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Hedging and Pledging Policies
The Company’s Securities Trading Policy requires executive officers and directors to consult the Company’s General Counsel prior to engaging in transactions involving the Company’s securities. The Company’s Securities Trading Policy prohibits directors and executive officers from hedging or monetization transactions including, but not limited to, through the use of financial instruments such as exchange funds, variable forward contracts, equity swaps, puts, calls, and other derivative instruments, or through the establishment of a short position in the Company’s securities. The Company’s Securities Trading Policy limits the pledging of Company securities to those situations approved by the Company’s General Counsel.
Incentive Compensation Clawback Policy We have adopted a clawback policy for incentive compensation. The Compensation Committee determined that it may be appropriate to recover annual and/or long-term incentive compensation in specified situations. Under the policy, if the Compensation Committee determines that incentive compensation of its current and former Section
162(m)16 officers (or any other employee designated by the Board or the Compensation Committee) was overpaid, in whole or in part, as a result of a restatement of the
Internal Revenue CodeWe expect to be able to claim the benefit of a special exemption rule that applies to compensation paid (or compensation in respect of equity awards such as stock options granted) during a specified transition period following our initial public offering. This transition period was previously anticipated to potentially extend until our first annual stockholders meeting that occurs in 2021 pursuant to regulations under the Section 162(m)reported financial results of the Internal Revenue CodeCompany or any of 1986, as amended (the “Code”). However,its segments due to material non-compliance with financial reporting requirements (unless due to a change in accounting policy or applicable law), then the recently enacted Tax Cut and Jobs Act amended Section 162(m)Compensation Committee will determine, in its discretion, whether to seek to recover or cancel any overpayment of the Code in several respects, including the elimination the “performance-based compensation” exception under Section 162(m) of the Code for tax years beginning after December 31, 2017. Pending further guidance under Section 162(m) of the Code, it is unclear whether the post-IPO transition period exception under Section 162(m) will continue to apply to us forincentive compensation paid or awards grantedawarded during the three-year period preceding the date on which the Company is required to prepare the restatement.
While our compensation philosophy is to focus on performance-based forms of compensation while providing only minimal executive benefits and perquisites, we provide to all our employees, including our NEOs, broad-based employee benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. These include:
a 401(k) savings plan;
medical, dental, vision, life and disability insurance coverage; and
dependent care and healthcare flexible spending accounts.
401(k) Plan
Our U.S. eligible employees, including our NEOs other than Mr. Miñarro Viseras, participate in
2018 or beyond. Once applicable guidancethe Ingersoll Rand Retirement Savings Plan (the “401(k) plan”), which is
released,a tax-qualified retirement savings plan. Eligible employees hired on and after January 1, 2014, are automatically enrolled in the 401(k) plan to make pre-tax salary contributions, unless they decline participation. Under the 401(k) plan, we
expect the Compensation Committee to consider the implications of Section 162(m) and such guidance in its future compensation decisions.Compensation Actions Taken in 2018
Long-Term Incentive Compensation
In February 2018, following an evaluation with the assistance of Pearl Meyermatch 100% of the equity-based incentives forfirst 6% of a participant’s eligible pre-tax and/or Roth salary contributions, subject to all IRS annual limits and plan limitations. Participants are 100% vested in employee salary contributions and Company matching contributions. 401(k) plan participants may elect to contribute up to 85% of their annual eligible compensation (either through pre-tax or Roth contributions), subject to annual IRS and plan limitations.
Supplemental Defined Contribution Plan
In addition to the 401(k) plan, U.S. employees with a salary band of 8 or higher (generally senior directors and above), including the NEOs other than Mr. Miñarro Viseras, are eligible to participate in the Ingersoll Rand Supplemental Defined Contribution Plan (the “Supplemental Contribution Plan”), which is funded through a Rabbi Trust. This Supplemental Contribution Plan is intended to permit Company matching contributions on eligible participant compensation contributions to the Supplemental Contribution Plan in excess of the annual limitations imposed by the IRS on our executive officers,tax-qualified 401(k) plan.
Eligible employees may contribute up to 50% of their salary and/or eligible annual bonus compensation to the
Compensation Committee adopted the 2018 LTI Program.Supplemental Contribution Plan. Under the
2018 LTI Program, our NEOs will receiveSupplemental Contribution Plan, after an eligible employee exceeds the annual
equity awards, 50%IRS pre-tax/Roth contribution limits and the annual catch up contribution limit for participants age 50 and older or compensation limit under the 401(k) plan, we match 100% of
which will be in the
formfirst 6% of
time-vestinga
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restricted stock units and 50% of which will be
participant’s further eligible contributions to the Supplemental Contribution Plan. Company matching contributions under the Supplemental Contribution Plan are contributed to the Rabbi Trust in the form of time-vesting stock options. The time-vesting restricted stock units awardscash rather than our common stock. All employee and the time-vesting options awardsCompany matching contributions under the 2018 LTI Program will vestSupplemental Contribution Plan are fully vested immediately.
Limited Perquisites
Executive perquisites are not part of our general compensation philosophy; however, we provide limited perquisites and personal benefits that are not generally available to all employees when necessary to attract top talent. For instance, beginning in equal annual installments on2021, certain of our senior executives, including each of the first four anniversariesNEOs, are eligible for a tax and financial planning benefit, under which participating executives are reimbursed for qualified services (up to $10,000 per year) and participation in our executive physical program.
In addition, from time to time, we may set forth additional perquisites in offer letters or employment agreements we enter into with our executive officers. These arrangements are discussed under “Narrative Disclosure to Summary Compensation Table and Grants of
the grant date, except that the awards grantedPlan-Based Awards in
2018 will vest2022—Summary of NEO Offer Letters and Employment Agreements.” For example, in
equal annual installments on each of the second, third, fourth and fifth anniversaries of the grant date. The Compensation Committee determined that, in 2018, awards under the 2018 LTI Program would be made to our NEOs in the following amounts:2022, per their respective employment agreements, Mr. Reynal
— $4,000,000; Mr. Herndon — $1,000,000; Mr. Schiesl — $675,000; Mr. Snyder — $400,000; Mr. Miñarro Viseras — $500,000. These grant amounts were translated into a numberwas entitled to limited personal use of
stock options and restricted stock units by taking such dollar amount and dividing it by the per share or per option “fair value” that will be used for reporting the compensation expense associated with the grant under applicable accounting guidance, which “fair value” will be based in part on the per share closing price of our common stock on the NYSE on the date of grant.Executive Severance Benefits – Mr. SnyderCompany-leased aircraft, and Mr. Miñarro Viseras
In February 2018, was entitled to use of a company car.
Severance and Change in
connectionControl Agreements The Company believes that reasonable and appropriate severance and change in control benefits are necessary in order to be competitive in the Company’s executive attraction and retention efforts. As discussed below, the offer letters we enter into with our
annual review of our executive compensation, we approved an increaseNEOs provide for certain payments, rights and benefits to the
benefits to which Messrs. Snyder and Miñarro Viseras are entitled in the eventNEOs upon an involuntary termination of
certain qualifying terminations to align them with the severance benefits to which our other senior executive officers are entitled.Under the terms approvedemployment without “cause” or a termination by the Compensation CommitteeNEO for “good reason” (as such terms are defined in February 2018, if the Company terminates Mr. Snyder’s employment without Cause (as that term is defined below under “Potential Payments to Named Executive Officers uponUpon Termination of Employment or Change in Control—SeveranceControl-Severance Arrangements and Restrictive Covenants”) or if Mr. Snyder terminates his below). In addition, our equity award agreements provide for accelerated vesting upon a change in control in certain circumstances and upon certain qualifying terminations of employment, with us for Good Reason (as that term is defined belowas more fully described above under “Potential Payments“―Narrative Disclosure to Named Executive Officers upon TerminationSummary Compensation Table and Grants of Employment or ChangePlan-Based Awards in Control—Severance Arrangements2022―Terms of Equity Awards.”
Risk Management and
Restrictive Covenants”), subject to Mr. Snyder’s continued compliance with the restrictive covenants in his management equity agreementsMitigation of Compensation Policies and
his execution of a customary waiver and release agreement, he will be entitled to receive:Continued payment over a 12-month period (the “Severance Period”) of his annual base salary earned in respect of our fiscal year preceding the fiscal year in which the termination date occurs, payable in substantially equal monthly installments over the Severance Period; andPractices
Continued group health coverage (on the same basis as actively employed employees of the Company), subject to his electing to receive benefits under COBRA, for 12 months following the date his employment terminates (or, if earlier, through the date that he becomes employed by another employer and eligible for health insurance coverage at such employer).
The Compensation Committee also approvedhas reviewed our incentive compensation programs, discussed the concept of risk as it relates to our compensation program, considered various mitigating factors, and reviewed these items with its independent consultant, Pearl Meyer. In addition, the Compensation Committee asked Pearl Meyer to conduct an independent risk assessment of our executive and other compensation programs. Based on these reviews and discussions, the Compensation Committee does not believe our compensation program creates risks that are reasonably likely to have a material adverse effect on our business.
For the foregoing reasons, the Compensation Committee has concluded that the programs by which our executives are compensated strike an appropriate balance between short-term and long-term compensation and incentivize our executives to act in February 2018 a mutual twelve-month advance notice period for a terminationmanner that prudently manages enterprise risk.
We entered into offer letters setting forth initial compensation and benefits, as well as severance terms, with Messrs. Reynal, Schiesl and Weatherred at the time of
Mr. Miñarro Viseras'stheir initial employment. In addition, we entered into an employment
not for cause or without good reason, during whichagreement with Mr. Miñarro Viseras
may be released from his work duties but will still be entitledin October 2018 in connection with our competitive review of executive officer compensation. As previously noted, we entered into a new employment agreement with Mr. Reynal in September 2022. We also entered into a new employment agreement with Mr. Miñarro Viseras effective April 3, 2023 (the “New Miñarro Viseras Employment Agreement”). Full descriptions of the material terms of the employment agreement with Messrs. Reynal, the employment agreement with Mr. Miñarro Viseras in effect on December 31, 2022 and the New Miñarro Viseras Employment Agreement, and the offer letters with Messrs. Schiesl and Weatherred are presented below in “―Narrative Disclosure to
remuneration.Summary Compensation Table and Grants of Plan-Based Awards in 2022.”
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Summary Compensation Table
The following table provides summary information concerning compensation of our NEOs for services rendered to us during the years indicated.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) |
Vicente Reynal, Chief Executive Officer | | 2017 | | | 765,754 | | | 225,000 | | | — | | | 1,103,760 | | | 285,581 | | | 2,380,095 | |
| 2016 | | | 750,000 | | | — | | | 4,568,331 | | | 877,500 | | | 233,614 | | | 6,429,445 | |
Philip T. Herndon, Vice President and Chief Financial Officer | | 2017 | | | 406,750 | | | 125,000 | | | — | | | 588,960 | | | 11,258 | | | 1,131,968 | |
| 2016 | | | 347,917 | | | — | | | 3,257,821 | | | 446,262 | | | 7,897 | | | 4,059,972 | |
Andrew Schiesl, Vice President, General Counsel, Chief Compliance Officer and Secretary | | 2017 | | | 457,500 | | | 100,000 | | | — | | | 489,900 | | | 75,872 | | | 1,123,272 | |
| 2016 | | | 450,000 | | | — | | | 610,717 | | | 367,875 | | | 49,565 | | | 1,478,082 | |
Neil Snyder, Senior Vice President, Strategy, Business Development and Planning | | 2017 | | | 351,000 | | | 75,000 | | | — | | | 254,160 | | | 123,941 | | | 804,101 | |
Enrique Miñarro Viseras, Vice President and General Manager, Industrials Segment EMEA(6) | | 2017 | | | 316,000 | | | — | | | — | | | 205,222 | | | 229,222 | | | 750,444 | |
| 2016 | | | 195,943 | | | 532,517 | | | 691,114 | | | 113,015 | | | 155,548 | | | 1,684,817 | |
Vicente Reynal, Chairman, President and Chief Executive Officer | | | 2022 | | | 1,075,000 | | | ― | | | 49,547,938 | | | 1,749,996 | | | 1,963,500 | | | 169,523 | | | 54,505,957 |
| 2021 | | | 1,000,000 | | | ― | | | 5,779,046 | | | 1,674,995 | | | 2,730,000 | | | 183,524 | | | 11,367,565 |
| 2020 | | | 861,358 | | | 843,150 | | | 6,932,600 | | | 1,674,996 | | | 1,500,000 | | | 561,723 | | | 12,373,829 |
Vikram Kini, SVP and Chief Financial Officer | | | 2022 | | | 518,750 | | | ― | | | 1,185,766 | | | 349,991 | | | 531,038 | | | 90,115 | | | 2,675,660 |
| 2021 | | | 487,500 | | | 122,455 | | | 948,750 | | | 274,995 | | | 773,500 | | | 119,806 | | | 2,727,006 |
| 2020 | | | 340,562 | | | 247,455 | | | 880,887 | | | 249,994 | | | 286,475 | | | 46,886 | | | 2,052,258 |
Enrique Miñarro Viseras, SVP and GM, Global Precision and Science Technologies(7) | | | 2022 | | | 502,885 | | | ― | | | 995,221 | | | 293,747 | | | 408,458 | | | 30,414 | | | 2,230,725 |
| 2021 | | | 481,304 | | | ― | | | 948,750 | | | 274,995 | | | 538,123 | | | 78,026 | | | 2,321,198 |
| 2020 | | | 396,782 | | | 388,430 | | | 1,034,720 | | | 249,998 | | | 393,863 | | | 89,626 | | | 2,553,419 |
Andrew Schiesl, SVP, General Counsel, Chief Compliance Officer and Secretary | | | 2022 | | | 500,000 | | | ― | | | 931,610 | | | 274,985 | | | 446,250 | | | 108,427 | | | 2,261,272 |
| 2021 | | | 500,000 | | | ― | | | 819,380 | | | 237,486 | | | 682,500 | | | 63,103 | | | 2,302,469 |
| 2020 | | | 437,083 | | | 375,000 | | | 982,961 | | | 237,493 | | | 375,000 | | | 1,026,939 | | | 3,434,476 |
Michael Weatherred, SVP, IR Execution Excellence (IRX) and Business Excellence | | | 2022 | | | 426,250 | | | ― | | | 719,903 | | | 212,488 | | | 383,775 | | | 83,983 | | | 1,826,399 |
| 2021 | | | 415,000 | | | ― | | | 603,721 | | | 174,989 | | | 566,475 | | | 39,811 | | | 1,799,996 |
| 2020 | | | 357,796 | | | 311,000 | | | 724,281 | | | 174,999 | | | 311,250 | | | 86,799 | | | 1,966,125 |
| (1)
| Reflects the salary amounts earned by our NEOs in the years indicated. |
| (2) | Reflects special, one-time IPO bonus amounts. |
| (3)
| Amounts shown for 2020 reflect one-time bonuses made in recognition of extraordinary efforts related to the Merger and integration as discussed in last year’s proxy statement. In addition, with respect to Mr. Kini, the amount shown for 2021 reflects the portion of a retention and relocation bonus earned in 2021 that was awarded to him in 2019 to encourage him to relocate to the Charlotte area after the Merger. |
(3)
| Represents the aggregate grant date fair value of the awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation (“FASB ASC Topic 718”), using the assumptions discussed in Note 16: “Stock-Based Compensation Plans” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. Amounts presented in the Stock Awards column for 2021 and 2020 have been recalculated to conform to the methodology utilized in 2022. The maximum value as of the grant date of performance stock units awarded in 2022 is as follows: Mr. Reynal: $51,976,972 ($8,357,972 relates to Mr. Reynal’s annual PSU award, $7,334,000 relates to his special TSR PSU award and $36,285,000 relates to his special Adjusted EPS PSU award); Mr. Kini: $1,671,594; Mr. Miñarro Viseras: $1,402,947; Mr. Schiesl: $1,313,314; and Mr. Weatherred: $1,014,874. |
(4)
| For Mr. Reynal, the Stock Awards in 2022 include $43,619,000 in performance-based restricted stock units granted to him as part of the one-time Performance-Based Award, which vest only upon meeting certain performance criteria and Mr. Reynal remaining with the Company long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award designed by the Compensation Committee to (i) drive the creation of long-term stockholder value, (ii) further strengthen the alignment of Mr. Reynal’s interests with those of long-term stockholders, and (iii) encourage the retention of Mr. Reynal for the next five to ten years. |
(5)
| Amounts shown for 2022 reflect amounts earned under our 20172022 MIP. |
| (4)(6)
| Amounts reported under All Other Compensation for 2022 reflect the following: |
Vicente Reynal | | | 82,800 | | | 1,404 | | | 26,025 | | | 53,009 | | | 6,285 | | | 169,523 |
Vikram Kini | | | 89,413 | | | 702 | | | ― | | | ― | | | ― | | | 90,115 |
Enrique Miñarro Viseras | | | ― | | | 687 | | | 9,733 | | | ― | | | 19,994 | | | 30,414 |
Andrew Schiesl | | | 97,725 | | | 702 | | | 10,000 | | | ― | | | ― | | | 108,427 |
Michael Weatherred | | | 73,400 | | | 583 | | | 10,000 | | | ― | | | ― | | | 83,983 |
(a)
| (a)Reflects Company matching contributions in the tax-qualified 401(k) Plan and the non-tax-qualified Supplemental Contribution Plan. |
(b)
| as toFor Mr. Reynal, reflects reimbursement for tax preparationof executive physical expenses Company-paid life insurance premiums ($1,827), Company 401(k) match ($6,367) and Company Excess Contribution Plan match ($161,300). Mr. Reynal also received a tax equalization payment with respect to his cash compensation earned during his service in Europe in 2016 ($83,871). |
| (b) | as to Mr. Herndon, company-paid life insurance premiums ($792) and Company 401(k) match ($10,467). |
| (c) | as to Mr. Schiesl, company-paid life insurance premiums ($792), Company 401(k) match ($15,429, plus a contribution of $2,571 to a Roth IRA) and Company Excess Contribution Plan match ($57,081). |
| (d) | as to Mr. Snyder, company-paid life insurance premiums ($792), Company 401(k) match ($16,200), a housing allowance ($53,903) and a tax gross-up relating to his housing allowance ($53,047). |
| (e) | as tonot covered by insurance. For Mr. Miñarro Viseras, reflects actual Company expenditures for use, including business use, of a Company car, including expenditures for the car lease and gas ($25,748), a housing allowance ($43,202), reimbursement of school fees for gas. |
(7)
| Mr. Miñarro Viseras’s children ($63,675), a tax gross-up relating to his housing allowance ($39,044)Viseras served as senior vice president and a tax gross-up relating to our reimbursementgeneral manager of school fees ($57,553). |
| (5) | the Industrial Technologies and Services, Europe, Middle East, India and Africa (EMEIA) business unit of the Company until April 10, 2023. Mr. Miñarro Viseras is based in Europe and compensated in Euros. We converted his 20172022 cash compensation, his amounts earned under our 20172022 MIP, and amounts shown in the “All Other Compensation” column for him to U.S. dollars at an exchange rate of 1.20048,1.1491, which was the endfive-year average exchange rate as of month translation rate, December 2017.31, 2021. |
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Grants of Plan-Based Awards in
2017 | Estimated Possible Payouts under Non-Equity Incentive Plan Awards(1) |
Name | Threshold ($) | Target ($) | Maximum ($) |
Vicente Reynal | | 8,083 | | | 766,500 | | | 1,533,000 | |
Philip T. Herndon | | 4,313 | | | 409,000 | | | 818,000 | |
Andrew Schiesl | | 10,914 | | | 345,000 | | | 690,000 | |
Neil Snyder | | 3,722 | | | 176,500 | | | 353,000 | |
Enrique Miñarro Viseras | | 57,006 | | | 152,016 | | | 304,032 | |
2022
Vicente Reynal | | | | | | 206,250 | | | 1,650,000 | | | 3,300,000 | | | | | | | | | | | | | | | | | | | | | |
| 2/22/22 | | | | | | | | | | | | 32,963 | | | 65,925 | | | 131,850 | | | | | | | | | | | | 4,178,986 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | 32,962 | | | | | | | | | 1,749,953 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 82,547 | | | $53.09 | | | 1,749,996 |
| 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 12,095,000 |
| 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 12,095,000 |
| 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 12,095,000 |
| 9/1/22(6) | | | | | | | | | | | | | | | 250,000 | | | | | | | | | | | | | | | 7,334,000 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Vikram Kini | | | | | | 55,781 | | | 446,250 | | | 892,500 | | | | | | | | | | | | | | | | | | | | | |
| 2/22/22 | | | | | | | | | | | | 6,593 | | | 13,185 | | | 26,370 | | | | | | | | | | | | 835,797 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | 6,592 | | | | | | | | | 349,969 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 16,509 | | | $53.09 | | | 349,991 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Enrique Miñarro Viseras
| | | | | | 53,656 | | | 429,250 | | | 858,500 | | | | | | | | | | | | | | | | | | | | | |
| 2/22/22 | | | | | | | | | | | | 5,533 | | | 11,066 | | | 22,132 | | | | | | | | | | | | 701,474 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | 5,533 | | | | | | | | | 293,747 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 13,856 | | | $53.09 | | | 293,747 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Andrew Schiesl | | | | | | 46,875 | | | 375,000 | | | 750,000 | | | | | | | | | | | | | | | | | | | | | |
| 2/22/22 | | | | | | | | | | | | 5,180 | | | 10,359 | | | 20,718 | | | | | | | | | | | | 656,657 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | 5,179 | | | | | | | | | 274,953 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 12,971 | | | $53.09 | | | 274,985 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael Weatherred | | | | | | 40,313 | | | 322,500 | | | 645,000 | | | | | | | | | | | | | | | | | | | | | |
| 2/22/22 | | | | | | | | | | | | 4,003 | | | 8,005 | | | 16,010 | | | | | | | | | | | | 507,437 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | 4,002 | | | | | | | | | 212,466 |
| 2/22/22 | | | | | | | | | | | | | | | | | | | | | | | | 10,023 | | | $53.09 | | | 212,488 |
| (1)
| Reflects the possible payouts of cash incentive compensation under the 20172022 MIP. The actual amounts earned are described in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” Mr. Miñarro Viseras is based in Europe and compensated in Euros. His Estimated Possible Non-Equity Incentive Plan Payout amounts were converted to U.S. dollars at an exchange rate of 1.20048,1.1491, which was the end5-year average exchange rate as of month translation rate, December 2017.31, 2021. |
(2)
| Reflects performance stock units granted under our 2017 Omnibus Incentive Plan. With respect to awards granted in February 2022, the actual earned award may range from 0% to 200% based on performance over a three-year performance period ending December 31, 2024. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards.” For Mr. Reynal, awards granted on September 1, 2022 reflect “Adjusted EPS PSUs” and “TSR PSUs,” respectively, as discussed in more detail under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - CEO Performance-Based Leadership Equity Incentive Award.” There are no threshold or maximum payout levels applicable to Mr. Reynal’s Performance-Based Award. |
(3)
| Reflects RSUs granted under our 2017 Omnibus Incentive Plan. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards.” |
(4)
| Reflects stock options granted under our 2017 Omnibus Incentive Plan. Vesting conditions and other key terms of these awards are discussed in more detail above under “Compensation Discussion and Analysis - 2022 Executive Compensation Program in Detail - Long-Term Equity Incentive Awards.” |
(5)
| Represents the grant date fair value of the awards computed in accordance with FASB ASC Topic 718, using the assumptions discussed in Note 16: “Stock-Based Compensation Plans” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The stock options have an exercise price per share equal to the closing price of the Company's common stock as reported on the NYSE on the date of grant. |
(6)
| Represents performance-based restricted stock units granted to Mr. Reynal as part of the one-time Performance-Based Award, which vest only upon meeting certain performance criteria and Mr. Reynal remaining with the Company long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award for Mr. Reynal designed by the Compensation Committee to (i) drive the creation of long-term stockholder value, (ii) further strengthen the alignment of Mr. Reynal’s interests with those of long-term stockholders, and (iii) encourage the retention of Mr. Reynal for the next five to ten years. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017
2022
Summary of NEO Offer Letters and Employment Agreements
In general, the Company
does not enter into employment agreements with employees, including our executive officers, however we do enterhistorically has entered into offer letters with
manyits executive officers in lieu of
our executive officers. In addition,employment agreements. However, as previously discussed, we did
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enter into an employment agreement with Mr. Reynal in September 2022. We also entered into an employment agreement with Mr. Miñarro Viseras as well as an offer letter.in
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October 2018, and a new employment agreement in April 2023. Descriptions of the offer letters we entered into with Messrs. Reynal,
Herndon, Schiesl, and
SnyderWeatherred, and the employment agreement
with Mr. Reynal and
offer letter we entered intothe employment agreements with Mr. Miñarro Viseras are provided below.
All current NEOs serve at the will of our Board of Directors.Offer Letter
Employment Agreement with Mr. Reynal
Effective September 1, 2022, the Compensation Committee approved a new employment agreement with Mr. Reynal. The Company entered into anemployment agreement, which supersedes Mr. Reynal’s prior offer letter with Mr. Reynal, dated April 17, 2015, which was modified by a letter, dated November 19, 2015, we entered into with Mr. Reynal in connection with his promotion to Chief Executive Officer of the Company (the offer letter, dated April 17, 2015, as so modified, the “Reynal Offer Letter”“Prior Agreement”). The Reynal Offer Letter, provides that, asfor an initial term of January 1, 2016, Mr. Reynal is entitled to receive afive years (with automatic one-year renewals), an annual base salary of $750,000, which base salary was increased to $766,500 in April, 2017, and that Mr. Reynal$1,100,000 (which is entitled to participate in our annual MIP with a target award opportunityan increase of 100% of$100,000 from his annual base salary. The Reynal Offer Letter further provides that,salary in 2016,2021), an annual target bonus of 150% of annual base salary (which target bonus remains unchanged from the Prior Agreement) and eligibility for the performance-conditioned stock option grants described above under “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement.”
Under the Employment Agreement, Mr. Reynal’s
MIP award would be based on the achievement of performance goals comparable to those that typically would be assigned to the Chief Executive Officer of the Industrials segment; however, following Mr. Reynal’s transition to devoting more of his business time and attention to the performance of duties as the Chief Executive Officer ofseverance entitlements for a termination by the Company
without “Cause” or his
annual MIP award would transition to being based on the achievement of Company performance goals.Mr. Reynal was eligible to receive two option grants under our Long-Term Incentive Program: one grant of 876,975 options upon commencement of his employmentresignation for “Good Reason” (each as the Chief Executive Officer of our Industrials segment, which he received in May 2015; and one grant of 585,403 options in connection with his promotion to Chief Executive Officer of the Company, which he received in May 2016. In addition, pursuant to the terms of the Reynal Offer Letter, Mr. Reynal was expected to invest a minimum of $2,000,000, and was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements.
During the time Mr. Reynal was based in Munich, Germany (the “Expat Period”), the Reynal Offer Letter provides that he was entitled to certain expatriate benefits, including an annual cost of living adjustment of $26,000, a monthly housing allowance of $5,533, payment or reimbursement of tuition to an international school for his dependent children, payment or reimbursement of school-sponsored transportation for his dependent children, reimbursement of expenses related to tax preparation performed by a tax preparation firm, use of a company car, reimbursement for expenses in connection with storage of household goodsdefined in the United StatesEmployment Agreement) remain unchanged from the Prior Agreement and reimbursement for business class travel to the United States or a comparable location for Mr. Reynal and his immediate family once per year. Mr. Reynal was also entitled to tax equalization on his cash compensation and expatriate benefits during the Expat Period; provided that the annual cost to the Company of such tax equalization shall not exceed $275,000.
Mr. Reynal is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.
The Reynal Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
Offer Letter The Employment Agreement also provides that Mr. Reynal may make personal use of the aircraft leased by the Company for an amount of time that does not result in the Company incurring more than $200,000 in aggregate incremental costs per year.
In addition, in exchange for entering into the Employment Agreement and receiving the Performance-Based Award, the post-termination non-competition, non-solicitation of clients and non-solicitation of employees covenants increased from 12 months under the Prior Agreement to 24 months.
Employment Agreements with Mr.
HerndonMiñarro Viseras
The
employment agreement the Company
entered into an offer letter with Mr. Herndon, dated November 18, 2015, which was modified by an offer letter, dated September 2, 2016, we entered into with Mr.
Herndon in connection with his promotion to Chief Financial Officer of the CompanyMiñarro Viseras on October 22, 2018 (the
offer letter, dated November 18, 2015, as so modified, the “Herndon Offer Letter”“Miñarro Viseras Employment Agreement”)
. The Herndon Offer Letter provides provided that Mr.
Herndon isMiñarro Viseras was entitled to receive a base salary of
$400,000, which base salary€330,000, was
increased to $409,000 in April, 2017, and is eligible to participate in the annual MIP with
a targetan award opportunity of
100%up to 45% of his base
salary.Mr. Herndon was eligible to receive a grant of 468,323 options under our Long-Term Incentive Program, which he received in May 2016. In addition, pursuant to the terms of the Herndon Offer Letter, Mr. Herndon was expected to invest a minimum of $1,000,000,salary, and was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements, no later than two months following the date his employment with us commenced.
Mr. Herndon is also eligible to participate in our Management Equity Program. In addition, under the Company’s 401(k), Excess Contribution, medical, dental, lifeMiñarro Viseras Employment Agreement, in 2022, Mr. Miñarro Viseras was entitled to use of a company car and was also covered under the standard group accident insurance of the Company.
On April 10, 2023, we entered into the New Miñarro Viseras Employment Agreement, effective April 3, 2023, in connection with the appointment of Mr. Miñarro Viseras to the position of senior vice president and
disability plans, alonggeneral manager, Global Precision and Science Technologies. Pursuant to the New Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras will receive a base salary of $540,000 and continued entitlement to use of a company car. Under the New Miñarro Viseras Employment Agreement, we are required to provide Mr. Miñarro Viseras with
a comprehensive wellness program.six months’ notice in the event of his termination, and we have the option to place him on garden leave during all or part of his notice period immediately until the date of termination provided we continue to pay him his full pay and benefits during such notice period. The New Miñarro Viseras Employment Agreement subjects Mr. Miñarro Viseras to non-competition, non-solicitation of clients and non-solicitation of employees covenants that apply during his employment, notice period, as well as for six months following termination of employment (or the start of garden leave, if sooner). Mr. Miñarro Viseras is entitled to continue to receive his base salary during the six-month post-termination restriction period as consideration for such covenants, which amount must be repaid by him if he violates the restrictive covenants. The New Miñarro Viseras Employment Agreement otherwise has terms that are materially consistent with his prior employment agreement. TABLE OF CONTENTS
The Herndon Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
Offer Letter with Mr. Schiesl
The Company entered into an offer letter with Mr. Schiesl, dated November 25, 2013 (the “Schiesl Offer Letter”). The Schiesl Offer Letter provides that Mr. Schiesl is entitled to receive a base salary of $450,000
which base salary was increased to $460,000 in April, 2017, and is eligible to participate in the annual MIP with a target award opportunity of 75% of his base salary.
Mr. Schiesl was eligible to receive (i) a grant of 394,474 options under our Long-Term Incentive Program, which he received in March 2014, and (ii) a grant of 36,739 options (the “Investment Options”) which he received in lieu of a sign-on bonus in March 2014 and which vested on June 16, 2014.
Mr. Schiesl is also eligible to participate in the Company’s 401(k),
ExcessSupplemental Contribution, medical, dental, life insurance and disability plans, along with a comprehensive wellness program.
The Schiesl Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
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Offer Letter with Mr.
SnyderWeatherred
The Company entered into an offer letter with Mr.
Snyder,Weatherred, dated
December 18, 2015(the “SnyderApril 30, 2018 (the “Weatherred Offer Letter”)
., in connection with his appointment as Vice President, Gardner Denver Operating System. The
SnyderWeatherred Offer Letter provides that Mr.
SnyderWeatherred is entitled to receive
aan annual base salary of
$300,000, which base salary was increased to $353,000 in April, 2017,$345,000, and
is eligible to participate in the
annual MIPCompany’s Management Incentive Plan with
aan annual target award opportunity of
45%50% of his
annual base
salary, which target award opportunitysalary. Mr. Weatherred was
increased to 50% in November 2016.Mr. Snyder was eligible to receive a grant of 263,430 options under our Long-Term Incentive Program, which he received in December 2016. In addition, pursuant to the terms of the Snyder Offer Letter, Mr. Snyder was expected to invest a minimum of $90,000, and was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements, no later than two months following the date his employment with us commenced.
Under the Snyder Offer Letter, Mr. Snyder received a lump sum cash signing bonus of $300,000 in February 2016. Such bonus was subject to a repayment obligation upon certain terminations of Mr. Snyder’s employment.
Under the Snyder Offer Letter, Mr. Snyder is entitled to reimbursement for his reasonable commuting expenses (consistent with our travel policies) related to travel to and from his home, as well as a tax gross-up relating to such reimbursement.
Mr. Snyder is also eligible to participate in the Company’s 401(k), Excess Contribution, medical, dental, life insurance and disability plans, alonglong-term incentive plan with a comprehensive wellness program.
target annual equity grant opportunity equal to $275,000.
The
SnyderWeatherred Offer Letter also contains severance arrangements, which are discussed below under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control.”
Employment Agreement and Offer Letter with Mr. Miñarro Viseras
The Company entered into an employment agreement with Mr. Miñarro Viseras, dated April 29, 2016 and commencing on May 10, 2016 (the “Miñarro Viseras Employment Agreement”). The Miñarro Viseras Employment Agreement provides that Mr. Miñarro Viseras is entitled to receive a base salary of $330,013, which base salary was increased to $337,814 in April, 2017 (in each case, converted from Euros to U.S. dollars at an exchange rate of 1.20048, which was the end of monthy translation rate, December 2017), is eligible to participate in the annual MIP with an award opportunity of up to 45% of his base salary and is eligible to participate in our Management Equity Program.
Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras received a lump sum cash signing bonus of $470,263 (which amount was paid to Mr. Miñarro Viseras in Euros and has been converted to U.S. dollars at an exchange rate of 1.1065, which is the average monthly translation rate for 2016) in August 2016. Such bonus was subject to a repayment obligation upon certain terminations of Mr. Miñarro Viseras’s employment.
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Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras is eligible for relocation benefits, use of a company car, and international school assistance for his children in the amount of $54,002 (converted from Euros to U.S. dollars at an exchange rate of 1.20048, which was the end of month translation rate, December 2017) for the first year of his employment and for $42,039 (converted from Euros to U.S. dollars at an exchange rate of 1.20048, which was the end of month translation rate, December 2017) for each year thereafter. Such relocation benefits are subject to a repayment obligation if Mr. Miñarro Viseras is terminated within 24 months by the Company for cause or by Mr. Miñarro Viseras without good reason.
Under the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras is also covered under the standard group accident insurance of the Company.
The Miñarro Viseras Employment Agreement provides for a mutual three-month advance notice period for a termination of employment not for cause or without good reason, during which Mr. Miñarro Viseras may be released from his work duties but will still be entitled to remuneration.
Under the terms of the Miñarro Viseras Employment Agreement, Mr. Miñarro Viseras is subject to certain restrictive covenants, including a perpetual confidentiality covenant, violation of which will constitute “cause” under such agreement, and a noncompetition covenant for the duration of the employment relationship. Mr. Miñarro Viseras may be required to pay certain contractual penalties for each breach of either restrictive covenant.
We also entered into an offer letter with Mr. Miñarro Viseras, dated March 16, 2016 (the “Miñarro Viseras Offer Letter”). The terms of the Miñarro Viseras Offer Letter are generally identical to those of the Miñarro Viseras Employment Agreement except that it does not contain any restrictive covenants, nor does it provide for a mutual three-month advance notice period for a termination of employment not for cause or without good reason. In addition, the Miñarro Viseras Offer Letter provided that Mr. Miñarro Viseras was eligible to receive a grant of 136,074 stock options under our Long-Term Incentive Plan, which he received in May 2016. The Miñarro Viseras Offer Letter also provided that Mr. Miñarro Viseras was expected to invest a minimum of $60,000, and he was given the opportunity to invest significantly more, into our common stock, subject to satisfaction of applicable securities law requirements.
Terms of Equity Awards
Long-Term Incentive Plan Grants
Time Option Vesting Schedule. We granted Time Options in May 2016 to Messrs. Reynal, Herndon, Snyder and Miñarro Viseras and in December 2016 to Messrs. Herndon and Snyder. The Time Options granted to Messrs. Reynal, Herndon and Snyder in May 2016 vest and become exercisable over time with respect to 33.3% of such Time Options on December 31st of each of 2016, 2017 and 2018, subject to continued employment through the applicable vesting date. The Time Options granted in May 2016 to Mr. Miñarro Viseras and December 2016 to Messrs. Herndon and Snyder vest and become exercisable over time with respect to 20% or such Time Options on December 31st of each of 2016, 2017, 2018, 2019 and 2020, subject to continued employment through the applicable vesting date.
In addition, we granted Time Options to Mr. Schiesl in 2014, and to Mr. Reynal in 2015. The Time Options granted to Mr. Schiesl in 2014 vest and become exercisable over time with respect to 20% of such Time Options on December 31st of each of 2014, 2015, 2016, 2017 and 2018, subject to continued employment through the applicable vesting date. The Time Options granted to Mr. Reynal in 2015 vest and become exercisable over time with respect to 33.3% of such Time Options on December 31st of each of 2016, 2017 and 2018, subject to continued employment through the applicable vesting date.
Performance Option Vesting Schedule. We granted Performance Options in May 2016 to Messrs. Reynal, Herndon, Snyder and Miñarro Viseras and in December 2016 to Messrs. Herndon and Snyder. The Performance Options granted in May 2016 to Messrs. Reynal, Herndon and Snyder are eligible to vest and become exercisable with respect to up to 33.3% of such Performance Options on December 31st of each of 2016, 2017 and 2018 and the Performance Options granted in May 2016 and December 2016 to Mr. Miñarro Viseras and Messrs. Herndon and Snyder, respectively, are eligible to vest and become exercisable with respect to up to 20% of such Performance Options on December 31st of each of 2016, 2017, 2018, 2019 and 2020, subject to continued employment through the applicable vesting date, if and only to the extent that the Company achieves the annual adjusted EBITDA performance targets set by the Compensation Committee, where “adjusted
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EBITDA” refers to earnings before interest, taxes, depreciation and amortization plus transaction, management and/or similar fees paid to KKR and/or its affiliates; provided that the Board may, following consultation with the CEO, adjust the calculation of adjusted EBITDA to reflect, to the extent not contemplated in the management plan, any extraordinary or one-time events, including, without limitation, acquisitions, divestitures, major capital investment programs, changes in accounting standards, stock expense related to the issuance of stock options, or other extraordinary or unusual events or occurrences, or any costs or expenses incurred during such period relating to environmental remediation, litigation or other disputes in respect of events and exposures that occurred prior to the end of the relevant fiscal year.
We also granted Performance Options to Mr. Schiesl in 2014, and to Mr. Reynal in 2015. The Performance Options granted to Mr. Schiesl in 2014 were eligible to vest and become exercisable with respect to up to 20% of such Performance Options on December 31st of each of 2014, 2015, 2016, 2017 and 2018, subject to continued employment through the applicable vesting date, if and only to the extent that the Company achieves the annual adjusted EBITDA performance targets set by the Compensation Committee. The Performance Options granted to Mr. Reynal in 2015 were eligible to vest and become exercisable with respect to up to 33.3% of such Performance Options on December 31st of each of 2016, 2017 and 2018, subject to continued employment through the applicable vesting date, if and only to the extent that the Company achieves the annual adjusted EBITDA performance targets set by the Compensation Committee.
The fiscal 2017 adjusted EBITDA performance target for purposes of determining vesting of Performance Options was $470 million and our actual adjusted EBITDA performance for fiscal 2017 was $561.5 million. Therefore, 33.3% of the Performance Options granted in May 2016 to Messrs. Reynal, Herndon and Snyder and to Mr. Reynal in 2015 and 20% of the Performance Options granted in May 2016 to Mr. Miñarro Viseras, in December 2016 to Messrs. Herndon and Snyder and to Mr. Schiesl in 2014 vested on December 31, 2017.
If the Company does not achieve the adjusted EBITDA performance target in 2018, but the Company’s adjusted EBITDA in respect of fiscal year 2018 equals or exceeds the adjusted EBITDA performance threshold set by the Compensation Committee for fiscal year 2018 then one-quarter (1/4) of the Performance Options granted in 2016 to our NEOs in other than Mr. Miñarro Viseras eligible to vest on December 31st of such year shall vest on December 31st of such year and with respect to the remaining three-quarters (3/4) of the Performance Options eligible to vest on December 31st of such year, one-half (1/2) of such Performance Options shall vest on December 31, 2019 if the Company’s adjusted EBITDA in respect of fiscal year 2019 equals or exceeds the adjusted EBITDA target set by the Compensation Committee for fiscal year 2019 and one-half (1/2) of such Performance Options shall vest on December 31, 2020 if the Company’s adjusted EBITDA in respect of fiscal year 2020 equals or exceeds the adjusted EBITDA target set by the Compensation Committee for fiscal year 2020.
At the end of the yearly measurement period with respect to any award of Performance Options, any then outstanding Performance Options that were not vested and exercisable in any previous year in accordance with their terms shall become vested and exercisable to the extent that the cumulative performance objectives have been satisfied in respect of the applicable performance period.
We believe that the adjusted EBITDA performance targets in all periods provide reasonably achievable, but challenging goals for our NEOs and other Long-Term Incentive Program participants and are intended to incentivize all participants to maximize their performance for the long-term benefit of our stockholders.
Effect of Change in Control on Vesting of Options. Notwithstanding the foregoing, immediately prior to any Change in Control (as defined below), any unvested portion of the Time Options shall vest and become immediately exercisable as to 100% of such Time Options. In addition, immediately prior to any Change in Control, the Performance Options shall vest and become immediately exercisable as to 100% of such Performance Options but only if, and to the extent that, as of such Change in Control, KKR achieves (x) a Sponsor IRR (as defined below) of 22.5% and (y) a Sponsor MOIC (as defined below) of 2.5x. No option will become exercisable as to any additional shares of the Company’s common stock following the termination of employment of an NEO for any reason and any option that is unexercisable as of the NEO’s termination of employment will immediately expire without payment.
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“Sponsor IRR” means, as of a Change in Control, the cumulative internal rate of return of KKR, excluding any fees paid to KKR or expenses reimbursed to KKR from time to time (“Sponsor Fees”), on KKR’s aggregate investment in the Company determined on a fully diluted basis, assuming inclusion of all shares of the Company’s common stock underlying all then outstanding Time Options and Performance Options.
“Sponsor MOIC” means, as of a Change in Control, the result obtained by dividing (i) the cash consideration received by KKR (other than any Sponsor Fees) as of the Change in Control by (ii) the aggregate amount of cash invested in (and the initial gross asset value of any property (other than money) contributed to) the Company by KKR, directly or indirectly, from time to time in respect of such investment.
A “Change in Control” means, (i) in one or a series of related transactions, the sale of all or substantially all of the assets of the Company to any person (or group of persons acting in concert), other than to (x) KKR or one or more of its controlled affiliates or (y) any employee benefit plan (or trust forming a part thereof) maintained by the Company or its controlled affiliates; or (ii) a merger, recapitalization, or other sale by the Company, KKR, or any of their respective affiliates, to a person (or group of persons acting in concert) of the Company’s common stock that results in more than 50% of the common stock of the Company (or any resulting company after a merger) being held by a person (or group of persons acting in concert) that does not include (x) KKR or its affiliates or (y) an employee benefit plan (or trust forming a part thereof) maintained by the Company or its controlled affiliates; and in any event of clause (i) or (ii), which results in KKR and its controlled affiliates or such employee benefit plan ceasing to hold the ability to elect a majority of the members of the Company’s Board of Directors.
Expiration of Vested Options. Except as provided in the Management Stockholder’s Agreement described below under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017,” all vested options will expire upon the earliest to occur of the following events: (1) the tenth anniversary of the date such options were granted, so long as the NEO remains employed with the Company through such date; (2) the first anniversary of the termination of the NEO’s employment with the Company because of death or Disability (as defined in the option award agreement); (3) one hundred eighty (180) days after the termination of the NEO’s employment with the Company without Cause (as defined in the option award agreement) (except due to death or Disability) or the NEO’s resignation for Good Reason (as defined in the option award agreement); (4) the date the NEO’s employment is terminated by the Company for Cause; or (5) thirty (30) days after the NEO’s employment is terminated by the NEO without Good Reason. In addition, at the discretion of the Company, options may be cancelled at the effective date of a merger, consolidation, or other transaction or capital change of the Company, in accordance with the terms of the 2013 Stock Incentive Plan, in exchange for a payment (payable in cash or other consideration depending on the terms of the transaction) per share equal to the excess, if any, of (x) the per share consideration paid to stockholders of the Company in the transaction over (y) the exercise price of the option.
General Provisions for Options and Shares under the Management Stockholder’s Agreement
In connection with their initial equity awards, each of our NEOs became party to a Management Stockholder’s Agreement.
Under the Management Stockholder’s Agreement, shares of our common stock beneficially owned by our NEOs are generally nontransferable prior to the earlier of (i) a Change in Control or (ii) the fifth anniversary of the effective date of the applicable Management Stockholder’s Agreement.
Our NEOs have limited “piggyback” registration rights with respect to shares of our common stock, provided that in lieu of piggyback rights where such rights would otherwise be available, our Board of Directors, in its sole discretion, may elect to waive the transfer restrictions (other than any such restrictions contained in an underwriters’ lock-up or in connection with a public offering) on the number of shares of Common Stock that would have been subject to such piggyback rights
Pursuant to the terms of the Management Stockholder’s Agreement, the NEOs are subject to covenants not to (1) disclose confidential information, (2) solicit customers and certain employees, consultants and independent contractors of the Company, (3) compete with the Company and (4) disparage the Company.
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Outstanding Equity Awards at 20172022 Fiscal Year End
| Option Awards |
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(3) | Option Exercise Price ($) | Option Expiration Date |
Vicente Reynal | 5/10/2015 | | 438,487 | | | 109,622 | | | | | | 10.61 | | 5/10/2025 |
| 5/10/2015 | | 219,244 | | | | | | 109,622 | | | 10.61 | | 5/10/2025 |
| 5/10/2016 | | 195,135 | | | 97,568 | | | | | | 10.61 | | 5/10/2026 |
| 5/10/2016 | | 195,134 | | | | | | 97,567 | | | 10.61 | | 5/10/2026 |
Philip T. Herndon | 5/10/2016 | | 156,108 | | | 78,054 | | | | | | 10.61 | | 5/10/2026 |
| 5/10/2016 | | 156,108 | | | | | | 78,054 | | | 10.61 | | 5/10/2026 |
| 12/9/2016 | | 28,261 | | | 42,392 | | | | | | 11.43 | | 12/9/2026 |
| 12/9/2016 | | 28,261 | | | | | | 42,392 | | | 11.43 | | 12/9/2026 |
Andrew Schiesl | 3/7/2014 | | 157,789 | | | 39,447 | | | | | | 8.16 | | 3/7/2024 |
| 3/7/2014 | | 157,789 | | | | | | 39,447 | | | 8.16 | | 3/7/2024 |
| 3/7/2014 | | 36,739 | | | — | | | | | | 8.16 | | 3/7/2024 |
Neil Snyder | 5/10/2016 | | 87,810 | | | 43,905 | | | | | | 10.61 | | 5/10/2026 |
| 5/10/2016 | | 87,810 | | | | | | 43,905 | | | 10.61 | | 5/10/2026 |
| 12/1/2016 | | 9,420 | | | 14,131 | | | | | | 11.43 | | 12/1/2026 |
| 12/1/2016 | | 9,421 | | | | | | 14,131 | | | 11.43 | | 12/1/2026 |
Enrique Miñarro Viseras | 5/10/2016 | | 27,215 | | | 40,823 | | | | | | 10.61 | | 5/10/2026 |
| 5/10/2016 | | 27,214 | | | | | | 40,822 | | | 10.61 | | 5/10/2026 |
Vicente Reynal | | | 5/24/15 | | | 438,486 | | | ― | | | $10.61 | | | 5/24/25 | | | | | | | | | | | | |
| 5/24/15 | | | 258,488 | | | ― | | | $10.61 | | | 5/24/25 | | | | | | | | | | | | |
| 5/10/16 | | | 292,702 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | |
| 5/10/16 | | | 292,701 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | |
| 2/22/18 | | | 106,761 | | | 35,588 | | | $32.06 | | | 2/22/28 | | | 15,596 | | | $814,891 | | | | | | |
| 2/21/19 | | | 165,106 | | | 55,036 | | | $27.05 | | | 2/21/29 | | | 20,102 | | | $1,050,330 | | | | | | |
| 3/6/20 | | | 85,459 | | | 85,459 | | | $27.79 | | | 3/6/30 | | | 30,137 | | | $1,574,658 | | | 241,092(5) | | | $12,597,057 |
| 2/23/21 | | | 23,276 | | | 69,831 | | | $45.58 | | | 2/23/31 | | | 27,561 | | | $1,440,062 | | | 146,994(6) | | | $7,680,437 |
| 2/22/22 | | | ― | | | 82,547 | | | $53.09 | | | 2/22/32 | | | 32,962 | | | $1,722,265 | | | 131,850(7) | | | $6,889,163 |
| 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(8) | | | $13,062,500 |
| 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(8) | | | $13,062,500 |
| 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(8) | | | $13,062,500 |
| 9/1/22 | | | | | | | | | | | | | | | | | | | | | 250,000(9) | | | $13,062,500 |
Vikram Kini | | | 3/19/14 | | | 84,576 | | | ― | | | $8.16 | | | 3/19/24 | | | | | | | | | | | | |
| 3/19/14 | | | 84,577 | | | ― | | | $8.16 | | | 3/19/24 | | | | | | | | | | | | |
| 12/9/16 | | | 7,066 | | | ― | | | $11.43 | | | 12/9/26 | | | | | | | | | | | | |
| 12/9/16 | | | 7,066 | | | ― | | | $11.43 | | | 12/9/26 | | | | | | | | | | | | |
| 2/22/18 | | | 10,676 | | | 3,559 | | | $32.06 | | | 2/22/28 | | | 1,560 | | | $81,510 | | | | | | |
| 2/21/19 | | | 15,182 | | | 5,061 | | | $27.05 | | | 2/21/29 | | | 1,849 | | | $96,610 | | | | | | |
| 3/6/20 | | | 5,102 | | | 5,102 | | | $27.79 | | | 3/6/30 | | | 1,799 | | | $93,998 | | | 14,392(5) | | | $751,982 |
| 6/30/20 | | | 6,660 | | | 6,661 | | | $28.12 | | | 6/30/30 | | | 2,667 | | | $139,351 | | | 21,336(5) | | | $1,114,806 |
| 2/23/21 | | | 3,821 | | | 11,465 | | | $45.58 | | | 2/23/31 | | | 4,525 | | | $236,431 | | | 24,132(6) | | | $1,260,897 |
| 2/22/22 | | | ― | | | 16,509 | | | $53.09 | | | 2/22/32 | | | 6,592 | | | $344,432 | | | 26,370(7) | | | $1,377,833 |
Enrique Miñarro Viseras
| | | 5/10/16 | | | 13,607 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | |
| 5/10/16 | | | 68,037 | | | ― | | | $10.61 | | | 5/10/26 | | | | | | | | | | | | |
| 2/22/18 | | | 13,345 | | | 4,449 | | | $32.06 | | | 2/22/28 | | | 1,950 | | | $101,888 | | | | | | |
| 9/11/18 | | | 22,361 | | | ― | | | $26.18 | | | 9/11/28 | | | | | | | | | | | | |
| 2/21/19 | | | 18,978 | | | 6,326 | | | $27.05 | | | 2/21/29 | | | 2,311 | | | $120,750 | | | | | | |
| 3/6/20 | | | 12,755 | | | 12,755 | | | $27.79 | | | 3/6/30 | | | 4,498 | | | $235,021 | | | 35,984(5) | | | $1,880,164 |
| 2/23/21 | | | 3,821 | | | 11,465 | | | $45.58 | | | 2/23/31 | | | 4,525 | | | $236,431 | | | 24,132(6) | | | $1,260,897 |
| 2/22/22 | | | ― | | | 13,856 | | | $53.09 | | | 2/22/32 | | | 5,533 | | | $289,099 | | | 22,132(7) | | | $1,156,397 |
Andrew Schiesl | | | 2/22/18 | | | 18,015 | | | 6,006 | | | $32.06 | | | 2/22/28 | | | 2,632 | | | $137,522 | | | | | | |
| 2/21/19 | | | 27,517 | | | 9,173 | | | $27.05 | | | 2/21/29 | | | 3,351 | | | $175,090 | | | | | | |
| 3/6/20 | | | 12,117 | | | 12,117 | | | $27.79 | | | 3/6/30 | | | 4,273 | | | $223,264 | | | 34,184(5) | | | $1,786,114 |
| 2/23/21 | | | 3,300 | | | 9,901 | | | $45.58 | | | 2/23/31 | | | 3,908 | | | $204,193 | | | 20,842(6) | | | $1,088,995 |
| 2/22/22 | | | ― | | | 12,971 | | | $53.09 | | | 2/22/32 | | | 5,179 | | | $270,603 | | | 20,718(7) | | | $1,082,516 |
Michael Weatherred | | | 5/14/18 | | | 9,800 | | | ― | | | $33.46 | | | 5/14/28 | | | | | | | | | | | | |
| 2/21/19 | | | 13,284 | | | 4,429 | | | $27.05 | | | 2/21/29 | | | 1,618 | | | $84,541 | | | | | | |
| 3/6/20 | | | 8,928 | | | 8,929 | | | $27.79 | | | 3/6/30 | | | 3,149 | | | $164,535 | | | 25,188(5) | | | $1,316,073 |
| 2/23/21 | | | 2,431 | | | 7,296 | | | $45.58 | | | 2/23/31 | | | 2,880 | | | $150,480 | | | 15,356(6) | | | $802,351 |
| 2/22/22 | | | ― | | | 10,023 | | | $53.09 | | | 2/22/32 | | | 4,002 | | | $209,105 | | | 16,010(7) | | | $836,523 |
| (1)
| Reflects vested and exercisable Time Options and Performance Options granted pursuant to our 2013 Stock Incentive Plan and 2017 Omnibus Incentive Plan. |
(2)
| Reflects unvested stock options granted prior to our initial public offering pursuant to our 2013 Stock Incentive Plan and unvested stock options granted from 2018 through 2022 pursuant to our 2017 Omnibus Incentive Plan. Stock options granted to our NEOs on February 22, 2018 vest in equal installments on the case of Mr. Schiesl, Investment Options. 25%second, third, fourth, and fifth anniversaries of the Time Optionsgrant date. All other unvested stock options granted on 12/18/2013 and 3/7/2014 shownto our NEOs vest in this column vestedequal installments on each of December 31, 2014, 2015, 2016 and 2017. 33.3%the first four anniversaries of the Time Options granted on 5/10/2015 shown in this column vested on each of December 31, 2015, 2016 and 2017. 50% of the Time Options granted on 5/10/2016, 12/9/2016 and 12/1/2017 shown in this column vested on each of December 31, 2016 and 2017. 25% of the Performance Options granted on 12/18/2013 and 3/7/2014 shown in this column vested on each of December 31, 2014, 2015 and 2016. 50% of the Performance Options granted on 5/10/2016, 12/9/2016 and 12/1/2016 shown in this column vested on each of December 31, 2016 and 2017. |
| (2) | Reflects unvested Time Options. The unvested Time Options granted on each of December 18, 2013, March 7, 2014, May 10, 2015 and May 10, 2016 shown in this column (other than those granted to Mr. Miñarro Viseras on May 10, 2016) will vest and become exercisable on December 31, 2018, subject to the NEO’s continued employment through such date. The unvested Time Options granted to Mr. Herndon on December 9, 2016, to Mr. Snyder on December 1, 2016 and to Mr. Miñarro Viseras on May 10, 2016 shown in this column will vest and become exercisable with respect to 33.3% of such Time Options on December 31st of each of 2018, 2019 and 2020, subject to the NEO’s continued employment through suchgrant date. |
| (3) | Reflects unvested Performance Options. As described in further detail under “Compensation Discussion and Analysis-Executive Compensation Program Elements-Long-Term Equity Incentive Awards,” the unvested Performance Options shown in this column will vest and become exercisable with respect to such Performance Options granted to Messrs. Reynal, Herndon and Snyder on May 10, 2016, to Mr. Schiesl on March 7, 2014 and to Mr. Reynal on March 10, 2015 on December 31, 2018, and with respect to 33.3% of such Performance Options granted to Mr. Herndon on December 9, 2016, Mr. Snyder on December 1, 2016 and Mr. Miñarro Viseras on May 10, 2016 on December 31st of each of 2018, 2019 and 2020, subject to the NEO’s continued employment through such date and our achievement of the relevant adjusted EBITDA target, or in full upon a Change in Control if we have achieved the Sponsor IRR and Sponsor MOIC targets at such time. The Performance Options eligible to vest on December 31st of 2018 (other than those granted to Mr. Miñarro Viseras) will vest and become exercisable with respect to 1/4 of such Performance Options on such date, subject to the NEO’s continued employment through such dates and our achievement of the relevant threshold adjusted EBITDA performance, and with respect to 3/8 of such Performance options on each of December 31st 2019 and 2020, subject to the NEO’s continued employment through such dates and our achievement of the relevant threshold adjusted EBITDA targets. At the end of the yearly measurement period with respect to any award of Performance Options, any then outstanding Performance Options that were not vested and exercisable in any previous year in accordance with their terms shall become vested and exercisable to the extent that the cumulative performance objectives have been satisfied in respect of the applicable performance period. We achieved the fiscal 2017 adjusted EBITDA target; accordingly the amounts reflected in the table reflect target performance. |
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(3)
| Reflects unvested RSUs and PSUs granted pursuant to our 2017 Omnibus Incentive Plan. RSUs granted to our NEOs on February 22, 2018 vest in equal installments on the second, third, fourth, and fifth anniversaries of the grant date. All other RSUs granted to our NEOs vest in equal installments on the first four anniversaries of the grant date. |
(4)
| Values determined based on the December 30, 2022 closing price of the Company’s common stock on the NYSE of $52.25. |
(5)
| Represents the total number of PSUs earned under the 2020-2022 Performance Plan for the three-year performance period beginning on January 1, 2020 and ending on December 31, 2022, which vested on February 13, 2023. |
(6)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of the Relative TSR performance measure over the performance period beginning on January 1, 2021 and ending on December 31, 2023. The number of PSUs reported in the table reflects the amount that would be earned for maximum performance. The actual number of shares that will vest with respect to the PSUs is not yet determinable. |
(7)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of the Relative TSR performance measure over the performance period beginning on January 1, 2022 and ending on December 31, 2024. The number of PSUs reported in the table reflects the amount that would be earned for maximum performance. The actual number of shares that will vest with respect to the PSUs is not yet determinable. |
(8)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of certain EPS growth goals over the performance period beginning on January 1, 2022 and ending on December 31, 2026. The number of PSUs reported in the table reflects the amount that would be earned for maximum performance. The actual number of shares that will vest with respect to the PSUs is not yet determinable. These PSUs were granted to Mr. Reynal as part of the one-time Performance-Based Award that vest only upon meeting certain performance criteria and Mr. Reynal remaining with the Company long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award for Mr. Reynal designed by the Compensation Committee to (i) drive the creation of long-term stockholder value, (ii) further strengthen the alignment of Mr. Reynal’s interests with those of long-term stockholders, and (iii) encourage the retention of Mr. Reynal for the next five to ten years. |
(9)
| Reflects PSUs that will vest, if at all, based on the Company’s achievement of an $81.85 60-day volume-weighted average closing price of the common stock over the performance period beginning on September 1, 2022 and ending on September 1, 2027. As of the date of this Proxy Statement, such performance goal has not been achieved and whether or not the PSUs will ultimately vest is not yet determinable. These PSUs were granted to Mr. Reynal as part of the one-time Performance-Based Award that vest only upon meeting certain performance criteria and Mr. Reynal remaining with the Company long-term. As described more fully in “Executive Summary - Performance-Based Leadership Equity Incentive Award & New CEO Employment Agreement,” the Performance-Based-Award is a one-time extraordinary award for Mr. Reynal designed by the Compensation Committee to (i) drive the creation of long-term stockholder value, (ii) further strengthen the alignment of Mr. Reynal’s interests with those of long-term stockholders, and (iii) encourage the retention of Mr. Reynal for the next five to ten years |
Option Exercises and Stock Vested in
2017During 2017, none of2022
The following table provides information regarding Options exercises and RSUs vested during fiscal 2022 for our NEOs exercised options or had any shares of stock or restricted stock or restricted stock units or similar instruments vest.NEOs.
Vicente Reynal | | | ― | | | ― | | | 90,090 | | | 4,466,876 |
Vikram Kini | | | ― | | | ― | | | 8,948 | | | 440,436 |
Enrique Miñarro Viseras | | | ― | | | ― | | | 14,902 | | | 737,018 |
Andrew Schiesl | | | ― | | | ― | | | 13,694 | | | 682,197 |
Michael Weatherred | | | ― | | | ― | | | 8,327 | | | 399,371 |
(1)
| Value realized on exercise is based on the gain, if any, equal to the difference between the fair market value of the stock acquired upon exercise on the exercise date less the exercise price, multiplied by the number of options exercised. |
(2)
| The value realized on vesting is based on the closing price of our common stock on the NYSE on the vesting date. If vesting occurs on a day on which the NYSE is closed, the value realized on vesting is based on the closing price on the last trading day prior to the vesting date. |
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Pension Benefits
-– Fiscal
20172022
During
2017,2022, no NEOs participated in either a tax-qualified or non-qualified defined benefit plan sponsored by the Company.
Non-Qualified Deferred Compensation
-– Fiscal
2017Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(4) |
Vicente Reynal | | 888,016 | | | 161,300 | | | 140,712 | | | — | | | 1,499,684 | |
Philip T. Herndon | | — | | | — | | | — | | | — | | | — | |
Andrew Schiesl | | 57,081 | | | 57,081 | | | 37,994 | | | — | | | 301,805 | |
Neil Snyder | | — | | | — | | | — | | | — | | | — | |
Enrique Miñarro Viseras | | — | | | — | | | — | | | — | | | — | |
2022
Vicente Reynal | | | 64,500 | | | 64,500 | | | (619,922) | | | ― | | | 3,266,313 |
Vikram Kini | | | 204,321 | | | 71,113 | | | (251,633) | | | ― | | | 1,286,682 |
Enrique Miñarro Viseras | | | ― | | | ― | | | ― | | | ― | | | ― |
Andrew Schiesl | | | 56,775 | | | 79,425 | | | (164,588) | | | ― | | | 721,330 |
Michael Weatherred | | | 29,893 | | | 55,100 | | | (35,582) | | | ― | | | 182,466 |
| (1)
| The amounts in this column are reported as compensation for fiscal 20172022 in the “Base Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table. |
| (2)
| Represents the amount of the matching contribution made by us in accordance with our ExcessSupplemental Contribution Plan. Matching contributions are reported for the year in which the compensation against which the applicable deferral election is applied has been earned (regardless of whether such matching contribution is actually credited to the NEO’s non-qualified deferred compensation account in that year or the following year). The amounts in this column are reported as compensation for fiscal 20172022 in the “All Other Compensation” column of the Summary Compensation Table. |
| (3)
| Amounts in this column are not reported as compensation for fiscal 20172022 in the Summary Compensation Table since they do not reflect above-market or preferential earnings. |
(4)
| (4) | Of theThe amounts reported in this column $759,750 represents a portioninclude the following aggregate amounts for each of the following NEOs reported as compensation to such named executive officers for 2016 reportedprevious years in the “Base Salary” andSalary,” “Non-Equity Incentive Plan Compensation” columns and $81,750 represents a portion of the compensation for 2016 reported in the “All Other Compensation” columncolumns of the Summary Compensation Table forTable: Mr. Reynal, $841,500 in fiscal 2016, $1,049,316 in fiscal 2017, $573,416 in fiscal 2018, $83,485 in fiscal 2019, $361,310 in fiscal 2020, and $32,768 represents a portion of the compensation for$187,612 in fiscal 2021; Mr. Kini, $207,607 in fiscal 2020, and $286,810 in fiscal 2021; Mr. Schiesl, $65,536 in 2016, reported$114,162 in the “Base Salary”fiscal 2017, $50,766 in fiscal 2018, $46,000 in fiscal 2019, $98,998 in fiscal 2020, and “Non-Equity Incentive Plan Compensation” columns$103,562 in fiscal 2021; and $32,768 represents a portion of the compensation for 2016 reportedMr. Weatherred, $20,994 in the “All Other Compensation” column of the Summary Compensation Table for Mr. Schiesl.fiscal 2019, $65,422 in fiscal 2020, and $11,916 in fiscal 2021. |
Non-qualified Deferred Compensation Plan
In addition to the 401(k) plan, U.S. employees with a salary
grade of 20band 8 or higher (generally senior
managersdirector and above) are eligible to participate in the
ExcessSupplemental Contribution Plan.
Once aThe participant
in the Excess Contribution Plan reaches the IRS annual limits for the 401(k) plan, contributions will be made to the Excess Contribution Plan based onselects the deferral percentage
underfor the
401(k) plan. Such deferral percentage is selectedSupplemental Contribution Plan at the time of
initial enrollment in the
ExcessSupplemental Contribution Plan or once per year in December for the following year.
AIn December of each year, a participant may make a separate election to defer from the annual
MIP awards is made in December for the MIP award earned the following year and payable in the year thereafter. The Company matches each participant’s contributions
to the Supplemental Contribution Plan with Company matching contributions. The Company match consists of $1 for each $1
contributed by athe participant
updefers under the Supplemental Contribution Plan (up to the first 6% of a participant’s annual
compensation.eligible compensation), less any matching contribution made to the 401(k) plan. The Company match is credited
to the Supplemental Contribution Plan in the form of cash.
Historically,
With respect to employee and Company matching contributions made to the
NEOs were also creditedSupplemental Contribution Plan on and after January 1, 2021, participants may elect to receive distributions related to each calendar year in a lump sum or 5-, 10-, or 15-year installments payable (i) when the participant separates from service with
the Company or (ii) on a
nonelectivespecific in-service date designated by the participant. For amounts deferred between January 1, 2019 and December 31, 2020, participants may elect to receive distributions in a lump sum or 5-, or 10-year installments payable (i) when the participant separates from service with the Company
contribution of 12% of recognized compensationor (ii) on a specific in-service date designated by the participant. A participant makes these distribution elections for the specific year’s contributions at the time the participant makes the salary and MIP deferral elections in
excess ofDecember for the
IRS annual limit. The Company nonelective contributions were also contributed in cash and became fully vested after three years of employment. We discontinued the nonelective Company contributions in 2014.Mr. Schiesl is fully vestedfollowing year. For amounts deferred before January 1, 2019, participants in the nonelective Company contribution portion of the Excess Contribution Plan, and Messrs. Reynal and Herndon joined the Company after the nonelective contribution had been discontinued.
Participants in the ExcessSupplemental Contribution Plan may elect to receive distributions of their plan account in either (x) a lump sum to be paid onor 5- or 10-year installments payable when the March 1 ofparticipant separates from service with the calendar year following the year of separation from the Company, or (y) in a lump sum to be paid within 90 days after separation from service, subject to the terms and conditions of the ExcessSupplemental Contribution Plan. Loans and in-service withdrawals are not permitted under the ExcessSupplemental Contribution Plan.
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The investment options available to participants, including the named executive officersNEOs, under the ExcessSupplemental Contribution Plan are virtually the same assimilar to those offered to all of the participants in the 401(k) plan. Because some specific investment
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options available under the 401(k) plan are not available
forunder the
nonqualified plan,Supplemental Contribution Plan, the Company has made similar investment options available to the
nonqualified planSupplemental Contribution Plan participants.
The table below shows the funds availableOur stock is not a permitted investment option under the
ExcessSupplemental Contribution
Plan and their annual rate of return for the calendar year ended December 31, 2017, as reported by the administrator of the 401(k) plan.Name of Investment FundPlan.
| Ticker
Symbol/Index
Type
| Annual
Rate of
Return %
|
JPMorgan SmartRetirement Income R5
| JSIIX
| | 11.11
| %
|
JPMorgan SmartRetirement 2020 R5
| JTTIX
| | 13.96
| %
|
JPMorgan SmartRetirement 2025 R5
| JNSIX
| | 16.32
| %
|
JPMorgan SmartRetirement 2030 R5
| JSMIX
| | 18.99
| %
|
JPMorgan SmartRetirement 2035 R5
| SRJIX
| | 20.42
| %
|
JPMorgan SmartRetirement 2040 R5
| SMTIX
| | 21.83
| %
|
JPMorgan SmartRetirement 2045 R5
| JSAIX
| | 22.05
| %
|
JPMorgan SmartRetirement 2050 R5
| JTSIX
| | 22.08
| %
|
JPMorgan SmartRetirement 2055 R5
| JFFIX
| | 22.01
| %
|
American Funds EuroPacific Gr R6
| RERGX
| | 31.17
| %
|
MFS International New Discovery R6
| MIDLX
| | 32.16
| %
|
American Century Small Cap Value Inv
| ASVIX
| | 10.26
| %
|
Vanguard Small Cap Growth Index Instl
| VSGIX
| | 21.94
| %
|
Artisan Mid Cap Institutional
| APHMX
| | 20.75
| %
|
Dreyfus Mid Cap Index Fund
| PESPX
| | 15.68
| %
|
American Funds Growth Fund of Amer R6
| RGAGX
| | 26.53
| %
|
Dodge & Cox Stock Fund
| DODGX
| | 18.33
| %
|
JPMorgan Equity Index I
| HLEIX
| | 21.61
| %
|
JPMorgan Core Bond R6
| JCBUX
| | 3.87
| %
|
Vanguard Federal Money Market Inv
| VMFXX
| | 0.81
| %
|
Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control
The following table describes the potential payments and benefits that would have been payable to our NEOs under existing plans and arrangements assuming a qualifying termination if a termination or change in control occurred on December
29, 2017,30, 2022, the last business day of our
20172022 fiscal year. A description of the provisions governing such payments under our agreements and any material conditions or obligations applicable to the receipt of payments is described below under “Severance Arrangements and Restrictive Covenants.”
The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the NEOs. These include accrued but unpaid salary and distributions of plan balances under our 401(k) savings plan.
Name | Cash Severance Payment ($)(1) | Continuation of Group Health Coverage ($)(2) | Accrued but Unused Vacation ($)(3) | Value of Time Option and Performance Option Acceleration ($)(4) | Total ($) |
Vicente Reynal
| | | | | | | | | | | | | | | |
Qualifying Termination | | 1,644,000 | | | 20,052 | | | — | | | — | | | 1,664,052 | |
Change in Control | | — | | | — | | | — | | | 9,663,318 | | | 9,663,318 | |
Philip T. Herndon
| | | | | | | | | | | | | | | |
Qualifying Termination | | 409,000 | | | 20,052 | | | — | | | — | | | 429,052 | |
Change in Control | | — | | | — | | | — | | | 5,548,079 | | | 5,548,079 | |
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Name | Cash Severance Payment ($)(1) | Continuation of Group Health Coverage ($)(2) | Accrued but Unused Vacation ($)(3) | Value of Time Option and Performance Option Acceleration ($)(4) | Total ($) |
Andrew Schiesl
| | | | | | | | | | | | | | | |
Qualifying Termination | | 827,875 | | | 20,052 | | | — | | | — | | | 847,927 | |
Change in Control | | — | | | — | | | — | | | 2,033,098 | | | 2,033,098 | |
Neil Snyder
| | | | | | | | | | | | | | | |
Qualifying Termination | | 172,500 | | | 10,026 | | | — | | | — | | | 186,526 | |
Change in Control | | — | | | — | | | — | | | 2,683,624 | | | 2,683,624 | |
Enrique Miñarro Viseras
| | | | | | | | | | | | | | | |
Qualifying Termination | | — | | | — | | | — | | | — | | | — | |
Change in Control | | — | | | — | | | — | | | 1,903,961 | | | 1,903,961 | |
Vicente Reynal
| | | | | | | | | | | | | | | |
Qualifying Termination | | | 1,100,000 | | | 17,757 | | | ― | | | 6,868,922 | | | 7,986,679 |
Change in Control (“CIC”) | | | ― | | | ― | | | ― | | | 60,727,249 | | | 60,727,249 |
Qualifying Termination and CIC | | | 1,100,000 | | | 17,757 | | | ― | | | 85,053,483 | | | 86,171,240 |
Vikram Kini
| | | | | | | | | | | | | | | |
Qualifying Termination | | | 525,000 | | | 6,666 | | | ― | | | 827,280 | | | 1,358,946 |
Change in Control (“CIC”) | | | ― | | | ― | | | ― | | | 3,447,455 | | | 3,447,455 |
Qualifying Termination and CIC | | | 525,000 | | | 6,666 | | | ― | | | 5,001,177 | | | 5,532,843 |
Enrique Miñarro Viseras
| | | | | | | | | | | | | | | |
Qualifying Termination | | | 505,000 | | | ― | | | ― | | | 921,917 | | | 1,426,917 |
Change in Control (“CIC”) | | | ― | | | ― | | | ― | | | 3,359,884 | | | 3,359,884 |
Qualifying Termination and CIC | | | 505,000 | | | ― | | | ― | | | 4,980,772 | | | 5,485,772 |
Andrew Schiesl
| | | | | | | | | | | | | | | |
Qualifying Termination | | | 500,000 | | | 17,277 | | | ― | | | 1,082,521 | | | 1,599,798 |
Change in Control (“CIC”) | | | ― | | | ― | | | ― | | | 3,102,292 | | | 3,102,292 |
Qualifying Termination and CIC | | | 500,000 | | | 17,277 | | | ― | | | 4,827,805 | | | 5,345,082 |
Michael Weatherred
| | | | | | | | | | | | | | | |
Qualifying Termination | | | 430,000 | | | 11,757 | | | ― | | | 506,214 | | | 947,971 |
Change in Control (“CIC”) | | | ― | | | ― | | | ― | | | 2,303,546 | | | 2,303,546 |
Qualifying Termination and CIC | | | 430,000 | | | 11,757 | | | ― | | | 3,948,660 | | | 4,390,417 |
| (1)
| Cash severance payment includes the following: |
Mr.Messrs. Reynal, Kini, Schiesl, and Weatherred - continued payment in substantially equal monthly installments over a 12-month period of the sum of (x) histheir respective annual base salary and (y) his annual incentive award under the MIP earned in fiscal 2016.
salaries.
Mr. HerndonMiñarro Viseras - continued paymenttwelve months' notice in substantially equal monthly installments over a 12-month periodthe event of his annual basetermination, with the option to terminate him immediately with a lump sum payment of twelve months' salary.
Mr. Schiesl - continued payment in substantially equal monthly installments over a 12-month period of the sum of (x) his annual base salary and (y) his annual incentive award under the MIP earned in fiscal 2016.
Mr. Snyder - continued payment in substantially equal monthly installments over a 6-month period of the sum of his annual base salary earned in fiscal 2016.
| (2)
| With respect to Messrs. Reynal, HerndonKini, Schiesl, and Schiesl,Weatherred, reflects the cost of providing continued group health coverage (on the same basis as actively employed employees of the Company), subject to the executive’sexecutive's electing to receive benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), for a period of 12 months, assuming 2017 rates. With respect to Mr. Snyder, reflects the cost of providing continued group health coverage (on the same basis as actively employed employees of the Company), subject to the executive’s electing to receive benefits under COBRA, for a period of 6 months, assuming 20172022 rates. |
| (3)
| Amounts reported in this column reflect zero accrued but unused vacation days for each of our NEOs. |
(4)
| (4) | Immediately priorUnvested PSUs, RSUs and Options granted to our NEOs since 2018 vest and, in the case of options, become immediately exercisable upon a termination without Cause (as defined below) within two years of a Change in Control, allControl. See “Treatment of our NEOs’ unvested Time Options would vest and become immediately exercisable. In addition, immediately prior to aOutstanding Equity Awards in the Event of Termination of Employment or Change in Control, allControl―Equity awards granted 2018-2022” below. For purposes of our NEOs’ Performance Options would vest and become immediately exercisable but only if, and to the extent that, KKR achieves (x) a Sponsor IRR of 22.5% and (y) a Sponsor MOIC of 2.5. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Terms of Equity Awards.” The amountamounts reported in this table in respect of Mr. Reynal’s Adjusted EPS PSU award, we have assumed that, as of December 30, 2022, there were four completed fiscal quarters during the table assumes that our Sponsor achieves the required Sponsor IRR and Sponsor MOIC.EPS Performance Period applicable to such award. |
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Severance Arrangements and Restrictive Covenants
We entered into offer letters with each of our NEOs, other than Mr. Miñarro Viseras, that contain severance terms. In 2017, Mr. Miñarro Viseras was not eligible for any severance pay and benefits not provided generally to all salaried employees upon termination of employment, however his employment agreement requires that we provide three months’ notice in the event of his termination, with the option to terminate him immediately with a lump sum payment of three months’ salary. As discussed above under “Compensation Discussion and Analysis—Compensation Actions Taken in 2018,” in February 2018, we approved an increase to Mr. Miñarro Viseras’s termination benefits.
Messrs. Reynal and Schiesl
Under the terms of theirMr. Reynal’s employment agreement, Messrs. Schiesl’s and Weatherred’s offer letters, and the severance terms applicable to Mr. Kini, if the Company terminates either of Messrs. Reynal’s or Schiesl’stheir employment without Cause“cause” or any of them terminates their employment for “good reason” (as such terms are defined below)in the applicable employment agreement or either of Messrs. Reynal or Schiesl terminates his employment with us for Good Reason (as defined below)severance terms), subject in Mr. Reynal’s case to his continued compliance with the restrictive covenants in his management equity agreements, in Mr. Schiesl’s case to certain provisions in the Severance Plan,conditions and in either case to the NEO’s execution of a customary waiver and release agreement, heon-going commitments, they will be entitled to receive:
Continued payment over a 12-month period (the “Severance Period”) of the sum of (x) histheir then-current annual base salary, and (y) the annual incentive award under the MIP, if any, earned in respect of our fiscal year preceding the fiscal year in which the termination date occurs, payable in substantially equal monthly installments over the Severance Period; and
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Continued group health coverage (on the same basis as actively employed employees of the Company), subject to the NEO’s electing to receive benefits under COBRA, for 12 months following the date his employment terminates (or, if earlier, through the date the NEO becomes employed by another employer and eligible for health insurance coverage at such employer).
Mr. Herndon
Under the termsemployment agreement with Mr. Miñarro Viseras that was in effect on December 30, 2022, we are required to provide him 12 months’ notice in the event of Mr. Herndon’s offer letter, if the Company terminates Mr. Herndon’s employment without Cause or if Mr. Herndon terminates his employment with us for Good Reason, subject to Mr. Herndon’s continued compliancetermination, with the restrictive covenantsoption to terminate him immediately with a lump sum payment of 12 months’ salary. For more details of these agreements, see “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in his management equity agreements2022― Summary of NEO Offer Letters and his execution of a customary waiver and release agreement, he will be entitled to receive:
Continued payment over a 12-month period (the “Severance Period”) of his annual base salary, payable in substantially equal monthly installments over the Severance Period; andEmployment Agreements.”
Continued group health coverage (on the same basis as actively employed employees of the Company), subject to his electing to receive benefits under COBRA, for 12 months following the date his employment terminates (or, if earlier, through the date that he becomes employed by another employer and eligible for health insurance coverage at such employer).
Mr. Snyder
Under the terms of Mr. Snyder’s offer letter, if the Company terminates Mr. Snyder’s employment without Cause or if Mr. Snyder terminates his employment with us for Good Reason, subject to Mr. Snyder’s continued compliance with the restrictive covenants in his management equity agreements and his execution of a customary waiver and release agreement, he will be entitled to receive:
Continued payment over a 6-month period (the “Severance Period”) of his annual base salary earned in respect of our fiscal year preceding the fiscal year in which the termination date occurs, payable in substantially equal monthly installments over the Severance Period; and
Continued group health coverage (on the same basis as actively employed employees of the Company), subject to his electing to receive benefits under COBRA, for 6 months following the date his employment terminates (or, if earlier, through the date that he becomes employed by another employer and eligible for health insurance coverage at such employer).
As described above under “Compensation Discussion and Analysis—Compensation Actions Taken in 2018,” in February 2018, we approved an increase to Mr. Snyder’s termination benefits.
In addition to the payments described above, each of our NEOs is entitled to receive a distribution of all vested amounts under our ExcessSupplemental Contribution Plan. See “—“―Non-Qualified Deferred Compensation — Fiscal 2017.2022.”
For purposes
Treatment of
eachOutstanding Equity Awards in the Event of
Termination of Employment or Change in Control The outstanding RSU and option awards we have granted to our NEOs provide for accelerated vesting in the
severance arrangementsevent of certain qualifying terminations of employment as described
above:“Cause” means the occurrence of any of the following with respect to an NEO: (1) a material breach by the NEO of the terms of the Company’s policies, the terms of which have previously been provided to such NEO; (2) any act of theft, misappropriation, embezzlement, fraud below and/or, similar conduct by the NEO involving the Company or any of its affiliates; (3) the NEO’s failure to act in accordance with any specific lawful instructions given to the NEO by the Board of Directors (or any committee thereof)certain circumstances described below, in connection with a change in control.
Annual Equity Awards
Effect of Qualifying Termination on Vesting of PSUs, RSUs, and Options. In the performanceevent of an NEO’s termination without Cause (as defined below) or Approved Retirement (as defined below), such NEO’s outstanding RSUs and options that would have vested on the first vesting date otherwise scheduled to occur immediately following the date of such termination without Cause or Approved Retirement will vest as of the date of such termination without Cause or Approved Retirement, as applicable. In the event of an NEO’s duties fordeath or Disability (as defined in the 2017 Omnibus Incentive Plan), such NEO’s outstanding RSUs and options that would have vested on the first and second vesting date otherwise scheduled to occur immediately following the date of such death or Disability shall vest as of the date of death or Disability. Notwithstanding the foregoing, if the Company receives a legal opinion that there has been a legal judgment and/or any subsidiarylegal development in the NEO’s jurisdiction that would likely result in the favorable treatment that applies to the RSUs and options if the NEO’s termination occurs as a result of NEO’s Approved Retirement being deemed unlawful and/or discriminatory, the Company may determine that the NEO’s Retirement (as defined below) is no longer an Approved Retirement.
In the event of an NEO’s termination without Cause, Approved Retirement or death or Disability occurring after the expiration of the Company, which continues beyond ten (10) business days afterPerformance Period and before the vesting date, the PSUs that would have vested on the vesting date will vest on the vesting date.
Effect of a written demand for substantial performance is deliveredChange in Control on Vesting of PSUs, RSUs, and Options. In the event of an NEO’s termination without Cause during the two-year period following a Change in Control (as defined in our 2017 Omnibus Incentive Plan), all of such NEO’s outstanding RSUs and options will immediately vest as of the date of such termination without Cause.
With respect to the
NEO byPSUs, if a Change in Control occurs during the
Company (the “Cure Period”); (4) any damage of a material nature toPerformance Period, then the
business or propertycalculation of the
Company or any affiliate caused by NEO’s willful or grossly negligent conduct which continues beyondnumber of PSUs that will vest is conducted as though (i) the
Cure Period (to the extent that, in the Board of Directors’ reasonable judgment, such breach can be cured); (5) any intentional misconduct by the NEO which is reasonably likely to be materially damaging to the Company without a reasonable good faith belief by the NEO that such conduct was in the best interestslast day of the
Company; (6)Performance Period was the
conviction or the plea of nolo contendere or the equivalent in respect of any felony or a misdemeanor involving an act of dishonesty, moral turpitude, deceit, or fraud by the NEO; or (7) a knowing and material breach of any written agreement with the Company to which the NEO is a party, which continues beyond the Cure Period (to the extent that, in the Board of Directors’ reasonable judgment, such breach can be cured). A termination for Cause shall be effective when TABLE OF CONTENTS
date of the Change in Control and (ii) the Company’s stock price at the end of the Performance Period was the price per share of the Company’s common stock payable in connection with such Change in Control. The number of PSUs resulting from such calculation will be the number that will vest upon the consummation of such Change in Control.
For purposes of the foregoing: “Approved Retirement,” “Cause,” “Detrimental Activity,” and “Retirement” have the definitions set forth in the relevant grant agreement or the 2017 Omnibus Incentive Plan, as applicable.
CEO Performance-Based Leadership Equity Incentive Award
Effect of Qualifying Termination or Termination due to Death or Disability on Vesting of the Adjusted EPS PSUs
Vesting of the Adjusted EPS PSUs is subject to Mr. Reynal’s continued employment through December 31, 2026; however, if he is terminated by the Company
has given the NEO written notice of its intention to terminatewithout Cause or he resigns for
Cause, describing those actsGood Reason (each, a “Qualifying Termination” and as defined in his employment agreement) or
omissions that are believed to constitute Cause, and has given the NEO the Cure Period within which to respond.“Good Reason” means any of the following actions if taken without an NEO’s prior written consent (which will be deemed to have been given if the NEO does not provide written notification of an event described in clauses (1) and (2) within 90 days after the NEO knowshe dies or has reason to know of the occurrence of any such event): (1) a material adverse change in the NEO’s position causing it to be of materially less stature, responsibility, or authority or the assignment to the NEO of any material duties inconsistent with the customary duties of the NEO’s position,becomes permanently disabled, in each case, withoutafter the NEO’s written consent (provided that if, after an initial public offering of equity securitiesexpiration of the Company,EPS Performance Period and before the date on which the Compensation Committee certifies the level of performance achieved (the “EPS PSU Vesting Date”), he remains entitled to receive the number of Adjusted EPS PSUs that the Compensation Committee certifies has become vested.
If Mr. Reynal dies, becomes permanently disabled or experiences a Qualifying Termination prior to the end of the EPS Performance Period, the calculation to determine the number of Adjusted EPS PSUs, if any, that will become vested will be conducted as though (i) the last day of the EPS Performance Period was the date on which such termination occurs and (ii) the Company’s Adjusted EPS will be the Adjusted EPS for the last four completed fiscal quarters during the EPS Performance Period prior to the date of such termination (or, if there are not four completed fiscal quarters at the time of such termination, then all of the Adjusted EPS PSUs will be forfeited on the date of such termination) and, if the reason for such termination is a later dateQualifying Termination, the Company or its successor entity ceases tonumber of Adjusted EPS PSUs that will become vested will be prorated by the number of days Mr. Reynal was employed during the EPS Performance Period.
Effect of a publicly traded entity, such fact shall not constituteChange in Control on Vesting of the Adjusted EPS PSUs
If a change in control (as defined in the NEO’s existing position); (2)2017 Omnibus Incentive Plan) occurs following the relocationexpiration of the officesEPS Performance Period but prior to the EPS PSU Vesting Date, then the Adjusted EPS PSUs will vest on the closing of such change in control based on the achievement of Adjusted EPS in accordance with the table above under “Potential Payments to Named Executive Officers upon Termination of Employment or Change in Control” so long as Mr. Reynal has remained in continuous employment with the Company through such change in control.
If a change in control occurs during the EPS Performance Period and the award is not assumed, then the calculation to determine the number of Adjusted EPS PSUs that will become eligible to vest will be conducted as though (i) the last day of the EPS Performance Period was the date of the change in control and (ii) the Company’s Adjusted EPS will be measured based on the last four completed fiscal quarters (or, if there are not four completed fiscal quarters at the time of such change in control, then all of the Adjusted EPS PSUs will be forfeited upon the change in control). The number of Adjusted EPS PSUs, if any, resulting from such calculation will become vested on the closing of the change in control so long as Mr. Reynal has remained continuously employed through such change in control.
If a change in control occurs prior to the expiration of the EPS Performance Period and the award is assumed by the successor to the Company, and Mr. Reynal is subsequently terminated due to death, permanent disability or a Qualifying Termination following such change in control but prior to the end of the EPS Performance Period, the Adjusted EPS PSUs will become vested in full on the date of such termination.
Effect of Qualifying Termination or Termination due to Death or Disability on Vesting of the TSR PSUs
If the TSR Target Price is achieved prior to the end of the TSR Performance Period and Mr. Reynal is terminated due to his death or permanent disability prior to the expiration of such performance period, then all of the TSR PSUs will vest upon such termination. If the TSR Target Price is achieved prior to the end of the TSR Performance Period and Mr. Reynal experiences a Qualifying Termination prior to the end of the TSR
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Performance Period, then he will vest pro-rata in a number of TSR PSUs based on the number of days he was employed with the Company during the TSR Performance Period. The TSR Target Price has not been achieved as of the date hereof so all the TSR PSUs would have been forfeited by Mr. Reynal if his employment had terminated due to one of the above-described events on December 30, 2022.
Effect of a Change in Control on Vesting of the TSR PSUs
If a change in control occurs following the date on which the NEOTSR Target Price is principally employed to a location which is more than 50 miles fromachieved, then all of the offices at which the NEO is principally employedTSR PSUs will become fully vested immediately prior to such relocation; or (3)change in control subject to Mr. Reynal’s continued employment through such change in control.
Subject to Mr. Reynal’s continued employment through such change in control, if a reduction, withoutchange in control occurs during the NEO’s written consent,TSR Performance Period and prior to the date on which the TSR Target Price is achieved, and the award is not assumed by the successor to the Company, then the TSR Performance Period will end on the date of the change in the NEO’s base salary or the target bonus amount the NEO is eligible to earn under the MIP; provided, however, that nothing herein shall be construed to guarantee the NEO’s MIP award payable for any fiscal yearcontrol and (i) if the applicable performance targetssum of (A) the price per share of the Company’s common stock payable in connection with such change in control, plus (B) the cumulative value of any dividends paid during the TSR Performance Period through and including the date of the change in control equals or exceeds the TSR Target Price, the TSR PSUs will vest immediately prior to the closing of such change in control, and (ii) if such sum is less than the TSR Target Price, all of the TSR PSUs will automatically be forfeited immediately prior to the closing of such change in control. If a change in control had occurred on December 30, 2022 and the TSR PSUs were not assumed by the successor to the Company, no vesting of the TSR PSUs would have occurred based on the application of the above-described formula.
If a change in control occurs prior to the date on which the TSR Target Price is achieved and the TSR PSUs are not met;assumed by the successor to the Company and provided, further,Mr. Reynal is terminated due to death, permanent disability or a Qualifying Termination following such change in control but prior to the end of the TSR Performance Period, the TSR PSUs will become fully vested on the date of such termination.
Effect of Qualifying Termination on Vesting of the Performance-Conditioned Stock Option Grants
If Mr. Reynal experiences a Qualifying Termination or he dies or becomes permanently disabled, the number of shares subject to the stock options that it shall not constitute Good Reasonwill become vested on the date of such termination will be determined as if the Company makes an appropriate pro rata adjustment to the applicable amount payablestock options had instead vested 20% per year over five years and, targets under the MIPsolely in the event of a termination due to his death or permanent disability, Mr. Reynal will become immediately vested in an additional 20% of the stock options.
Effect of a Change in Control on Vesting of the Performance-Conditioned Stock Option Grants
If a change in
control occurs and the
fiscal year.Notwithstandingstock options are not assumed, then the foregoing, any event describedstock options will become vested in clauses (1) or (2) above must be an event that would result in a material negativefull immediately prior to the change in control.
If the Executive’s employment relationship withstock options are assumed by the successor to the Company, and thus effectively constitute an involuntary terminationMr. Reynal is subsequently terminated due to death, disability or a Qualifying Termination, the stock options will become fully vested on the date of employment for purposes of Section 409A of the Code.such termination.
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Director Compensation in Fiscal
2017Name | Fees Earned or Paid In Cash ($) | Option Awards ($)(1) | Total ($) |
Brandon F. Brahm | | — | | | — | | | — | |
William P. Donnelly(2) | | 75,000 | | | 400,000 | | | 475,000 | |
John Humphrey(3) | | — | | | — | | | — | |
William E. Kassling | | 75,000 | | | | (1) | | 75,000 | |
Michael V. Marn | | 75,000 | | | | (1) | | 75,000 | |
Peter M. Stavros | | — | | | — | | | — | |
Nickolas Vande Steeg | | 75,000 | | | | (1) | | 75,000 | |
Pastor Velasco(4) | | 75,000 | | | 422,519 | (1) | | 497,519 | |
Joshua T. Weisenbeck | | — | | | — | | | — | |
2022
Kirk E. Arnold | | | 75,000 | | | 190,000 | | | ― | | | 265,000 |
Elizabeth Centoni(3) | | | 75,000 | | | 175,000 | | | ― | | | 250,000 |
William P. Donnelly | | | 75,000 | | | 235,000 | | | (2) | | | 310,000 |
Gary D. Forsee | | | 75,000 | | | 185,000 | | | ― | | | 260,000 |
John Humphrey | | | 75,000 | | | 200,000 | | | ― | | | 275,000 |
Marc E. Jones | | | 75,000 | | | 190,000 | | | ― | | | 265,000 |
Vicente Reynal | | | ― | | | ― | | | ― | | | ― |
Mark Stevenson | | | 37,500 | | | 87,500 | | | ― | | | 125,000 |
Michael Stubblefield | | | 37,500 | | | 92,500 | | | ― | | | 130,000 |
Tony L. White | | | 75,000 | | | 175,000 | | | ― | | | 250,000 |
| (1)
| Represents as to Mr. Donnelly, the aggregate grant date fair value of optionstock awards granted during 20172022 computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)FASB ASC Topic 718 and, as to Mr. Velasco, the incremental fair value, computed718. The aggregate number of RSUs outstanding as of the modification date,December 31, 2022 for each director was as follows: Ms. Arnold: 3,578; Ms. Centoni: 3,296; Mr. Donnelly: 4,426; Mr. Forsee: 3,484; Mr. Humphrey: 3,767; Mr. Jones: 3,578; Mr. Stevenson: 1,757; Mr. Stubblefield: 1,857; and Mr. White: 3,296. The RSUs of Mses. Arnold and Centoni and Messrs. Donnelly, Forsee, Humphrey, Jones, and White vested in connection with the modificationfull on February 22, 2023. The RSUs of his outstanding option award. Messrs. Stevenson and Stubblefield are scheduled to vest in full on August 5, 2023. |
(2)
| In May 2017, we granted 44,799 time-vesting options to Mr. Donnelly (the “Donnelly Time Options”). Of to purchase shares of our common stock at an exercise price of $20.00 per share. All of the Donnelly Time Options 22,399 are fully vested and exercisable. The remaining 22,400 Donnelly Time Options will vest and become exercisable on December 31, 2018. In October 2017, in connection with his resignation from our Board, Mr. Velasco and the Company agreed that Mr. Velasco’s options would remain outstanding and eligible to vest as if he had continued to provide services to the Company through each applicable vesting date. |
In December 2013, we granted 57,534 time-vesting options (the “Director Time Options”) to purchase shares of our common stock at an exercise price of $8.16 per share to each non-employee director who was not associated with our Sponsor: Messrs. Kassling, Marn, Vande Steeg and Velasco. Of the Director Time Options, 46,026 are fully vested and exercisable. The remaining 11,507 Director Time Options will vest and become exercisable on December 31, 2018.
(3)
| (2) | Mr. Donnelly joined our Board of Directors in May 2017. |
| (3) | Mr. Humphrey joinedMs. Centoni resigned from our Board of Directors in February 2018.2023. Ms. Hartsock was appointed to the Board of Directors, effective as of January 2023. |
| (4) | Mr. Velasco resigned from our Board in October 2017. In connection with his resignation, Mr. Velasco and the Company agreed that Mr. Velasco’s options would remain outstanding and eligible to vest as if he had continued to provide services to the Company through each applicable vesting date. |
Description of Director Compensation
This section contains
Following a
descriptioncompetitive market assessment of
non-employee director compensation conducted by Pearl Meyer in connection with the
material termsMerger, the Board adopted the following director compensation program for each of our
compensation arrangements for our non-employee
directors in 2017.directors: TABLE OF CONTENTS
Sponsor Directors
Our non-employee directors associated with KKR, including Messrs. Brahm, Stavros and Weisenbeck, received no compensation for their service on our Board of Directors in 2017.
Messrs. Donnelley, Kassling, Marn, Vande Steeg and Velasco
Each of Messrs. Donnelly, Kassling, Marn, Vande Steeg and Velasco was entitled to receive an annual $75,000Annual cash retainer for his service on the Board of Directors in fiscal 2017,$75,000, payable quarterly in arrears and pro-ratedprorated for any portionpartial year of service;
Annual equity award having a calendar quarter duringfair market value of $175,000, payable in RSUs, which he commences or terminates servicevests on the anniversary of the grant date;
Additional annual equity award having a fair market value of $25,000, payable in RSUs, which vests on the anniversary of the grant date, for serving as the chairperson of our Audit Committee and an additional annual equity award having a fair market value of $10,000, payable in RSUs, which vests on the anniversary of the grant date, for serving as a director,member of such committee, prorated, in each case, for any partial year of service;
Additional annual equity award having a fair market value of $15,000, payable in RSUs, which vests on the anniversary of the grant date, for serving as well as reimbursementthe chairperson of hisour Compensation Committee, Nominating and Corporate Governance Committee or our Sustainability Committee, prorated, in each case, for any partial year of service; and
Additional annual equity award having a fair market value of $35,000, payable in RSUs, which vests on the anniversary of the grant date, to compensate our Lead Director, if applicable, for the additional time and responsibilities associated with this role.
Our directors are not paid any fees for attending meetings, however, our directors are reimbursed for reasonable travel and related expenses associated with attendance at Board or committee meetings. In addition, Mr. Donnelly was eligible to receive
We believe that an
annual $25,000 cash retainerequity-focused compensation scheme for
his service as chairpersonour directors strengthens the alignment of
the Audit Committee, payable in quarterly installments in arrears and pro-rated for any portion of a calendar quarter during which he commences or terminates service as chairperson of the Audit Committee. The Board of Directors also approved in 2017 an annual $25,000 cash retainer for any non-employee director not associated with KKR who serves as chairperson of the Compensation Committee, payable in quarterly installments in arrears and pro-rated for any portion of a calendar quarter during which such director commences or terminates service as chairperson of the Compensation Committee; however, Mr. Stavros, the chairpersoninterests of our
Compensation Committee was ineligible to receive compensation for his service.directors and stockholders.
In connection with his election to our Board of Directors, Mr. Donnelly received the Donnelly Time Options, a grant of options under the 2013 Stock Incentive Plan with a fair value of $400,000, which vested and vesting and becomingbecame exercisable in equal parts on December 31, 2017 and December 31, 2018.
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In addition, in December 2013, we granted each of Messrs. Kassling, Marn, Vande Steeg and Velasco 57,534 Director Time Options pursuant to the 2013 Stock Incentive Plan. Prior to our initial public offering, we also gave our non-employee directors not associated with our sponsor the opportunity to make investments in our common stock, subject to satisfaction of applicable securities law requirements, and each of Messrs. Marn and Vande Steeg has done so.
The Director Time Options vested and became exercisable or will vest and become exercisable with respect to 20% of such Director Time Options on December 31st of each of 2014, 2015, 2016, 2017 and 2018, subject to the director’s continued service through such date.
Vested
Director Time Options and Donnelly Time Options expire upon the earliest to occur of the following events: (1) the tenth anniversary of the date such options were granted; (2) the first anniversary of the cessation of
the director’sMr. Donnelly’s service to the Company because of death or Disability (as defined in the option award agreement); (3) one hundred eighty (180) days after the cessation of
the director’sMr. Donnelly’s service to the Company without Cause (as defined in the option award agreement) (except due to death or Disability); (4) the date
the director’sMr. Donnelly’s service is terminated by the Company for Cause; or (5) pursuant to the repurchase rights in the Director Stockholder’s Agreement described below. In addition, at the discretion of the Company, options may be cancelled at the effective date of a merger, consolidation, or other transaction or capital change of the Company, in accordance with the terms of the 2013 Stock Incentive Plan, in exchange for a payment (payable in cash or other consideration depending on the terms of the transaction) per share equal to the excess of (x) the per share consideration paid to stockholders of the Company in the transaction over (y) the exercise price of the option.
Except as described below with respect to Mr. Velasco’s Director Time Options, the Director Time Options and the Donnelly Time Options will not become exercisable as to any additional shares following the cessation of director’s service to the Company for any reason except in connection with a Change in Control. Notwithstanding the foregoing, immediately prior to any Change in Control (as defined in “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards in 2017— Terms of Equity Awards”), any unvested portion of the Director Time Options and Donnelly Time Options shall vest and become immediately exercisable as to 100% of such Time Options.
On October 23, 2017, in
In connection with his
resignation from our Board of Directors, we agreed to allow Mr. Velasco’s unvested Director Time Options to remain outstanding and eligible to vest following Mr. Velasco’s resignation as if Mr. Velasco had continued to provide services to the Company through each applicable vesting date. The incremental fair value in connection with such modification is reflected in the “Option Awards” column of the “Director Compensation in Fiscal 2017” table above. TABLE OF CONTENTS
In connection with their option awards, each of Messrs.Mr. Donnelly Kassling, Marn, Vande Steeg and Velasco became party to a Director Stockholder’s Agreement.
Under the Director Stockholder’s Agreement, shares of our common stock beneficially owned by our directors are generally nontransferable prior to the earlier of (i) a Change in Control or (ii) the fifth anniversary of the effective date of the applicable Director Stockholder’s Agreement.
Our directors party to a Director Stockholder’s Agreement have limited “piggyback” registration rights with respect to shares of our common stock, provided that in lieu of piggyback rights where such rights would otherwise be available, our Board of Directors, in its sole discretion, may elect to waive the transfer restrictions (other than any such restrictions contained in an underwriters’ lock-up or in connection with a public offering) on the number of shares of Common Stock that would have been subject to such piggyback rights.
Pursuant to the terms of the Director Stockholder’s Agreement, the directors party to such agreement areMr. Donnelly is subject to covenants not to (1) disclose confidential information, (2) solicit customers and certain employees, consultants and independent contractors of the Company, (3) compete with the Company and (4) disparage the Company.
Mr. Humphrey
Mr. Humphrey, who joined our Board on February 7, 2018, will be entitled to receive the compensation described below under “Director Compensation in 2018.” However, while our directors who served prior to 2018 will not receive their first annual equity grant until 2019, in February 2018 Mr. Humphrey received an award of restricted stock units having a fair market value of $125,000 which vests on the anniversary of the grant date.
Stock Ownership and Retention Policy
Our directors are also subject to the stock ownership guidelines and retention policy described under
“—Compensation“Compensation Discussion and
Analysis—Analysis―Other Compensation Practices and Policies that Align Our NEOs to Our Stockholders―Stock Ownership and Retention Policy.”
Director Compensation in 2018
Following a competitive market assessment of non-employee director compensation conducted by Pearl Meyer, the Board adopted the following director compensation program for each of our non-employee directors not associated with KKR:
Cash retainer of $75,000, payable quarterly in arrears;
Additional cash retainer of $25,000 payable quarterly in arrears for serving as the chairperson of our Audit Committee or $12,500 payable quarterly in arrears for serving as the chairperson of our Compensation Committee; and
An annual equity award having a fair market value of $125,000 payable in restricted stock units which vests on the anniversary of the grant date.
Our directors will not be paid any fees for attending meetings, however, our directors will be reimbursed for reasonable travel and related expenses associated with attendance at Board or committee meetings. Because each of our non-employee directors not associated with KKR other than Mr. Humphrey was granted an equity award at or before our initial public offering, such directors will not receive their first equity awards under our newly-adopted director compensation program until 2019.
Compensation Committee Interlocks and Insider Participation
During 2017, none2022, each of Messrs. Donnelly, Jones, Stevenson and White and Ms. Arnold served on our Compensation Committee for at least a portion of the year. None of the current (including Ms. Hartsock), or in the case of Mr. Donnelly, former, members of our Compensation Committee has at any time been one of our executive officers or employees. None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K (“Item 402(u)”), the Company is providing the following information regarding the relationship of the annual total compensation of Vicente Reynal, our Chief Executive Officer (“CEO”) to the median all of our employees (except Mr. Reynal), calculated in a manner consistent with Item 402(u). For 2022, our last completed fiscal year:
The median of the annual total compensation of all of our employees, excluding our CEO, was $65,098.
The annual total compensation of our CEO was $54,505,957.
Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees except our CEO was 837:1.
If the significant one-time impact of the CEO’s Performance-Based Award were removed from the calculations:
The annual total compensation of the CEO would have been $10,886,957.
The ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees except our CEO would have been 167:1.
The median employee identified for calculating the ratio of the CEO's annualized total compensation to that of all employees remains unchanged from the one disclosed in last year’s proxy statement. We are partiesconfident that no significant changes have been made to certain transactionsour employee population or compensation arrangements that would have a significant impact on our pay ratio disclosure.
We determined that, as of December 31, 2021, our employee population consisted of 15,454 individuals, including full time, part time, and temporary employees.
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To identify our “median employee” from this employee population, we obtained annual base salary and target annual bonus information as of December 31, 2021 from our internal payroll records for each employee in our employee population. We believe this consistently applied compensation measure reasonably reflects annual compensation across our employee base. Base salary amounts for employees located outside the United States and compensated in currencies other than U.S. dollars were converted to U.S. dollars based on the average annual exchange rate for 2021. We then ranked the resulting annual base salary plus target annual bonus amounts for all of the employees in the employee population other than our CEO to determine our median employee. Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2022 in accordance with
KKR described below under “Item 13. Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons”.the requirements of Item 402(c)(2)(x) of Regulation S-K for the Summary Compensation Table. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table set forth above in this Proxy Statement.
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Pay vs. Performance (“PvP”) Disclosure
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K (“Item 402(v)”), the Company is providing the following information regarding the relationship between the executive compensation actually paid by the Company and the financial performance of the Company over the applicable time period of the disclosure, calculated in a manner consistent with Item 402(v). Refer to the “Compensation Discussion and Analysis” section of this Proxy Statement for a discussion on how the Compensation Committee determines named executive officer pay.
2022 | | | $54,505,957 | | | $51,229,750 | | | $2,248,514 | | | $1,167,175 | | | $142.73 | | | $120.91 | | | $605 | | | $1,435 | | | $2.36 |
2021 | | | $11,367,565 | | | $26,768,202 | | | $2,287,667 | | | $4,355,177 | | | $168.73 | | | $130.16 | | | $563 | | | $1,192 | | | $2.09 |
2020 | | | $12,373,829 | | | $24,423,018 | | | $2,627,334 | | | $3,169,464 | | | $124.21 | | | $109.01 | | | ($33) | | | $934 | | | $1.28 |
(a)
| Deductions from, and additions to, total compensation in the Summary Compensation Table by year to calculate Compensation Actually Paid include: |
Summary Compensation Table (“SCT”) Total | | | $54,505,957 | | | $11,367,565 | | | $12,373,829 | | | $2,248,514 | | | $2,287,667 | | | $2,627,334 |
Adjustments for Pension | | | | | | | | | | | | | | | | | | |
Deduct: | | | Change in Pension Value reported in SCT | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 |
Add: | | | Amount added for current year service cost | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a |
Add: | | | Amount added for prior service cost impacting current year | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a |
Total Adjustments for Pension | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 |
Adjustments for Equity Awards | | | | | | | | | | | | | | | | | | |
Deduct: | | | Grant date values in SCT | | | ($51,297,935) | | | ($7,454,041) | | | ($8,607,596) | | | ($1,240,928) | | | ($1,070,766) | | | ($1,943,350) |
Add: | | | Year-end fair value of unvested awards granted in the current year | | | $55,421,266 | | | $11,389,717 | | | $17,782,559 | | | $1,150,403 | | | $1,636,124 | | | $2,178,885 |
Add: | | | Year-over-year difference of year-end fair values for unvested awards granted in prior years | | | ($4,849,563) | | | $11,342,130 | | | $2,711,819 | | | ($643,997) | | | $1,466,034 | | | $459,596 |
Add: | | | Fair values at vest date for awards granted and vested in current year | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 |
Add: | | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | | | ($2,549,976) | | | $122,831 | | | $162,409 | | | ($346,817) | | | $36,118 | | | ($153,000) |
Deduct: | | | Forfeitures during current year equal to prior year-end fair value | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 |
Add: | | | Dividends or dividend equivalents not otherwise included in total compensation | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 |
Total Adjustments for Equity Awards | | | ($3,276,208) | | | $15,400,636 | | | $12,049,190 | | | ($1,081,338) | | | $2,067,510 | | | $542,130 |
Compensation Actually Paid | | | $51,229,750 | | | $26,768,202 | | | $24,423,018 | | | $1,167,175 | | | $4,355,177 | | | $3,169,464 |
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(b)
| The following summarizes the valuation assumptions used for stock option awards included as part of Compensation Actually Paid: |
−
| Expected life of each stock option is based on the “simplified method” using an average of the remaining vest and remaining term, as of the vest/FYE date. |
−
| Strike price is based on each grant date closing price and asset price is based on each vest/FYE closing price. |
−
| Risk free rate is based on the Treasury Constant Maturity rate closest to the remaining expected life as of the vest/FYE date. |
−
| Historical volatility is based on daily price history for each expected life (years) prior to each vest/FYE date. Closing prices provided by S&P Capital IQ are adjusted for dividends and splits. |
−
| Represents annual dividend yield on each vest/FYE date. |
(c)
| CEO Compensation Actually Paid in 2022 would have been $2,927,250 if Mr. Reynal’s special one-time Performance-Based Award was excluded from the calculation. We believe this is an appropriate alternative way to view Compensation Actually Paid in 2022 given the long-term nature of the award with vesting events occurring five to ten years after the grant date. In our view, including all of this long-term compensation as Compensation Actually Paid in a single year does not reflect the long-term nature of the award and overstates the actual compensation paid to Mr. Reynal in 2022. |
(d)
| For the non-CEO NEOs, the amounts in the table reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: |
2022: Vikram Kini, Andrew Schiesl, Enrique Minarro-Viseras, Michael Weatherred
2021: Vikram Kini, Andrew Schiesl, Enrique Minarro-Viseras, Michael Weatherred
2020: Vikram Kini, Andrew Schiesl, Enrique Minarro-Viseras, Michael Weatherred, Emily Weaver
Based on the PvP table above, the Compensation Actually Paid values for our CEO and non-CEO NEOs are directionally aligned with our stock price performance – i.e, in years where stock has appreciated, Compensation Actually Paid exceeds the values reported in the Summary Compensation Table, whereas in years where stock price depreciates, Compensation Actually Paid is lower than the amounts reported in the Summary Compensation Table. There would be an even clearer correlation if Mr. Reynal’s special one-time Performance-Based Award was not included in the 2022 Compensation Actually Paid calculation.
This is not an unexpected finding. As one of the key tenets of our compensation philosophy is to deliver the majority of compensation in long-term pay, each of our NEOs’ total pay packages are comprised primarily of equity awards. As such, the Compensation Actually Paid figures will generally move in tandem with TSR.
It is also worth noting that in each of the years disclosed in the table, our total return outpaced the S&P 500 Industrials’ return over the same measurement period.
As to the financial measures displayed in the table (Net Income, Adjusted EBITDA, and Adjusted EPS), the table demonstrates consistent year-over-year improvement for each of these performance measures. Over time, we would expect that continued strong execution on these financial measures would positively influence the TSR and increase Compensation Actually Paid, driving a result that is based on pay-for-performance.
Tabular List of Financial Performance Measures Linked to Compensation Actually Paid
The following financial performance measures represent, in the Company’s view, the most important financial measures used to link Compensation Actually Paid to the NEOs in 2022 to Company performance:
| Adjusted EBITDA | |
| Adjusted EPS | |
| Free Cash Flow | |
| Relative TSR vs. S&P 500 Industrials | |
The following table and accompanying footnotes set forth information regarding the beneficial ownership of our common stock as of
March 14, 2018April 20, 2023 by: (1) each person known to us to beneficially own more than 5% of our common stock, (2) each of the named executive officers, (3) each of our directors and (4) all of our directors and executive officers as a group.
As of
March 14, 2018,April 20, 2023, there were
197,223,598404,677,854 shares of our common stock outstanding.
Name of beneficial owner | Amount and Nature of Beneficial Ownership | Percent of Common Stock Outstanding |
Beneficial Owners of More than 5%
| | | | | | |
Investment funds affiliated with KKR(1) | | 121,157,473 | | | 61.4 | % |
Directors and Named Executive Officers:
| | | | | | |
Vicente Reynal(2) | | 1,280,024 | | | | * |
Philip T. Herndon(2) | | 538,305 | | | | * |
Andrew Schiesl(2) | | 352,318 | | | | * |
Neil D. Snyder(2) | | 222,721 | | | | * |
Enrique Miñarro Viseras(2) | | 60,076 | | | | * |
Peter M. Stavros(3) | | — | | | — | |
Brandon F. Brahm(3) | | — | | | — | |
William P. Donnelly(2) | | 65,041 | | | | * |
John Humphrey | | — | | | | * |
William E. Kassling(2) | | 376,003 | | | | * |
Michael V. Marn(2) | | 46,026 | | | | * |
Nickolas Vande Steeg(2) | | 222,920 | | | | * |
Joshua T. Weisenbeck(3) | | — | | | — | |
All directors and executive officers as a group (15 persons)(2) | | 3,402,830 | | | 1.7 | % |
Beneficial ownership is determined in accordance with the rules of the SEC, and includes common stock of which that person has the right to acquire beneficial ownership within 60 days of April 20, 2023.
Beneficial Owners of More than 5%
| | | | | | |
The Vanguard Group(1) | | | 45,406,196 | | | 11.22% |
T. Rowe Price Investment Management, Inc.(2) | | | 50,820,205 | | | 12.56% |
T. Rowe Price Associates, Inc.(3) | | | 30,462,884 | | | 7.53% |
BlackRock, Inc.(4) | | | 32,108,452 | | | 7.93% |
Directors and Named Executive Officers:
| | | | | | |
Vicente Reynal(5)(6) | | | 2,210,593 | | | * |
Vikram Kini(5) | | | 291,028 | | | * |
Enrique Miñarro Viseras(5) | | | 209,113 | | | * |
Andrew Schiesl(5) | | | 156,523 | | | * |
Michael A. Weatherred(5) | | | 81,093 | | | * |
Kirk E. Arnold | | | 14,541 | | | * |
William P. Donnelly(5) | | | 106,624 | | | * |
Gary D. Forsee | | | 37,901 | | | * |
Jennifer Hartsock | | | — | | | — |
John Humphrey | | | 22,423 | | | * |
Marc E. Jones | | | 18,335 | | | * |
Mark Stevenson | | | 2,488 | | | * |
Michael Stubblefield | | | — | | | — |
Tony L. White | | | 37,234 | | | * |
All directors and executive officers as a group (17 persons(5)) | | | 3,368,315 | | | * |
(1)
| (1) | Includes 121,157,473Beneficial ownership information is based on information contained in the Schedule 13G/A filed on February 9, 2023 on behalf of The Vanguard Group. According to the schedule, included in the shares directlyof our common stock listed above as beneficially owned by KKR Renaissance Aggregator L.P. KKR Renaissance Aggregator GP LLC, as the general partner of KKR Renaissance Aggregator L.P., KKR North America Fund XI L.P., as theThe Vanguard Group are 0 shares over which The Vanguard Group has sole member of KKR Renaissance Aggregator GP LLC, KKR Associates North America XI L.P., as the general partner of KKR North America Fund XI L.P., KKR North America XI Limited, as the general partner of KKR Associates North America XI L.P., KKR Fund Holdings L.P., as the sole shareholder of KKR North America XI Limited, KKR Fund Holdings GP Limited, as a general partner of KKR Fund Holdings L.P., KKRvoting power, 566,936 shares over which The Vanguard Group Holdings L.P., as the sole shareholder of KKR Fund Holdings GP Limited and a general partner of KKR Fund Holdings L.P., KKR Group Limited, as the general partner of KKR Group Holdings L.P., KKR & Co. L.P., as the sole shareholder of KKR Group Limited, KKR Management LLC, as the general partner of KKR & Co. L.P., and Messrs. Henry R. Kravis and George R. Roberts, as the designated members of KKR Management LLC may be deemed to be the beneficial owners havinghas shared voting power, 43,734,284 shares over which The Vanguard Group has sole dispositive power and 1,671,912 shares over which The Vanguard Group has shared dispositive power. According to the schedule, The Vanguard Group’s clients, including investment companies registered under the Investment Company Act of 1940 and other managed accounts, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities reported therein. No one other person’s interest in the securities reported is more than 5%. The address of the principal business office of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. |
(2)
| Beneficial ownership information is based on information contained in the Schedule 13G/A filed on February 14, 2023 on behalf of T. Rowe Price Investment Management, Inc. (“T. Rowe IM”). According to the schedule, included in the shares of our common stock listed above as beneficially owned by T. Rowe IM, are 16,778,175 shares over which T. Rowe IM has sole voting power, 0 shares over which T. Rowe IM has shared voting power, 50,820,205 shares over which T. Rowe IM has sole dispositive power and 0 shares over which T. Rowe IM has shared dispositive power. According to the schedule, T. Rowe IM does not serve as custodian of the assets of any of its clients; accordingly, in each instance only the client or the client’s custodian or trustee bank has the right to receive dividends paid with respect to, and proceeds from the shares describedsale of, such securities. The ultimate power to direct the receipt of dividends paid with respect to, and the proceeds from the sale of, such securities, is vested in this footnote.the individual and institutional clients which T. Rowe IM serves as investment adviser. Any and all discretionary authority which has been delegated to T. Rowe IM may be revoked in whole or in part at any time. The principal business address of eachT. Rowe IM is 100 E. Pratt Street, Baltimore, MD 21202. |
(3)
| Beneficial ownership information is based on information contained in the Schedule 13G/A filed on February 14, 2023 on behalf of T. Rowe Price Associates, Inc. (“T. Rowe Associates”). According to the entitiesschedule, included in the shares of our common stock listed above as beneficially owned by T. Rowe, are 11,474,551 shares over which T. Rowe Associates has sole voting power, 0 shares over which T. Rowe Associates has shared voting power, 30,462,884 shares over which T. Rowe Associates has sole dispositive power and persons identified |
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0 shares over which T. Rowe Associates has shared dispositive power. According to the schedule, T. Rowe Associates does not serve as custodian of the assets of any of its clients; accordingly, in each instance only the client or the client’s custodian or trustee bank has the right to receive dividends paid with respect to, and proceeds from the sale of, such securities. The ultimate power to direct the receipt of dividends paid with respect to, and the proceeds from the sale of, such securities, is vested in the individual and institutional clients which T. Rowe Associates serves as investment adviser. Any and all discretionary authority which has been delegated to T. Rowe Associates may be revoked in whole or in part at any time. The principal business address of T. Rowe Associates is 100 E. Pratt Street, Baltimore, MD 21202.
(4)
| Beneficial ownership information is based on information contained in this paragraph, except Mr. Roberts, is c/o Kohlberg Kravis Roberts &the Schedule 13G/A filed on February 7, 2023 by BlackRock, Inc. in which BlackRock, Inc. reported that it has sole voting power over 29,397,076 shares, shared voting power over 0 shares, sole dispositive power over 32,108,452 shares and shared dispositive power over 0 shares. BlackRock, Inc. indicated the following subsidiaries in the schedule: BlackRock Life Limited, BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co. L.P., 9 West 57th Street, Suite 4200, New York, NY 10019.Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd. The principal business address for Mr. Robertsof BlackRock, Inc. is c/o Kohlberg Kravis Roberts & Co. L.P.55 East 52nd St., 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025.New York, NY 10055. |
| (2)(5)
| The number of shares reported includes shares covered by options that are currently exercisable within 60 days as follows: Mr. Reynal, 1,047,998;1,840,245; Mr. Herndon, 368,737;Gillespie, 111,961; Ms. Hepding, 7,983; Ms. Keene, 13,565; Mr. Kini, 243,846; Mr. Schiesl, 352,318; Mr. Snyder, 194,460;88,728; Mr. Miñarro Viseras, 54,428;177,342; Mr. Weatherred, 48,273; Mr. Donnelly, 22,399; Mr. Kassling, 46,026; Mr. Marn, 46,026; Mr, Vande Steeg, 46,026;44,799; all directors and executive officers as a group, 2,384,749.2,576,742. |
(6)
| The number of shares reported includes 75,000 shares held in a trust for the benefit of Mr. Reynal’s descendants, 171,802 shares held in a trust for the benefit of Mr. Reynal and his spouse and 22,500 shares held in a trust for the benefit of Mr. Reynal’s spouse and descendants. |
| (3) | The principal business address of each of Messrs. Stavros, Weisenbeck and Brahm is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, New York, New York 10019. |
DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
REPORTS
Section 16(a) of the Exchange1934 Act requires executivethe Company’s Directors and certain officers, and directors, a company’s chief accounting officer andas well as persons who beneficially own more than 10% of a company’s common stockthe outstanding shares of Common Stock, to file reports regarding their initial reports ofstock ownership and reports ofsubsequent changes into their ownership with the SECSEC.
Based solely on a review of the reports filed for fiscal year 2022 and the
NYSE. Executive officers, directors,period through the
chief accounting officerdate hereof and
beneficial owners with more than 10% of our common stock are required by SEC regulations to furnish us with copies ofrelated written representations and except as previously reported, we believe that all Section 16(a)
forms they file.Based solelyreports were filed on our review of copies of such reports and written representations from our executive officers, directors and KKR, we believe that our executive officers, directors and KKR complied with all Section 16(a) filing requirements during 2017.
a timely basis, except for a Form 5 for Mr. Reynal relating to an estate planning transfer which was filed late due to a Company administrative oversight.
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TRANSACTIONS WITH RELATED PERSONSArrangements with Our Executive Officers, Directors
Since January 1, 2022, there were no “related person transactions” requiring disclosure under SEC rules and
AdvisorsWe have entered into letter agreements with certain members of management, including each of our executive officers, and our directors and certain advisors, pursuant to which such individuals agreed to invest in our stock and/or through the purchase of our shares with cash. In addition, our Board of Directors granted options to purchase shares of our common stock to certain members of management and key employees, including to our executive officers. In connection with the grants of new options described above, the participating members of our management, including our executive officers, were required to enter into a Management Stockholder’s Agreement as well as a stock option agreement, as applicable.
Below is a brief summary of the principal terms of the Management Stockholder’s Agreements, the Director Stockholder’s Agreements and the Advisor Stockholder’s Agreements, which are qualified in their entirety by reference to the agreements themselves, forms of which are filed as exhibits to this Annual Report on Form 10-K.
Management, Director and Advisor Stockholder’s Agreements
The Management Stockholder’s Agreements impose significant restrictions on transfers of shares of our common stock. Generally, shares held by our management are nontransferable by any means at any time prior to the earlier of (i) the occurrence of a Change in Control (as defined in the Management Stockholder’s Agreements) or (ii) the later to occur of (a) the fifth anniversary of the execution of the applicable Management Stockholder’s Agreement or (b) the consummation of an Initial Public Offering (as defined in the Management Stockholder’s Agreements). These transfer restrictions are subject to certain exceptions, including transfers approved by our Board of Directors; transfers upon the death or Disability (as defined in the Management Stockholder’s Agreements) of the holder; transfers to immediate family members or estate planning vehicles, provided such transferees become party to the applicable Management Stockholder’s Agreement; or repurchases of such shares by the Company.
Additionally, management stockholders have limited “piggyback” registration rights with respect to certain registered offerings conducted by the Company. The maximum number of shares of common stock which a management stockholder may register is generally proportionate with the percentage of common stock being sold by certain affiliates of KKR (relative to their holdings thereof). The Management Stockholder’s Agreements also contain certain lock-up provisions in the event that any shares are offered to the public pursuant to an effective registration statement under the Securities Act.
The Director Stockholder’s Agreements and Advisor Stockholder’s Agreements are substantially similar to the Management Stockholder’s Agreements. In addition to certain exceptions to transfer restrictions related to piggyback rights available to Management Stockholders, the Director and Advisor Stockholder’s Agreements further provide that in lieu of piggyback registration rights in connection with a public offering in which such piggyback rights would otherwise be available, the Board of Directors may waive transfer restrictions with respect to the number of shares that would have been subject to such piggyback rights.
Arrangements with KKR
Stockholders Agreement
In connection with our initial public offering, we entered into a stockholders agreement with certain affiliates of KKR. This agreement grants affiliates of KKR the right to nominate to our Board of Directors a number of designees equal to: (i) at least a majority of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 50% of the shares of our common stock entitled to vote generally in the election of our directors; (ii) at least 40% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 40% but less than 50% of the shares of our common stock entitled to vote generally in the election of our directors; (iii) at least 30% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 30% but less than 40% of the shares of our common stock entitled to vote generally in the election of our directors; (iv) at least 20% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 20% but less 30% of the
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shares of our common stock entitled to vote generally in the election of our directors; and (v) at least 10% of the total number of directors comprising our Board of Directors at such time as long as affiliates of KKR beneficially own at least 5% but less than 20% of the shares of our common stock entitled to vote generally in the election of our directors. For purposes of calculating the number of directors that affiliates of KKR are entitled to nominate pursuant to the formula outlined above, any fractional amounts would be rounded up to the nearest whole number and the calculation would be made on a pro forma basis, taking into account any increase in the size of our Board of Directors (e.g., one and one quarter (11/4) directors shall equate to two directors). In addition, in the event a vacancy on the Board of Directors is created by the death, disability, retirement or resignation of a Sponsor director designee, affiliates of KKR shall, to the fullest extent permitted by law, have the right to have the vacancy filled by a new Sponsor director-designee. In addition, the stockholders agreement grants to KKR special governance rights, for as long as KKR maintains ownership of at least 30% of our outstanding common stock, including rights of approval over certain corporate and other transactions such as mergers or other transactions involving a change in control and certain rights regarding the appointment of our chief executive officer.
Registration Rights Agreement
In connection with the KKR Transaction, certain affiliates of KKR entered into a registration rights agreement with us. In connection with the completion of our initial public offering, we and KKR entered into an amended and restated registration rights agreement. The amended and restated registration rights agreement grants such affiliates of KKR the right to cause us to register shares of our common stock held by it under the Securities Act and, if requested, to use our reasonable best efforts (if we are not eligible to use an automatic shelf registration statement at the time of filing) to maintain a shelf registration statement effective with respect to such shares. Certain affiliates of KKR are also entitled to participate on a pro rata basis in any registration of our common stock under the Securities Act that we may undertake. The amended and restated registration rights agreement also provides that we will pay certain expenses relating to such registrations and indemnify certain affiliates of KKR and members of management participating in any offering against certain liabilities, which may arise under the Securities Act, the Exchange Act, any state securities law or any rule or regulation thereunder applicable to us.
Monitoring Agreement
In connection with the KKR Transaction, we entered into a monitoring agreement with KKR pursuant to which KKR provided various management and advisory services to us and our direct and indirect divisions, subsidiaries, parent entities and controlled affiliates and received fees and reimbursements of related out-of-pocket expenses. We paid management fees of $17.3 million to KKR for the year ended December 31, 2017. In May 2017, the monitoring agreement was terminated in accordance with its terms and we paid a termination fee of approximately $16.2 million.
Indemnification Agreement
In connection with entering into the monitoring agreement, we also entered into a separate indemnification agreement with KKR and certain of its affiliates, which provides customary exculpation and indemnification provisions in favor of KKR and such affiliates in connection with the services provided to us under the monitoring, transaction fee and syndication fee agreements.
Relationship with KKR Capstone Americas LLC
We have utilized and may continue to utilize KKR Capstone Americas LLC and/or its affiliates (“KKR Capstone”), a consulting company that works exclusively with KKR’s portfolio companies, for consulting services, and have paid to KKR Capstone related fees and expenses. KKR Capstone is not a subsidiary or affiliate of KKR. KKR Capstone operates under several consulting agreements with KKR and uses the “KKR” name under license from KKR.
Relationship with KKR Credit
Since 2014, investment funds or accounts managed or advised by the global credit business of KKR (“KKR Credit”) were participating lenders under our existing credit agreements and holders of notes issued by us, and as of December 31, 2017, had received in aggregate principal payments of approximately $0.5 million and interest payments of approximately $4.0 million. As of December 31, 2017, investment funds or accounts managed or advised by KKR Credit held a position in the debt of the Company.
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Financing Arrangements with Related Parties
In May 2017, KKR Capital Markets LLC, an affiliate of KKR, acted as an underwriter in connection with the initial public offering of the Company’s stock and received underwriter discounts and commissions of approximately $8.9 million. In August 2017, KKR Capital Markets LLC received $1.5 million for services rendered in connection with a debt refinancing transaction. In November 2017, KKR Capital Markets LLC acted as an underwriter in connection with an offering of Company’s stock by certain selling shareholders, and earned underwriter discounts and commissions of approximately $3.5 million.
Policies and Procedures for Related Person Transactions
Our Board of Directors has adopted a written statement of policy regarding transactions with related persons, which we refer to as our “related person transaction policy.” Our related person transaction policy requires that (a) any “related person transaction” (defined as any transaction that is anticipated would be reportable by us under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) be approved or ratified by an approving body comprised of the disinterested members of our Board of Directors or any committee of the Board of Directors (provided that a majority of the members of the Board of Directors or such committee, respectively, are disinterested) and (b) any employment relationship or transaction involving an executive officer and any related compensation be approved by the Compensation Committee of the Board of Directors or recommended by the Compensation Committee to the Board of Directors for its approval. In connection with the review and approval or ratification of a related person transaction:
management must disclose to the committee or disinterested directors, as applicable, the name of the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction;
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction complies with the terms of our agreements governing our material outstanding indebtedness that limit or restrict our ability to enter into a related person transaction;
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction will be required to be disclosed in our applicable filings under the Securities Act or the Exchange Act, and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with such Acts and related rules; and
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act of 2002.
In addition, the related person transaction policy provides that the committee or disinterested directors, as applicable, in connection with any approval or ratification of a related person transaction involving a non-employee director or director nominee, should consider whether such transaction would compromise the director or director nominee’s status as an “independent,” “outside,”“independent” or “non-employee” director, as applicable, under the rules and regulations of the SEC the NYSE and the Internal Revenue Code.
NYSE.TABLE OF CONTENTS
STOCKHOLDER PROPOSALS FOR THE
20192024 ANNUAL MEETING
If any stockholder wishes to propose a matter for consideration at our
20192023 Annual Meeting of Stockholders, the proposal should be mailed by certified mail return receipt requested, to our Corporate Secretary,
Gardner Denver Holdings,Ingersoll Rand Inc.,
222 East Erie Street,525 Harbour Place Drive, Suite
500 Milwaukee, Wisconsin 53202.600, Davidson, North Carolina 28036. To be eligible under the SEC’s stockholder proposal rule (Rule 14a-8(e) of the Exchange Act) for inclusion in our
20192023 Annual Meeting Proxy Statement and form of proxy, a proposal must be received by our Corporate Secretary on or before
November 27, 2018.December 30, 2023. Failure to deliver a proposal in accordance with this procedure may result in it not being deemed timely received.
In addition, our
bylawsBylaws permit stockholders to nominate directors and present other business for consideration at our Annual Meeting of Stockholders. To make a director nomination or present other business
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for consideration at the Annual Meeting of Stockholders to be held in 2019,2024, you must submit a timely notice in accordance with the procedures described in our by-laws.Bylaws. To be timely, a stockholder’s notice shall be delivered to the Corporate Secretary at the principal executive offices of our Company not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. Therefore, to be presented at our Annual Meeting to be held in 2019,2024, such a proposal must be received on or after January 10, 2019,February 16, 2024, but not later than February 9, 2019.March 17, 2024. In the event that the date of the Annual Meeting of Stockholders to be held in 20192024 is advanced by more than 30 days, or delayed by more than 70 days, from the anniversary date of this year’s Annual Meeting of Stockholders, such notice by the stockholder must be so received no earlier than 120 days prior to the Annual Meeting of Stockholders to be held in 20192024 and not later than the later of the 90th day prior to such Annual Meeting of Stockholders to be held in 20192024 or ten (10) calendar days following the day on which public announcement of the date of such Annual Meeting is first made. Any such proposal will be considered timely only if it is otherwise in compliance with the requirements set forth in our bylaws.Bylaws. The proxy solicited by the Board for the 20192024 Annual Meeting of Stockholders will confer discretionary authority to vote as the proxy holders deem advisable on such stockholder proposals which are considered untimely.
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 16, 2024.
HOUSEHOLDING OF PROXY MATERIALS SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice addressed to those stockholders. This process, which is commonly referred to as “householding,” provides cost savings for companies by reducing printing and mailing costs and helps the environment by conserving natural resources. Some brokers household proxy materials, delivering a single proxy statement or notice to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will generally continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker. If your household received a single Notice of Internet Availability of Proxy Materials or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact Broadridge Householding Department, by calling their toll free number, 1-866-540-7095 or by writing to: Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. You will be removed from the householding program within 30 days of receipt of your instructions at which time you will then be sent separate copies of the documents.
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The Board does not know of any other matters to be brought before the meeting. If other matters are presented, the proxy holders have discretionary authority to vote all proxies in accordance with their best judgment.
By Order of the Board of Directors,
Andrew Schiesl
We make available, free of charge on our website, all of our filings that are made electronically with the SEC,
including Forms 10-K, 10-Q and 8-K. To access these filings, go to our website (www.gardnerdenver.com)(www.irco.com) and click on “SEC“Financials―SEC Filings” under the “Investors” heading.
Copies of our Annual Report on Form 10-K for the year ended December 31,
2017,2022, including financial
statements and schedules thereto, filed with the SEC, are also available without charge to stockholders upon written request addressed to:
Corporate Secretary
Gardner Denver Holdings,
Ingersoll Rand Inc.
222 East Erie Street,
525 Harbour Place Drive, Suite 500
Milwaukee, Wisconsin 53202600
Davidson, North Carolina 28036
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Reconciliation of GAAP Measures to Non-GAAP Measures
In addition to consolidated GAAP financial measures, Ingersoll Rand reviews various non-GAAP financial measures, including “Organic Revenue Growth,” “Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Diluted EPS,” “Free Cash Flow,” “Adjusted Free Cash Flow,” “Supplemental Adjusted EBITDA,” “Supplemental Adjusted Revenue” and “Supplemental Adjusted Diluted EPS.”
Ingersoll Rand believes Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS are helpful supplemental measures to assist management and investors in evaluating the Company’s operating results as they provide supplemental information about the Company’s financial performance on a combined basis as if the Merger had occurred on January 1, 2019. Ingersoll Rand believes Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS are helpful supplemental measures to assist management and investors in evaluating the Company’s operating results as they exclude certain items that are unusual in nature or whose fluctuation from period to period do not necessarily correspond to changes in the operations of Ingersoll Rand’s business. Ingersoll Rand believes Organic Revenue Growth is a helpful supplemental measure to assist management and investors in evaluating the Company’s operating results as it excludes the impact of foreign currency and acquisitions on revenue growth. Adjusted EBITDA represents net income before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net income including interest, depreciation and amortization of non-acquisition related intangible assets and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions. Organic Revenue Growth is defined as As Reported Revenue growth less the impacts of Foreign Currency and Acquisitions. Ingersoll Rand believes that the adjustments applied in presenting Adjusted EBITDA and Adjusted Net Income are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that the Company does not expect to continue at the same level in the future. Adjusted Diluted EPS is defined as Adjusted Net Income divided by Adjusted Diluted Average Shares Outstanding.
Ingersoll Rand uses Free Cash Flow and Adjusted Free Cash Flow to review the liquidity of its operations. Ingersoll Rand measures Free Cash Flow as cash flows from operating activities less capital expenditures and Adjusted Free Cash Flow as cash flows from operating activities less capital expenditures and other adjustments. Ingersoll Rand believes Free Cash Flow and Adjusted Free Cash Flow are useful supplemental financial measures for management and investors in assessing the Company’s ability to pursue business opportunities and investments and to service its debt. Free Cash Flow and Adjusted Free Cash Flow are not measures of our liquidity under GAAP and should not be considered as an alternative to cash flows from operating activities.
Supplemental Adjusted EBITDA represents Adjusted EBITDA as if the Merger had occurred on January 1, 2019. Ingersoll Rand believes that the adjustments applied in presenting Adjusted EBITDA and Supplemental Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that the Company does not expect to continue at the same level in the future. Supplemental Adjusted Revenue represents revenue for the Company as if the Merger had occurred on January 1, 2019. Supplemental Adjusted Diluted EPS is defined as Adjusted Net Income divided by Adjusted Diluted Average Shares Outstanding as if the Merger had occurred on January 1, 2019.
Management and Ingersoll Rand’s board of directors regularly use these measures as tools in evaluating the Company’s operating and financial performance and in establishing discretionary annual compensation. Such measures are provided in addition to, and should not be considered to be a substitute for, or superior to, the comparable measures under GAAP. In addition, Ingersoll Rand believes that Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow and Adjusted Free Cash Flow are frequently used by investors and other interested parties in the evaluation of issuers, many of which also present Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow and Adjusted Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity.
Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS should not be considered as alternatives to net income, diluted earnings per share or any
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other performance measure derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Adjusted Diluted EPS have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing Ingersoll Rand’s results as reported under GAAP.
Reconciliations of Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Adjusted Free Cash Flow, Supplemental Adjusted EBITDA, Supplemental Adjusted Revenue and Supplemental Diluted EPS to their most comparable U.S. GAAP financial metrics for historical periods are presented in the tables below.
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INGERSOLL RAND INC. AND SUBSIDIARIES
ADJUSTED COMBINED FINANCIAL INFORMATION BY SEGMENT
(Unaudited; in millions, except per share amounts)
Ingersoll Rand
| | | | | | |
Orders | | | $6,367.6 | | | $5,764.5 |
Revenue | | | 5,916.3 | | | 5,152.4 |
Adjusted EBITDA (non-GAAP) | | | 1,434.8 | | | 1,191.9 |
Adjusted EBITDA Margin (non-GAAP) | | | 24.3% | | | 23.1% |
Adjusted Diluted EPS (non-GAAP) | | | $2.36 | | | $2.09 |
Free Cash Flow (non-GAAP) | | | 770.8 | | | 563.7 |
Free Cash Flow Margin (non-GAAP) | | | 13.0% | | | 10.9% |
| | | | | | |
Industrial Technologies & Services
| | | | | | |
Orders | | | $5,120.1 | | | $4,678.8 |
Revenue | | | 4,705.1 | | | 4,161.0 |
Segment Adjusted EBITDA | | | 1,214.0 | | | 1,033.7 |
Segment Adjusted EBITDA Margin | | | 25.8% | | | 24.8% |
| | | | | | |
Precision & Science Technologies
| | | | | | |
Orders | | | $1,247.5 | | | $1,085.7 |
Revenue | | | 1,211.2 | | | 991.4 |
Segment Adjusted EBITDA | | | 347.5 | | | 291.4 |
Segment Adjusted EBITDA Margin | | | 28.7% | | | 29.4% |
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INGERSOLL RAND INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME AND CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO FREE CASH FLOW
(Unaudited; in millions)
Net Income | | | $608.5 | | | $565.0 |
Less: Income from discontinued operations | | | 0.5 | | | 121.0 |
Less: Income tax benefit (provision) from discontinued operations | | | 14.7 | | | (79.4) |
Income from Continuing Operations, Net of Tax | | | 593.3 | | | 523.4 |
Plus:
| | | | | | |
Interest expense | | | 103.2 | | | 87.7 |
Provision (benefit) for income taxes | | | 149.6 | | | (21.8) |
Depreciation expense | | | 81.8 | | | 85.1 |
Amortization expense | | | 347.6 | | | 332.9 |
Restructuring and related business transformation costs | | | 32.3 | | | 18.8 |
Acquisition related expenses and non-cash charges | | | 40.7 | | | 65.2 |
Stock-based compensation | | | 85.6 | | | 95.9 |
Foreign currency transaction gains, net | | | (5.9) | | | (12.0) |
Loss (income) on equity method investments | | | (0.7) | | | 11.4 |
Loss on extinguishment of debt | | | 1.1 | | | 9.0 |
Adjustments to LIFO inventories | | | 36.1 | | | 33.2 |
Gain on settlement of post-acquisition contingencies | | | (6.2) | | | (30.1) |
Other adjustments | | | (23.7) | | | (6.8) |
Adjusted EBITDA | | | $1,434.8 | | | $1,191.9 |
Minus:
| | | | | | |
Interest expense | | | 103.2 | | | 87.7 |
Income tax provision, as adjusted | | | 267.3 | | | 120.7 |
Depreciation expense | | | 81.8 | | | 85.1 |
Amortization of non-acquisition related intangible assets | | | 18.8 | | | 17.0 |
Interest income on cash and cash equivalents | | | (8.0) | | | — |
Adjusted Net Income | | | $971.7 | | | $881.4 |
| | | | | | |
Cash Flows from Operating Activities from Continuing Operations | | | 865.4 | | | 627.8 |
Minus:
| | | | | | |
Capital expenditures | | | 94.6 | | | 64.1 |
Free Cash Flow | | | $770.8 | | | $563.7 |
| | | | | | |
Revenue | | | 5,916.3 | | | 5,152.4 |
Free Cash Flow Margin | | | 13.0% | | | 10.9% |
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INGERSOLL RAND INC. AND SUBSIDIARIES
RECONCILIATION OF DILUTED NET INCOME PER SHARE TO
ADJUSTED DILUTED EARNINGS PER SHARE
(Unaudited; in millions, except per share amounts)
Diluted Net Income Per Share (As Reported)1 | | | $1.47 | | | $1.34 |
Less: Diluted Net Income Per Share from Discontinued Operations (As Reported)1 | | | 0.04 | | | 0.10 |
Diluted Net Income Per Share from Continuing Operations (As Reported)1 | | | 1.44 | | | 1.24 |
Plus:
| | | | | | |
Provision (benefit) for income taxes | | | 0.36 | | | (0.05) |
Amortization of acquisition related intangible assets | | | 0.80 | | | 0.75 |
Restructuring and related business transformation costs | | | 0.08 | | | 0.05 |
Acquisition related expenses and non-cash charges | | | 0.10 | | | 0.15 |
Stock-based compensation | | | 0.21 | | | 0.23 |
Foreign currency transaction gains, net | | | (0.01) | | | (0.03) |
Loss on equity method investments | | | — | | | 0.03 |
Loss on extinguishment of debt | | | — | | | 0.02 |
Adjustments to LIFO inventories | | | 0.09 | | | 0.08 |
Gain on settlement of post-acquisition contingencies | | | (0.02) | | | (0.07) |
Other adjustments | | | (0.06) | | | (0.02) |
Minus:
| | | | | | |
Income tax provision, as adjusted | | | 0.65 | | | 0.29 |
Interest income on cash and cash equivalents | | | (0.02) | | | — |
Adjusted Diluted Earnings Per Share2 | | | $2.36 | | | $2.09 |
| | | | | | |
Average shares outstanding:
| | | | | | |
Basic, as reported | | | 405.3 | | | 414.8 |
Diluted, as reported | | | 410.2 | | | 421.2 |
Adjusted diluted2 | | | 410.2 | | | 421.2 |
1
| Basic and diluted earnings per share (as reported) are calculated by dividing net income attributable to Ingersoll Rand Inc. by the basic and diluted average shares outstanding for the respective periods. |
2
| Adjusted diluted share count and adjusted diluted earnings per share include incremental dilutive shares, using the treasury stock method, which are added to average shares outstanding. |
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INGERSOLL RAND INC. AND SUBSIDIARIES
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO ADJUSTED CASH FLOW FROM OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
(Unaudited; in millions)
Cash Flow from Operating Activities from Continuing Operations | | | $627.8 |
Plus:
| | | |
Synergy delivery and stand-up related costs | | | 31.3 |
Cash taxes related to SVT and HPS divestitures | | | 253.7 |
Settlement of post-acquisition contingencies | | | (49.5) |
Adjusted Cash Flow from Operating Activities | | | 863.3 |
Minus:
| | | |
Capital expenditures | | | 64.1 |
Adjusted Free Cash Flow | | | $799.2 |
| | | |
Revenue | | | $5,152.4 |
Adjusted Free Cash Flow Margin | | | 15.5% |
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INGERSOLL RAND INC. AND SUBSIDIARIES
REVENUE GROWTH BY SEGMENT(1)
(Unaudited)
Ingersoll Rand
| | | | | | |
Organic growth | | | 16.1% | | | 12.3% |
Impact of foreign currency | | | (5.7%) | | | 2.6% |
Impact of acquisitions | | | 4.4% | | | 3.7% |
Total adjusted orders and revenue growth | | | 14.8% | | | 18.6% |
| | | | | | |
Industrial Technologies & Services
| | | | | | |
Organic growth | | | 17.5% | | | 12.6% |
Impact of foreign currency | | | (5.5%) | | | 2.7% |
Impact of acquisitions | | | 1.1% | | | 2.2% |
Total adjusted orders and revenue growth | | | 13.1% | | | 17.5% |
| | | | | | |
Precision & Science Technologies
| | | | | | |
Organic growth | | | 10.3% | | | 10.9% |
Impact of foreign currency | | | (6.4%) | | | 2.3% |
Impact of acquisitions | | | 18.3% | | | 10.0% |
Total adjusted orders and revenue growth | | | 22.2% | | | 23.2% |
(1)
| Organic growth, impact of foreign currency, and impact of acquisitions are non-GAAP measures. References to “impact of acquisitions” refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition. The portion of GAAP revenue attributable to currency translation is calculated as the difference between (a) the period-to-period change in revenue (excluding acquisition sales) and (b) the period-to-period change in revenue (excluding acquisition sales) after applying prior year foreign exchange rates to the current year period. |
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INGERSOLL RAND INC. AND SUBSIDIARIES
SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION BY SEGMENT
(Unaudited; in millions)
Ingersoll Rand
| | | | | | |
Supplemental Adjusted Orders | | | $4,410.4 | | | $4,829.9 |
Supplemental Adjusted Revenue (non-GAAP) | | | 4,344.4 | | | 4,907.8 |
Supplemental Adjusted EBITDA (non-GAAP) | | | 933.9 | | | 960.2 |
Supplemental Adjusted EBITDA Margin (non-GAAP) | | | 21.5% | | | 19.6% |
| | | | | | |
Industrial Technologies & Services
| | | | | | |
Supplemental Adjusted Orders | | | $3,576.2 | | | $3,983.0 |
Supplemental Adjusted Revenue (non-GAAP) | | | 3,540.0 | | | 4,057.5 |
| | | | | | |
Precision & Science Technologies
| | | | | | |
Supplemental Adjusted Orders | | | $834.2 | | | $846.9 |
Supplemental Adjusted Revenue (non-GAAP) | | | 804.4 | | | 850.3 |
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INGERSOLL RAND INC. AND SUBSIDIARIES
SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF GAAP REVENUE TO SUPPLEMENTAL ADJUSTED REVENUE BY SEGMENT AND FOR THE COMPANY
(Unaudited; in millions)
Segment
| | | | | | | | | | | | | | | | | | |
Industrial Technologies & Services | | | $3,248.2 | | | $291.8 | | | $3,540.0 | | | $1,700.9 | | | $2,356.6 | | | $4,057.5 |
Precision & Science Technologies | | | 725.0 | | | 79.4 | | | 804.4 | | | 316.6 | | | 533.7 | | | 850.3 |
Total Company | | | $3,973.2 | | | $371.2 | | | $4,344.4 | | | $2,017.5 | | | $2,890.3 | | | $4,907.8 |
(1)
| For the year ended December 31, 2020, the “Adjustments” column represents the impact of two months (January and February of 2020) of standalone legacy Ingersoll Rand Industrial Segment activity. As it relates to adjustments to Segment Adjusted EBITDA, these amounts are impacted by the merged Company's corporate costs, a portion of which is allocated to the business segments. |
(2)
| For the year ended December 31, 2019, the “Adjustments” column represents the impact of one full year of 2019 standalone legacy Ingersoll Rand Industrial Segment activity. As it relates to adjustments to Segment Adjusted EBITDA, these amounts are impacted by the newly merged Company's corporate costs, a portion of which is allocated to the business segments. |
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INGERSOLL RAND INC. AND SUBSIDIARIES
SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
AND SUPPLEMENTAL ADJUSTED EBITDA
(Unaudited; in millions)
Net Income (Loss) (GAAP)
| | | $(32.4) | | | $159.1 |
Less: Income from discontinued operations | | | 26.0 | | | 80.7 |
Less: Income tax provision from discontinued operations | | | (1.6) | | | (18.9) |
Income (loss) from continuing operations, net of tax | | | (56.8) | | | 97.3 |
Plus(1):
| | | | | | |
Interest expense | | | 111.1 | | | 88.4 |
Provision for income taxes | | | 11.4 | | | 12.9 |
Depreciation expense | | | 75.3 | | | 41.2 |
Amortization expense | | | 335.1 | | | 105.3 |
Impairment of intangible assets | | | 19.9 | | | — |
Restructuring and related business transformation costs | | | 88.0 | | | 19.6 |
Acquisition related expenses and non-cash charges | | | 181.5 | | | 54.6 |
Stock-based compensation | | | 47.0 | | | 20.2 |
Foreign currency transaction losses, net | | | 18.6 | | | 7.3 |
Loss on extinguishment of debt | | | 2.0 | | | 0.2 |
Shareholder litigation settlement recoveries | | | — | | | (6.0) |
Adjustments to LIFO inventories | | | 39.8 | | | 0.2 |
Other adjustments | | | 5.2 | | | 0.4 |
Adjusted EBITDA(1) | | | 878.1 | | | 441.6 |
Additional Segment Adjusted EBITDA Adjustments(2):
| | | | | | |
Industrial Technologies & Services | | | $40.3 | | | $424.8 |
Precision & Science Technologies | | | 20.4 | | | 140.2 |
Incremental corporate expenses not allocated to segments | | | (4.9) | | | (46.4) |
Supplemental Adjusted EBITDA | | | 933.9 | | | 960.2 |
(1)
| These amounts are reported in accordance with US GAAP and have not been adjusted to reflect the pro forma impact of a full quarter of the combined Ingersoll Rand. |
(2)
| These “Additional Segment Adjusted EBITDA Adjustments” represent the impact of two months (January and February of 2020) of standalone legacy Ingersoll Rand Industrial Segment activity in the twelve month period ended December 31, 2020 and a full year of standalone legacy Ingersoll Rand Industrial Segment activity in the twelve month period ended December 31, 2019. The incremental corporate expenses not allocated to segments represent additional corporate expenses incurred by the Company to operate the combined Ingersoll Rand. |
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INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF GAAP DILUTED EARNINGS PER SHARE TO
SUPPLEMENTAL ADJUSTED DILUTED EARNINGS PER SHARE
(Unaudited; in millions, except per share amounts)
Diluted Loss Per Share (GAAP) | | | $(0.09) |
Diluted Earnings Per Share from Discontinued Operations (GAAP) | | | 0.06 |
Diluted Loss Per Share from Continuing Operations (GAAP) | | | (0.15) |
Plus: | | | |
Effect of transaction(1) | | | 0.01 |
Legacy Ingersoll Rand Industrial Segment's earnings(2) | | | 0.13 |
Interest expense | | | 0.26 |
Provision for income taxes | | | 0.03 |
Depreciation expense | | | 0.18 |
Amortization expense | | | 0.79 |
Impairment of intangible assets | | | 0.05 |
Restructuring and related business transformation costs | | | 0.21 |
Acquisition related expenses and non-cash charges | | | 0.43 |
Stock-based compensation | | | 0.11 |
Foreign currency transaction losses, net | | | 0.04 |
Shareholder litigation settlement recoveries | | | 0.09 |
Other adjustments | | | 0.03 |
Minus:
| | | |
Adjusted interest expense | | | 0.28 |
Adjusted income tax provision, as adjusted | | | 0.42 |
Adjusted depreciation expense | | | 0.20 |
Adjusted amortization of non-acquisition related intangible assets | | | 0.03 |
Supplemental Adjusted Diluted Earnings Per Share | | | $1.28 |
Supplemental Adjusted Diluted Shares Outstanding | | | 422.5 |
(1)
| This amount represents the impact of adjusting the GAAP weighted average shares outstanding for the period by the additional shares outstanding as if the acquisition of the Ingersoll Rand Industrial Segment was in effect for the entirety of the twelve month periods ended December 31, 2020. |
(2)
| The “Legacy Ingersoll Rand Industrial Segment's earnings” represent the impact of two months (January and February of 2020) of standalone legacy Ingersoll Rand Industrial Segment activity in the twelve month period ended December 31, 2020. This line is inclusive of incremental corporate expenses not allocated to segments which represent additional corporate expenses incurred by the Company to operate the combined Ingersoll Rand. |