rights to acquire shares issued by the Company under its Certificate of Incorporation and stockholders would not acquire preemptive rights with respect to additional shares under the proposed amendment to the Company’s Certificate of Incorporation. Under some circumstances, the issuance of additional shares of Common Stock could dilute the voting rights, equity and earnings per share of existing stockholders.
If the proposed amendment is adopted, the newly authorized shares would be unreserved and available for issuance by the Company without further stockholder authorization.
Although the Board has no present intention of issuing any additional shares of Common Stock as an anti-takeover measure, the proposed increase in authorized but unissued Common Stock could have an anti-takeover effect because the additional authorized but unissued shares of Common Stock could be used by the Board to make a change in control of the Company more difficult. For example, the Board could issue additional shares of Common Stock (within the limits imposed by applicable law) to dilute the stock ownership or voting rights of persons seeking to obtain control of the Company, even if the persons seeking to obtain control of the Company offer an above-market premium that is favored by a majority of the independent stockholders. Similarly, the issuance of additional shares to persons allied with the Company’s management could have the effect of making it more difficult to remove the Company’s current management by diluting the stock ownership or voting rights of persons seeking to cause such removal.
The Company’s Certificate of Incorporation and By-laws contain other provisions that could have an anti-takeover effect. For example, the Certificate of Incorporation authorizes undesignated preferred stock, which makes it possible for the Board to issue preferred stock with
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2014 PROXY STATEMENT
voting or other rights or preferences designated by the Board at the time of issuance that could impede the success of an attempt to obtain control of the Company. The Company’s By-laws provide for a classified Board with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of the Board or could deter the accumulation of large blocks of Common Stock by limiting the voting power of such blocks. The By-laws also contain advance notice provisions that impose procedural limitations on stockholders’ ability to present proposals at stockholder meetings. The By-laws further provide that vacancies in the Board may be filled only by the vote of a majority of directors then in office, which could limit the ability of a potential acquiror to obtain representation on the Board prior to the annual meeting of stockholders.
The first paragraph of the Fourth Article of the Company’s Certificate of Incorporation, as amended, would read as follows:
FOURTH: The total number of shares that the corporation shall have authority to issue and have outstanding is Three Hundred Twenty-two Million (322,000,000) shares, of which Two Million (2,000,000) shares shall be Preferred Stock, par value One Dollar ($1.00) per share, and Three Hundred Twenty Million (320,000,000) shares shall be Common Stock, par value One Dollar ($1.00) per share.
The affirmative vote of a majority of the outstanding shares entitled to vote at the annual meeting of stockholders is required to approve the proposed amendment to the Company’s Certificate of Incorporation. For the purpose of counting votes on this proposal, abstentions, and broker non-votes, if any, have the same effect as a vote against the proposal. The NYSE has advised the Company that shares of Common Stock held by NYSE member organizations, or their nominees, may be voted on this proposal without specific instructions from the beneficial owners of such shares.
BOARD RECOMMENDATION
The Board recommends that you vote “FOR” approval of the amendment to the Company’s Certificate of Incorporation.
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2014 PROXY STATEMENT
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SECTION 1 - 2013: AN INTEGRATION YEAR
In October 2012, Wolverine Worldwide acquired the Performance + Lifestyle Group (“PLG”) business from Collective Brands, Inc. The Company expanded its existing 12-brand portfolio by adding the iconic Sperry Top-Sider, Stride-Rite, Keds and Saucony brands. The acquisition transformed Wolverine Worldwide into a 16-brand Company, with revenues for fiscal year 2013, the first full year of operation for the combined companies, of $2.69 billion. Fiscal year 2013 is the first full year of operation for the 16-brand Company. Highlights for the year include:
»the successful integration of the four new brands and businesses;
»revenues of $2.69 billion, marking record full year revenue for Wolverine Worldwide;
»fully diluted earnings per share of $0.99, not adjusted for non-recurring transaction and integration expenses associated with the Performance + Lifestyle Group acquisition and other non-recurring charges; and
»one and three year total shareholder return in the 90th and 78th percentile, respectively, compared to the 2013 Peer Group (defined below).
2013 was a transformative year for the Company as it integrated the Sperry Top-Sider, Stride-Rite, Keds and Saucony businesses while delivering record revenue, strong financialrelevant performance and outstanding shareholder return.
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2014 PROXY STATEMENT
Wolverine Worldwide has a history of delivering strong financial performance. The current challenging macroeconomic conditions, including the continuing economic difficulties in Europe, have created significant challenges for global companies. The brand portfolio approach and the diversified geographic and customer base served by those brands are key strengths of the Company’s business model and have helped it continue delivering strong financial performance in difficult economic times. The 16 brands offered in approximately 200 countries and territories around the world help buffer the Company against challenges in any economic region or demographic sector.
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The Company’s portfolio also has enabled it to consistently deliver strong financial results compared to other companies of similar size or in the same industry. Over the past five years, the Company’s performance, based on cumulative total stockholder return, compared to the S&P SmallCap Index and the S&P Footwear Index, is as shown in the following table:
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2014 PROXY STATEMENT
Executive Compensation Overview for 2013
Peer Group
After the Performance + Lifestyle Group acquisition, the Compensation Committee, with Towers Watson’s input, established in late 2012 an updated peer group comprised of the companies set out in the accompanying table (the “2013 Peer Group”) for use in setting 2013 NEO compensation. The Committee and Towers Watson used three criteria to screen companies for the 2013 Peer Group: (1) Global Industry Classification Standard (“GICS”) code; (2) revenues; and (3) market capitalization. In applying the screens, Towers Watson used projected full year operations of the Company (post the Performance + Lifestyle Group acquisition). All 2013 Peer Group companies fall within the same 2-digit GICS code as Wolverine Worldwide, and seven share the same 6-digit GICS code. As of the end of the 2013 Fiscal Year, companies in the 2013 Peer Group had market capitalizations ranging from 0.2 times to 4.6 times Wolverine Worldwide’s market capitalization and Wolverine Worldwide’s market capitalization placed it at the 53rd percentile of the 2013 Peer Group.
The following companies comprise the 2013 Peer Group:
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CEO Compensation Alignment
The Company believes that stockholders view total stockholder return (“TSR”) as a useful measure of long-term performance. As the following charts show, the Company’s TSR performance outpaces the total compensation for its CEO, as reported in the Summary Compensation Table on pages 52-53, and shows a strong relationship between pay and performance when compared to the companies in the 2013 Peer Group over one- and three-year periods. However, because there is no direct causal link between the Company’s TSR and NEO compensation, as reported in the Summary Compensation Table, the degree of alignment could vary significantly in future years due to factors other than the design of the Company’s compensation programs.
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1The red diamond represents Wolverine Worldwide. The 1 Year TSR data is from Standard & Poor’s Research Insight. The 1 Year Average CEO Pay data is from the Company’s Summary Compensation Table and from the Summary Compensation Table in the most recent proxy statement of each company in the 2013 Peer Group.
2The red diamond represents Wolverine Worldwide. The 3 Year TSR data is from Standard & Poor’s Research Insight. The 3 Year Average CEO Pay data is from the Company’s Summary Compensation Table and from the Summary Compensation Table in the three most recent proxy statements of each company in the 2013 Peer Group.
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2014 PROXY STATEMENT
Demonstrated Pay-for-Performance
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Other Relevant Factors
CEO and other NEO compensation for fiscal year 2013, and, in the case of the long-term incentive bonuses for the three year period ending with fiscal year 2013, reflected the Company’s consistent financial performance and cumulative return to stockholders over the past three years:
»approximately 80% of the CEO’s total compensation as reported in the Summary Compensation Table is tied to the Company’s stock and/or performance measures;
»the ratio of performance-based equity awards (including stock options) to time-based equity awards for the CEO is 1.9 to 1; and
»each NEO’s bonus opportunity was capped at 200% of his or her Target Percentage for that opportunity, limiting the incentive to take risks that could have a material adverse impact on the Company.
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Compensation Philosophy and Objectives
Wolverine Worldwide’s compensation philosophy is to provide competitive salaries and incentives to achieve superior financial performance. The Board’s Compensation Committee oversees the Company’s executive compensation program. The Committee reviews and approves NEO compensation, other than the CEO’s compensation, which it approves together with the Board’s other independent directors. The NEO compensation program has four primary objectives:
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2014 PROXY STATEMENT
The program balances fixed compensation (base salaries) with performance-based compensation (annual bonuses and long-term incentives), and rewards annual performance while maintaining emphasis on longer-term objectives. The program also blends cash, non-cash, long- and short-term compensation components, and current and future compensation components. The Committee considers qualitative and quantitative factors when setting compensation. Each NEO’s compensation mix and cash-to-equity ratio depends on his or her responsibilities, experience, skills, and potential to affect Wolverine Worldwide’s overall performance. In general, an NEO’s compensation and the proportion of compensation that is variable increases as the NEO’s level of responsibilities increases. The Committee believes the CEO has the broadest scope of responsibilities and typically approves higher compensation for the CEO (with a higher proportion of variable compensation) than for any other NEO. The Board believes this executive compensation philosophy has successfully generated sustained superior performance over the long term.
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2014 PROXY STATEMENT
Purposes of Compensation Program Elements
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2014 PROXY STATEMENT
The Compensation Committee is responsible to the Company’s Board for overseeing the development and administration of the Company’s compensation and benefits policies and programs. The Committee consists of four independent directors. Among its other responsibilities, the Committee formulates the compensation recommendations to the independent directors of the Board for the Company’s CEO and reviews and approves all aspects of the Company’s NEO compensation program, including:
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When making compensation recommendations or decisions, the Compensation Committee considers the CEO’s assessment of each individual’s performance, the performance of the individual’s respective business unit or function, the scope of each NEO’s responsibilities, years of service with the Company and in similar positions at other companies, skills, knowledge, market conditions, retention considerations, economic conditions, and Wolverine Worldwide’s compensation philosophy. The Committee considers these factors subjectively and no single factor or combination of factors is determinative. Following its review and discussion, the Committee approves compensation for all NEOs except the CEO. The Committee recommends compensation for the CEO to the independent directors of the Board, and those independent directors approve the CEO’s compensation. The Committee and the independent directors of the Board meet with the CEO at the end of the year to evaluate his performance compared to his personal objectives set at the beginning of the year. The Committee is supported in its work by senior Global Human Resources staff and an executive compensation consultant as described below.
Within the framework of the compensation programs approved by the Compensation Committee, the CEO recommends the level of base salary, annual incentive bonus, long-term incentive bonus, equity awards and other compensation package components for his direct reports, including the other NEOs. The CEO bases his recommendation upon his assessment of each individual’s performance, the performance of the individual’s respective business unit or function, the scope of each NEO’s responsibilities, years of service with the Company and in similar positions at other companies, skills, knowledge, market conditions, retention considerations, economic conditions, and Wolverine Worldwide’s compensation philosophy. The CEO considers these factors subjectively and no single factor is determinative. The Committee reviews the CEO’s recommendations and approves any compensation changes affecting these individuals it determines are appropriate, in its sole discretion.
The Compensation Committee has retained Towers Watson as its executive compensation consultant. Towers Watson reports directly to the Committee and the Committee may replace it or hire additional consultants at any time. The Committee has evaluated Towers Watson’s independence under the rules established by the NYSE and has determined that Towers Watson is “independent” as defined by NYSE rules. In addition, the Committee has evaluated whether the engagement of Towers Watson raises any conflicts of interest and has determined that no such conflicts of interest exist. In making this determination the Committee reviewed the following factors (as outlined by the SEC): (i) the provision of other services to the Company by Towers Watson, (ii) the amount of fees received by Towers Watson from the Company as a percentage of Towers Watson’s total revenue, (iii) Towers Watson’s policies and procedures regarding conflicts of interest, (iv) the existence of any business or personal relationships between the consultants at Towers Watson involved in its engagement by the Company and members of the Committee, (v) stock ownership in the Company by the consultants at Towers Watson involved in its engagement by the Company and (vi) the existence of any business or personal relationships between Towers Watson and/or the consultants at Towers Watson involved in its engagement by the Company and the Company’s executive officers. At the Committee’s invitation, a representative of Towers Watson attends Committee meetings. The Committee retains sole authority to hire the consultant, approve its compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement. A representative of Towers Watson also
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2014 PROXY STATEMENT
communicates with the Chairperson of the Committee between meetings. However, the Committee makes all decisions regarding NEO compensation. Towers Watson provides various executive compensation services to the Committee pursuant to a written consulting agreement with the Committee. Generally, these services include advising the Committee on the principal aspects of the Company’s executive compensation program, evolving industry practices, and providing market information and analysis regarding the competitiveness of the Company’s program design. During 2013, Towers Watson performed the following specific services:
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The total fees the Company paid to Towers Watson for services to the Committee in 2013 was $153,000. Towers Watson also was engaged by Wolverine Worldwide in 2013 to perform actuarial services, pension plan consulting and risk and financial services that are not part of the executive compensation services provided to the Committee. These services were performed on an interim and annual basis for financial reporting purposes. The total annual expense for this work was approximately $301,000. The total fees the Company paid to Towers Watson ($454,000) represent less than two one hundredths of one percent (0.02%) of Towers Watson’s revenue for its 2013 fiscal year ($3.6 billion).
The Committee uses surveys and peer group information as a market reference point. The Committee believes that compensation levels in the footwear, apparel and retail industries typically exceed levels reported in general industry surveys. The Committee also considers information the Company learns through recruiting NEOs and the experience levels and responsibilities of NEOs prior to joining the Company as reference points in setting NEO compensation.
As part of its competitive data review in connection with determining 2013 compensation, the Committee considered information presented by Towers Watson based on three published compensation surveys: (1) 2012 Towers Watson Data Services Survey Report on Top Management Compensation – Retail and Wholesale Trade Industry Cut, (2) 2012 Towers Watson Compensation Database Executive Database – Retail/Wholesale Executive Database, and (3) 2012 US Mercer Benchmark Database, Executive – General, Retail Industry Cut.
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2014 PROXY STATEMENT
The Compensation Committee approved the 2013 base salaries for NEOs set out in the accompanying table. As part of approving an NEO’s base salary, the Compensation Committee considers the scope of his or her responsibilities, years of service with the Company and in similar positions at other companies, skills, and knowledge. The Committee also considers market conditions, economic conditions, and Wolverine Worldwide’s compensation philosophy, the acquisition of the Performance + Lifestyle Group in 2012 and resulting increase in the Company’s revenue and scope of operations, and the NEO’s scope of responsibilities. Based on these factors, the Compensation Committee determined to adjust 2013 base salaries as noted in the table. | Name | 2013 Base Salary | 2012 Base Salary |
Krueger | $1,100,000 | $862,600 | |
Grimes | $560,000 | $431,000 | |
Jeppesen | $410,000 | $375,000 | |
Linton | $331,000 | $321,000 | |
Zwiers | $590,000 | $451,000 | |
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In 2013, each NEO had the opportunity to earn annual incentive compensation, consisting of two parts: (1) an annual bonus (“Annual Bonus”) under the Annual Bonus Plan, and (2) an individual performance bonus (“Individual Performance Bonus”) under the Individual Performance Bonus Plan. Each NEO’s payout under the two parts was determined by comparing his or her performance against specific criteria set at the beginning of each year. Under the Annual Bonus Plan, the NEO’s payout was determined by comparing his or her performance against four performance levels set for each criterion: threshold (50% payout), target (100% payout), goal (150% payout) and stretch (200% payout). Under the Individual Performance Bonus Plan, the NEO’s payout was determined by comparing his or her performance against each criterion and scoring it on a scale of 0% to 100%. As shown in further detail below under the heading “Individual Performance Bonus,” payouts under the Individual Performance Bonus Plan can range from 0% to 200% depending on the NEO’s cumulative weighted performance score on his or her individual performance objectives.
The Compensation Committee set a percentage of the NEO’s 2013 base salary as his or her annual incentive compensation target percentage (the “Target Percentage”). The Target Percentage represented the percentage of the NEO’s salary he or she could earn as annual incentive compensation at a “target” performance level (100% payout) under the Annual Bonus Plan and Individual Performance Bonus. Generally, the Committee set higher Target Percentages for individuals with greater influence on business strategy, profits or sales. This put a larger percentage of an NEO’s total potential cash compensation “at risk.”
Consistent with the 2012 bonus opportunity, each NEO’s total annual incentive compensation opportunity for 2013 ranged from 0% to 200% of his or her Target Percentage. The accompanying table shows the total annual incentive compensation payout earned by each NEO for 2013. As part of approving an NEO’s 2013 target percentage, the Compensation Committee considers the scope of his or her responsibilities, years of service with the Company and in similar positions at other companies, skills, and knowledge. The Committee also considers market
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2014 PROXY STATEMENT
conditions, economic conditions, and Wolverine Worldwide’s compensation philosophy, the acquisition of the Performance + Lifestyle Group in 2012 and resulting increase in the Company’s revenue and scope of operations, and the NEO’s scope of responsibilities.
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| Annual Incentive Compensation Component
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Annual Bonus Percentage By
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| Total |
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| Human |
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| Performance |
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| Total |
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Krueger |
| 125% |
| 100% |
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| 15% |
| 85% |
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| $2,321,983 |
| $1,512,608 |
| $309,375 |
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Grimes |
| 60% |
| 55% |
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| 15% |
| 85% |
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| $557,827 |
| $369,627 |
| $88,200 |
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Jeppesen |
| 50% |
| 50% |
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| 15% |
| 10% |
| 75% |
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| $309,985 |
| $256,172 |
| $53,813 |
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Linton |
| 45% |
| 45% |
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| 15% |
| 65% |
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| 20% |
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| $217,001 |
| $183,701 |
| $33,300 |
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Zwiers |
| 55% |
| 55% |
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| 15% |
| 20% |
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| 65% |
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| $488,050 |
| $340,037 |
| $73,013 |
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1The Committee approved revenue and pretax earnings performance criteria for the Company, as described below under “Annual Incentive Compensation – Annual Bonus.”
2The Committee approved an array of metrics as performance criteria for the Global Operations Group: pretax earnings and net sales (Leathers 20%); financial performance, quality goal and productivity (Owned Manufacturing 30%); and actual expenses, speed-to-market, product costs and quality measurements compared to 2013 planned targets (Sourcing 25%)
3The Committee approved actual Department expenses compared to budgeted expenses in the Human Resources Department’s fiscal year 2013 operating plan as the 2013 performance criterion for the Human Resources Department.
4The Committee approved revenue and pretax earnings as the performance criteria for the Performance Group.
5Includes the NEO’s 2013 Annual Bonus, the 2013 Individual Performance Bonus and the following additional bonus amounts paid in recognition of contributions to the successful efforts integrating the Performance + Lifestyle Group business and strong individual and Company performance: Mr. Krueger ($500,000); Mr. Grimes ($100,000); and Mr. Zwiers ($75,000).
Annual Incentive Compensation - Annual Bonus
At the same time it set Target Percentages, the Compensation Committee established the performance criteria for the Company and business units under the Annual Bonus Plan. Each NEO’s Annual Bonus was based on performance criteria for the Company, or for the Company and a business unit. The Committee set fiscal year 2013 revenue (weighted 35% of the Company component) and pretax earnings (weighted 65%) as the Company’s performance | Company |
Revenue2 | Pretax Earnings2 | |
Threshold (50%) | $2,600,000,000 | $155,400,000 | ||
Target (100%) | $2,700,000,000 | $170,500,000 | ||
Goal (150%) | $2,850,000,000 | $191,700,000 | ||
Stretch (200%) | $2,950,000,000 | $207,700,000 | ||
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criteria. The Committee selected these criteria because it believed a strong correlation exists between performance on these financial measures and increases in stockholder value. As shown in the accompanying table, the Committee also set four performance levels for each criterion: threshold (50% payout), target (100% payout), goal (150% payout) and stretch (200% payout). The Committee set the revenue and pretax earnings goals for these performance levels (shown in the accompanying table) following discussion with management and a review of | 1 The maximum payout an NEO can receive is 200% of the payment earned at his or her Target Percentage, even if performance is above Stretch, and an NEO would receive 0% of his or her Target Percentage if performance is below Threshold. 2 Not including the effect of acquisitions, divestitures, accounting changes, restructuring, or other special charges or extraordinary items excluded by the Compensation Committee. Pretax earnings for 2013 exclude transaction and integration expenses related to the PLG acquisition, restructuring charges related to the Company’s owned manufacturing operations, store impairment charges and expenses relating to the October 2013 debt refinancing.
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2014 PROXY STATEMENT
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Two of the NEOs, Messrs. Krueger and Grimes, have significant influence on the Company’s overall business strategy and their respective Annual Bonus opportunities (85% of their total Annual Incentive Compensation opportunities) are based on the Company performance criteria. Three of the NEOs, Messrs. Jeppesen and Zwiers and Ms. Linton, are directly responsible for business units and exert a more significant influence on those business units than on the Company’s overall business strategy. For each of those three NEOs, the Committee based the following percentages of the overall Annual Bonus opportunity on the Company’s performance: Mr. Jeppesen (10%); Ms. Linton (65%) and Mr. Zwiers (20%). The remaining portions of the Annual Bonus opportunities for each of these three NEOs were based on the performance of their respective business units. Those percentages were: Mr. Jeppesen (75% Global Operations Group); Ms. Linton (20% Human Resources); and Mr. Zwiers (65% Performance Group). For each of the NEOs, the remaining 15% of their Annual Incentive Compensation opportunity was determined by his or her respective Individual Performance Bonus criteria.
The Committee set the same four performance levels for each criterion as it set for the Company. It set the goals for each performance level for each business unit criteria at substantially similar difficulty levels as the goals for each performance level for the Company criteria. The Committee believed the |
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| Historical Group Performance | |||||||||
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| 2013 |
| 2012 |
| 2011 |
| 2010 |
| 2009 |
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Global Operations Group |
| Between target and goal |
| Between target and goal |
| Between threshold and target |
| Between goal and stretch |
| N/A |
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Human Resources Department |
| Above stretch |
| Between target and goal |
| Above stretch |
| Between goal and stretch |
| Above stretch |
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Performance Group |
| Between target and goal |
| Below threshold |
| Above stretch |
| Above stretch |
| Between goal and stretch |
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business units could achieve these goals under strong management performance, based on a review of each business unit’s historical performance and its fiscal year 2013 operating plan. The accompanying table shows historical performance levels achieved by the business units using these performance criteria, for those years when the performance criteria were the same as the 2013 performance criteria. | ||||||||||||
In early 2014, the Committee certified actual 2013 performance compared to the performance levels for the Company and business unit criteria. The Company’s fiscal year 2013 revenue was $2,691.1 million which was near Target performance level. The Company’s adjusted pretax earnings for fiscal year 2013 were $190.7 million which was between Target and Goal performance level. The weighted average results for the applicable performance criterion are shown in the accompanying table:
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For 2013, the Company paid the NEOs the following amounts under the Annual Bonus Plan.
Name
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| Annual Bonus Opportunity
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| Annual Bonus Percentage |
| Annual Bonus Paid1 |
| Other Bonus2 |
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Krueger |
| 0 – 200% |
| 129% |
| $1,512,608 |
| $500,000 |
Grimes |
| 0 – 200% |
| 129% |
| $369,627 |
| $100,000 |
Jeppesen |
| 0 – 200% |
| 147% |
| $256,172 |
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Linton |
| 0 – 200% |
| 146% |
| $183,701 |
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Zwiers |
| 0 – 200% |
| 123% |
| $340,037 |
| $75,000 |
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2014 PROXY STATEMENT
Annual Incentive Compensation – Individual Performance Bonus
Also at the same time Target Percentages are set, the CEO approves for each NEO other than himself, Individual Performance Bonus personal objectives. The CEO recommends, and the
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The CEO recommended to the Committee the 2013 cumulative weighted personal objectives scores and payout levels for each of the | |||||
NEOs other than himself. The Committee and the other independent directors of the Board met with the CEO at the end of the year to evaluate his performance compared to his personal objectives. The Committee determined the cumulative weighted personal | |||||
objectives score for the CEO and recommended to the independent directors of the Board the CEO’s payout level. The Committee also determined the Individual Performance Bonus payout for each NEO, as shown in the accompanying table, by multiplying his or her cumulative weighted performance score payout level by fifteen percent (representing the percentage of the Individual Performance Bonus to the total annual incentive compensation opportunity) of his or her Target Percentage. |
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Name | 2013 Individual | Personal Objectives | 2013 | 2013 | |
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Krueger | 0 – 200% | 86.75% | 150% | $309,375 | |
Grimes | 0 – 200% | 90% | 175% | $88,200 | |
Jeppesen | 0 – 200% | 90.25% | 175% | $53,813 | |
Linton | 0 – 200% | 81% | 150% | $33,300 | |
Zwiers | 0 – 200% | 85% | 150% | $73,013 | |
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In 2013, each NEO had the opportunity to earn long-term incentive compensation, consisting of two parts: (1) performance shares under the Company’s stock incentive plan, and (2) equity awards in the form of stock option grants and/or restricted stock awards under the stock incentive plan.
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2014 PROXY STATEMENT
Long-Term Incentive Compensation - Performance Share Bonuses
Each NEO had the opportunity to earn long-term incentive compensation in the form of performance shares issued under the Company’s stock incentive plan based on performance criteria covering three-year periods (“3-Year Bonus”). The Committee established two performance criteria for the performance period 2011-2013: (1) business value added (“BVA”), and (2) fully diluted earnings per share (“EPS”). BVA is calculated by starting with operating income determined in accordance with U.S. generally accepted accounting principles (“GAAP”), and then reducing operating income by (1) an amount for income taxes where the effective tax rate used to calculate the income tax amount is determined in accordance with GAAP (adjusted as described in the footnote to the table below), and (2) a capital charge equal to a 2-point average of “net operating assets” during the fiscal year (with “net operating assets” defined as the net of trade receivables (net of reserves), inventory (net of reserves), other current assets, property, plant and equipment, trade payables and accrued liabilities), multiplied by 10%. The Committee believes that BVA is useful for determining incentive compensation, because it ties the income statement (profit delivery) to the balance sheet (effective asset utilization) and does not focus on one to the exclusion of the other. The Committee further believes that focusing NEOs’ interests on increasing BVA aligns their interests more closely with stockholder interests, and that BVA is superior to total shareholder return (which the Company used before BVA as a metric for incentive compensation) in measuring management’s long-term influence over the Company’s performance. The Committee believes the EPS is a key metric that plays an important role in driving the Company’s stock price and that it further aligns the interests of the NEOs with other stockholders. Using BVA and EPS balances the NEOs’ focus on near-term profitability with longer-term shareholder value. The Committee weights EPS 65% and BVA 35% when determining the overall performance level.
3-Year Performance Share Bonus (Fiscal 2011-2013)
The following table lists performance levels set by the Committee for the 2011-2013 performance period:
Performance level |
| Cumulative EPS for the |
| Cumulative BVA for the |
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Threshold (50%) |
| $7.33 |
| $251.2 |
Target (100%) |
| $7.53 |
| $258.6 |
Goal (150%) |
| $7.75 |
| $266.6 |
Stretch (200%) |
| $7.93 |
| $273.1 |
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2014 PROXY STATEMENT
3-Year Performance Share Bonus (Fiscal 2013-2015)
In 2013, the Committee evaluated each NEO’s long-term incentive target payout opportunity expressed as a percentage of base salary. It considered the Company’s recruiting experiences; each NEO’s experience and responsibilities; the NEO’s performance; and competition with other footwear, apparel and retail companies for candidates. The Committee considers these factors subjectively, and no single factor or combination of factors was determinative for any NEO. The Committee decided to set the NEOs’ Target Percentage (expressed as a percentage of the NEO’s base salary, similar to the Annual Bonus) for the 2013-2015 3-Year Bonus opportunity, as set out in the accompanying table. | Name | 2013-2015 | 2012-2014 |
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Krueger | 100% | 75% | |
Grimes | 60% | 50% | |
Jeppesen | 45% | 45% | |
Linton | 35% | 35% | |
Zwiers | 50% | 50% | |
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In February 2013, the Committee awarded performance shares to each NEO with a value equal to the estimated maximum bonus payout the NEO could earn as the 3-Year Bonus for the 2013-2015 performance period. The Committee weighted the EPS criterion at 65% of the total payout and weighted the BVA performance criterion at 35% of the total payout for the 2013-2015 performance period, which was consistent with the 2011 and 2012 performance share grants. The Committee intended the level of difficulty in attaining Threshold, Target, Goal and Stretch performance levels it set for the 2013-2015 performance period to be substantially similar to the level of difficulty in attaining the performance levels for the 2012-2014 performance period. The Committee granted the awards under the Company’s Stock Incentive Plan of 2010. The award details are in the table “Grants of Plan-Based Awards” on pages 54-55. The Company accrues, but does not pay, dividends on the performance shares during the performance period. OnceAt the Committee certifiesend of the Company’sapplicable performance comparedperiod, the Company will pay to the NEO the accrued dividends (if any) on the performance criteria,shares for which the restrictions on none, some or alllapse. For a description of the performance shares awarded to each NEO will lapse at that time, andgranted in 2016 under the NEO will receive accrued dividends only on the shares actually earned.
Long-TermStock Incentive Compensation - Stock Option Grants and Restricted Stock AwardsPlan of 2013, see pages 52-54.
The Compensation Committee believes that NEO stock ownership benefits stockholders.
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For 2013, under the actual total valueStock Incentive Plan of the equity award to each NEO (the combined total grant date fair value2016 for the stock options and restricted stock, not including the performance share awards) was determined based upon a review of the factors listed in the preceding paragraph as well as the amount of the prior year’s total equity awardJuly 13, 2016 grant to each NEO, the percentage of the NEO’s total compensation that would be reflected by the equity award, the change in total compensation for the NEO compared to the prior year, and equity awards to each NEO in recent years, but no single factor or combination of factors was determinative in setting the percentage. The “Grants of Plan-Based Awards” table on pages 54-55 shows the actual grants and awards for 2013.
A stock option’s exercise price is set at the closing price of the Company’s common stock on the grant date. The Committee grants annual equity awards at its regularly scheduled February meeting. The independent directors of the Board approve equity grants to the CEO at the same time. A stock option grant typically vests one-third each year over three years.Mr. Jeppesen. The restrictions on restricted stock25% of the shares received under the awards typicallyreflected in this column lapse 25% on each of the third and fourth anniversary and 50% on the fifth anniversary of the award.
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Wolverine Worldwide Notice of | | | Page |
20142017 PROXY STATEMENT
The restricted stock award, not including performance shares, was approximately 60%, and the stock option grants were approximately 40%, of the combined value of the equity awarded to each NEO. These were the same approximate percentages as in 2012 and in the past five years. The Committee believed this mix was appropriate based on the fact that restricted stock promotes retention and stock options incentivize stock price performance.
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Retirement and Welfare Plans
The NEOs participate in Wolverine Worldwide’s medical and dental plans and receive life and disability insurance. Subject to variations to account for requirements in local jurisdictions, variances in local compensation structure (for example, as applicable to Wolverine Worldwide’s employees in the United States versus certain overseas offices), and to requirements under collective bargaining agreements, all Wolverine Worldwide employees receive the same health and welfare benefit opportunities. The NEOs also participate in the Wolverine Worldwide Employees’ Pension Plan (a defined benefit plan) and the Wolverine World Wide, Inc. 409A Supplemental Executive Retirement Plan (an unfunded, non-qualified plan). For a description of the benefits under Wolverine Worldwide’s retirement plans, see “Pension Plans and 2013 Pension Benefits” below.
Perquisites
The Company provides limited perquisites to NEOs in order to provide a competitive total compensation package. The Company reimbursed NEOs for tax, financial planning and estate planning services, and made 401(k) matching payments in the amounts set forth in footnote 7 to the “Summary Compensation Table” on pages 52-53. The Company did not provide gross ups to the NEOs for the taxes due on the value of the perquisites.
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The dates of the Compensation Committee’s and Board’s February meetings at which annual grants are made generally are scheduled at least one year in advance. The Compensation Committee also delegated to the CEO the authority to award restricted stock or grant stock options to employees during the period from the February 2013 regular meeting of the Compensation Committee until the February 2014 meeting of the Compensation Committee. The CEO may not make such grants or awards to himself or other NEOs. The grants and awards are intended to recognize outstanding performance by employees. The restricted stock awards for the February 2013 to February 2014 period could not exceed 17,000 shares in aggregate and the stock option awards could not exceed 12,294 options in aggregate.
NEO Stock Ownership Guidelines
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Stock Hedging and Pledging Policies
The Company has adopted a policy covering hedging transactions involving the Company’s common stock or pledging of the Company’s common stock by directors or executive officers. Under the policy, no director or executive officer of the Company may (1) enter into any transaction involving pledging as collateral for a loan, or holding on margin, any securities of the Company beneficially owned by the director
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2014 PROXY STATEMENT
or executive officer unless pre-cleared with the Company’s General Counsel, and (2) enter into or maintain any hedging transaction or position involving securities of the Company beneficially owned by the directors or executive officer.
Impact of Accounting and Tax Treatments on Compensation
Section 162(m) of the Internal Revenue Code provides that publicly held companies may not deduct compensation paid to the CEO and the three next most highly-paid executive officers (other than the CFO) in excess of $1,000,000 annually, with certain exceptions for qualified “performance-based” compensation. Wolverine Worldwide has designed its Annual Bonus Plan, Long-Term Incentive Plan, and stock incentive plans, to permit certain awards payable under these plans that are intended to qualify as “performance-based” compensation for purposes of Section 162(m). Wolverine Worldwide does not require all of its compensation programs to be fully deductible under Section 162(m) because Wolverine Worldwide believes it is important to preserve flexibility in administering compensation programs in a manner designed to promote varying corporate goals. Wolverine Worldwide may pay compensation that does not qualify as performance-based compensation.
Each NEO is party to an Executive Severance Agreement that provides for certain payments and benefits upon termination of employment after a change in control of Wolverine Worldwide. The Board believes Executive Severance Agreements will promote management stability during the transition period accompanying a change in control. Each NEO is eligible to receive compensation if his or her employment is terminated within two years (Messrs. Grimes, Jeppesen and Zwiers and Ms. Linton) or three years (Mr. Krueger) following a change in control of Wolverine Worldwide. The Compensation Committee believes this “double trigger” requirement of (1) change in control, and (2) termination of employment, is appropriate because a change in control does not, in many circumstances, materially harm an NEO unless his or her employment with the Company is terminated. None of the Executive Severance Agreements requires an NEO to mitigate payments by seeking employment, but they do reduce compensation paid during the fourth and later months after termination by an amount equal to any other compensation earned by the NEO during that period. An NEO does not receive payment under the Executive Severance Agreement if his or her employment terminates:
»due to death or retirement in accordance with Wolverine Worldwide’s policy or as otherwise agreed;
»for cause or disability; or
»by resignation of the NEO for other than “good reason,” which includes the assignment of duties inconsistent with the NEO’s status as a senior executive officer or the duties performed by the NEO immediately before a change in control, a reduction in the NEO’s annual base salary or relocation of the NEO.
All NEOs also may be eligible under Wolverine Worldwide’s retirement plans or equity plans to receive certain payments and benefits upon termination of employment or in connection with a change in control. The Compensation Committee believes that single-trigger accelerated vesting is appropriate in some circumstances, because by protecting a significant component of the NEO’s total compensation, the acceleration of equity vesting (1) mitigates potential conflicts of interest that might arise between the NEOs and the stockholders, and (2) serves as a substantial incentive for those NEOs to obtain the highest possible value for the stockholders if the Company becomes an acquisition target. The Compensation Committee also retains the discretion to modify or eliminate the accelerated vesting.
Mr. Krueger also is party to a Separation Agreement under which he receives certain payments and benefits if the Company terminates his employment other than for “cause” or if he terminates his employment for “good reason.” The Compensation Committee determined upon appointing Mr. Krueger as CEO that, given the Company’s strategic initiatives the Board had asked him to lead, it was appropriate for the Company to enter into a separation arrangement. You will find information on benefits payable to Mr. Krueger and each other NEO and the specific elements comprising the payment under the Separation Agreement, Executive Severance Agreements, and other retirement and equity plans of Wolverine Worldwide, in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement.
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(This page has been left blank intentionally.)
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2014 PROXY STATEMENT
The Compensation Committee has reviewed and discussed with management the information provided under the heading “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Company include the Compensation Discussion and Analysis section in this proxy statement and incorporate it by reference into the Company’s Annual Report on Form 10-K.
Respectfully submitted,
Joseph R. Gromek (Chairperson)
Jeffrey M. Boromisa
Nicholas T. Long
Michael A. Volkema
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2014 PROXY STATEMENT
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Name and Principal Position | Year | Salary1 | Bonus1,2 | Stock Awards3 |
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Blake W. Krueger Chairman, CEO and President | 2013 | $1,090,869 | $500,000 | $3,550,125 |
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2012 | $853,906 |
| $2,638,485 |
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2011 | $812,558 |
| $1,675,335 |
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Donald T. Grimes Senior Vice President, CFO, Treasurer and Chief Accounting Officer | 2013 | $555,038 | $100,000 | $816,866 |
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2012 2011 | $427,827 $412,923 | $50,000 | $826,172 $524,643 |
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Michael Jeppesen President, Global Operations Group8 | 2013 | $408,654 |
| $463,023 |
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2012 | $359,135 |
| $603,254 |
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Pamela L. Linton Senior Vice President, Global Human Resources | 2013 | $328,885 |
| $340,130 |
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2012 | $318,885 |
| $386,469 |
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2011 | $309,269 |
| $304,200 |
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James D. Zwiers Senior Vice President and President, Performance Group | 2013 | $584,654 | $75,000 | $728,005 |
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2012 2011 | $445,500 $420,192 |
| $1,108,664 $531,335 |
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2014 PROXY STATEMENT
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| Change in Pension Value |
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| and Nonqualified |
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| Non-Equity Incentive | Deferred Compensation |
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Option Awards4 | Plan Compensation1,5 | Earnings6 | All Other Compensation7 | Total |
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$1,044,046 | $1,821,983 | $0 | $30,264 | $8,037,287 |
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$615,287 | $192,129 | $3,366,911 | $18,772 | $7,685,490 |
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$509,899 | $1,238,247 | $2,696,772 | $34,032 | $6,966,843 |
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$222,144 | $457,827 | $33,418 | $19,573 | $2,204,886 |
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$170,553 | $52,944 | $253,321 | $12,810 | $1,793,627 |
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$146,726 | $346,087 | $108,411 | $12,975 | $1,551,765 |
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$131,248 | $309,985 | $72,041 | $7,650 | $1,392,601 |
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$120,898 | $166,692 | $57,147 | $155,961 | $1,463,087 |
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$113,100 | $217,001 | $88,744 | $7,650 | $1,095,510 |
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$104,707 | $92,182 | $258,275 | $7,685 | $1,168,203 |
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$94,696 | $225,216 | $144,408 | $7,635 | $1,085,424 |
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$201,760 | $413,050 | $0 | $19,424 | $2,021,893 |
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$170,553 | $81,351 | $509,767 | $16,866 | $2,332,701 |
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$146,726 | $366,800 | $230,137 | $16,611 | $1,711,801 |
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2014 PROXY STATEMENT
The following table provides information concerning each grant of an award made to the NEOs in fiscal year 2013:
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| Stock |
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| Option |
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| Estimated Possible Payouts |
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| Awards: |
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| Awards: |
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| Exercise |
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| Estimated Possible Payouts Under |
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| Under Equity Incentive Plan |
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| Number of |
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| Number of |
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| or Base |
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Name |
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| Award Type |
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| Grant |
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| Threshold |
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| Target |
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| Maximum |
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| Threshold |
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| Target |
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| Maximum |
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| Stock or |
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| Underlying |
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| Option |
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| Grant |
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Krueger |
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| Annual Bonus |
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| $545,435 |
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| $1,090,869 |
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| $2,181,738 |
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| FY13-FY15 Performance Shares |
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| 36,997 |
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| 73,994 |
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| 147,988 |
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| $1,971,560 |
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| Stock Options |
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| 2/6/13 |
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| 200,778 |
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| $21.48 |
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| $1,044,046 |
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| Restricted Stock |
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| 2/6/13 |
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| 73,490 |
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| $1,578,565 |
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Grimes |
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| Annual Bonus |
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| $166,512 |
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| $333,023 |
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| $666,046 |
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| FY13-FY15 Performance Shares |
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| 9,040 |
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| 18,081 |
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| 36,162 |
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| $481,778 |
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| Stock Options |
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| 2/6/13 |
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| 42,720 |
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| $21.48 |
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| $222,144 |
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| Restricted Stock |
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| 2/6/13 |
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| 15,600 |
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| $335,088 |
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Jeppesen |
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| Annual Bonus |
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| $102,164 |
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| $204,327 |
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| $408,654 |
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| FY13-FY15 Performance Shares |
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| 4,964 |
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| 9,929 |
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| 19,858 |
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| $264,548 |
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| Stock Options |
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| 2/6/13 |
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| 25,240 |
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| $21.48 |
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| $131,248 |
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| Restricted Stock |
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| 2/6/13 |
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| 9,240 |
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| $198,475 |
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Linton |
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| Annual Bonus |
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| $73,999 |
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| $147,998 |
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| $295,996 |
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| FY13-FY15 Performance Shares |
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| 3,117 |
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| 6,234 |
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| 12,468 |
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| $169,149 |
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| Stock Options |
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| 2/6/13 |
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| 21,750 |
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| $21.48 |
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| $113,100 |
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| Restricted Stock |
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| 2/6/13 |
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| 7,960 |
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| $170,981 |
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Zwiers |
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| Annual Bonus |
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| $160,780 |
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| $321,560 |
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| $643,120 |
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| FY13-FY15 Performance Shares |
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| 7,937 |
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| 15,875 |
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| 31,750 |
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| $422,989 |
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| Stock Options |
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| 2/6/13 |
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| 38,800 |
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| $21.48 |
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| $201,760 |
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| Restricted Stock |
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| 2/6/13 |
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| 14,200 |
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| $305,016 |
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2014 PROXY STATEMENT
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2014 PROXY STATEMENT
The following table provides information concerning unexercised options and stock awards that have not vested for each NEO outstanding as of December 28, 2013:31, 2016:
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| Option Awards
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| Stock Awards
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Name |
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| Grant |
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| Number of |
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| Number of |
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| Option |
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| Option |
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| Number of |
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| Market |
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| Equity |
|
| Equity |
|
Krueger |
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|
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|
|
|
|
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| Various |
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|
|
|
|
|
|
|
|
|
|
|
|
| 277,990 |
|
| $9,284,866 |
|
|
|
|
|
|
|
|
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| Various |
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|
|
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|
|
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|
|
|
|
|
|
|
|
| 301,160 |
|
| $10,058,744 |
|
|
|
| 2/6/08 |
|
| 7,984 |
|
| - |
|
| $12.53 |
|
| 2/5/18 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/10 |
|
| 44,266 |
|
| - |
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| $12.50 |
|
| 2/10/20 |
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|
|
|
|
|
|
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|
|
|
|
|
|
|
| 2/9/11 |
|
| 65,333 |
|
| 32,667 |
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| $18.25 |
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| 2/8/21 |
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|
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|
|
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|
|
|
|
|
|
| 2/8/12 |
|
| 38,000 |
|
| 76,000 |
|
| $19.92 |
|
| 2/7/22 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/6/13 |
|
| - |
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| 200,778 |
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| $21.48 |
|
| 2/5/23 |
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|
Grimes |
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|
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| �� |
|
|
| Various |
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|
|
|
|
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|
|
|
|
|
|
| 76,500 |
|
| $2,555,100 |
|
|
|
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| Various |
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|
|
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|
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|
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|
|
|
|
|
|
|
|
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| 87,534 |
|
| $2,923,636 |
|
|
|
| 5/27/08 |
|
| 32,000 |
|
| - |
|
| $14.14 |
|
| 5/26/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/09 |
|
| 60,000 |
|
| - |
|
| $8.56 |
|
| 2/9/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/10 |
|
| 40,600 |
|
| - |
|
| $12.50 |
|
| 2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/11 |
|
| 18,800 |
|
| 9,400 |
|
| $18.25 |
|
| 2/8/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/8/12 |
|
| 10,534 |
|
| 21,066 |
|
| $19.92 |
|
| 2/7/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/6/13 |
|
| - |
|
| 42,720 |
|
| $21.48 |
|
| 2/5/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeppesen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 18,240 |
|
| $609,216 |
|
|
|
|
|
|
|
|
|
| Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 52,186 |
|
| $1,743,012 |
|
|
|
| 2/8/12 |
|
| 7,467 |
|
| 14,933 |
|
| $19.92 |
|
| 2/7/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/6/13 |
|
| - |
|
| 25,240 |
|
| $21.48 |
|
| 2/5/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| | Option Awards | | Stock Awards | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable1 (#) | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested2 (#) | Market Value of Shares or Units of Stock That Have Not Vested3 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested4 (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested3 ($) | ||||||||||
| | | | | | | | | | | | | ||||||||||||
Krueger | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 355,923 | $7,812,510 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 195,505 | $4,291,335 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/10 | 44,266 | - | $12.50 | 2/10/20 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/9/11 | 98,000 | - | $18.25 | 2/8/21 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/8/12 | 114,000 | - | $19.92 | 2/7/22 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/13 | 200,778 | - | $21.48 | 2/5/23 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/14 | 150,189 | 75,095 | $27.13 | 2/10/24 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/15 | 73,663 | 147,325 | $28.00 | 2/10/25 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/16 | - | 425,076 | $16.51 | 2/9/26 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Jeppesen | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 93,592 | $2,054,344 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 28,147 | $617,827 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/8/12 | 22,400 | - | $19.92 | 2/7/22 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/13 | 25,240 | - | $21.48 | 2/5/23 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/14 | 14,749 | 7,374 | $27.13 | 2/10/24 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/15 | 9,010 | 18,018 | $28.00 | 2/10/25 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/16 | - | 51,988 | $16.51 | 2/9/26 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | |
Page 64 | | | Wolverine Worldwide Notice of |
20142017 PROXY STATEMENT
|
|
|
|
|
| Option Awards
|
|
| Stock Awards
|
| ||||||||||||||||||
Name |
|
| Grant |
|
| Number of |
|
| Number of |
|
| Option |
|
| Option |
|
| Number of |
|
| Market |
|
| Equity |
|
| Equity |
|
Linton |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 42,710 |
|
| $1,426,514 |
|
|
|
|
|
|
|
|
|
| Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 39,302 |
|
| $1,312,687 |
|
|
|
| 2/6/08 |
|
| 32,000 |
|
| - |
|
| $12.53 |
|
| 2/5/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/09 |
|
| 38,000 |
|
| - |
|
| $8.56 |
|
| 2/9/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/10 |
|
| 27,000 |
|
| - |
|
| $12.50 |
|
| 2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/11 |
|
| 12,133 |
|
| 6,067 |
|
| $18.25 |
|
| 2/8/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/8/12 |
|
| 6,467 |
|
| 12,933 |
|
| $19.92 |
|
| 2/7/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/6/13 |
|
| - |
|
| 21,750 |
|
| $21.48 |
|
| 2/5/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Zwiers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 86,100 |
|
| $2,875,740 |
|
|
|
|
|
|
|
|
|
| Various |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 84,854 |
|
| $2,834,124 |
|
|
|
| 2/9/05 |
|
| 17,200 |
|
| - |
|
| $11.52 |
|
| 2/9/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/7/07 |
|
| 8,100 |
|
| - |
|
| $15.13 |
|
| 2/6/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/6/08 |
|
| 32,000 |
|
| - |
|
| $12.53 |
|
| 2/5/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/09 |
|
| 38,000 |
|
| - |
|
| $8.56 |
|
| 2/9/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4/22/09 |
|
| 4,000 |
|
| - |
|
| $10.90 |
|
| 4/21/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/10/10 |
|
| 40,600 |
|
| - |
|
| $12.50 |
|
| 2/10/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/9/11 |
|
| 18,800 |
|
| 9,400 |
|
| $18.25 |
|
| 2/8/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/8/12 |
|
| 10,534 |
|
| 21,066 |
|
| $19.92 |
|
| 2/7/22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2/6/13 |
|
| - |
|
| 38,800 |
|
| $21.48 |
|
| 2/5/23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | Option Awards | | Stock Awards | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable1 (#) | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested2 (#) | Market Value of Shares or Units of Stock That Have Not Vested3 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested4 (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other rights That Have Not Vested3 ($) | ||||||||||
| | | | | | | | | | | | | ||||||||||||
Stornant | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 59,764 | $1,311,820 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 21,099 | $463,123 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/08 | 7,800 | - | $12.53 | 2/5/18 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 4/16/08 | 2,600 | - | $13.85 | 4/15/18 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/09 | 27,000 | - | $8.56 | 2/9/19 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/10 | 16,800 | - | $12.50 | 2/10/20 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/9/11 | 12,300 | - | $18.25 | 2/8/21 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/8/12 | 12,640 | - | $19.92 | 2/7/22 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/13 | 13,590 | - | $21.48 | 2/5/23 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/14 | 7,941 | 3,971 | $27.13 | 2/10/24 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/15 | 3,922 | 7,843 | $28.00 | 2/10/25 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 6/12/15 | 4,229 | 8,458 | $29.31 | 6/11/25 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/16 | - | 70,948 | $16.51 | 2/9/26 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Woodworth | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 50,143 | $1,100,639 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 26,924 | $590,982 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/13 | 17,030 | - | $21.48 | 2/5/23 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/14 | 7,945 | 3,972 | $27.13 | 2/10/24 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/15 | 3,922 | 7,843 | $28.00 | 2/10/25 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/16 | - | 64,465 | $16.51 | 2/9/26 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Zwiers | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 89,188 | $1,957,677 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| Various | 31,573 | $693,027 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/09 | 38,000 | - | $8.56 | 2/9/19 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 4/22/09 | 4,000 | - | $10.90 | 4/21/19 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/10 | 40,600 | - | $12.50 | 2/10/20 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/9/11 | 28,200 | - | $18.25 | 2/8/21 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/8/12 | 31,600 | - | $19.92 | 2/7/22 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/6/13 | 38,800 | - | $21.48 | 2/5/23 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/14 | 22,673 | 11,336 | $27.13 | 2/10/24 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/11/15 | 11,172 | 22,342 | $28.00 | 2/10/25 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| 2/10/16 | - | 64,465 | $16.51 | 2/9/26 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
| | |
Wolverine Worldwide Notice of | | Page |
20142017 PROXY STATEMENT
|
|
Named | Vesting | Number of Shares to Vest | | |||||||||
Krueger | | | | | | | | |||||
| | | | | | | | ||||||
| | | 2/6/17 | | | | 18,373 | | | ||||
| | | | | | | | ||||||
| | | 2/8/17 | | | | 23,200 | | | ||||
| | | | | | | | ||||||
| | | 2/11/17 | | | | 19,213 | | | ||||
| | | | | | | | ||||||
| | | 2/6/18 | | | | 36,745 | | | ||||
| | | | | | | | ||||||
| | | 2/11/18 | | | | 37,829 | | | ||||
| | | | | | | | ||||||
| | | 2/10/19 | | | | 31,571 | | | ||||
| | | | | | | | ||||||
| | | 2/11/19 | | | | 57,043 | | | ||||
| | | | | | | | ||||||
| | | 2/10/20 | | | | 31,572 | | | ||||
| | | | | | | | ||||||
| | | 2/11/20 | | | | 37,233 | | | ||||
| | | | | | | | ||||||
| | | 2/11/21 | | | | 63,144 | | | ||||
| | | | | | | | ||||||
Jeppesen | | | | | | | | |||||
| | | | | | | | ||||||
| | | 2/6/17 | | | | 2,310 | | | ||||
| | | | | | | | ||||||
| | | 2/8/17 | | | | 4,500 | | | ||||
| | | | | | | | ||||||
| | | 2/11/17 | | | | 1,902 | | | ||||
| | | | | | | | ||||||
| | | 10/8/17 | | | | 5,000 | | | ||||
| | | | | | | | ||||||
| | | 2/6/18 | | | | 4,620 | | | ||||
| | | | | | | | ||||||
| | | 2/11/18 | | | | 4,179 | | | ||||
| | | | | | | | ||||||
| | | 10/8/18 | | | | 5,000 | | | ||||
| | | | | | | | ||||||
| | | 2/10/19 | | | | 8,861 | | | ||||
| | | | | | | | ||||||
| | | 2/11/19 | | | | 6,082 | | | ||||
| | | | | | | | ||||||
| | | 7/13/19 | | | | 2,500 | | | ||||
| | | | | | | | ||||||
| | | 10/8/19 | | | | 10,000 | | | ||||
| | | | | | | | ||||||
| | | 2/10/20 | | | | 8,861 | | | ||||
| | | | | | | | ||||||
| | | 2/11/20 | | | | 4,554 | | | ||||
| | | | | | | | ||||||
| | | 7/13/20 | | | | 2,500 | | | ||||
| | | | | | | | ||||||
| | | 2/10/21 | | | | 17,723 | | | ||||
| | | | | | | | ||||||
| | | 7/13/21 | | | | 5,000 | | | ||||
| | | | | | | | ||||||
| | | |||
| | | | ||
Page 66 | | |
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Wolverine Worldwide Notice of |
20142017 PROXY STATEMENT
Named | Vesting | Number of Shares to Vest | | |||||||||
Stornant | | | | | | | | |||||
| | | | | | | | ||||||
| | | 2/6/17 | | | | 1,245 | | | ||||
| | | | | | | | ||||||
| | | 2/8/17 | | | | 2,610 | | | ||||
| | | | | | | | ||||||
| | | 2/11/17 | | | | 1,025 | | | ||||
| | | | | | | | ||||||
| | | 2/6/18 | | | | 2,490 | | | ||||
| | | | | | | | ||||||
| | | 2/11/18 | | | | 2,016 | | | ||||
| | | | | | | | ||||||
| | | 6/12/18 | | | | 1,068 | | | ||||
| | | | | | | | ||||||
| | | 2/10/19 | | | | 10,269 | | | ||||
| | | | | | | | ||||||
| | | 2/11/19 | | | | 3,042 | | | ||||
| | | | | | | | ||||||
| | | 6/12/19 | | | | 1,069 | | | ||||
| | | | | | | | ||||||
| | | 2/10/20 | | | | 10,270 | | | ||||
| | | | | | | | ||||||
| | | 2/11/20 | | | | 1,983 | | | ||||
| | | | | | | | ||||||
| | | 6/12/20 | | | | 2,138 | | | ||||
| | | | | | | | ||||||
| | | 2/10/21 | | | | 20,539 | | | ||||
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Woodworth | | | | | | | | |||||
| | | | | | | | ||||||
| | | 2/6/17 | | | | 1,558 | | | ||||
| | | | | | | | ||||||
| | | 2/11/17 | | | | 1,437 | | | ||||
| | | | | | | | ||||||
| | | 12/12/17 | | | | 10,000 | | | ||||
| | | | | | | | ||||||
| | | 2/6/18 | | | | 3,115 | | | ||||
| | | | | | | | ||||||
| | | 2/11/18 | | | | 2,829 | | | ||||
| | | | | | | | ||||||
| | | 2/10/19 | | | | 6,038 | | | ||||
| | | | | | | | ||||||
| | | 2/11/19 | | | | 4,267 | | | ||||
| | | | | | | | ||||||
| | | 2/10/20 | | | | 6,038 | | | ||||
| | | | | | | | ||||||
| | | 2/11/20 | | | | 2,785 | | | ||||
| | | | | | | | ||||||
| | | 2/10/21 | | | | 12,076 | | | ||||
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Zwiers | | | | | | | | |||||
| | | | | | | | ||||||
| | | 2/6/17 | | | | 3,550 | | | ||||
| | | | | | | | ||||||
| | | 2/8/17 | | | | 16,400 | | | ||||
| | | | | | | | ||||||
| | | 2/11/17 | | | | 2,923 | | | ||||
| | | | | | | | ||||||
| | | 2/6/18 | | | | 7,100 | | | ||||
| | | | | | | | ||||||
| | | 2/11/18 | | | | 5,746 | | | ||||
| | | | | | | | ||||||
| | | 2/10/19 | | | | 9,788 | | | ||||
| | | | | | | | ||||||
| | | 2/11/19 | | | | 8,670 | | | ||||
| | | | | | | | ||||||
| | | 2/10/20 | | | | 9,788 | | | ||||
| | | | | | | | ||||||
| | | 2/11/20 | | | | 5,647 | | | ||||
| | | | | | | | ||||||
| | | 2/10/21 | | | | 19,576 | | | ||||
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Wolverine Worldwide Notice of | | Page |
20142017 PROXY STATEMENT
| | Option Awards | | Stock Awards | |||||||||||
| | | | | | | | | | | | | | | |
| | Number of Shares Acquired on Exercise (#) | | Value Realized On Exercise1 ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized On Vesting2 ($) | |||||||
Krueger | 7,984 | $93,173 | 178,310 | $2,949,463 | ||||||||||
| | | | | | | | | | | | | | | |
Jeppesen | - | - | 20,725 | $342,951 | ||||||||||
| | | | | | | | | | | | | | | |
Stornant | 6,000 | $57,660 | 13,238 | $219,502 | ||||||||||
| | | | | | | | | | | | | | | |
Woodworth | - | - | 21,143 | $389,541 | ||||||||||
| | | | | | | | | | | | | | | |
Zwiers | 24,584 | $289,373 | 36,803 | $609,091 | ||||||||||
| | | | | | | | | | | | | | | |
|
|
| Option Awards |
| Stock Awards |
| ||||
|
| Number of |
| Value |
| Number of |
| Value |
|
Krueger |
| - |
| - |
| - |
| - |
|
Grimes |
| - |
| - |
| 5,500 |
| $143,495 |
|
Jeppesen |
| - |
| - |
| - |
| - |
|
Linton |
| - |
| - |
| - |
| - |
|
Zwiers |
| 17,474 |
| $318,324 |
| 500 |
| $11,525 |
|
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* The Company calculates the dollar values using the closing price of Wolverine Worldwide common stock on the date of vesting. |
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Page 68 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
2017 PROXY STATEMENT
Wolverine Worldwide maintains the following defined benefit retirement plans covering NEOs:Messrs. Krueger, Jeppesen, Stornant, and Zwiers: (1) the Wolverine Worldwide Employees’Employees' Pension Plan (“("Pension Plan”Plan"), which is a funded and tax-qualified defined benefit plan under the Internal Revenue Code that covers eligible employees, and (2) the Wolverine World Wide, Inc. 409A Supplemental Executive Retirement Plan (“SERP”("SERP"), which is an unfunded, non-qualified plan that covers individuals recommended by the CEO and approved by the Compensation Committee for participationCommittee. Mr. Woodworth does not participate in these plans, but has "frozen" benefits under the SERP. The following describes the material features of the PensionStride Rite Corporation Retirement Income Plan and SERP.("SR Plan").
NEOsParticipants vest in the Pension Plan after five years of qualifying service. Subject to the limitations imposed by the Internal Revenue Code, the Pension Plan generally pays an NEO a monthly benefit in an amount equal to a percentage of the NEO’sparticipant's final average monthly earnings multiplied by his or her number of years of service. TheFor purposes of this benefits formula, the Pension Plan caps years of service at 25 (30 for non-SERP participants). The, and the percentages of final average monthly earnings are 2.4% for Mr. Krueger and 2.0% for Messrs. Grimes, Jeppesen, Stornant, and Zwiers and Ms. Linton. “Earnings”Zwiers. "Earnings" as used in this formula generally includes base salary and annual bonus, less Social Security allowance, and for 20132016 was capped at $255,000,$265,000, the IRS limit applicable to tax-qualified plans.
Upon retirement, an NEOa participant may elect to receive the benefit in the form of a life annuity, 5- or 10-year certain annuities, or joint and 50%, joint and 75%, or joint and 100% survivor annuities. The payments are actuarially adjusted based on the participant's election. Any election, other than an election to receive life annuity benefits, reduces the monthly benefit payable. The “normal” retirement"normal" age at which benefits may be drawn under the plan is age 65. Mr. Krueger is currently the only NEO eligible to begin drawing early retirement benefits under the Pension Plan.
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2014 PROXY STATEMENT
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
All NEOsMessrs. Krueger, Jeppesen, Stornant and Zwiers participate in the SERP, which provides retirement benefits above amounts available under the Company’sCompany's tax-qualified pension programs. An NEO’sPension Plan. The SERP benefit generally equals the difference between the NEO’sparticipant's retirement benefit under the Pension Plan and the benefits the NEOparticipant would have received if there were no IRS-imposed cap on earnings when calculating the Pension Plan benefit. The SERP caps years of service at 25.25 in calculating a participant's benefit. The SERP also allows a retired NEOparticipant who has five years of service to draw earlier (beginning at age 55) and on different terms than under the Pension Plan. An NEO’sA participant's earnings percentage multiplier is the same under the SERP as it is under the Pension Plan.Plan (2.4% for Mr. Krueger and 2.0% for Messrs. Jeppesen, Stornant and Zwiers). The Compensation Committee may grant additional deemed years of service to an NEO,a participant, subject to the cap of 25 years. The full benefit of any additional years of deemed service is paid under the SERP. Mr. Krueger reached the 25-year cap in 2012.
If a retired NEOparticipant draws the SERP benefit prior to age 65, the reduction factor is 0.333% for each month prior to age 60, and 0.1666% for each month between age 60 and age 65. As of the end of fiscal year 2013,2016, Mr. Krueger and Ms. Linton werewas the only NEOsNEO eligible to retire and begin drawing early retirement benefits under the SERP.
SERP benefits are paid monthly, and the SERP has a lump sum payment option in the event of death or termination of employment after a change in control. The SERP also includes a disability benefit and a death benefit payable to the NEO’sparticipant's designated beneficiary if the NEOparticipant dies before retiring. The SERP provides for lump sum payments equal to participating NEOs if125% of the NEO resignsnet present value of accrued benefits without regard to any reduction for early payment to participants who resign for good reason or isare terminated by Wolverine other than for
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 69 |
2017 PROXY STATEMENT
cause or due to death or disability within two years (Messrs. Grimes, Jeppesen, Stornant and Zwiers and Ms. Linton)Zwiers) or three years (Mr. Krueger) after a change in control.
The SERP also contains non-competition, confidentiality and employee non-solicitation provisions in favor of Wolverine Worldwide. Under the SERP non-competition provisions, an NEOa participant is not entitled to any benefit payment if the participant enters into certain relationships with a competing business prior to the date on which such benefit payment is due. If the NEO’sparticipant's employment is terminated for serious misconduct or if Wolverine Worldwide cannot collect under an insurance policy purchased to fund SERP benefits for certain reasons, the Company may terminate an NEO’sa participant's benefits under the SERP. Wolverine Worldwide may terminate the SERP or stop further accrual of SERP benefits for a participating NEO at any time, but termination will not affect previously accrued benefits.
PENSION BENEFITS IN FISCAL YEAR 20132016
The following table provides for each NEO certain information concerning each plan that provides for payments or other benefits at, following, or in connection with retirement:
Name |
| Plan |
| Number |
| Present |
| Payments |
|
Krueger |
| Pension Plan |
| 18 |
| $1,024,345 |
| - |
|
|
| SERP2 |
| 25 |
| $9,324,217 |
| - |
|
Grimes |
| Pension Plan |
| 6 |
| $179,209 |
| - |
|
|
| SERP |
| 6 |
| $332,797 |
| - |
|
Jeppesen |
| Pension Plan3 |
| 2 |
| $70,505 |
| - |
|
|
| SERP3 |
| 2 |
| $58,683 |
| - |
|
Linton |
| Pension Plan |
| 6 |
| $358,054 |
| - |
|
|
| SERP |
| 6 |
| $355,249 |
| - |
|
Zwiers |
| Pension Plan |
| 16 |
| $359,628 |
| - |
|
|
| SERP |
| 16 |
| $651,611 |
| - |
|
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1 These values are as of December 28, 2013, and are calculated assuming the participants will commence their benefits at age 65 (in the form of the annuity elected by the NEO) and use the 2013 PPA static mortality tables and a 5.26% interest rate (compared to 4.30% used the prior year). |
| ||||||||
Name | Plan Name | | Number of Years Credited Service (#) | Present Value of Accumulated Benefit1 ($) | Payments During Last Fiscal Year ($) | ||||||
Krueger | SERP | 25 | $16,623,170 | 2 | - | ||||||
| | | | | | | | | | | | |
| Pension | 21 | $1,641,573 | - | ||||||||
| | | | | | | | | | | | |
Jeppesen | SERP | 5 | $531,397 | - | |||||||
| | | | | | | | | | | | |
| Pension | 5 | $257,172 | - | ||||||||
| | | | | | | | | | | | |
Stornant | SERP | 20 | $575,663 | - | |||||||
| | | | | | | | | | | | |
| Pension | 20 | $762,681 | - | ||||||||
| | | | | | | | | | | | |
Woodworth3 | SERP | - | - | - | |||||||
| | | | | | | | | | | | |
| Pension | - | - | - | ||||||||
| | | | | | | | | | | | |
| SR Plan | 3 | $111,435 | - | ||||||||
| | | | | | | | | | | | |
Zwiers | SERP | 19 | $1,887,768 | - | |||||||
| | | | | | | | | | | | |
| Pension | 19 | $671,085 | - | ||||||||
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Page 70 | | | Wolverine Worldwide Notice of |
20142017 PROXY STATEMENT
Wolverine Worldwide maintains a Deferred Compensation Plan. This unfunded and non-qualified plan allows executives and other eligible senior employees of the Company to elect to defer all or a portion of their base salary, cash bonus, or other performance-based cash compensation. Wolverine Worldwide may, but need not, credit a participant's account under the plan with an additional discretionary Company contributions, which may be subject to a vesting schedule and which would vest in full on a change in control. Amounts deferred pursuant to the Deferred Compensation Plan may be invested, at the direction of the participant, in an investment fund, index, or other investment vehicle, as designated by the Compensation Committee to be available under the plan, and earnings, if any, are credited to the participant's account.
Accounts are paid out upon the earliest to occur of (i) a qualifying separation from service, (ii) a change in control (as such term is defined in the plan), and (iii) a termination of the Deferred Compensation Plan. Payment must generally be made, or installment payments must begin, (as elected by the participant at the time of deferral) within 60 days of the event triggering payment.
Mr. Stornant is the only NEO who has elected to defer amounts under the Deferred Compensation Plan. Wolverine Worldwide did not make any discretionary Company contributions on behalf of Mr. Stornant or any other NEO during 2016.
NONQUALIFIED DEFERRED COMPENSATION
Name | Executive Contributions in 2016 ($) | Registrant Contributions in 2016 ($) | Aggregate Earnings in 2016 ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE ($) | | ||||||
Stornant | $13,4621 | - | $02 | - | ||||||||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 71 |
2017 PROXY STATEMENT
Potential Payments Upon Termination or Change in Control |
Wolverine Worldwide has entered into an Executive Severance Agreement with each of the NEOsNEO that provides certain rights, including the right to receive payments in the event of a termination of employment in connection withfollowing a change in control. The Company also has entered into an agreement with Mr. Krueger regarding certain termination benefits in the event of termination of his employment under certain circumstances.other circumstances described below.
BENEFITS TRIGGERED BY TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION
An NEO is not entitled to receive any additional forms of severance payments or benefits upon termination of employment for causeCause or upon the NEO’sNEO's voluntary decision, other than for Good Reason, to terminate employment with Wolverine Worldwide prior to being eligible for retirement.his employment.
BENEFITS TRIGGERED BY TERMINATION OTHER THAN FOR CAUSE OR BY THE NEO FOR GOOD REASON
Mr. Krueger entered into a Separation Agreement on March 13, 2008, which states that upon termination of his employment other than termination by Wolverine Worldwide forwithout Cause or termination by Mr. Krueger withoutwith Good Reason, as such terms are defined in theMr. Krueger's Separation Agreement, Wolverine Worldwide will pay Mr. Krueger the following payments in exchange for a general release of claims in favor of Wolverine Worldwide: (1) continued base salary for 18 months (reduced by payments he receives if he is employed by a Competing Business, as defined in theMr. Krueger's Separation Agreement); (2) a lump sum pro ratathe pro-rata portion of the annual incentive bonus and the long-term3-year bonus for all uncompleted performance periods based on actual corporate performance for the applicable performance periods; (3) a lump sum pro ratathe pro-rata portion of the annual individual performance bonus relating to personal performance objectives; and (4) retiree medical benefits for Mr. Krueger, his spouse and dependents for a period starting on the day after the termination date and ending on the last day of the 18th month following the month in which the termination date falls.
“Cause”"Cause" generally is defined in Mr. Krueger’sKrueger's Separation Agreement to mean: (1) any act or omission knowingly undertaken or omitted with the intent of causing material damage to Wolverine Worldwide; (2) any intentional act involving fraud, misappropriation or embezzlement, that causes material damage to Wolverine Worldwide; (3) repeated willful failure to substantially perform any of his significant duties as reasonably directed by the Board of Directors of Wolverine Worldwide; (4) a conviction (including any plea of guilty or nolo contendere) of any criminal act that (a) results in the executive serving prison time and not being able to perform the normal duties of his position for more than thirty (30) days; or (b) causes material damage to Wolverine Worldwide; or (5) chronic or habitual use or consumption of drugs or alcohol that causes material damage to Wolverine Worldwide.
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2014 PROXY STATEMENT
“"Good Reason”Reason" generally is defined in Mr. Krueger’sKrueger's Separation Agreement to mean: (1) a material reduction in base compensation, including a reduction in base salary or opportunities under Wolverine Worldwide’sWorldwide's bonus plans or equity plans (other than those implemented for the executive team as a whole); (2) a material reduction in authority, duties, or responsibilities; (3) a requirement to report to a Company officer or employee instead of reporting directly to the Board of Directors; or (4) certain relocations, other than those related to a change in the location of Wolverine Worldwide’sWorldwide's headquarters affecting a majority of the executive team.
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Page 72 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
2017 PROXY STATEMENT
BENEFITS TRIGGERED UPON A CHANGE IN CONTROL
Benefits Upon Termination Following a Change in Control. Under the Executive Severance Agreements entered into with the NEOs, payments and benefits are triggered when Wolverine terminates employment is terminated without “cause”"Cause" or when an executive terminates employment for “good reason”"Good Reason" within two years (Messrs. Grimes, Jeppesen, Stornant, Woodworth and Zwiers and Ms. Linton)Zwiers) or three years (Mr. Krueger) following a change in control of Wolverine Worldwide.
Upon such a qualifying termination, Wolverine Worldwide payswill pay the lump sum severance payment under the Executive Severance Agreement and the payment is composed of the following: (1) unpaid base salary benefit awards (including both cash and stock) and bonus payments that havehad been earned; (2) in lieu of a bonus payment under the Annual Bonus Plan, an amount equal to the quotient of the number of days the NEO was employed by Wolverine Worldwide, or any successor company in the year of termination, divided by the number of days in the year, multiplied by 100% of the greater of either (a) the bonus awarded to the NEO under an Annual Bonus Planthe annual bonus plan for the preceding year orand (b) the average paid to the NEO over the preceding two-year period under an Annual Bonus Plan;the annual bonus plan; (3) in lieu of payments under the various three-year performance periods that remain open on the date of termination, an amount equal to the bonus the NEO would have received based on actual and assumed performance measures, multiplied by the quotient of the number of days the NEO participated in the performance period prior to the termination, divided by the total number of days in the performance period (in determining the earnings per share or other performance measures that can be determined annually for any year subsequent to the year of termination, performance will equal the level required to attain the maximum goal under the three yearthree-year plan for that year); (4) either two (Messrs. Grimes, Jeppesen, Stornant, Woodworth and Zwiers and Ms. Linton)Zwiers) or three (Mr. Krueger) times the sum of (a) the NEO’sNEO's highest annual rate of base salary during the 12-month period prior to termination;termination and (b) the greater of (i) the average amount earned by the NEO during the previous two years orunder the annual bonus plan and (ii) the amount earned during the previous year under the Annual Bonus Plan; (5) 100% of the positive spread for any stock options held by the NEO on the date of termination, whether or not vested; (6) in the case of Messrs. Krueger and Zwiers, an excise tax gross-up adjustment (Mr. Jeppesen’s agreement was(note: the agreements with Messrs. Jeppesen, Stornant and Woodworth were entered into after 2008 and doesthat the Committee determined to not include an excise tax gross-up adjustment)provide such gross-ups after that date); and (7) in the case of Messrs. Jeppesen, Stornant and Zwiers, the present value of an additional three years of deemed service under the retirement plans.Pension Plan and SERP. Upon a termination of employment in connection withfollowing a change of control, Wolverine Worldwide or any successor company will maintain for up toa period of six months to one year the employeeNEO's benefits under the then-current benefit plans, programs or arrangements that the NEO was entitled to participate in immediately prior to the termination date. In addition, Wolverine Worldwide or any successor company will provide outplacement services through the last day of the second calendar year following the calendar year of termination.
“"Change in control”Control" under the Executive Severance Agreements generally means certain changes in composition of the Board of Directors, certain acquisitions of 20% or more of Wolverine Worldwide’sWorldwide's common stock or combined outstanding voting power of Wolverine Worldwide,World Wide, Inc., and other specified reorganizations, mergers, consolidations, liquidations, dissolutions or distributions of substantial assets (unless such transactions result in the creation of an entity in which at least 50% of the common stock and combined voting power is owned by the owners of record prior to the transaction, no single stockholdershareholder owns more than 20% of the combined voting power and a majority of the board remains unchanged).
“Cause”"Cause" is defined under the Executive Severance Agreements to generally mean the willful and continued failure to substantially perform duties or willfully engaging in gross misconduct that is injurious to Wolverine Worldwide.the Company.
“"Good Reason”Reason" is defined under the Executive Severance Agreements to generally to mean: (1) any materially adverse change in position, duties, responsibilities or title, or any removal, involuntary termination or failure to re-elect an officer; (2) a reduction in annual base salary; (3) any relocation or requirement to substantially increase business travel; (4) the failure to continue providing any executive incentive plans or bonus plans; (5) the failure to continue any employee benefit plan or compensation plan unless a comparable plan is available; (6) the failure to pay any salary, bonus, deferred compensation or other compensation; (7) the failure to obtain an assumption agreement from any successor; (8) any purported termination of the employment which is not effected in a manner prescribed by the Executive Severance Agreement; or (9) any other material breach by Wolverine Worldwide or aany successor company of its obligations under the Executive Severance Agreement.
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2014 PROXY STATEMENT
Excise Tax Gross-Up. The Compensation Committee previously determined that Wolverine Worldwide would not provide excise tax gross-up payments in employment agreements entered into after 2008.
Benefits Upon a Change in Control Only. Under the stockholder-approved equity plans, uponUpon a change in control of Wolverine Worldwide, absent a determination by the Compensation Committee to the contrary, all of each NEO’sNEO's outstanding stock options become immediately exercisable in full and will remain exercisable
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 73 |
2017 PROXY STATEMENT
during their remaining term, regardless of whether the NEO remains in the employ or servicean employee of Wolverine Worldwide.Worldwide or any successor company. The Compensation Committee may determine that one or all of the NEOs shall receive cash in an amount equal to the positive spread amount. In addition, upon a change in control of Wolverine Worldwide all other outstanding equity incentive awards of the NEOs, including shares of restricted stock, become immediately and fully vested and non-forfeitable uponnon-forfeitable. To the extent that the Company has made discretionary contributions under the Deferred Compensation Plan that are subject to a vesting schedule, any unvested portion of these contributions will vest on a change in control of Wolverine Worldwide.control. Change in control for this purpose generally means certain changes in the composition of the Board of Directors, certain acquisitions of 20% of Wolverine Worldwide’sWorldwide's common stock (50% in the case of the Deferred Compensation Plan) and other specified reorganizations, mergers, consolidations, liquidations, dissolutions or dispositions of substantial assets. Equity awards granted to the NEOs in 2017 no longer have single trigger acceleration upon a change in control.
Excise Tax Gross-Up. The Compensation Committee previously determined that Wolverine Worldwide would not provide excise tax gross-up payments in employment agreements entered into after 2008. Messrs. Krueger and Zwiers are the only NEOs who have excise tax gross-up protection in their agreements.
BENEFITS TRIGGERED BY RETIREMENT, DEATH OR PERMANENT DISABILITY
Pension PlanPlan.. In the event of death before retirement, the Pension Plan provides the surviving spouse of a vested NEO participant a death benefit equal to the qualified pre-retirement survivor annuity as defined in the Internal Revenue Code (generally 50% of the participant’sparticipant's accrued normal retirement benefit). This benefit is paid annually to the surviving spouse beginning when the NEO participant would have turned 60 and continues for the life of the surviving spouse. For NEO participants with at least three years of service as of December 31, 2003, and who have at least 10 years of service and are employed by Wolverine Worldwidethe Company at the time of death, the amount of the survivor benefit under the Pension Plan is calculated as though the NEO participant had continued as an employee of Wolverine Worldwidethe Company until age 65 at the compensation level as of the date of death and the benefit begins upon the date of death, unreduced for early commencement. The survivor benefit for NEO participants who meet all the criteria set forth in the preceding sentence, but who die when they are not employed by Wolverine Worldwidethe Company, are entitled to a joint and survivor benefit commencing upon the date of death, unreduced for early commencement.
SERP.SERP. If an NEOa SERP participant dies before beginning to receive benefits under the SERP, Wolverine Worldwidethe Company must, (basedbased on the current elections by all of the NEOs)participant's election, pay the beneficiary either a monthly annuity or a lump sum death benefit equal to the present value of the benefit computed as if the NEO participant had retired on the date of death, had begun receiving benefits at age 55 and had continued to receive benefits for the remainder of the participant’sparticipant's life expectancy. If the participant dies after beginning to receive benefit payments, benefits cease unless the NEO participant was receiving benefits in the form of one of the joint and survivor annuity optional elections under the plan or had elected benefits in a form that provides for a continuation of benefits.
If an NEOa participant becomes totally and permanently disabled (as defined), the SERP provides a disability benefit equal to 60% of the normal retirement accrued benefit based upon years of service up to the date that the NEO participant became disabled through the date the NEO participant reaches age 65 (at which point, the NEO participant would begin drawing full SERP benefits) or is no longer disabled.
Annual Bonus PlanPlan.. Upon termination of employment at least six months after the beginning of a fiscal year due to death, disability or early or normal retirement, an NEO is entitled to receive a pro rata portion of any Annual Bonusannual bonus award earned under the Annual Bonus Plan based on the NEO’sNEO's service during such fiscal year.year and actual performance under the Annual Bonus Plan. The Annual Bonusannual bonus is payable at the same time and in the same manner as awards are paid to other NEOs for the fiscal year.
Stock Incentive PlansPlans.. Upon death, disability or earlyvoluntary termination of employment after attaining age 62 or normal retirementage 50 with seven years of service with the NEO,Company, subject to certain conditions, the restrictions applicable to his or hereach NEO's shares of restricted stock (excluding performance shares) terminate automatically and stock options vest in full if held for more than one year or, if employed for less than one year after the grant, on a percentage basis based on months employed after the grant divided by 12. An NEO is eligible for early retirement under the stock incentive plans upon voluntarily terminatingUpon death, disability or voluntary termination of employment after attaining age 62 or age 50 with seven years of service with the Company, subject to certain conditions. Upon death, disability or early or normal retirement of the NEO,conditions, the restrictions on performance shares lapse on a prorated basis, based on months employed in the performance period and actual Company performance during the performance period. Any prorated award is payable at the time awards are paid to other NEOs. At fiscal year-end, Mr. Krueger was the only NEO eligible for early
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20142017 PROXY STATEMENT
vesting as a result of age or service with the Company. On February 10, 2016, for equity grants occurring on or after that date, the Compensation Committee determined to change the age and years of service requirements for retirement vesting eligibility from the attainment age of 62 or age 50 with seven years of service to the attainment of age 59 with ten years of service and determined to fully accelerate all stock options and service-based restricted shares rather than providing prorated acceleration for such awards held for less than one year.
Deferred Compensation Plan. Upon death, disability, or other qualifying separation from service, including retirement, all in accordance with Section 409A of the Internal Revenue Code, all amounts deferred by the NEOs under the Deferred Compensation Plan, including any vested amounts credited to the NEOs pursuant to a discretionary Company contribution, shall generally be paid, or commence payment, within 60 days of the termination in accordance with the schedule elected by the NEO at the time of deferral.
DESCRIPTION OF RESTRICTIVE COVENANTS THAT APPLY DURING AND AFTER TERMINATION OF EMPLOYMENT
The SERP contains non-competition, confidentiality and employee non-solicitation provisions in favor of Wolverine Worldwide. Under the non-competition provisions of the SERP, the NEO participant will not be entitled to any benefit payment if, prior to the date on which such benefit payment is due, the NEO participant enters into certain relationships with a competing business.
ESTIMATED PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
The following table summarizes the potential payments and benefits payable to each of Wolverine Worldwide’s NEOsNEO upon a change in control or termination of employment in connection withfollowing each of the triggering events set forth in the table. As required, the amounts in the table assuming in each situationassume that the termination of employment or change in control of Wolverine Worldwide took place on the Company's last day of fiscal 2016, which was December 28, 2013.31, 2016. The amounts set out below are in addition to benefits that are generally available to the Company’sCompany's employees such as distributions under the Company’sCompany's 401(k) savings plan, disability or life insurance benefits and accrued vacation. Due to the many factors that affect the nature and amount of any benefits provided upon the termination events discussed below, any actual amounts paid or distributed to NEOs may be different. Factors that may affect these amounts include timing during the year of the occurrence of the event, Wolverine Worldwide’sWorldwide's stock price and the NEO’s age.
NEO's age and years of service.
The value of the accelerated vesting of unvested equity-based compensation awards was computed using the closing market price ($33.40)21.95) of Wolverine Worldwide’sWorldwide's common stock on December 27, 2013,30, 2016, the last business day in the fiscal year.2016. The value for unvested restricted stock is computed by multiplying $33.40$21.95 by the number of shares of the NEO’sNEO's restricted stock that would vest as a result of an event. The value of stock options that would vest as a result of an event equals the difference between the exercise price of each option and $33.40. No value was attributed to accelerated vesting$21.95.
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 75 |
Table of a stock option if its exercise price was greater than $33.40.Contents
2017 PROXY STATEMENT
Each of the hypothetical events described in the following table (the highlighted blue headings in the left-hand column) is calculated and reported as a discreetdiscrete event. For example, the amounts disclosed under the “Change"Change in Control Only”Only" heading are not cumulative with the amounts disclosed under the “Change"Change in Control Termination”Control/Termination" heading.
| Termination Event and Payments/Benefits | | | Krueger | | | Jeppesen | | | Stornant | | | Woodworth | | | Zwiers | ||||||||||||||
Termination by Company for Cause or Voluntary Termination (other than for Good Reason or due to Retirement) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Termination by Company Other Than for Cause or by Executive for Good Reason | | $6,525,616 | 1 | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Change in Control/Termination | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Severance Agreement2 | $19,303,052 | $3,945,927 | 13 | $5,163,360 | 13 | $1,659,209 | 13 | $8,457,889 | |||||||||||||||||||||
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Benefits under Executive Severance Agreement3 | $60,714 | $56,429 | $56,492 | $59,921 | $58,555 | ||||||||||||||||||||||||
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Stock Incentive Plans4 | $10,124,923 | $2,337,159 | $1,697,777 | $1,451,328 | $2,308,366 | ||||||||||||||||||||||||
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Lump sum payment under the SERP5 | $22,759,627 | $1,039,773 | $1,252,332 | - | $4,026,587 | ||||||||||||||||||||||||
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TOTAL | $52,248,316 | $7,379,288 | $8,169,961 | $3,170,458 | $14,851,397 | ||||||||||||||||||||||||
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| | Death | ||||||||||||||||||||||||||||
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SERP6 | $18,368,498 | $931,794 | $968,779 | - | $2,929,220 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pension Plan7 | $989,778 | $145,716 | $1,098,705 | $44,996 | $1,103,900 | ||||||||||||||||||||||||
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Stock Incentive Plans4 | $10,124,923 | $2,337,159 | $1,697,777 | $1,451,328 | $2,308,366 | ||||||||||||||||||||||||
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Earned Incentive Compensation8 | $4,542,471 | $786,218 | $611,570 | $652,848 | $779,278 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Disability | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SERP9 | $18,452,334 | $711,761 | $1,030,857 | - | $3,658,941 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock Incentive Plans4 | $10,124,923 | $2,337,159 | $1,697,777 | $1,451,328 | $2,308,366 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Earned Incentive Compensation8 | $4,542,471 | $786,218 | $611,570 | $652,848 | $779,278 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Retirement | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SERP10 | $18,452,334 | $708,950 | $890,446 | - | $2,572,657 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pension Plan10 | $1,813,070 | $305,484 | $833,788 | $95,557 | $730,091 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock Incentive Plans4,11 | $10,124,923 | - | $410,158 | - | - | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Earned Incentive Compensation8,11 | $4,542,471 | - | $274,998 | - | - | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Change in Control Only | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock Incentive Plans12 | $10,124,923 | $2,337,159 | $1,697,777 | $1,451,328 | $2,308,366 | ||||||||||||||||||||||||
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20142017 PROXY STATEMENT
Termination Event and Payments/Benefits | Krueger | Grimes | Jeppesen13 | Linton | Zwiers | |
Termination by Company for Cause or Voluntary Termination
| - | - | - | - | - | |
|
|
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Termination by Company Other Than for Cause or by Executive for Good Reason | $7,129,8641 | - | - | - | - | |
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Change in Control Termination2 |
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| Executive Severance Agreement3 | $19,822,625 | $6,835,865 | $3,231,968 | $3,870,742 | $7,912,544 |
| Benefits under Executive Severance Agreement4 | $51,520 | $46,923 | $51,370 | $47,217 | $49,797 |
| Stock Incentive Plans5 | $13,197,525 | $3,490,702 | $1,111,374 | $1,952,026 | $3,764,616 |
| Lump sum payment under the SERP6 | $17,724,505 | $900,566 | $346,746 | $491,617 | $1,715,817 |
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Death |
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| SERP7 | $13,271,876 | $747,694 | $202,068 | $779,189 | $1,119,073 |
| Pension Plan8 | $909,088 | $102,061 | - | - | $971,910 |
| Stock Incentive Plans5 | $12,389,552 | $3,318,992 | $1,009,794 | $1,864,505 | $3,608,486 |
| Earned Incentive Compensation9 | $6,822,150 | $1,969,665 | $1,182,532 | $817,321 | $1,892,848 |
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Disability |
|
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|
|
| |
| SERP10 | $12,170,153 | $640,901 | $211,106 | $366,064 | $1,667,271 |
| Stock Incentive Plans5 | $12,389,552 | $3,318,992 | $1,009,794 | $1,864,505 | $3,608,486 |
| Earned Incentive Compensation9 | $6,822,150 | $1,969,665 | $1,182,532 | $817,321 | $1,892,848 |
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Retirement |
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| |
| SERP11 | See fn 11 | See fn 11 | See fn 11 | See fn 11 | See fn 11 |
| Pension Plan11 | See fn 11 | See fn 11 | See fn 11 | See fn 11 | See fn 11 |
| Stock Incentive Plans5, 12 | $12,389,552 | - | - | $1,864,505 | - |
| Earned Incentive Compensation9,12 | $6,822,150 | - | - | $817,321 | - |
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Change in Control Only |
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| Stock Incentive Plans5 | $13,197,525 | $3,490,702 | $1,111,374 | $1,952,026 | $3,764,616 |
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Wolverine Worldwide Notice of | | | Page 77 |
20142017 PROXY STATEMENT
The Company is asking its shareholders to indicate their support for Wolverine Worldwide's NEO compensation, as described in this Proxy Statement. This proposal, commonly known as a "say-on-pay" proposal, gives the Company's shareholders the opportunity to express their view on compensation for the Company's NEOs. The say-on-pay vote is advisory and, therefore, not binding on the Company, the Compensation Committee or the Board. Even though non-binding, the Board and Compensation Committee value the opinions of Wolverine Worldwide's shareholders and will review and consider the voting results when making future decisions regarding the Company's executive compensation program.
The Company encourages shareholders to read the "Compensation Discussion and Analysis" ("CD&A") section of this proxy statement beginning on page 39. As described in the CD&A section, the Compensation Committee has structured the executive compensation program to achieve the following key objectives:
The executive compensation program is designed to achieve these objectives, in part, by:
The Company encourages shareholders to read the Summary Compensation Table and other related compensation tables and narrative, appearing on pages 60-77, which provide detailed information on the compensation of the Company's NEOs.
The Compensation Committee and the Board of Directors believe the Company's compensation program and its policies and procedures articulated in the CD&A section are effective in aligning the interests of the Company's NEOs with the interests of shareholders, promoting the achievement of the Company's near and long term objectives, and increasing shareholder value.
In accordance with the rules under Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as a matter of good corporate governance, the Company asks shareholders to approve the following advisory resolution at the 2017 Annual Meeting of Shareholders:
RESOLVED, that the shareholders of Wolverine World Wide, Inc. (the "Company") approve, on an advisory basis, the compensation of the Company's named executive officers disclosed in the Compensation Discussion and Analysis section, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company's 2017 Annual Meeting of Shareholders.
Board Recommendation
The Board recommends that you vote "FOR" approval of the advisory resolution to approve executive compensation.
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Wolverine Worldwide Notice of |
20142017 PROXY STATEMENT
Pursuant to Section 14A of the Exchange Act, the Company is asking its shareholders to vote on whether future advisory votes on executive compensation of the nature reflected in Proposal 2 above should occur every year, every two years or every three years. You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote. Shareholders are not voting to approve or disapprove the Board's recommendation. This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board of Directors. The Board may decide that it is in the best interests of the Company's shareholders and the Company to hold an advisory vote on executive compensation on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs.
BOARD RECOMMENDATION
The Board recommends that you vote for conducting future advisory votes on executive compensation "EVERY ONE YEAR."
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 79 |
2017 PROXY STATEMENT
Ernst & Young LLP ("Ernst & Young") was the Company's independent registered public accounting firm for the fiscal year ended December 31, 2016. The Audit Committee has reappointed Ernst & Young as the Company's independent registered public accounting firm for the current fiscal year. As a matter of good corporate governance, the Audit Committee has determined to submit its appointment of Ernst & Young to the Company's shareholders for ratification. If this appointment is not ratified by the holders of a majority of shares cast affirmatively or negatively on the matter, the Audit Committee will review its future selection of an independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm any time during the year if it determines that such a change would be in the best interests of the Company and the Company's shareholders.
The Audit Committee reviewed Ernst & Young's performance prior to appointing it as the Company's independent registered public accounting firm, and considered:
Representatives of Ernst & Young are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from shareholders.
Board Recommendation
The Board recommends that you vote "FOR" ratification of the Audit Committee's selection of the firm of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal year 2017.
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Page 80 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
2017 PROXY STATEMENT
The Audit Committee of the Board of Directors consists of fourfive directors who are independent under the Company’sCompany's Director Independence Standards, the NYSE listed company standards, and applicable SEC standards. The Audit Committee represents and assists the Board in fulfilling its oversight responsibility regarding the Company’sCompany's financial statements and the financial reporting process, the internal control over financial reporting, the performance of the internal audit function and the independent auditors,registered public accounting firm, the qualifications and independence of the independent auditors,registered public accounting firm, the annual independent audit of Wolverine Worldwide’sWorldwide's financial statements and internal control over financial reporting, and compliance with legal and regulatory requirements. The Audit Committee is directly responsible in its capacity as a committee of the Board for appointing, retaining, compensating, overseeing, evaluating and terminating (if appropriate) Wolverine Worldwide’sWorldwide's independent auditors.registered public accounting firm. Wolverine Worldwide’sWorldwide's management has primary responsibility for the financial statements and the financial reporting process, including the application of accounting and financial principles, the preparation, presentation and integrity of the financial statements, and the systems of internal controls and other procedures designed to promote compliance with accounting standards and applicable laws and regulations. Wolverine Worldwide’sWorldwide's independent auditors areregistered public accounting firm is responsible for expressing an opinion on the conformity of Wolverine Worldwide’sWorldwide's financial statements with generally accepted accounting principles and for auditing the effectiveness of Wolverine Worldwide’sWorldwide's internal control over financial reporting.
The Audit Committee has taken steps to provide assurances regarding Audit Committee composition and procedures, the independence of Wolverine Worldwide’s outside auditorsWorldwide's independent registered public accounting firm and the integrity of Wolverine Worldwide’sWorldwide's financial statements and disclosures. These steps include: (i) reviewing the Audit Committee Charter; (ii) reviewing with legal counsel and the independent registered public accounting firm the Accounting and Finance Code;Code of Ethics; (iii) maintaining an Accountingfinancial, accounting and Auditing Complaint Procedurebusiness ethics complaint procedures to allow employees, stockholdersshareholders and the public to report concerns regarding Wolverine Worldwide’sWorldwide's financial statements, internal controls and disclosures; and (iv) reviewing procedures for the Audit Committee to pre-approve all audit and non-audit services provided by Wolverine Worldwide’sWorldwide's independent auditors.
registered public accounting firm.
As part of its supervisory duties, the Audit Committee has reviewed Wolverine Worldwide’sWorldwide's audited financial statements for the fiscal year ended December 28, 2013,31, 2016, and has discussed those financial statements with Wolverine Worldwide’sWorldwide's management and internal financial staff, and the internal auditors and independent auditorsregistered public accounting firm with and without management present. The Audit Committee has also reviewed and discussed the following with Wolverine Worldwide’sWorldwide's management and the financial staff, and with the internal auditors and independent auditorsregistered public accounting firm with and without management present:
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The Audit Committee has discussed with Wolverine Worldwide’sWorldwide's independent auditorsregistered public accounting firm the results of the independent auditors’its examinations and theits judgments of the independent auditors concerning the quality, as well as the acceptability, of Wolverine Worldwide’sWorldwide's accounting principles and such other matters that it is required to discuss with the independent auditorsregistered public accounting firm under applicable rules, regulations or generally accepted auditing standards, including the matters required to be discussed by applicable rules of the Public Company Accounting Oversight Board (“PCAOB”("PCAOB"). In addition, the Audit Committee has received from the independent auditorsregistered public accounting firm the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent auditor’sregistered public accounting firm's communications with the Audit Committee concerning independence rules and has discussed their independence from Wolverine Worldwide and Wolverine Worldwide’sWorldwide's management with them, including a consideration of the compatibility of non-audit services with
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 81 |
2017 PROXY STATEMENT
their independence, the scope of the audit and the scope of all fees paid to the independent auditorsregistered public accounting firm during the year. After and in reliance upon the reviews and discussions described above, the Audit
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2014 PROXY STATEMENT
Committee recommended to Wolverine Worldwide’s Board of Directors that the audited financial statements for the fiscal year ended December 28, 2013,31, 2016, be included in Wolverine Worldwide’sWorldwide's Annual Report on Form 10-K for the year then ended to be filed with the SEC.
Respectfully submitted,
William K. Gerber (Chairperson)
Jeffrey M. Boromisa
Roxane Divol
Brenda J. Lauderback
Michael A. Volkema
Shirley D. Peterson
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20142017 PROXY STATEMENT
Wolverine Worldwide’sThe Company's Audit Committee has adopted a policy under which the Audit Committee must approve all audit and non-audit services provided by the Company’sCompany's independent registered public accounting firm, Ernst & Young LLP, and which prohibits Ernst & Young LLP from providing any non-audit services that are prohibited by the SEC or the PCAOB. The Company’sCompany's Audit Committee provides categorical pre-approval before the beginning of each fiscal year for routine and recurring services, with specific service descriptions and budgets. All audit services, internal control-related services, and other services not within the specifically pre-approved service descriptions and budgets require engagement-specific pre-approval. With certain exceptions (such as pre-approval of audit services), the Audit Committee may delegate engagement-specific pre-approval to one or more Audit Committee members.members, and has so delegated in certain instances to the Audit Committee Chairperson. Management must communicate to the Audit Committee at its next regularly scheduled meeting any services approved by aan Audit Committee member. Wolverine Worldwide’sWorldwide's Audit Committee pre-approved all fees paid to Ernst & Young LLP for services performed in 20132016 and 2012.2015. The aggregate fees billed by Ernst & Young LLP for audit and non-audit services were:
|
| 2013 |
| 2012 |
Audit Fees1 |
| $1,618,331 |
| $1,366,500 |
Audit Related Fees2 |
| - |
| $552,200 |
Total Audit and Audit Related |
| $1,618,331 |
| $1,918,700 |
Tax Fees |
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Tax Compliance |
| $691,100 |
| $524,905 |
Tax Planning & Advisory |
| $115,000 |
| $19,379 |
Tax Planning & Advisory Other3 |
| - |
| $1,092,035 |
Total Tax Fees |
| $806,100 |
| $1,636,319 |
All Other Fees4 |
| - |
| $569,476 |
Total Fees |
| $2,424,431 |
| $4,124,495 |
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1 “Audit Fees” is comprised of fees for the annual audit, reviews of the financial statements included in Wolverine Worldwide’s Quarterly Reports on Form 10-Q, audit of internal control over financial reporting, foreign statutory audits and consultations concerning accounting matters associated with the annual audit. 2 “Audit Related Fees” is comprised of fees for audit services related to the acquisition of the Performance + Lifestyle Group. 3 “Tax Planning & Advisory Other” is comprised of fees in connection with the acquisition of the Performance + Lifestyle Group. 4 “All Other Fees” is comprised of due diligence fees in connection with the acquisition of the Performance + Lifestyle Group. | ||||
| | 2016 | | 2015 | ||||
Audit Fees1 | $ | 1,843,600 | $ | 1,607,400 | |||
Audit Related Fees | - | - | |||||
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Total Audit and Audit Related | $ | 1,843,600 | $ | 1,607,400 | |||
Tax Fees | |||||||
Tax Compliance | $ | 1,141,800 | $ | 777,600 | |||
Tax Planning & Advisory | $ | 370,000 | $ | 100,250 | |||
Tax Planning & Advisory Other | - | - | |||||
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Total Tax Fees | $ | 1,511,800 | $ | 877,850 | |||
All Other Fees | - | - | |||||
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Total Fees | $ | 3,355,400 | $ | 2,485,250 | |||
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Wolverine Worldwide’sWorldwide's Audit Committee has adopted a policy restricting the Company’sCompany's hiring of current or former partners or employees of the independent registered public accounting firm retained by the Company.
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Wolverine Worldwide Notice of | | | Page 83 |
20142017 PROXY STATEMENT
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To provide incentives and rewards for achievement of annual corporate and business unit goals, on March 13, 2017, the Board of Directors adopted, subject to shareholder approval, the Amended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan) (the "Restated Annual Bonus Plan"). The Restated Annual Bonus Plan would amend and restate the existing Amended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan), which was most recently approved by shareholders at the 2012 Annual Meeting of Shareholders (the "2012 Annual Plan").
The AuditRestated Annual Bonus Plan differs from the 2012 Annual Plan in three main ways: (a) it would extend the term of the 2012 Annual Plan to the first meeting of shareholders in 2022; (b) it would update the performance criteria that the Compensation Committee has reappointed Ernst & Young LLP as the Company’s independent registered public accounting firmmay select for the current fiscal year. As a matterpurpose of good corporate governance,setting and determining annual bonuses, and (c) it would make clarifying and other minor changes. The term of the Audit Committee has determined to submit its appointment2012 Annual Plan expires at this year's Annual Meeting of Ernst & Young LLP toShareholders unless shareholders approve the Company’s stockholders for ratification. If this appointment is not ratifiedextension of the 2012 Annual Plan by approving the holders of a majority of shares present or representedRestated Annual Bonus Plan at the annual meeting2017 Annual Meeting of Shareholders.
The Restated Annual Bonus Plan is designed to provide executive officers, senior corporate and entitled to votedivisional officers and other key employees of the Company or its subsidiaries with the opportunity for bonuses based on the matter,performance of the Audit CommitteeCompany or any business unit or units to which the employee is assigned, as applicable. The Restated Annual Bonus Plan is intended to allow the Company to grant awards designed to qualify as performance-based compensation under Section 162(m) of the Code, as amended, and will reviewbe interpreted and administered to achieve that purpose, however, there can be no guarantee that amounts payable under the Restated Annual Bonus Plan will be treated as qualified performance-based compensation under Section 162(m). The Company intends to continue its future selectionestablished practice of paying annual incentive bonuses to officers and key management employees based on individual performance goals. Participants in the Restated Annual Bonus Plan may also receive cash or other bonuses from the Company under other bonus programs, which may or may not qualify for deductibility under Section 162(m) of the Code. No payment under any such other arrangement may be contingent upon failure to satisfy the criteria for payment of an independent registered public accounting firm. Even ifincentive bonus under the appointmentRestated Annual Bonus Plan.
The Board believes it is ratified, the Audit Committee in its discretion may select different independent auditors any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders to provide for a shareholder-approved plan under which annual bonuses paid to its executive officers can qualify for deductibility for federal income tax purposes. Accordingly, the Company’s stockholders.
The Audit Committee reviewed Ernst & Young LLP’s performance prior to appointing them asCompany has structured the Company’s independent registered public accounting firm, and considered:
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Ernst & Young LLP,Restated Annual Bonus Plan in a registered public accounting firm, wasmanner such that payments under it can satisfy the Company’s independent registered public accounting firmrequirements for "performance-based" compensation within the fiscal year ended December 28, 2013. Representativesmeaning of Ernst & Young LLP are expected to be present at the annual meeting, will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders.
Board Recommendation
The Board recommends that you vote “FOR” ratificationSection 162(m) of the Audit Committee’s selection of the firm of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2014.
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Code. The Company may also grant annual bonuses under the Restated Annual Plan that are not intended to meet the requirements for "performance-based" compensation within the meaning of Section 162(m). Notwithstanding the fact that the Restated Annual Bonus Plan has been structured to enable the Company to pay bonuses that are intended to constitute "performance-based" compensation, there is asking its stockholders to indicate their support for Wolverine Worldwide’s NEO compensation,no guarantee that amounts payable under the Restated Annual Bonus Plan will qualify as such and, as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s stockholders the opportunity to express their view on compensation for the Company’s NEOs. The say-on-pay vote is advisory and, therefore, not binding on the Company, the Compensation Committee or the Board. The Board and Compensation Committee value the opinions of Wolverine Worldwide’s stockholders and will review and consider the voting results when making future decisions regarding the Company’s executive compensation program.
As described above in the “Compensation Discussion and& Analysis” section of this proxy statement, the Compensation Committee may, and has, structuredawarded compensation that does not qualify as performance-based compensation.
In general, Section 162(m) places a limit on the executive compensation program to achieve the following key objectives:
»attract and retain talented NEOs who will lead Wolverine Worldwide and achieve and inspire superior performance;
»provide incentivesdeductibility for achieving specific near-term individual, business unit and corporate goals and reward the attainment of those goals at pre-established levels;
»provide incentives for achieving longer-term financial goals and reward attaining those goals at pre-established levels; and
»align the interests of NEOs with thosefederal income tax purposes of the stockholders through incentives based on increasing stockholder value.
The executive compensation program achieves these objectives,paid to the NEOs set forth in part, by:
»balancing fixed compensation (base salaries) with performance-based compensation (annual bonuses and long-term incentives);
»rewarding annual performance while maintaining emphasis on longer-term objectives; and
»blending cash, non-cash, long- and short-term compensation components, and current and future compensation components.
The Company performed strongly in 2013. The stock price increased to $33.40 at the end of fiscal year 2013 from $20.09 at the end of fiscal year 2012. Over the past five years, the Company’s performance, based on cumulative total stockholder return, has outperformed the S&P SmallCap 600 Index and S&P 600 Footwear Index.
The Company urges stockholders to read the “Compensation Discussion and Analysis” beginning on page 34 of this proxy statement, which describes in more detail how the Company’s executive compensation policies and procedures operate and are designed to achieve the Company’s compensation objectives. The Company also encourages stockholders to read the Summary Compensation Table, and other related compensation tables and narrative, appearing on pages 52 through 60, which provide detailed informationthan the Chief Financial Officer, who were employed by the Company on the last day of its taxable year. Under Section 162(m), compensation paid to such persons in excess of the Company’s NEOs. The Compensation Committee and the Board of Directors believe$1 million in a taxable year is not generally deductible. However, compensation that the policies and procedures articulated in the “Compensation Discussion and Analysis” section are effective in achieving the Company’s goals and that the compensation of the Company’s NEOs reported in this proxy statement has supported and contributed to the Company’s recent and long-term success.
In accordance with the rulesqualifies as "performance-based" as determined under Section 14A of162(m) does not count against the Exchange Act, and as a matter of good corporate governance, the Company asks stockholders to approve the following advisory resolution at the 2014 Annual Meeting of Stockholders:$1,000,000 limitation.
RESOLVED, that the stockholders of Wolverine World Wide, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis section, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2014 Annual Meeting of Stockholders.
Board Recommendation
The Board recommends that you vote “FOR” approval of the advisory resolution to approve executive compensation.
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One of the requirements of "performance-based" compensation for purposes of Section 162(m) is that the material terms of the performance goal under which compensation may be paid be disclosed to and approved by the Company's shareholders at least once every five years. For purposes of Section 162(m), the material terms include: (a) the employees eligible to receive compensation; (b) a description of the business criteria on which the performance goal is based; and (c) the maximum amount of compensation that can be paid to an employee under the performance goal. Each of these aspects of the Restated Annual Bonus Plan is discussed below, and shareholder approval of the Restated Annual Bonus Plan is intended to constitute approval of each of these aspects of the Restated Annual Bonus Plan for purposes of the approval requirements of Section 162(m) of the Code.
The following is a summary of the principal features of the Restated Annual Bonus Plan and is qualified in its entirety by reference to the terms of the Restated Annual Bonus Plan set forth in Appendix A to this Proxy Statement. The Restated Annual Bonus Plan is effective as of March 13, 2017, contingent upon shareholder approval.
The Restated Annual Bonus Plan is administered by the Compensation Committee of the Board of Directors (the "Compensation Committee") or such other committee as the Board designates. The Compensation Committee currently consists of four independent members, all of whom are "non-employee directors" as defined in Rule 16b-3 issued under the Exchange Act and "outside directors" as defined in the regulations issued under Section 162(m) of the Code. Except as limited by the Restated Annual Bonus Plan, the Compensation Committee has all of the express and implied powers and duties set forth in the Restated Annual Bonus Plan and has full authority and discretion to interpret the Restated Annual Bonus Plan and to make all other determinations considered necessary or advisable for the administration of the Restated Annual Bonus Plan. The Compensation Committee can adopt such other rules, policies and forms for the administration, interpretation and implementation of the Restated Annual Bonus Plan as it considers advisable. All determinations, interpretations and selections made by the Compensation Committee regarding the Restated Annual Bonus Plan are final and conclusive. The Compensation Committee may delegate certain administrative functions to individuals designated by the committee.
For each fiscal year or part thereof (in the case of an individual who only becomes eligible to participate after the beginning of the fiscal year), the Compensation Committee selects the executive officers (currently eight persons), senior corporate and divisional officers and other key employees (currently approximately 833 persons in the aggregate) who would be participants for the year. The Compensation Committee may limit the number of executive officers and senior corporate and divisional officers and other key employees who would be participants for a fiscal year or part thereof. Selection as a participant for a fiscal year or part thereof by the Compensation Committee is limited to that fiscal year or part thereof. An individual is a participant for a fiscal year or part thereof only if designated as a participant by the Compensation Committee for such fiscal year or part thereof. The amount of bonus any individual receives under the Restated Annual Bonus Plan depends upon corporate and/or business unit performance for each fiscal year and is not presently determinable for the Company's 2017 fiscal year. The benefits set forth in the table below were paid under the 2012 Annual Plan with respect to fiscal 2016:
Name and Position | Dollar Value | ||
Blake W. Krueger, Chairman, CEO and President | $831,376 | ||
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Michael Jeppesen, President, Wolverine Heritage Group and Global Operations Group | $229,888 | ||
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Michael D. Stornant, Senior Vice President, Chief Financial Officer and Treasurer | $173,299 | ||
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Richard J. Woodworth, President, Wolverine Boston Group | $123,655 | ||
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James D. Zwiers, President, Wolverine Outdoor & Lifestyle Group | $172,529 | ||
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Executive Group (non-NEO) | $148,309 | ||
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Non-Executive Director Group | $0 | ||
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Non-Executive Officer Employee Group | $6,988,924 | ||
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The Compensation Committee establishes performance goals for each participant in the manner and within the time limits specified in the plan. A target bonus goal is established by the Compensation Committee, expressed as a percentage of the participant's base salary or a
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specified dollar amount. The Compensation Committee then establishes incentive bonus levels, expressed as a percentage of the target bonus, which is paid to the participant at specified levels of performance by the Company, a business unit, subsidiary, division, or profit center, as applicable. The term incentive bonus, as used in the Restated Annual Bonus Plan, means an annual bonus awarded and paid to a participant for services to the Company during a fiscal year or part thereof that is based upon achievement of pre-established objectives. The Compensation Committee also establishes any specific conditions under which an incentive bonus could be reduced or forfeited (but not increased).
Under the Restated Annual Bonus Plan, performance is determined by reference to one or more of the following objectively determinable factors, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit, subsidiary, division, or profit center, either individually, alternatively or in any combination, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, as selected by the Compensation Committee: (i) net earnings or earnings per share (including earnings before interest, taxes, depreciation and/or amortization); (ii) income, net income or operating income; (iii) revenues; (iv) net sales; (v) return on sales; (vi) return on equity; (vii) return on capital (including return on total capital or return on invested capital); (viii) return on assets or net assets; (ix) earnings per share; (x) economic or business value added measurements; (xi) return on invested capital; (xii) return on operating revenue; (xiii) cash flow (before or after dividends); (xiv) stock price; (xv) total shareholder return; (xvi) market capitalization; (xvii) economic value added; (xviii) debt leverage (debt to capital); (xix) operating profit or net operating profit; (xx) operating margin or profit margin; (xxi) cash from operations; (xxii) market share; (xxiii) product development, release schedules lead times, delivery or quality; (xxiv) new product innovation; (xxv) cost or expense control; (xxvi) customer acquisition or retention; (xxvii) customer service; or (xxviii) customer satisfaction.
To the extent consistent with Section 162(m) of the Code, the administrator (i) will appropriately adjust any evaluation of performance under qualifying performance criteria to eliminate the effects of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the disposal of a segment of a business or related to a change in accounting principle, all as determined in accordance with standards established by applicable accounting provisions, as well as the cumulative effect of accounting changes, in each case as determined in accordance with generally accepted accounting principles or identified in the Company's financial statements or notes to the financial statements, and (ii) may appropriately adjust any evaluation of performance under qualifying performance criteria to exclude any of the following events that occurs during a performance period: (a) asset write-downs, (b) litigation, claims, judgments or settlements, (c) the effect of changes in tax law or other such laws or provisions affecting reported results, (d) corporate stock and asset acquisitions and dispositions, and (e) accruals of any amounts for payment under the Restated Annual Bonus Plan or any other compensation arrangement maintained by the Company.
The incentive bonus for each eligible participant for a fiscal year is determined on the basis of the target bonus and performance criteria established by the Compensation Committee for the fiscal year or part thereof, as applicable. The Compensation Committee determines, and certifies in writing prior to payment of the incentive bonus, that performance for the fiscal year or part thereof, as applicable, satisfied the criteria established by the Compensation Committee. The incentive bonus for any participant for a fiscal year may not, in any event, exceed $4,000,000. The incentive bonus of each participant is paid as soon as feasible following the final determination and certification by the Compensation Committee of the amount payable, but not later than the fifteenth day of the third month following the end of the performance period to which it relates.
In the event of a termination of employment prior to the end of a fiscal year, the incentive bonus otherwise payable to a participant for the fiscal year is adjusted as follows. If a participant ceases to be a participant before the end of any fiscal year and more than six months after the beginning of such fiscal year because of death, or normal or early retirement under the Company's retirement plan, as then in effect, or total disability under the Company's long-term disability plan, an award is paid to the participant or the participant's beneficiary after the end of such fiscal year prorated as follows: the award, if any, for such fiscal year is equal to 100% of the incentive bonus that the participant would have received if the participant had been a participant during the entire fiscal year, multiplied by the ratio of the participant's full months as a participant during that fiscal year to the 12 months in that fiscal year. If an employee ceases to be a participant during any fiscal year, or prior to actual receipt of the award for a previous fiscal year, because of the participant's termination of employment for any reason other than as described above, the participant is not entitled to any award for such fiscal year.
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The Board of Directors may terminate the Restated Annual Bonus Plan at any time or may from time to time amend the Restated Annual Bonus Plan as it considers proper and in the best interests of the Company.
If the Restated Annual Bonus Plan is approved by the Company's shareholders, the Restated Annual Bonus Plan would terminate as of the date of the first meeting of shareholders occurring in the fifth year following approval (that is, 2022) or any subsequent re-approval. If the Restated Annual Bonus Plan terminates due to lack of approval by the shareholders, no incentive bonus would be awarded under the plan for the fiscal year in which the Restated Annual Bonus Plan terminates.
VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the Amended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan) requires the favorable vote of a majority of shares cast affirmatively or negatively on the matter for approval.
BOARD RECOMMENDATION
The Board of Directors recommends that you vote FOR approval of the Restated Executive Short-Term Incentive Plan (Annual Bonus Plan).
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Wolverine WorldwideSince January 2, 2016, the Company has entered into agreementsnot engaged in any "related person" transactions with Grimoldi S.A., an Argentinean corporationits directors, executive officers or holders of which Mr. Alberto L. Grimoldi, a director5% or more of Wolverine Worldwide, is chairman and a 35% shareholder. The agreements grant Grimoldi, S.A. the exclusive rights to distribute and sell footwear products in Argentina under the Hush Puppies®, Caterpillar®, and Patagonia® brand names, and footwear and apparel under the Merrell® brand name. Grimoldi S.A.Company voting securities, affiliates or its subsidiary purchases products, samples, footwear components, advertising materials and miscellaneous items from Wolverine Worldwide or pays Wolverine Worldwide royalties and certain sublicense fees based on sales or purchases of products in Argentina. Grimoldi S.A. was obligated to pay Wolverine Worldwide purchase prices, royalties, sublicense fees, service fees and interest relating to purchases made or royalties and fees incurred in fiscal year 2013 totaling $5,660,001. Allany member of the transactions described above occurred pursuant to continuing contractual arrangements between Wolverine Worldwide and Grimoldi S.A. Wolverine Worldwide expects similar transactions to occur between Grimoldi S.A. and Wolverine Worldwide and its subsidiaries during fiscal year 2014. The Governance Committee reviewed and approved or ratified eachimmediate family of these transactions in accordance with Wolverine Worldwide’s related person transactions policy, as described below.the foregoing persons.
RELATED PERSON TRANSACTIONS POLICY
Wolverine Worldwide’sWorldwide's Board adopted written policies and procedures regarding related person transactions. They require the Governance Committee to review and either approve or disapprove the Company entering into any Interested Transactions (defined below). If advance approval is not feasible, then the Governance Committee must review and ratify the Interested Transaction at its next meeting.
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| Interested Transaction | Any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: | |||||
| the aggregate amount involved is or is expected to exceed | |||||
| (2) | Wolverine Worldwide is a participant; and | ||||
| (3) | any Related Person (defined below) has or will have a direct or indirect interest. | ||||
An Interested Transaction does not include: | ||||||
(1) | any employment compensation paid to an executive officer of the Company if the Compensation Committee approved or recommended to the Board of Directors for approval such compensation; | |||||
| (2) | any compensation paid to a director for service as a director of the Company; | |||||
| (3) | any transaction in which a Related Person has an indirect interest | |||||
| (4) | any transaction in which the Related |
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| Related Person |
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(a) | person who is or was at any point during the last fiscal year for which Wolverine Worldwide filed an Annual Report on Form 10-K and proxy statement, an executive officer, director or, to the extent information regarding such nominee is being presented in a proxy or information statement relating to the election of that nominee as a director, nominee for election as a director; | |||||
| (b) | beneficial owner of greater than five percent | ||||
| (c) | immediate family member* of any of the foregoing. | ||||
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The Governance Committee considers whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the extent of the Related Person’sPerson's interest in the transaction, and other factors that it deems relevant. No director participates in any discussion or approval of an Interested Transaction for which he or she is a Related Person, except to provide all material information to the Governance Committee.
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The following Interested Transactions are pre-approved under the policies and procedures:
(a)any transaction with another company where a Related Person’s only relationship is as an employee (other than an executive officer), if the aggregate amount involved does not exceed the lesser of $250,000, or ten percent of that company’s total revenues.
(b)any charitable contribution by Wolverine Worldwide to a charitable organization where a Related Person is an employee, if the aggregate amount involved does not exceed the greater of $50,000, or two percent of the charitable organization’s total annual receipts.
A list of stockholdersshareholders entitled to vote at the meeting will be available for review by Wolverine Worldwide stockholdersshareholders at the office of Secretary, Wolverine World Wide, Inc., 9341 Courtland Drive, N.E., Rockford, Michigan 49351, during ordinary business hours for the 10-day period before the meeting.
DIRECTOR AND OFFICER INDEMNIFICATION
The Company indemnifies its directors and NEOs to the fullest extent permitted by law so that they will be free from undue concern about personal liability in connection with their service to the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the Company’sCompany's directors and NEOs, and persons who beneficially own more than 10% of the outstanding shares of the Company’sCompany's common stock, to file reports of ownership and changes in ownership of shares of common stock with the SEC. Directors, NEOs and greater than 10% beneficial owners are required by SEC regulations to furnish Wolverine Worldwide with copies of all Section 16(a) reports they file. Based on its review of the copies of such reports received by it, or written representations from certain reporting persons that no reports on Form 5 were required for those persons for fiscal year 2013, except as set forth below,2016, the Company believes that during fiscal year 2013,2016, its officers and directors filed the required reports under Section 16(a) on a timely basis. On February 12, 2013, a Form 4 was filed on behalf of each non-management director forbasis, except as follows: (i) one report related to an award of deferredrestricted stock, units madean award of performance stock, and an issuance of stock options, which vests in three installments, to Amy Klimek on February 1, 2013,July 13, 2016 and (ii) one report related to each non-management director (Messrs. Boromisa, Gerber, Grimoldi, Gromek, Kollat, Long, O’Donovan and Volkema and Mses. Lauderback and Peterson).an award of restricted stock to Michael Jeppesen on July 13, 2016; both reports were filed on July 20, 2016 due to an inadvertent delay by the Company.
STOCKHOLDERSHAREHOLDER PROPOSALS FOR INCLUSION IN NEXT YEAR’SYEAR'S PROXY STATEMENT
Pursuant to SEC Rule 14a-8, some stockholdershareholder proposals may be eligible for inclusion in Wolverine Worldwide’s 2015Worldwide's 2018 proxy statement and proxy card. Any such stockholdershareholder proposals must be submitted in writing to the Secretary of Wolverine Worldwide no later than the close of business on November 12, 2014.28, 2017. You should address all stockholdershareholder proposals to the attention of Secretary, Wolverine World Wide, Inc., 9341 Courtland Drive, N.E., Rockford, Michigan 49351.
OTHER STOCKHOLDERSHAREHOLDER PROPOSALS FOR PRESENTATION AT NEXT YEAR’SYEAR'S ANNUAL MEETING
The By-lawsCompany's By-Laws require that any stockholdershareholder proposal that is not submitted for inclusion in next year’syear's proxy statement under SEC Rule 14a-8, but is instead sought to be presented directly at the 20152018 Annual Meeting of Stockholders,Shareholders, must be received at the Company’sCompany's principal executive offices by the close of business not less than 90 days nor more than 120 days prior to the first anniversary of the 20142017 Annual
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Meeting. As a result, proposals, including director nominations, submitted pursuant to these provisions of the By-laws must be received between December 24, 2014,January 4, 2018, and the close of business on January 23, 2015.February 3, 2018. You should address a proposal to Secretary, Wolverine World Wide, Inc., 9341 Courtland Drive N.E., Rockford, Michigan 49351, and include the information and comply with the requirements set forth in those By-laws, which the Company has posted on its website. SEC rules permit management to vote proxies in its discretion in certain cases if the stockholdershareholder does not comply with this deadline, and in certain other cases notwithstanding the stockholder’sshareholder's compliance with this deadline.
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StockholdersShareholders of record at the close of business on March 3, 2014,13, 2017, are eligible to vote at the meeting.Annual Meeting. The Company’sCompany's voting securities consist of its $1.00 par value common stock, and there were 101,337,68996,954,357 shares outstanding and entitled to vote on the record date. Each share outstanding on the record date will be entitled to one vote on each director nominee and one vote on each other matter. Treasury shares are not voted. Individual votes of stockholdersshareholders are kept private, except as appropriate to meet legal requirements. Access to proxies and other individual stockholdershareholder voting records is limited to the independent inspectors of election and certain employees of the Company and its agents who acknowledge their responsibility to comply with this policy of confidentiality.
A majority of the outstanding shares of common stock as of the record date must be present at the meetingAnnual Meeting in order to hold the meetingAnnual Meeting and conduct business. This is called a “quorum.”"quorum." Your shares are counted as present at the meeting if you are present at the meetingAnnual Meeting and vote in person, a proxy card has been properly submitted by you or on your behalf, or you have submitted your proxy by telephone or by Internet, or by completing, signing, dating and returning your proxy form in the enclosed envelope. Both abstentions and broker non-votes (defined below in “"Vote Required for Election and Approval”") are counted as present for the purpose of determining the presence of a quorum.
VOTE REQUIRED FOR ELECTION AND APPROVAL
AFor Proposal 1, Election of Directors for Terms Expiring in 2020, directors are elected by a majority of votes cast unless the election is contested, in which case directors are elected by a plurality of votes cast. A majority of votes cast means that the number of shares voted "for" a Director nominee exceeds the number of votes cast "against" the Director nominee. If an incumbent director in an uncontested election does not receive a majority of votes cast for his or her election, under the Company's Corporate Governance Guidelines the director is required to elect directors. This meanssubmit a letter of resignation to the Board for consideration by the Governance Committee. The Governance Committee will then make a recommendation to the Board as to whether to accept or reject the tendered resignation. The Governance Committee and the Board, in making their decisions, may implement any procedures they deem appropriate and may consider any factor or other information that they deem relevant. The Board will then act on the four nominees who receivetendered resignation, taking into account the mostGovernance Committee's recommendation, and will publicly disclose its decision regarding the resignation within 90 days after the results of the election are certified. A director whose resignation is under consideration shall abstain from participating in any recommendation or decision regarding that resignation. If the resignation is not accepted, the director will continue to serve until the next annual meeting of shareholders at which such director faces re-election and until such director's successor is elected and qualified.
Proposal 2, Advisory Vote To Approve Executive Compensation, is a non-binding, advisory vote. Therefore, there is no required vote that would constitute approval. The Company values the opinions expressed by its shareholders in this advisory vote, and the Board and Compensation Committee will consider the outcome of these votes when designing compensation programs and making future compensation decisions for the Company's named executive officers.
Proposal 3, Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation, is a non-binding advisory vote. Therefore, there is no required vote that would constitute approval. The Company values the opinions expressed by its shareholders in this advisory vote, and the Board and Compensation Committee will be elected. In countingconsider the outcome of these votes when determining the frequency of future advisory votes on the election of directors, only votes cast “for” or “withheld” affect the outcome. Item 2, Amendment of the Certificate of Incorporation, requires for approval the affirmative vote of a majority of the outstanding shares entitled to vote at the meeting. Item 3,executive compensation.
Proposal 4, Ratification of Appointment of Independent Registered Public Accounting Firm, and Item 4, Advisory Resolution To Approve Executive Compensation, require for approvalrequires the affirmative vote of a majority of shares presentcast affirmatively or represented at the meeting and entitled to votenegatively on the applicable matter. The resultsmatter for approval.
Proposal 5, Approval of Item 4 are not bindingAmended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan) requires the affirmative vote of a majority of shares cast affirmatively or negatively on the Board of Directors.
matter for approval.
With respect to the election of directors, abstentionsProposals 1, 2, 3, 4 and broker non-votes, if any, will not be counted as votes cast and therefore will have no effect. With respect to Item 2,5, abstentions and broker non-votes, if any, will have the same effect as votes “against” the matter. With respect to Item 3 and Item 4, abstentions will have the same effect as votes “against” the matter, and broker non-votes, if any, will have no effect on Item 3 and Item 4.effect. Generally, broker non-votes occur when shares held by a broker in “street name”"street name" for a beneficial owner are not voted with respect to a particular proposal because (1) the
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broker has not received voting instructions from the beneficial owner, and (2) the broker lacks discretionary voting power to vote those shares. Brokers do not have discretionary authority with respect to any of the proposals except for Item 2 and Item 3.Proposal 4.
VOTING RESULTS OF THE ANNUAL MEETING
The Company will announce preliminary voting results at the annual meetingAnnual Meeting and publish final results in a Form 8-K within four business days following the meeting.Annual Meeting. If final results are not known within four business days of the annual meeting,Annual Meeting, then the Company will file a Current Report on Form 8-K with the preliminary results and file an amended Current Report on Form 8-K within four business days of the availability of the final results.
You may vote shares held directly in your name as the stockholdershareholder of record in person at the annual meeting.Annual Meeting. If you choose to vote in person, please bring the enclosed proxy card and proof of identification. Even if you plan to attend the annual meetingAnnual Meeting in person, Wolverine
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2014 PROXY STATEMENT
Worldwide recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the annual meeting.Annual Meeting. You may vote shares held in “street name”"street name" through a brokerage account or by a bank or other nominee in person if you obtain a proxy from the record holder giving you the right to vote the shares.
The shares represented by all valid proxies received by telephone, by Internet or by mail will be voted in the manner specified. Where the stockholdershareholder has not indicated a specific choice, the shares represented by all valid proxies received will be voted in accordance with the Board’sBoard's recommendations as follows: (1) for each of the nominees for directors named earlier in this proxy statement, (2) for approval of the amendmentadvisory resolution to the Certificateapprove executive compensation, (3) for every one year frequency of Incorporation to increase the number of authorized shares of Common Stock, (3)advisory votes on executive compensation, (4) for ratification of the appointment of the independent registered public accounting firm and (4)(5) for approval of the advisory vote to approve executive compensation.Amended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan). The Board has not received timely notice of any other matter that may come before the annual meeting.Annual Meeting. However, should any matter not described above be properly presented at the annual meeting,Annual Meeting, the persons named in the proxy form will vote in accordance with their judgment, as permitted.
A stockholdershareholder who gives a proxy may revoke it at any time before it is exercised by voting in person at the annual meeting,Annual Meeting, by delivering a subsequent proxy or by notifying the inspectors of election in writing of such revocation. If your Wolverine Worldwide shares are held for you in a brokerage, bank or other institutional account, you must obtain a proxy from that entity and bring it with you to hand in with your ballot, in order to be able to vote your shares at the meeting.Annual Meeting.
The Company will pay the expenses of solicitation of proxies for the annual meeting.Annual Meeting. Solicitations may be made in person or by telephone, by officers and employees of the Company, or by nominees or other fiduciaries who may mail materials to or otherwise communicate with the beneficial owners of shares held by the nominees or other fiduciaries. These individuals will not be paid any additional compensation for any such solicitation. Upon request, the Company will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding material to beneficial owners of the Company’sCompany's common stock. The Company has engaged Georgeson Inc. at an estimated cost of $9,000,$9,500, plus expenses and disbursements, to assist in solicitation of proxies.
DELIVERY OF DOCUMENTS TO STOCKHOLDERSSHAREHOLDERS SHARING AN ADDRESS
If you are the beneficial owner, but not the record holder, of shares of Wolverine Worldwide stock, your broker, bank or other nominee may only deliver one copy of this proxy statement and the Company’s 2013Company's 2016 Annual Report to multiple stockholdersshareholders who share an address, unless that nominee has received contrary instructions from one or more of the stockholders.shareholders. The Company will deliver promptly, upon written or
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page 91 |
2017 PROXY STATEMENT
oral request, a separate copy of this proxy statement and its 20132016 Annual Report to a stockholdershareholder at a shared address to which a single copy of the documents was delivered. A stockholdershareholder who wishes to receive a separate copy of the proxy statement and annual report, now or in the future, or stockholdersshareholders who share an address and receive multiple copies of the proxy statement and annual report but would like to receive a single copy, should submit this request by writing to Investor Relations, Wolverine World Wide, Inc., 9341 Courtland Drive N.E., Rockford, Michigan 49351, or by calling (616) 866-5500 and asking for Investor Relations. Beneficial owners sharing an address who are receiving multiple copies of proxy materials and who wish to receive a single copy of such materials in the future should make a request directly to their broker, bank or other nominee.
ACCESS TO PROXY STATEMENT AND ANNUAL REPORT
Wolverine Worldwide’sWorldwide's financial statements for the fiscal year ended December 28, 2013,31, 2016, are included in the Company’s 2013Company's 2016 Annual Report, which the Company is providing to stockholdersshareholders at the same time as this proxy statement. Wolverine Worldwide’sWorldwide's Proxy Statement for the 2014 Annual Meeting of Stockholders and the Annual Report to StockholdersShareholders for the fiscal year ended December 28, 2013,31, 2016, are available atwww.wolverineworldwide.com/2014annualmeeting2017annualmeeting. If you have not received or do not have access to the 20132016 Annual Report, write to Wolverine World Wide, Inc., 9341 Courtland Drive N.E., Rockford, Michigan 49351, Attn: Investor Relations or call (616) 866-5500 and ask for Investor Relations, and the Company will send a copy to you without charge.
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Page 92 | | | Wolverine Worldwide Notice of |
APPENDIX A
APPENDIX A – Amended and Restated |
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page A-1 |
APPENDIX A
WOLVERINE WORLD WIDE, INC.
AMENDED AND RESTATED EXECUTIVE
SHORT-TERM INCENTIVE PLAN (ANNUAL BONUS PLAN)
| SECTION 1: | Establishment of Plan; Purpose of Plan | |||
1.1 | Establishment of Plan. The Company hereby establishes the AMENDED AND RESTATED EXECUTIVE SHORT-TERM INCENTIVE PLAN (ANNUAL BONUS PLAN) (the "Plan"), for its executive officers, senior corporate and divisional officers and other key employees. The Plan amends and restates the Wolverine World Wide, Inc. Amended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan) previously approved by the stockholders at the 2012 Annual Meeting of Stockholders. The Plan provides for the payment of Incentive Bonuses to Participants based upon the achievement of Performance Measures during a specified Performance Period. | |||
1.2 | Purpose of Plan. The purpose of the Plan is to motivate Participants to improve the Company's profitability and growth through the attainment of carefully planned goals, to promote initiative and cooperation through awards based on corporate and divisional performance and to encourage outstanding individuals to enter and continue in the employ of the Company. The Plan is intended to provide for Incentive Bonuses that satisfy the exception for performance-based compensation under Section 162(m) of the Code and shall be interpreted and administered to achieve that purpose with respect to such Incentive Bonuses. | |||
1.3 | Effective Date. The Plan is initially effective as of March 13, 2017. Adoption of the Plan by the Board and payment of Incentive Bonuses for Performance Periods beginning in Fiscal Year 2018 and thereafter shall be contingent upon approval of the Plan by the Company's stockholders at the 2017 Annual Meeting of Stockholders or any adjournment thereof or at a Special Meeting of the Stockholders. In the absence of such approval, this Plan shall be void. | |||
SECTION 2: | Definitions | |||
The following terms have the stated definitions unless a different meaning is plainly required by the context: | ||||
2.1 | "Act" means the Securities Exchange Act of 1934, as amended. | |||
2.2 | "Beneficiary" means the individual, trust or other entity designated by the Participant to receive any amount payable with respect to the Participant under the Plan after the Participant's death. A Participant may designate or change a Beneficiary by filing a signed designation with the Committee in a form approved by the Committee. A Participant's will is not effective for this purpose. If a designation has not been completed properly and | |||
2.3 | "Board" means the Board of Directors of the Company. | |||
2.4 | "Code" means the Internal Revenue Code of 1986, as amended. | |||
2.5 | "Committee" means the Compensation Committee of the Board or such other committee as the Board shall designate to administer the Plan. The Committee shall consist of at least two members and all of its members shall be "non-employee directors" as defined in Rule 16b-3 issued under the Act and "outside directors" as defined in the regulations issued under Section 162(m) of the Code. | |||
2.6 | "Company" means Wolverine World Wide, Inc., a Delaware corporation, and its successors and assigns. | |||
2.7 | "Eligible Employees" means executive officers, senior corporate and divisional officers and other key employees of the Company or a Subsidiary. | |||
2.8 | "Fiscal Year" means the fiscal year of the Company for financial reporting purposes as the Company may adopt from time to time. | |||
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APPENDIX A
| 2.9 | "Incentive Bonus" means an annual bonus awarded and paid to a | |||
2.10 | "Participant" means an | |||
2.11 | "Performance" means the level of achievement of the Performance Measures as determined by the Committee pursuant to Section 6.1. | |||
2.12 | "Performance Measure" or "Performance Measures" means the performance measures established by the Committee pursuant to Section 5. | |||
2.13 | "Performance Period" means a Fiscal Year or other period determined by the Committee. | |||
2.14 | "Subsidiary" means any company or other entity of which 50% or more of the outstanding voting stock or voting ownership interest is directly or indirectly owned or controlled by the Company. | |||
2.15 | "Surviving Spouse" means the spouse of the Participant at the time of the Participant's death who survives the Participant. If the Participant and spouse die under circumstances which prevent ascertainment of the order of their deaths, it shall be presumed for the Plan that the Participant survived the spouse. | |||
2.16 | "Target Bonus" means the bonus amount established by the Committee for each Participant under Section 5.1(a). | |||
SECTION 3: | Administration | |||
3.1 | Power and Authority. The Plan shall be administered by the Committee. The Committee may delegate recordkeeping, calculation, payment and other ministerial or administrative functions to individuals designated by the Committee, who may be employees of the Company or its Subsidiaries. Except as limited by the Plan, the Committee shall have all of the express and implied powers and duties set forth in the Plan and shall have full authority and discretion to interpret the Plan and to make all other determinations deemed necessary or advisable for the administration of the Plan. Action may be taken by a written instrument signed by a majority of the members of the Committee and any action so taken shall be as effective as if it had been taken at a meeting. The Committee may make such other rules for the conduct of its business and may adopt such other rules, policies and forms for the administration, interpretation and implementation of the Plan as it deems advisable. All determinations, interpretations and selections made by the Committee regarding the Plan shall be final and conclusive. | |||
3.2 | Indemnification of Committee Members. Neither any member or former member of the Committee nor any individual to whom authority is or has been delegated shall be personally responsible or liable for any act or omission in connection with the performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the Plan or for any adverse tax or other consequence to any Participant or to the estate or beneficiary of a Participant, including by reason of the application of Section 7.10 or any acceleration of income or any additional tax (including interest and penalties) asserted by reason of the failure of an Incentive Bonus to satisfy the requirements of Section 409A of the Code or Section 4999 of the Code. Each individual who is or has been a member of the Committee, or delegated authority by the Committee, shall be indemnified and held harmless by the Company from and against any cost, liability or expense imposed or incurred in connection with any act or failure to act under the Plan. Each such individual shall be justified in relying on information furnished in connection with the Plan's administration by any appropriate person or persons. | |||
SECTION 4: | Participation | |||
4.1 | Participation. The Committee shall select the Eligible Employees who will Participants in the Plan for a Performance Period. If, following the commencement of a Performance Period, (a) an Eligible Employee commences employment with the Company or a Subsidiary, or (b) a current employee of the Company or a Subsidiary first becomes an Eligible Employee, and, in either case, such Eligible Employee is designated as a Participant by the Committee, unless otherwise determined by the Committee, the Performance Period applicable to such Eligible Employee's Incentive Bonus for such Fiscal Year will begin on the date of such commencement of employment or eligibility, as applicable, and end on the last day of such Performance Period. | |||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page A-3 |
APPENDIX A
| 4.2 | Continuing Participation. Selection as a Participant for a Performance Period by the Committee is limited to that Performance Period. An Eligible Employee will be a Participant for a Performance Period only if designated as a Participant by the Committee for such Performance Period. | |||
SECTION 5: | Incentive Bonus Terms; Performance Measures | |||
5.1 | Incentive Bonus Terms. The Committee shall establish the terms of the Incentive Bonus for each Participant or group of Participants in the manner and within the time limits specified in this | |||
(a) | Target Bonus. A Target Bonus, expressed as a percentage of the Participant's base salary or a specified dollar amount; | |||
(b) | Incentive Bonus. The amount that may be payable under an Incentive Bonus, expressed as a percentage of the Target Bonus, based on the level (or varying levels) of achievement of the Performance Measures; for these purposes, the Incentive Bonus payable based on varying levels of achievement may be expressed either as (i) a matrix of percentages of the Target Bonus that will be paid at specified levels of achievement of the Performance Measures or (ii) a mathematical formula that determines the percentage of the Target Bonus that will be paid at varying levels of achievement of the Performance Measures. | |||
(c) | Performance Measures. The Performance Measures applicable to the Incentive Bonus; and | |||
(d) | Conditions on Incentive Bonus. Any specific circumstances under which an Incentive Bonus specified under subsection (b) above may be reduced or forfeited (but not | |||
5.2 | Performance Measures. For purposes of the Plan, "Performance Measure" means any objectively determinable measure (or measures) of performance relating to any one or more of the following performance criteria, or derivations of such performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit, division, line or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to an index or indices or a designated | |||
To the extent consistent with the requirements for | ||||
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Page A-4 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
APPENDIX A
| 5.3 | Incentive Bonus Conditioned on Performance. Payment of an Incentive Bonus to a Participant for a Performance Period or part thereof under this Plan shall be entirely contingent upon achievement of the Performance Measures established by the Committee pursuant to this Section 5, the satisfaction of which is substantially uncertain when established by the Committee for the Performance Period. | |||
5.4 | Time of Determination by Committee. The Committee shall establish in writing all terms applicable to an Incentive Bonus pursuant to this Section 5 not later than (i) the 90th day of the applicable Performance Period (in the case of a Performance Period of 360 days or longer), or (ii) if sooner, the end of the period constituting the first quarter of the Performance Period (in the case of a Performance period of less than 360 days). Once the Committee has established such terms in accordance with the foregoing, it may not thereafter adjust such terms, except to reduce payments, if any, under the Incentive Bonus in accordance with Section 5.5 or as otherwise permitted in accordance with the requirements of Section 162(m) of the Code. | |||
5.5 | Committee Discretion. Except as specifically provided in Section 5.2, the Committee may not increase any Incentive Bonus or construct, modify or apply the Performance Measures in a manner that will directly or indirectly increase the Incentive Bonus for any Participant for any Performance Period above the amount determined by the applicable objective standards established within the | |||
SECTION 6: | Determination and Payment of Incentive Bonuses | |||
6.1 | Committee Certification. The Incentive Bonus, if any, payable to each Participant for any Performance Period shall be determined by the | |||
6.2 | Eligibility for Payment. An Incentive Bonus otherwise payable to a | |||
(a) | Retirement, Death or Total Disability. If the | |||
(b) | Reassignment of | |||
(c) | Other Termination. Except as provided in Section 6.2(a), if the Participant's employment terminates prior to the payment of an Incentive Bonus with respect to any Performance Period, the Participant will not be entitled to payment of the Incentive Bonus for such Performance Period. | |||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page A-5 |
APPENDIX A
| 6.3 | Maximum Incentive Bonus. The maximum Incentive Bonus payable to any Participant for a Fiscal Year under this Plan shall not exceed $4,000,000. | |||
6.4 | Payment to Participant or Beneficiary. Any Incentive Bonus payable to a Participant shall be paid to the Participant, or the Beneficiary of any deceased Participant, by the Company as soon as feasible following final determination and certification by the Committee of the amount payable as provided in Section 6.1; provided, however, in no event may an Incentive Bonus be paid later than the fifteenth day of the third month following the end of the Performance Period to which the Incentive Bonus relates. | |||
6.5 | Manner of Payment. Each Participant will receive his or her Incentive Bonus in cash. | |||
SECTION 7: | General Provisions | |||
7.1 | Benefits Not Guaranteed. Neither the establishment and maintenance of the Plan nor participation in the Plan shall provide any guarantee or other assurance that an Incentive Bonus will be payable under the Plan. | |||
7.2 | No Right to Participate. Nothing in this Plan shall be deemed or interpreted to provide a Participant or any Eligible Employee any contractual right to participate in or receive benefits under the Plan. No designation of an employee as an Eligible Employee or a Participant for all or any part of a Performance Period shall create a right to an Incentive Bonus under the Plan for any other Performance Period. There is no obligation of uniformity of treatment of Eligible Employees or Participants under the Plan. The loss of any Incentive Bonus will not constitute an element of damages in the event of termination of employment for any reason, even if the termination is in violation of an obligation of the Company or a Subsidiary to a Participant. | |||
7.3 | No Employment Right. Participation in this Plan shall not be construed as constituting a commitment, guarantee, agreement or understanding of any kind that the Company or any Subsidiary will continue to employ any individual and this Plan shall not be construed or applied as an employment contract or obligation. Nothing in this Plan shall abridge or diminish the rights of the Company or any Subsidiary to determine the terms and conditions of employment of any Participant or Eligible Employee or to terminate the employment of any Participant or Eligible Employee with or without reason at any time. | |||
7.4 | No Assignment or Transfer. Neither a Participant nor any Beneficiary or other representative of a Participant shall have any right to assign, transfer, attach or hypothecate any amount or credit, potential payment or right to future payments of any amount or credit or any other benefit provided under this Plan. Payment of any amount due or to become due under this Plan shall not be subject to the claims of creditors of the Participant or to execution by attachment or garnishment or any other legal or equitable proceeding or process. | |||
7.5 | No Limit on Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Company or any Subsidiary from adopting or continuing in effect other or additional compensation arrangements. A Participant may have other targets under other plans of the Company. However, no payment under any other plan or arrangement shall be contingent upon failure to attain the criteria for payment of an Incentive Bonus under this Plan. | |||
7.6 | Withholding and Payroll Taxes. The Company shall deduct from any payment made under this Plan all amounts required by federal, state, local and foreign tax laws to be withheld and shall subject any payments made under the Plan to all applicable payroll taxes and assessments. | |||
7.7 | Incompetent Payee. If the Committee determines that an individual entitled to a payment under this Plan is incompetent, it may cause benefits to be paid to another individual for the | |||
7.8 | Governing Law. The validity, construction and effect of the Plan shall be determined in accordance with the laws of the State of Michigan and applicable federal law. | |||
7.9 | Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the remaining provisions of the Plan shall not be affected and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. | |||
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Page A-6 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
APPENDIX A
| 7.10 | Clawback. Incentive Bonuses are subject to forfeiture, termination and rescission, and a Participant will be obligated to return to the Company payments received | |||
SECTION 8: | Termination and Amendment | |||
The Board may terminate the Plan at any time, or may from time to time amend the Plan as it deems proper and in the best interests of the Company. Except as otherwise provided in this Plan and the applicable Performance Measures established pursuant to this Plan for determining the amount of any Incentive Bonus for a Fiscal Year or part thereof, no Incentive Bonuses shall be payable for the Fiscal Year in which the Plan is terminated, or, if later, in which the termination is effective. | ||||
SECTION 9: | Duration of the Plan | |||
Subject to earlier termination by the Board, this Plan shall terminate without action by the Board as of the date of the first meeting of stockholders held in 2022, unless reapproved by the stockholders at such meeting or earlier. If reapproval occurs, the Plan will terminate as of the date of the first meeting of stockholders in the fifth year following reapproval or any subsequent reapproval. If the Plan terminates under this provision due to lack of reapproval by the stockholders, no Incentive Bonuses shall be awarded for the Fiscal Year in which the Plan terminates. | ||||
SECTION 10: | Other Awards | |||
Notwithstanding anything to the contrary in this Plan, the Committee may grant Incentive Bonuses under this Plan to Eligible Employees whose compensation is not subject to Section 162(m) (such employees, "Non-Covered Employees"). Any Incentive Bonuses granted to Non-Covered Employees may, but need not, be subject to those provisions of this Plan that are intended to satisfy the applicable requirements of performance based compensation under Section 162(m). Incentive Bonuses granted to Non-Covered Employees under this Section 10 shall be construed as separate and apart from any Incentive Bonus granted hereunder that are intended to qualify as performance based compensation for purposes of Section 162(m). | ||||
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page A-7 |
APPENDIX B
APPENDIX B – Forward-Looking |
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page B-1 |
APPENDIX B
This Proxy Statement contains "forward-looking statements," which are statements relating to future, not past, events. In this context, forward-looking statements often address the Company's current beliefs, assumptions, expectations, estimates and projections about future business and financial performance, national, regional or global political, economic and market conditions, and the Company itself. Such statements often contain words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "should," "will," variations of such words, and similar expressions. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Uncertainties that could cause the Company's performance to differ materially from what is expressed in forward-looking statements include, but are not limited to, the following:
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Page B-2 | | | Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement |
APPENDIX B
These uncertainties could cause a material difference between an actual outcome and a forward-looking statement. The uncertainties included here are not exhaustive. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company does not undertake an obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
RECONCILIATION OF REPORTED DILUTED EPS TO ADJUSTED
DILUTED EPS ON A CONSTANT CURRENCY BASIS
(Unaudited)
| | GAAP Basis EPS | | Adjustments1 | | As Adjusted EPS | | Foreign Exchange Impact | | As Adjusted EPS On a Constant Currency Basis | |||||||
Fiscal 2016 | $ | 0.89 | $ | 0.47 | $ | 1.36 | $ | 0.16 | $ | 1.52 | ||||||
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Fiscal 2015 | $ | 1.20 | $ | 0.25 | $ | 1.45 | ||||||||||
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To supplement the consolidated financial statements presented in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company describes what certain financial measures would have been if restructuring and impairment costs, organizational transformation costs and debt extinguishment costs were excluded. The Company believes these non-GAAP measures provide useful information to both management and investors to increase comparability to the prior period by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis. The Company evaluates results of operations on both a reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company believes providing constant currency information provides valuable supplemental information regarding results of operations, consistent with how the Company evaluates performance. The Company calculates constant currency by converting the current-period local currency financial results using the prior period exchange rates and comparing these adjusted amounts to our current period reported results. Management does not, nor should investors, consider such non-GAAP financial measures in isolation from, or as a substitution for, financial information prepared in accordance with GAAP.
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Wolverine Worldwide Notice of 2017 Annual Meeting of Shareholders and Proxy Statement | | | Page B-3 |
. Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Daylight Time, on May 3, 2017. Vote by Internet • Go to www.investorvote.com/WWW • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposals 2, 4 and 5, and 1 Yr on Proposal 3. + 1. Election of Directors: For Against Abstain For Against Abstain For Against Abstain 01 - William K. Gerber 02 - Blake W. Krueger 03 - Nicholas T. Long 04 - Michael A. Volkema 3 Yrs2 Yrs1 Yr Abstain For Against Abstain 3. Advisory vote on the frequency of future advisory votes on compensation of the Company’s named executive officers. 2. An advisory resolution approving compensation for the Company’s named executive officers. ForAgainst Abstain 4. Proposal to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2017. 5. Proposal to approve the Amended and Restated Executive Short-Term Incentive Plan (Annual Bonus Plan). B Non-Voting Items Change of Address — Please print new address below. C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below IMPORTANT - Please sign exactly as your name(s) appears on this Proxy. When signing on behalf of a corporation, partnership, estate or trust, indicate title or capacity of person signing. If shares are held jointly, each holder must sign. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. + 1 U P X 02JY3C Annual Meeting Proxy Card X IMPORTANT ANNUAL MEETING INFORMATION
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. WOLVERINE WORLD WIDE, INC. 9341 Courtland Drive, N.E. Rockford, Michigan 49351 Wolverine World Wide, Inc. will be holding its Annual Meeting of Stockholders on May 4, 2017. The enclosed Notice of 2017 Annual Meeting of Stockholders provides information regarding the matters that are expected to be voted on at the meeting. Your vote is important to us. Even if you plan to attend the meeting, please read the enclosed materials and vote through the Internet, by telephone or by mailing the Proxy Card below. Telephone and Internet Voting. On the reverse side of this card are instructions on how to vote through the Internet or by telephone. Please consider voting through one of these methods. Your vote is recorded as if you mailed in your Proxy. Thank you in advance for your participation in our 2017 Annual Meeting. Wolverine World Wide, Inc. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — WOLVERINE WORLD WIDE, INC. This proxy is solicited on behalf of the Board of Directors The undersigned stockholder hereby appoints Blake W. Krueger and Brendan M. Gibbons, and each of them, each with full power of substitution, as proxies to represent the undersigned stockholder and to vote all shares of Common Stock of Wolverine World Wide, Inc. that the stockholder would be entitled to vote on all matters that properly come before the Annual Meeting of Stockholders to be held at the Company’s headquarters located at 9341 Courtland Drive N.E., Rockford, Michigan, 49351, on Thursday, May 4, 2017, at 10 a.m. Eastern Daylight Time, and any adjournment of that meeting. If this Proxy is properly executed, the shares represented by this Proxy will be voted as specified. If this Proxy is properly executed but no specification is made, the shares represented by this Proxy will be voted for the election of all nominees named on this Proxy as directors, for approval of Proposals 2, 4 and 5, and 1 Yr on Proposal 3. The shares represented by this Proxy will be voted in the discretion of the proxies on any other matters that may properly come before the meeting. PLEASE DO NOT VOTE BY MORE THAN ONE METHOD. THE LAST VOTE RECEIVED WILL BE THE OFFICIAL VOTE. DO NOT RETURN THIS PROXY IF YOU ARE VOTING BY THE INTERNET OR BY TELEPHONE. (CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
