UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Hillenbrand, Inc. | | |
| Hillenbrand, Inc. |
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HILLENBRAND, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 11, 2021
20, 2024
The Annual Meeting of shareholders of Hillenbrand, Inc., an Indiana corporation (the “Company”), will be held at the Company’s headquarters at One Batesville Boulevard, Batesville, Indiana 47006, on Thursday,Tuesday, February 11, 2021,20, 2024, at 10:00 a.m. Eastern Standard Time, for the following purposes:
(1)to elect three members to the Board of Directors;
| (1) | to elect three members to the Board of Directors; |
(2)to approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers (“Say on Pay Vote”);
| (2) | to approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers;
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| (3) | to approve the amendment and restatement of the Company’s Stock Incentive Plan;
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| (4) | to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2021; and
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| (5) | to transact such other business as may properly come before the meeting and any postponement or adjournment of the meeting.
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(3)to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2024; and
(4)to transact such other business as may properly come before the meeting and any postponement or adjournment of the meeting.
We intend to hold the Annual Meeting in person. But given public health concerns related to the COVID-19 pandemic,person, but we urge you to consider voting in advance of the meeting via one of the remote methods described in the proxy statement in lieu of attending the meeting in person. In addition, we continue to actively monitor developments in relation to the COVID-19 pandemic and the related recommendations and protocols issued and that may be issued by public health authorities and governments. The health and well-being of our employees and shareholders is a high priority, and we are sensitive to the public health and travel concerns our shareholders may have. Accordingly, ifstatement. If for any reason we determine that it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for the meeting, which may include a change in venue or holding the meeting solely by means of remote communication. We will announce any such change and the details on how to participate by press release, on our web site at https://ir.hillenbrand.com, and in a filing with the Securities and Exchange Commission. If you are planning to attend the Annual Meeting in person, please check our web site priorin advance for any updates to planned arrangements.
In preparing for the meeting date. In addition, for your safetyAnnual Meeting, we regularly review and ours, weconsider the requirements, recommendations, and protocols that are issued and that may be issued by public health authorities and governments. We require you to register your planned in-person attendance with us at least ten (10) business days prior to the meeting, by writing to Kaveh Bakhtiari, Senior Director,the Investor Relations Department, Hillenbrand, Inc., One Batesville Boulevard, Batesville, Indiana 47006 or by email at investors@hillenbrand.com. Pre-registrationPreregistration and an admission ticket, as well as matching photo identification, are necessary to gain entrance to the secure area of our headquarters building where the meeting will be held, and enhanced health and safety protocols will be in place. In addition, due to these extraordinary public health circumstances and contrary to prior years, no food or beverages will be served, and the Chief Executive Officer’s business update that has been provided after past annual meetings will not take place. Please know that we are making the decisions to limit opportunities for social interaction with great reluctance, as we trulyheld. We value the opportunity to have more personal engagement with our shareholders. We also understand that circumstancesshareholders and require you to follow these procedures and any protocols we may be very differenthave in early February, but we have to makeplace on the best decision we can based on information available to us today.meeting date.
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| By Order of the Board of Directors, | |
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| Nicholas R. Farrell | |
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Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read the proxy statement and submit your proxy and voting instructions as soon as possible. Important notice regarding the availability of proxy materials for the Annual Meeting of shareholders to be held on February 11, 2021:20, 2024: This proxy statement, the accompanying proxy card, and our 20202023 Annual Report to Shareholders are available on the Internet at www.hillenbrand.com.
December 29, 2020
January 9, 2024
TABLE OF CONTENTS
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HILLENBRAND, INC.
PROXY STATEMENT SUMMARY
To assist you in reviewing the proposals to be acted upon at the 20212024 Annual Meeting of shareholders (the “Annual Meeting”) of Hillenbrand, Inc., an Indiana corporation (“Hillenbrand” or the “Company”), we call your attention to the following information about the proposals and the Board’s voting recommendations, the Company’s director nominees, andalong with highlights of the Company’s corporate governance and executive compensation practices. The following description is only a summary. For more complete information about these topics, please review the proxy statement in its entirety.
Annual Meeting Information
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| Time and Date: | February 11, 202120, 2024 @ 10:00 a.m. EST |
| Location: | Hillenbrand headquarters |
| Record Date: | December 14, 2020 15, 2023 |
| Admission: | TicketPre-registration by writing to the Investor Relations Department (email to investors@hillenbrand.com acceptable), together with ticket attached to the proxy card (available to beneficial owners upon request as detaileddescribed in the proxy statement) and photo identification
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See “Questions and Answers about the Annual Meeting and Voting” in the proxy statement for additional information.
Proposals and Voting Recommendations
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| Proposal | Board’s Voting
Recommendation | Page
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| No. 1 | Election of Directors | FOR | Board’s Voting
Recommendation
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No. 1 | Election of Directors | FOR | 15 |
| No. 2 | Non-Binding Advisory Vote to Approve Compensation of Named Executive Officers, or “Say on Pay” | FOR | 95 |
| No. 3 | Approval of the Amendment and Restatement of the Company’s Stock Incentive Plan | FOR | 100 |
No. 4 | Ratification of Appointment of the Independent Registered Public Accounting Firm | FOR | 111 |
Incentive Compensation Plans and Results
Our compensation program is characterized by certain distinct features highlighted in the proxy statement that we believe strengthen its performance orientation and reflect our ongoing commitment to align executive pay with long term shareholder value.1
Short-term: For the Company’s short-term incentive compensation (“STIC”The Compensation and Management Development Committee of our Board of Directors (the “Compensation Committee”) plan,determined for fiscal 2023 to use net revenue, order intake (used by our Coperion subsidiary in lieu of net revenue as further detailed in the proxy statement), STIC incomeadjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and cash
1 See the “Executive Compensation” section of our proxy statement for additional detail on our compensation program and for additional background on our Say on Pay Vote.
conversion cycle areas the metrics thatfor the Compensation and Management Development Committee of our Board of Directors (the “Compensation Committee”Company’s short-term incentive compensation (“STIC”) has determined to useplan in evaluating the Company’s operational performance, efficiency, and sustainable improvements, as shown in the charts below. We believe that these metrics align the interests of our management with those of our shareholders notwithstanding present uncertainty in global markets, caused largely by the COVID-19 pandemic.1
1 shareholders. For fiscal year 2021 STIC, however, in light of ongoing uncertainty,2023, the Compensation Committee has approved useconducted a comprehensive review of two six-month measurement periods rather than one twelve-month period, as further describedthe performance and payout curves associated with the metrics within the STIC plan and determined that the wider and flatter curves used in the “Compensation Discussionpast two performance cycles were no longer needed to address the economic and Analysis” sectionsupply chain challenges brought about by COVID. Therefore, the Compensation Committee set performance and payout curves to levels more consistent with pre-pandemic levels, and which aligned with the going-forward needs of the proxy statement.Company.
The following charts show actual performance for these metrics for the past three years, reflected as the achievement percentage of target:2
Long-term: For the Company’s long-term incentive compensation (“LTIC”) plan for our Named Executive Officers, the Compensation Committee determined for fiscal 20202023 that one-third of the grant value be awarded in stock options and the remaining two-thirds in performance-based restricted stock units. The restricted stock units are based on shareholder value creation and relative total shareholder return metrics over a three-year measurement period, which we believe closely aligns the interests of our management with those of our shareholders.
2 The charts present the achievement percentages for these metrics at the consolidated Company level for the Named Executive Officers. As part of the annual compensation setting process, the Compensation Committee establishes payout curves for these achievement percentages to determine payout levels. These charts do not reflect achievement of these metrics at an underlying business unit level, nor achievement of the order intake metric used by our Coperion subsidiary which applyapplies to certainone of our Named Executive Officers as further explained in the proxy statement.
In addition, for awards made in fiscal 2021 and fiscal 2022, the Company used a different externally reported financial metric as the starting point for calculation. This measure, called “Adjusted Income Before Taxes (IBT),” is further explained in the fiscal 2021 and 2022 proxy statements. The measure used in fiscal 2023, Adjusted EBITDA, is also further explained in this proxy statement. The chart shows Adjusted EBITDA achievement for fiscal year 2023, and Adjusted IBT achievement for fiscal 2021 and 2022.
the grant value would be awarded in time-based restricted stock units and the remaining two-thirds would be awarded in performance-based restricted stock units. The performance-based awards are based on shareholder value creation and relative total shareholder return metrics over a three-year measurement period, which we believe closely aligns the interests of our management with those of our shareholders.The following charts show actual performanceachievement relative to target for these metrics for the past three measurement periods, reflected as the achievement percentage of target:periods:
Governance and Executive Compensation Highlights
The following highlightsgraphics highlight key components of our governance and executive compensation practices.
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| Here’s What We Do . . . |
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☑þ | | Pay for performance |
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☑þ | | Benchmark Named Executive Officer target core compensation3 to the 50th percentile of peer group compensation3 |
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☑þ | | Maintain stock ownership guidelines:guidelines based on shares of Company common stock and time-based restricted stock units beneficially owned: for directors, five times annual cash compensation; for the CEO, five times base salary; for Senior Vice Presidents, two times base salary; for certain other senior officers designated by the CEO, one times base salary |
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☑þ | | EnsureSeek to ensure that at least 75 percent of the CEO’s target core compensation is at risk4
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☑þ | | Require an independent Chairperson of the Board and that at least 80 percent of directors to be independent |
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☑þ | | Require executives and directors to preclear all stock trades, including gifts, with the Company’s Legal Department |
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| þ | | Require that directors receive at least a majority of the votes cast in an uncontested election to be elected |
3 We define our Named Executive Officers’ annual “core compensation” as annual base salary and the target values for STIC and LTIC.
4 This proportion will change for fiscal 2021, as the Compensation Committee has determined to replace stock options with time-based RSU awards going forward, as further explained under the heading “Long-Term Incentive Compensation” in the proxy statement.
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| þ | | Require that the Compensation Committee, the Audit Committee, and the Nominating/Corporate Governance Committee of our Board each be composed entirely of outside, independent directors |
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☑þ | | Engage an independent compensation consultant, hired by and reporting directly to the Compensation Committee |
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☑þ | | Operate with multiple performance metrics that drive our incentive compensation plans, including a relative metric that measures our performance against an appropriate peer group of companies, currently the Standard & Poor’s 400 Mid Cap Industrials index (a peer group reflecting companies of similar size and complexity) |
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☑þ | | Maintain a clawback policy covering cash and equity incentive compensation plans that applies in the event of a restatement of our financial statements |
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☑þ | | Impose a limit of $400,000$600,000 on total annual base compensation5 for non-employee directors5 |
3 We define our Named Executive Officers’ annual “core compensation” as annual base salary and the target values for STIC and LTIC.
4 A portion of the CEO’s target core compensation consists of time-based restricted stock units, which the Compensation Committee considers to be “at risk” since the value fluctuates based on stock price performance and vesting of all tranches is contingent upon continued service. This portion does not exceed one-third of target annual LTIC awards made to the CEO and, together with the portion represented by performance-based LTIC awards and STIC, comprises the “at risk” compensation.
5 Director “annual base compensation” includes both the annual cash retainer and grant date fair value of annual stock award as detailed further in this proxy statement.
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☑þ | | Encourage Board refreshment in a variety of ways, including by requiring, without exemptions or conditions, our directors to retire no later than the first Annual Meeting of shareholders following the date on which athat director turns 73 years of age |
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☑þ | | Maintain a Board diversity policy that provides that Board members will be diverse in terms of gender and of race and ethnicity, and in terms of other characteristics, including background, perspective, knowledge, skills, and experience |
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Here’s What We Don’t Do . . . |
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☒x | | Permit re-pricing, exchanging, or cashing out of “underwater” stock options without shareholder approval |
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☒x | | Permit spring-loading, back-dating, or similar practices that “time” the grant of our equity awards |
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☒x | | Permit granting of stock options below fair market value |
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☒x | | Permit “recycling” (into the equity plan pool) of Company shares that are (i) used to pay an award exercise price or withholding taxes, or (ii) repurchased on the open market with the proceeds of a stock option exercise price |
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| x | | Permit transferability of stock options for consideration |
5 This limit is inclusive of the value of both the annual cash retainer and the grant date fair value of the annual RSU award. We propose increasing this limit to $600,000 as part of the amendment and restatement of the Company’s Stock Incentive Plan as further discussed under “Proposal No. 3 – Approval of the Amendment and Restatement of the Hillenbrand, Inc. Stock Incentive Plan” in the proxy statement.
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| x | | Permit single-trigger change in control agreements for Named Executive Officers and certain other executives |
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☒x | | Permit change in control tax gross-ups for executives |
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☒x | | Permit a liberal change in control definition in our equity plan |
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☒x | | Permit pledging, short sales or hedging of Company securities by directors, officers, or other employees |
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☒x | | Permit directors, officers, or other employees to hold Company securities in margin accounts or otherwise to pledge Company securities as collateral for loans |
Recent Developments
This past year, we have augmented our governance and executive compensation practices in the following ways:
☑ | Added a new member of
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| þ | | Appointed Helen W. Cornell as our third Board Chairperson, effective upon the Board, Jennifer W. Rumsey, who also is also a memberretirement of our Compensation Committee and our Nominating/ Corporate Governance Committeeprior Board Chairperson on January 10, 2023 |
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☑ | Updated our relative total shareholder return (“TSR”) performance-based restricted stock units to measure TSR in comparison to the Standard & Poor’s 400 Mid Cap Industrials index for future awards, rather than continuing to use our compensation peer group
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☑ | Published our inauguralfourth annual sustainability report, or Communication on Progress, under the United Nations Global Compact, enhancing our energy and emissions data for major manufacturing sites, including initial Scope 3 disclosures, and expanding health and safety and diversity disclosures |
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☑ | In responseþ
| | Updated our STIC program to replace the COVID-19 pandemic, our Chief Executive Officer voluntarily reduced his fiscal year 2020 base salary by 30 percent beginning in April, our Named Executive Officers did not receive their scheduled merit salary increases,prior Adjusted IBT measure with one based on Adjusted EBITDA, which further aligns internal compensation with externally reported metrics while preserving the overall focuses of top- and our Boardbottom-line growth, healthy cash generation, and the appropriate balance of Directors waived its scheduled cash compensation increase for 2020STIC components |
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☑ | Closedþ
| | Tightened our STIC performance and payout curves to encourage achievement and emphasize high performance |
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| þ | | Revised and updated our clawback policy (“Clawback Policy”) to align with final Securities & Exchange Commission rules and New York Stock Exchange listing standards, and to strengthen the acquisitionCompany’s ability to recover any erroneously awarded performance-based compensation |
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| þ | | Adopted an amendment to our Amended and Restated Code of Milacron Holdings Corp. (“Milacron”)By-Laws to prohibit indemnification to a Company director, officer, or employee that would be against public policy, in further support of the revised Clawback Policy |
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| þ | | Amended our Insider Trading and exceededDisclosure Policy to reflect new Exchange Act Rule 10b5-1 requirements, including mandatory “cooling-off” periods and limitations on the number and types of plans permitted to be adopted |
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| þ | | Implemented a new compensation peer group following the divestiture of our target for year-one cost synergies in fiscal 2020; also, as further describedhistorical Batesville business segment, which represented a strategic shift in the proxy statement, made various updates toCompany’s business and accelerated our compensation programs following the acquisition, in some cases to take effect in fiscal 2021 |
☑ | Engaged Ernst & Young LLP as our independent registered public accounting firm beginning fiscal 2020, replacing our prior auditor, which had served more than 10 years6
transformation into a pure-play industrial company |
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☑ | þ | | Amended and restatedRevised our Code of Ethical Business Conduct (available on our web site) in connection with our transformation into a pure-play industrial company, with a focus on, among other improvements, reflecting the Company’s Stock Incentive Plan, which our Board now recommends to the shareholders for approval as further set forth under the heading “Proposal No. 3 – Approval of the Amendmentrecently adopted Purpose, Shape What Matters For TomorrowTM, and Restatement of the Hillenbrand, Inc. Stock Incentive Plan” in the proxy statementits updated mission, vision, and values
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6 There was no disagreement between the Company and the prior auditor on any matter of accounting principles or practices, consolidated financial statement disclosure, or auditing scope or procedures, which if not resolved to their satisfaction would have caused them to make reference thereto in their reports on the consolidated financial statements for the preceding two fiscal years through their dismissal, nor were there any reportable events, and the prior auditor’s dismissal was not as a result of any of the foregoing.
HILLENBRAND, INC.
PROXY STATEMENT
This proxy statement relates to the solicitation by the Board of Directors of Hillenbrand, Inc. (the “Company” or “Hillenbrand”) of proxies for use at the Annual Meeting of the Company’s shareholders to be held at the Company’s headquarters at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 934-7500,931-5000, on Thursday,Tuesday, February 11, 2021,20, 2024, at 10:00 a.m. Eastern Standard Time, and at any postponements or adjournments of the meeting. This proxy statement was first mailed to shareholders on or about December 29, 2020.January 9, 2024.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
The following questions and answers will explain the purpose of this proxy statement and what you need to know to vote your shares. Throughout these questions and answers and the proxy statement, we sometimes refer to Hillenbrand and the Company in terms of “we,” “us,” or “our.”
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| Q: | What is the purpose of this proxy statement? |
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| A: | The Board of Directors of Hillenbrand (the “Board”) is soliciting your proxy to vote at the 20212024 Annual Meeting of shareholders of Hillenbrand because you were a shareholder at the close of business on December 14, 2020,15, 2023, the record date for the 20212024 Annual Meeting, and are entitled to vote at the Annual Meeting. The record date for the 20212024 Annual Meeting was established by the Board in accordance with our Amended and Restated Code of By-laws (the “By-laws”) and Indiana law. This proxy statement contains the matters that must be set out in a proxy statement according to the rules of the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”) and provides the information you need to know to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares. |
This proxy statement contains the matters that must be set out in a proxy statement according to the rules of the U.S. Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange and provides the information you need to know to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares.
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| Q: | What is the difference between holding shares as a “shareholder of record” and as a “beneficial owner”? |
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| A: | If your shares are registered directly in your name with Hillenbrand’s transfer agent, Computershare Investor Services, LLC, you are the “shareholder of record” with respect to those shares, and you tell us directly how your shares are to be voted. If your shares are held in a stock brokerage account or by a bank or other nominee, then your nominee is the shareholder of record for your shares and you are considered the “beneficial owner” of shares held in street name. As the beneficial owner, you direct your broker, bank, or nominee how to vote your shares. |
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If your shares are held in a stock brokerage account or by a bank or other nominee, then your nominee is the shareholder of record for your shares and you are considered the “beneficial owner” of shares held in street name. As the beneficial owner, you direct your broker, bank, or nominee how to vote your shares.
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| Q: | What am I being asked to vote on? |
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| A: | •Election of three directors:directors for the three-year term set forth under Proposal No. 1 – Election of Directors: Helen W. Cornell, Jennifer W. Rumsey, and Stuart A. Taylor, II; •Approval, by a non-binding advisory vote, of the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to SEC compensation disclosure rules in the “Compensation Discussion and Analysis” and “Executive Compensation Tables” sections of this proxy statement and in any related material herein (the “Say on Pay Vote”); •Ratification of the appointment of Ernst & Young LLP (“EY’) as the Company’s independent registered public accounting firm for fiscal year 2024. |
Approval, by a non-binding advisory vote, of the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to SEC compensation disclosure rules in the “Compensation Discussion and Analysis” and “Executive Compensation Tables” sections of this proxy statement and in any related material herein (the “Say on Pay Vote”);
Approval of the amendment and restatement of the Company’s Stock Incentive Plan (the “Stock Plan”); and
Ratification of the appointment of Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm for fiscal year 2021.
The Board recommends a vote FOR each of the director nominees; FOR approval of the compensation paid to the Named Executive Officers of the Company pursuant to the Say on Pay Vote; FOR approval of the amendment and restatement of the Stock Plan; and FOR the ratification of the appointment of EY as the Company’s independent registered public accounting firm for fiscal year 2021.
Our Named Executive Officers are those officers specified by Item 402(a)(3) of Regulation S-K. See the discussion under the heading “Introduction” in Part I under “Executive Compensation” for more information regarding Named Executive Officers.
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| The Board recommends a vote FOR each of the director nominees; FOR approval of the compensation paid to the Named Executive Officers of the Company pursuant to the Say on Pay Vote; and FOR the ratification of the appointment of EY as the Company’s independent registered public accounting firm for fiscal year 2024. Our Named Executive Officers are those officers specified by Item 402(a)(3) of Regulation S-K. See the introductory discussion in Part I under “Executive Compensation” for more information regarding Named Executive Officers. |
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| Q: | What are the voting requirements to elect the directors and to approve the other proposals being voted on? |
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| A: | The Restated and Amended Articles of Incorporation of Hillenbrand (as amended to date, the “Articles of Incorporation”) provide that in an uncontested election, the directors are elected by a majority of the votes cast at the Annual Meeting. This means that to be elected, the number of votes cast “for” a director nominee must exceed the number of votes “withheld” from that nominee. The adoption of each of the proposals (a) to approve, by a non-binding advisory vote, the compensation paid to the Named Executive Officers, and (b) to ratify the appointment of EY as the Company’s independent registered public accounting firm for fiscal year 2024 requires the affirmative vote of a majority of the votes cast for or against approval. If you are present or represented by proxy at the Annual Meeting and you affirmatively elect to abstain, your abstention, as well as any broker non-votes, will not be counted as votes cast on any matter to which they relate. See “How will my shares be voted?” below for more information about broker non-votes. |
The adoption of each of the proposals (a) to approve, by a non-binding advisory vote, the compensation paid to the Named Executive Officers, (b) to approve the amendment and restatement of the Stock Plan; and (c) to ratify the appointment of EY as the Company’s independent registered public accounting firm for fiscal year 2021 requires the affirmative vote of a majority of the votes cast for or against approval.
If you are present or represented by proxy at the Annual Meeting and you affirmatively elect to abstain, your abstention, as well as any broker non-votes, will not be counted as votes cast on any matter to which they relate except that abstentions will count as votes against the approval of the amendment and restatement of the Stock Plan. See “How will my shares be voted?” below for more information about broker non-votes.
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| Q: | How many votes do I have? |
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| A: | You are entitled to one vote for each share of Hillenbrand common stock that you held as of the record date. |
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| A: | The different ways that you (if you are a shareholder of record) or your nominee (if you are a beneficial owner) can vote your shares depend on how you received your proxy statement this year. |
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| For shareholders of record, many of you were not mailed a paper copy of proxy materials, including this proxy statement, a proxy card, and our 2023 Annual Report to Shareholders. Instead, commencing on or about January 9, 2024, we sent you a Notice of Internet Availability of Proxy Materials (“Notice”) telling you that proxy materials are available at the web site indicated in that Notice, www.proxyvote.com, and giving you instructions for voting your shares at that web site. We also told you in that Notice (and on the web site) how you can request us to mail proxy materials to you. If you subsequently do receive proxy materials by mail, you can vote in any of the ways described below. If not, you must vote via the Internet (and we encourage you to do so) at www.proxyvote.com, by telephone, or in person at the Annual Meeting as explained below. With respect to shareholders of record who received proxy materials by mail, we commenced mailing on or about January 9, 2024. You can vote using any of the following methods: |
For shareholders of record, many of you were not mailed a paper copy of proxy materials, including this proxy statement, a proxy card, and our 2020 Annual Report to Shareholders. Instead, commencing on or about December 29, 2020, we sent you a Notice of Internet Availability of Proxy Materials (“Notice”) telling you that proxy materials are available at the web site indicated in that Notice, www.proxyvote.com, and giving you instructions for voting your shares at that web site. We also told you in that Notice (and on the web site) how you can request us to mail proxy materials to you. If you subsequently do receive proxy materials by mail, you can vote in any of the ways described below. If not, you must vote via the Internet (and we encourage you to do so) at www.proxyvote.com or in person at the Annual Meeting as explained below.
With respect to shareholders of record who received proxy materials by mail, we commenced mailing on or about December 29, 2020. You can vote using any of the following methods:
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| | Proxy card or voting instruction card. Be sure to complete, sign, and date the card and return it in the prepaid envelope. |
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| | By telephone or the Internet.The telephone and Internet voting procedures established by Hillenbrand for shareholders of record are explained in detail on your proxy card and in the Notice many shareholders receive. These procedures are designed to authenticate your identity, to allow you to give your voting instructions, and to confirm that these instructions have been properly recorded. |
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| | In person at the Annual Meeting.You may vote in person at the Annual Meeting. You may also be represented by another person at the meeting by executing a proper proxy designating that person. If you are not the record holder of your shares and want to attend the meeting and vote in person, you must obtain a legal proxy from your broker, bank, or nominee and present it to the inspectors of election with your ballot when you vote at the meeting. |
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| With respect to the beneficial owners of shares held by nominees, the methods by which you can access proxy materials and give voting instructions to your nominee may vary, depending on the nominee. Accordingly, if you are such a beneficial owner, you should follow the instructions provided by your nominee. |
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With respect to the beneficial owners of shares held by nominees, the methods by which you can access proxy materials and give voting instructions to your nominee may vary, depending on the nominee. Accordingly, if you are such a beneficial owner, you should follow the instructions provided by your nominee.
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| Q: | I share an address with another shareholder and we received only one Notice of Internet Availability of Proxy Materials or one paper copy of the proxy materials, as applicable. How may I obtain an additional copy? |
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| A: | The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, the Company is delivering a single copy of either the Notice of Internet Availability of Proxy Materials or a paper copy of the proxy materials, as applicable, to multiple shareholders who share the same addressaddress, unless the Company has received contrary instructions from one or more of the shareholders. This procedure reduces the Company’s printing costs, mailing costs,costs, and fees. Shareholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, a separate copy of the Notice of Internet Availability of Proxy Materials or a paper copy of the proxy materials or the annual report, as applicable, will be promptly delivered to any shareholder at a shared address to which the Company delivered a single copy. To receive a separate copy, or a separate copy of future materials, shareholders may write or call the Company’s Investor Relations Department at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931‑6000, and facsimile (812) 931-5209. Shareholders who hold shares in street name may contact their broker, bank, or other nominee to request information about householding. |
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| Q: | How will my shares be voted? |
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| A: | For shareholders of record, all shares represented by the proxies mailed to shareholders will be voted at the Annual Meeting in accordance with instructions given by the shareholders.shareholder. Where proxies are returned without instructions, the shares will be voted: (1) (1) FOR election of each of the three nominees named above as directors of the Company; (2) (2) FOR approval, by a non-binding advisory vote, of the compensation paid to the Named Executive Officers pursuant to the Say on Pay Vote; (3) (3) FOR approval of the amendment and restatement of the Stock Plan; (4) FOR ratification of the appointment of EY as the independent registered public accounting firm of the Company for fiscal year 2021;2024; and (5)(4) in the discretion of the proxy holders, upon such other business as may properly come before the Annual Meeting.Meeting (we are not currently aware of any other matter that may come before the meeting). Where a proxy is not returned, your shares will not be voted unless you attend the Annual Meeting and vote in person (including by means of remote communication, if applicable). For beneficial owners, the brokers, banks, or nominees holding shares for the beneficial owner must vote those shares as instructed. If the broker, bank, or nominee has not received instructions from the beneficial owner, the broker, bank, or nominee generally has discretionary voting power only with respect to matters that are considered routine matters. Under applicable New York Stock Exchange rules, Proposal No. 1 relating to election of directors, and Proposal No. 2 relating to a non-binding advisory vote to approve Named Executive Officer compensation are deemed to be non-routine matters with respect to which brokers and nominees may not exercise their voting discretion without receiving instructions from the beneficial owners of the shares (this is referred to as a “broker non-vote”). Proposal No. 3 relating to ratification of the appointment of EY as the independent registered public accounting firm of the Company for fiscal year 2024 is a matter on which brokers holding stock for the accounts of their clients who have not been given specific voting instructions are allowed to vote client shares. |
For beneficial owners, the brokers, banks, or nominees holding shares for beneficial owners must vote those shares as instructed. If the broker, bank, or nominee has not received instructions from the beneficial owner, the broker, bank, or nominee generally has discretionary voting power only with respect to matters that are considered routine matters. Under applicable New York Stock Exchange rules, Proposal No. 1 relating to election of directors, Proposal No. 2 relating to an advisory vote to approve Named Executive Officer compensation, and Proposal No. 3 relating to approval of the amendment and restatement of the Stock Plan, are deemed to be non-routine matters with respect to which brokers and nominees may not exercise their voting discretion without receiving instructions from the beneficial owners of the shares (this is referred to as a “broker non-vote”). Proposal No. 4 relating to ratification of the appointment of EY as the independent registered public accounting firm of the Company for fiscal year 2021 is a matter on which brokers holding stock for the accounts of their clients who have not been given specific voting instructions are allowed to vote client shares. To avoid a broker non-vote of your shares on Proposals No. 1, 2, and 3, you must send voting instructions to your bank, broker, or nominee or obtain a legal proxy and vote your shares in person at the Annual Meeting.
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| To avoid a broker non-vote of your shares on Proposals No. 1 and 2, you must send voting instructions to your bank, broker, or nominee or obtain a legal proxy and vote your shares in person at the Annual Meeting. |
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| Q: | What can I do if I change my mind after I vote my shares prior to the Annual Meeting? |
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| A: | If you are a shareholder of record, you may revoke your proxy at any time before it is voted at the Annual Meeting by: •sending written notice of revocation to the Secretary of Hillenbrand at One Batesville Boulevard, Batesville, Indiana 47006; •submitting a revised proxy by telephone, Internet, or paper ballot after the date of the revoked proxy; or •attending the Annual Meeting and voting in person. If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank, or nominee. You may also vote in person at the Annual Meeting if you obtain a legal proxy as described under “How do I vote?” above. |
sending written notice of revocation to the Secretary of Hillenbrand at One Batesville Boulevard, Batesville, Indiana 47006;
submitting a revised proxy by telephone, Internet, or paper ballot after the date of the revoked proxy; or
attending the Annual Meeting and voting in person.
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank, or nominee. You may also vote in person at the Annual Meeting if you obtain a legal proxy as described under “How do I vote?” above.
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| Q: | Who will count the votes? |
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| A: | Representatives of Broadridge Investor Communication Solutions, Inc. (“Broadridge”) will tabulate the votes and act as inspectors of election. |
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| Q: | What constitutes a quorum at the Annual Meeting? |
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| A: | As of the record date, 75,034,27470,123,120 shares of Hillenbrand common stock were outstanding. A majority of the outstanding shares must be present or represented by proxy at the Annual Meeting to constitute a quorum for the purpose of conducting business at the Annual Meeting. Your shares will be considered part of the quorum if you submit a properly executed proxy or attend the Annual Meeting. |
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| Q: | Who can attend the Annual Meeting in person? |
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| A: | We intend to hold the Annual Meeting in person. But given public health concerns related to the COVID-19 pandemic,person, but, we urge you to consider voting in advance of the meeting via one of the remote methods described above in lieu of attending the meeting in person. Even so, all shareholders as of the record date may attend the Annual Meeting in person but must have an admission ticket, bring matching photo identification, and register their planned in-person attendance with the Company at least ten (10) business days prior to the Annual Meeting, by writing to Kaveh Bakhtiari, Senior Director,the Investor Relations Department, Hillenbrand, Inc., One Batesville Boulevard, Batesville, Indiana 47006 or by email at investors@hillenbrand.com. In addition, we require you to follow these procedures and any protocols we may have in place on the meeting date. If you are a shareholder of record, the ticket attached to the proxy card or a copy of your Notice (whichever you receive), together with matching photo identification and pre-registration, will admit you . you. |
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| If you are a beneficial owner, you may request a ticket by writing to the Secretary of Hillenbrand at One Batesville Boulevard, Batesville, Indiana 47006, or by faxing your request to (812) 931-5185 or emailing it to investors@hillenbrand.com. You must provide evidence of your ownership of shares with your ticket request, which you can obtain from your broker, bank, or nominee. We encourage you or your broker to fax or email your ticket request and proof of ownership as soon as possible to avoid any mail delays. As described in the cover letter to this proxy statement, we continue to monitor developments in relation to the COVID-19 pandemic and ifIf for any reason we determine that it is not possible or advisable to hold the Annual Meetingmeeting in person, we will announce alternative arrangementsany such change and the details on how to participate by press release, on our website at https://ir.hillenbrand.com, and in a filing with the Securities and Exchange Commission. If you are planning to attend the Annual Meeting in person, please check our website in advance for the meeting.any updates to planned arrangements. |
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| Q: | When are shareholder proposals due for the 20222025 Annual Meeting? |
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| A: | For a shareholder proposal to be presented at the Company’s 20222025 Annual Meeting of shareholders and to be considered for possible inclusion in the Company’s proxy statement and form of proxy relating to that meeting, it must be submitted to and received by the Secretary of Hillenbrand at its principal offices at One Batesville Boulevard, Batesville, Indiana 47006, not later than August 31, 2021.September 11, 2024. Our By-laws describe certain information required to be submitted with such a proposal. In addition, without regard to whether a proposal is or is not submitted in time for possible inclusion in our proxy statement for the 2025 Annual Meeting, our By-laws provide that for business to be brought before the Annual Meeting by a shareholder, or for director nominations to be made by a shareholder for consideration at the Annual Meeting, written notice thereof must be received by the Secretary of Hillenbrand at its principal offices not later than 100 days prior to the anniversary of the immediately preceding Annual Meeting, or not later than November 12, 2024, for the 2025 Annual Meeting of shareholders. This notice must also provide certain information as set forth in our By-laws. See the discussion below under “Committees of the Board of Directors” under “The Board of Directors and Committees” for additional details regarding shareholder nominees for director. In addition to the foregoing, any shareholder who intends to solicit proxies in support of director nominees other than the Company's nominees must comply with the additional requirements of Rule 14a-19 under the Securities Exchange Act of 1934, as amended. |
In addition, without regard to whether a proposal is or is not submitted in time for possible inclusion in our proxy statement for the 2022 Annual Meeting, our By-laws provide that for business to be brought before the Annual Meeting by a shareholder, or for director nominations to be made by a shareholder for consideration at the Annual Meeting, written notice thereof must be received by the Secretary of Hillenbrand at its principal offices not later than 100 days prior to the anniversary of the immediately preceding Annual Meeting, or not later than November 3, 2021, for the 2022 Annual Meeting of shareholders. This notice must also provide certain information as set forth in our By-laws. See the discussion below under “Committees of the Board of Directors” under “The Board of Directors and Committees” for additional details regarding shareholder nominees for director.
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| Q: | What happens if a nominee for director is unable to serve as a director? |
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| A: | If any of the nominees becomes unavailable for election, which we do not expect to happen, votes will be cast for such substitute nominee or nominees as may be designated by the Board, unless the Board reduces the number of directors. |
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| Q: | Can I view the shareholder list? If so, how? |
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| A: | A complete list of the shareholders entitled to vote at the Annual Meeting will be available to view during the Annual Meeting. The list will also be available to view at the Company’s principal offices during regular business hours during the five business days preceding the Annual Meeting. |
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| Q: | Who pays for the proxy solicitation related to the Annual Meeting? |
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| A: | The Company pays for the proxy solicitation related to the Annual Meeting. In addition to sending you these materials, some of our directors and officers, as well as management and non-management employees, may contact you by telephone, mail, email, or in person. You may also be solicited by means of press releases issued by Hillenbrand and postings on our web sitewww.hillenbrand.com., www.hillenbrand.com. None of our officers or employees will receive any additional compensation for soliciting your proxy. We have retained Broadridge to assist us with proxy solicitation and related services for an estimated fee of $12,000, plus reasonable out of pocket expenses. Such fees will be incurred after the mailing of the proxy materials. Broadridge will ask brokers, banks, and other custodians and nominees whether they hold shares for which other persons are beneficial owners. If so, we will supply them with additional copies of the proxy materials for distribution to the beneficial owners. We will also reimburse banks, nominees, fiduciaries, brokers, and other custodians for their costs of sending proxy materials to the beneficial owners of Hillenbrand common stock. |
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| Q: | How can I obtain a copy of the Annual Report on Form 10-K? |
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| A: | A copy of Hillenbrand’s 20202023 Annual Report on Form 10-K, as well as Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, are available on the Internet at the Company’s web site, www.hillenbrand.com.The 20202023 Annual Report on Form 10-K may also be obtained free of charge by writing or calling the Investor Relations Department of Hillenbrand at its principal offices at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931-6000, and facsimile (812) 931-5209. |
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| Q: | How can I obtain the Company’s corporate governance information? |
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| A: | The documents listed below are available on the Internet at the Company’s web site, www.hillenbrand.com. You may also go directly tohttp: https://ir.hillenbrand.com/investor-relations/corporate-governance/governance-documentsgovernance-documents for those documents. Printed copies are also available to any shareholder who requests them through our Investor Relations Department at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931‑6000, and facsimile (812) 931-5209. The available documents are: •Hillenbrand, Inc. Corporate Governance Standards •Hillenbrand, Inc. Committee Charters – Audit Committee, Nominating/Corporate Governance Committee, Compensation and Management Development Committee, and Mergers and Acquisitions Committee •Position Descriptions for Chairperson of the Board, Vice Chairperson of the Board, Members of the Board, and Committee Chairpersons •Restated and Amended Articles of Incorporation of Hillenbrand, Inc. •Amended and Restated Code of By-laws of Hillenbrand, Inc. •Hillenbrand, Inc. Code of Ethical Business Conduct •Hillenbrand, Inc. Global Anti-Corruption Policy •Supply Chain Transparency Policy – Hillenbrand, Inc. and its subsidiaries •Human Rights Policy – Hillenbrand, Inc. and its subsidiaries •Global Environmental Policy – Hillenbrand, Inc. and its subsidiaries •Conflict Minerals Policy – Hillenbrand, Inc. and its subsidiaries •Supplier Diversity Policy – Hillenbrand, Inc. and its subsidiaries •Hillenbrand, Inc. Insider Trading and Disclosure Policy •Hillenbrand, Inc. Clawback Policy |
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Hillenbrand, Inc. Corporate Governance Standards
Hillenbrand, Inc. Committee Charters – Audit Committee, Nominating/Corporate Governance Committee, Compensation and Management Development Committee, and Mergers and Acquisitions Committee
Position Descriptions for Chairperson of the Board, Members of the Board, and Committee Chairpersons
Restated and Amended Articles of Incorporation of Hillenbrand, Inc.
Amended and Restated Code of By-laws of Hillenbrand, Inc.
Hillenbrand, Inc. Code of Ethical Business Conduct
Hillenbrand, Inc. Global Anti-Corruption Policy
Supply Chain Transparency Policy – Hillenbrand, Inc. and its subsidiaries
Human Rights Policy – Hillenbrand, Inc. and its subsidiaries
Global Environmental Policy – Hillenbrand, Inc. and its subsidiaries
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
This section of the proxy statement introduces the current directors, including the three directors in Class I who have been nominated to serve additional three-year terms.
The Articles of Incorporation and the By-laws of Hillenbrand provide that directors of the Board are classified with respect to the terms that they serve by dividing them into three equal (or near-equal) classes.Classes. Each director is elected to serve a three-year term (or the term applicable to his or her Class) and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation, lawful removal, or failure to be re-elected in accordance with the Company’s By‑laws.By-laws.
The Board of Directors currently consists of eleven directors, with four directors in each of Class I and Class III and three directors in Class II. In conformity with the Company’s director retirement policy, Edward B. Cloues, II, a Class I director, is not standing for reelection as a director at the 2021 Annual Meeting of shareholders. In connection with Mr. Cloues’ departure, the Board expects to reduce the size of the Board to ten directors, with three directors in each of Class I and Class II and four directors in Class III.
6The terms of the directors expire as follows:
Class
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| Class | Term Expires at |
Class I | 20212024 Annual Meeting
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Class II | 20222025 Annual Meeting
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Class III | 20232026 Annual Meeting
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The three directors in Class I who are nominated for election to the Board at the 20212024 Annual Meeting, each of whom has agreed to serve as a director if elected, are Helen W. Cornell, Jennifer W. Rumsey, and Stuart A. Taylor, II.
II . Each of these directors has been nominated to serve a three-year term as required by our By-laws.
The Board of Directors recommends that the shareholders vote FOR Proposal No. 1 to elect each of the three nominees to the Board of Directors.
The Articles of Incorporation of Hillenbrand provide that in an uncontested election, directors are elected by a majority of the votes cast at the Annual Meeting. This means that to be elected, the number of votes cast “for” a director nominee must exceed the number of votes “withheld” from that nominee.If you own shares through a bank, broker, or other holder of record, you must instruct your bank, broker, or other holder of record how to vote your shares in order for your vote to be counted on this Proposal. At the Annual Meeting, the proxies being solicited will be voted for no more thanthe three nominees as Class I directors.
Set forth below is information about all of our current directors, including the three nominees for election at the 20212024 Annual Meeting of shareholders. The biographical information provided for each person includes all directorships held by and other relevant business experience of such person at any time during at least the past five years and, in some cases, directorships held prior to such five-year lookback.
6 As previously disclosed, in conformity with the Company’s director retirement policy, F. Joseph Loughrey, a former Class II director, retired from service as a member of the Board during fiscal year 2023. In connection with Mr. Loughrey’s retirement, the Board reduced the size of the Board to ten directors.
Class I Nominees for Election as Directors with Terms Expiring in 2024
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| Class I Nominees for Election as Directors with Terms Expiring in 2027 | |
Helen W. Cornell Independent | Director since 2011Age 65
Age 62Chairperson of the Board
Chairperson of the NCG Committee | |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Owensboro Grain Company, grain and soybean products (privately-owned). |
Ms. Cornell has servedIndustrial Experience. More than twenty-two years as a director ofleader in global industrial manufacturing; her strong manufacturing background and global industrial expertise continues to benefit the Board, the Company, since August 10, 2011. She is currentlyand the shareholders as Hillenbrand works to execute its profitable growth strategy.
Corporate Finance. A certified public accountant (CPA) and certified management accountant (CMA) with a long tenure in operations and finance, and experience interfacing with investors, including as CFO of a major public company and most recently as President and CEO (since December 2015) of the privately-owned Owensboro Grain Company, (grainas well as board experience with both a public and soybean products), where she also servesprivate company.
Risk Management and Oversight. Long record of managing risk as Chairmanformer CEO and President of Owensboro Grain Company and former CFO and Executive Vice President of Gardner Denver, Inc.
Strategic Thinking. Extensive experience in strategic transactions and operations as an executive and as Chairperson of the BoardBoard.
Mergers and ChairmanAcquisitions. Leader of the Executive Committee. She is also a director of the privately-owned Dot Family Holdings, LLC (formerly Dot Foods, Inc.) (a food distributor), where she ismany mergers, acquisitions, financings, and investments, including during her tenure as a member of the Compensation Committee and Chairman of the AuditHillenbrand’s M&A Committee. In October 2018, Ms. Cornell joined the Board of Trustees of Brescia University, where she is a member of the Finance Committee. In November 2010, Ms. Cornell retired as Executive Vice | |
| 2015 to 2023 | President and Chief Financial Officer of CEO | |
Gardner Denver, Inc. (n/k/a Ingersoll Rand), a leading global manufacturer of compressors, blowers, pumps, loading arms, and fuel systems for various industrial, medical, environmental, transportation, and process applications. During her 22-year tenure with Gardner Denver, Inc., Ms. Cornell served in various operating | |
| 1998 to 2010 | CFO and financial roles, includingExecutive Vice President and General Manager | |
| HILLENBRAND BOARD SERVICE | |
| Since 2023 | Chairperson of the Fluid Transfer DivisionBoard | |
| Since 2022 | Chairperson of the NCG Committee | |
| 2022 to 2023 | Vice Chairperson of the Board | |
| 2018 to 2022 | Chairperson of Compensation Committee | |
| Since 2013 | Compensation Committee Member | |
| 2011 to 2023 | M&A Committee Member | |
| 2011 to 2013 | Audit Committee Member | |
| Since 2011 | Director and Vice PresidentNCG Committee Member | |
| OTHER BOARD SERVICE | |
Dot Family Holdings, LLC, a privately-owned food redistributor. | |
| Since 2012 | Director, Chair of Strategic Planning. Until December 2016, Ms. Cornell served onCompensation Commitee, Audit Committee Member; past Chair of the Audit Committee | |
Brescia University, a private Catholic liberal arts college in Owensboro, Kentucky. | |
| 2018 to 2023 | Board of Trustees and Finance Committee Member | EDUCATION | |
Owensboro Grain Company. | MBA (Finance), Vanderbilt University
BS (Accounting), University of Kentucky | |
| 1998 to 2023 | Director, Chair of the Board, and Chair of Directors ofthe Executive Committee | |
The Alamo Group Inc. (agriculture, a global leader in design and other equipment), where she was Chairpersonmanufacture of agricultural equipment for farms and ranches and infrastructure maintenance equipment for governmental and industrial markets. | |
| 2011 to 2016 | Director, Chair of the Audit Committee and a member of the Compensation Committee.Committee Member | |
The Company’s Board of Directors concluded that Ms. Cornell should serve as a director based on her long tenure in operations and finance and her experience interfacing with investors, including as Chief Financial Officer of a major public company and most recently as President and Chief Executive Officer of Owensboro Grain Company, and her experience as a member of the board of both a public and private company.
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Jennifer W. Rumsey Independent | Director since 2020
Age 47 50 | |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Ms. Rumsey has served as a director of the Company since August 5, 2020. Ms. Rumsey is currently Vice President and President, Components Business Segment, of Cummins, Inc. (“Cummins”), which designs, manufacturesdesigner, manufacturer, and sells a portfolioseller of innovative products, including components, engines, power generation, and digital solutions. Prior to Ms. Rumsey’s election to this role in October 2019, Ms. Rumsey served as Vice President, Chief Technical Officer of Cummins, from October 2015 until October 2019. Since November 2000, Ms. Rumsey has held various technical roles in research, technology,
| Innovation/Technology. Deep technological background and product development and other positions of increasing responsibility at Cummins. Ms. Rumsey currently serves as a member of the Purdue College of Engineering Advisory Council (since October 2016). She is also a member of the United States Department of Energy Hydrogen and Fuel Cell Advisory Council (since November 2019). Ms. Rumsey holds a Bachelor of Science degree from Purdue University and a Master of Science in Mechanical Engineering from Massachusetts Institute of Technology. She is Six Sigma certified.
The Company’s Board of Directors concluded that Ms. Rumsey should serve as a director based on her deep operations and technological experience, particularly given her tenure as a senior technical executive of a Fortune 500 public industrial manufacturing company, including in product life cycle responsibility, from advanced research to current product support, in engineering and product quality, and in multiple business areas.
Sustainability/ESG. Current CEO and President of a global leader providing power solutions that both meet business needs and have large-scale environmental impact; previously as Cummins CTO, led strategic investments in key technologies and applications to transition to lower carbon emissions products.
Continuous Improvement (Lean, Six Sigma). Six Sigma certified, including extensive knowledge, professional skills, and experience in improving performance, increasing profits, and decreasing errors.
Operations (Manufacturing, Service). Experience overseeing strategic direction, growth initiatives, and global operations including as President and CEO of a Fortune 500 public industrial manufacturing company.
Industrial Experience. Decades of experience in highly technical fields at a Fortune 500 public industrial manufacturing company in a variety of technical and operational functions.
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| Since 2022 | President and CEO
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| 2021 to 2022 | President and Chief Operating Officer
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| 2019 to 2021 | Vice President and President, Components Business Segment
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| 2015 to 2019 | Vice President, Chief Technical Officer
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| HILLENBRAND BOARD SERVICE | |
| Since 2020 |
Director, NCG Committee Member, and Compensation Committee Member
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| OTHER BOARD SERVICE | |
College of Engineering at Purdue University, a public land-grant research university in West Lafayette, Indiana. | |
| 2016 to 2022 | Advisory Council Member | |
| Cummins, Inc. | |
| Since 2023 | Chair | |
| Since 2022 | Director
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US Department of Energy (“DOE”) Hydrogen and Fuel Cell Technical Advisory Committee, established under the Energy Policy Act of 2005 to advise the Secretary of Energy on hydrogen research, development, and demonstration efforts. | |
| 2019 to 2021 | Advisory Council Member | EDUCATION | |
| | MS (Mechanical Engineering), Massachusetts Institute of Technology
BS (Mechanical Engineering), Purdue University | |
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Stuart A. Taylor, IIII. Independent | Director since 2008Age 63
Age 60Chairperson of the M&A Committee
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| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Mr. Taylor has served as a director of the Company since September 26, 2008. Since 2001, Mr. Taylor has been the Chief Executive Officer of The Taylor Group, LLC, a private equity firm focused on creating and acquiring businesses. He has previously held positions
| Mergers and Acquisitions. Thirty years of investment banking experience as Senior Managing Directora leader in financings, mergers, acquisitions, investments, and strategic transactions, including a career at several large investment banking firms and running a private investment management company.
Strategic Thinking. More than two decades as CEO and owner of private equity firm, evaluating strategic investments and transactions and managing risk.
Corporate Finance. Extensive experience supervising business operations, including providing strategic and financial advisory and investment banking services to public and private companies, as well as supervisory authority over the Taylor Group’s principal financial and accounting officers on all financial matters.
Risk Management and Oversight. Decades of experience as CEO with ultimate responsibility for risk-adjusted decision making and oversight of risk management.
Human Resources. Extensive experience managing employees as CEO, and serving on Human Resources and Compensation Committees of multiple boards of directors for both public and private companies.
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| Since 2001 | CEO | |
Bear, Stearns, & Co. Inc., a global brokerage and investment banking firm (acquired by JPMorgan Chase & Co. in 2008). | |
| 1999 to 2001 | Senior Managing Director | |
CIBC World Markets, an investment banking firm based out of Canada. | |
| 1996 to 1999 | Managing Director of CIBC World Markets and head of its Global Automotive Group and Capital Goods Group. He also served as Group | |
Banker’s Trust, a privately-owned financial institution. | |
| 1993 to 1996 | Managing Director of the Automotive Industry Group at Bankers Trust following a ten-year position in corporate finance at Morgan Stanley & Co. Mr. Taylor has been a member | |
| HILLENBRAND BOARD SERVICE | |
| Since 2012 | Member and Chairperson of the Board of Directors of M&A Committee | |
| 2009 to 2018 | Audit Committee Member | |
| 2008 to 2009; Since 2019 | Compensation Committee Member | |
| Since 2008 | Director, NCG Committee Member | |
| OTHER BOARD SERVICE | EDUCATION | |
Ball Corporation (a, a diversified manufacturer) sincemanufacturer. | MBA (Finance), Harvard
BA (History), Yale | |
Since 1999 where he currently serves as lead independent director (since April 2019) | Director, current Lead Independent Director and as Chair of the Nominating/Corporate Governance Committee. He has also been a member of the Board of Directors of NCG Committee, Human Resources Committee Member | |
Wabash National Corporation, a provider of engineered solutions for the transportation, logistics and distribution industries, since Augustindustries. | |
Since 2019 and serves on the | Director, Member, Audit and Compensation Committees. In addition, in October 2020, Mr. Taylor was appointed to the board of directors of Committees | |
Solenis, LLC, a global producer of specialty chemicals for water-intensive industries, where he serves on theindustries. | |
| Since 2020 | Director and Compensation Committee. Mr. Taylor was previously a member of the Board of Directors of Committee Member | |
Essendant, Inc. (formerly known as, (f/k/a United Stationers, Inc.) (a, a wholesale distributor of business products) from products. | |
2011 until its sale to Staples Inc. in January 2019.The Company’s Board of Directors concluded that Mr. Taylor should serve as a director based on his experience with several leading investment firms, his ongoing experience as a member of public company and other boards, and his broad merger and acquisition experience.
2019 | Director | |
Retiring Class I Director
| | Edward B. Cloues, II | Director since 2010
Age 73
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Class II Directors with Terms Expiring in 2025
Mr. Cloues has served as a director of the Company since April 2010. He currently serves as Vice Chairman of the Board of Trustees of Virtua Health, Inc. (a non-profit hospital and healthcare system), where he chairs the Finance and Investment Committee and is a member of the Executive Committee, Audit Committee, and Compensation Committee. He also serves as a director and as the non-executive Chairman of the Board of AMREP Corporation (a land development company), where he is a member and Chairman of the Audit Committee, a member
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Gary L. Collar Independent | Age 67 Chairperson of the Compensation and Human Resources Committee and a member and Chairman of the Nominating and Corporate Governance Committee. He previously was a director (from 2001) and Chairman of the Board (from May 2011) of Penn Virginia Corporation (an oil and gas exploration and development company) and served as the interim Chief Executive Officer (from October 2015 to September 2016), during the board-led reorganization of that company, including a filing for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in May 2016 and the emergence from Chapter 11 in September 2016 pursuant to a confirmed plan of reorganization. He previously served as a director (from January 2003) and as the non-executive Chairman of the Board (from July 2011) of PVR GP, LLC, which was the general partner of PVR Partners, L.P. (a pipeline and natural resources master limited partnership), until its sale in March 2014. He also previously served as Chairman of the Board and Chief Executive Officer of K-Tron International, Inc. (“K-Tron”) from January 1998 until the Company acquired K-Tron in April 2010. Prior to joining K-Tron, Mr. Cloues was a senior partner of Morgan, Lewis & Bockius LLP. Pursuant to the Company’s director retirement policy, Mr. Cloues is not standing for reelection as a director at the 2021 Annual Meeting of shareholders. For more information on the Company’s director retirement policy, please see the Company’s Corporate Governance Standards available on the Company’s web site at www.hillenbrand.com.
The Company’s Board of Directors concluded that Mr. Cloues should serve as a director based on his past extensive legal experience as a law firm partner specializing in business law matters, particularly in the area of mergers and acquisitions, and his experience as Chairman and CEO of K-Tron International, Inc. prior to its acquisition by the Company in 2010.
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Class II Directors with Terms Expiring in 2022
| | | Director since 2015
Age 64
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| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Mr. Collar has served as a director of the Company since May 2015. Mr. Collar is the Senior Vice President and General Manager of the Asia Pacific and Africa (APA) region for AGCO Corporation (“AGCO”), a world leader in the development, manufacture, and marketing of agricultural machinery and solutions. Mr. Collar is responsible for all activities and all brands
| International Business/Global Markets. International business leader at Fortune 500 company with proven expertise within the region, which includes China, India,manufacturing industry and extensive experience leading, managing, and overseeing global operations.
Human Resources. Considerable experience managing and overseeing labor and human relations risks globally, as well as service as Chairperson of the Company’s Compensation and Management Development Committee.
Strategic Thinking. Experience providing strategic direction while overseeing global development and manufacturing at AGCO.
Operations (Manufacturing, Service). Decades of senior executive experience in the industrial sector at global public companies.
Industrial Experience. Career devoted to serving as a senior executive to global public and private manufacturing companies, as well as board service at Tractor and Farm Equipment Limited.
| |
| 2012 to 2021 | Senior Vice President and General Manager of the Asia Pacific and Africa and Australia - New Zealand. In addition, Mr. Collar leads the development of business, distribution structures and investments in China for AGCO. He was appointed(APA) Region | |
2004 to his current position with AGCO in January 2012. Mr. Collar previously served as AGCO’s 2011 | Senior Vice President and General Manager of Europe, Africa, Middle East, Australia, and New Zealand from 2004 | |
2002 to December 2011. Prior to that appointment, Mr. Collar was 2003 | Vice President of Worldwide Market Development, Worldwide forChallenger Division
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ZF Friedrichshaven A.G., a leader in development and manufacture of advanced technology automotive chassis and power train systems. | |
| 2001 to 2002 | Vice President of Business Development, ZF Group NAO | |
| 1995 to 2001 | President and CEO, Zua Autoparts Joint Venture | |
| HILLENBRAND BOARD SERVICE | |
| Since 2022 | Chairperson of the Challenger Division, after joining AGCO in 2002.Compensation Committee | |
| Since 2015 | Compensation Committee Member
| |
| Since 2015 | Director and NCG Committee Member Mr. Collar currently serves on the Board of Directors of
| |
| OTHER BOARD SERVICE | EDUCATION | |
Tractors and Farm Equipment Limited, an Indian a tractor manufacturer and an investment of AGCO, based in India. | BS (Business Administration and serves on the Global Board of Directors of Marketing Management), California State University – East Bay | |
| 2012 to 2021 | Director | |
AGCO Finance, Incorporated,Inc., a joint venture between AGCO and De Lage Landen Financial Services, which provides retail and wholesale financing services to AGCO customers globally. Mr. Collar previously held various senior management positions within several divisions at ZF Friedrichshaven A.G. between 1994 and 2002. These assignments included President and CEO of the company’s joint venture producing steering systems for the North American automotive market, and Vice President, Business Development for the automotive group. Prior
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2016 to this, he was employed by Caterpillar Incorporated.2021 | Global Director | |
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Joy M. Greenway The Company’s BoardIndependent
| Age 63
| |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
General Motors, a global motor vehicle manufacturer headquartered in the USA. | Operations (Manufacturing, Service). Extensive profit and loss leadership experience in businesses requiring long-term financial planning, successfully impacting top- and bottom-line results.
Continuous Improvement (Lean, Six Sigma). Experience operating above industry market growth rates reinforcing existing strategic customer business, capitalizing on global footprint, investing in technology, and creating synergistic corporate infrastructures.
International Business/Global Markets. Global operational and multicultural experience, building relationships throughout Asia, Eastern and Western Europe, and the Americas, with expertise in Asia and growth markets.
Industrial Experience. Decades of Directors concluded that Mr. Collar should serve as a director based on his deep internationalleadership experience in global industrial manufacturing, including senior executive roles at Fortune 500 companies.
Innovation/Technology. Deep technological and innovation background and experience, particularly in Asia, as an executive of several multinational companies, and his significant experience in financial analysis and controls.a Fortune 500 public industrial company.
|
| | Joy M. Greenway | Director since 2013
Age 60
|
| 2018 to 2020 |
Ms. Greenway has served as a director of the Company since February 2013. In March 2020, Ms. Greenway retired after serving in a variety of roles at General Motors, most recently as the Executive Director of Global Business Solutions since September 2018. Ms. Greenway joined General Motors in June 2014 as Chief Financial Officer of Global Purchasing and Supply Chain, and in May
| |
2017 she was named the to 2018 | Executive Director Transformation, Global Business Services of General Motors. Prior | |
2014 to that, she served as Senior 2017 | CFO, Global Purchasing and Supply Chain
| |
Visteon Corporation, a tier one automotive supplier. | |
| 2005 to 2013 | Vice President for Visteon Corporation (a Tier 1 automotive systems supplier), where she held a varietyand President of positions from Climate | |
2000 until 2013. Prior to joining Visteon, Ms. Greenway was employed as the 2005 | Director, Manufacturing for Strategic Business Unit, Customer Business Unit, Powertrain
| |
United Technologies Corporation, a diversified aerospace and building company. Before United Technologies Corporation, Ms. Greenway was employed by | |
| 1995 to 2000 | Director, Operations
| |
GE Industrial Power Systems as, a Materials world energy leader providing technology, solutions, and services across the entire energy value chain from the point of generation to consumption. | |
| 1994 to 1995 | Director, Materials | |
| HILLENBRAND BOARD SERVICE | EDUCATION | |
Since 2013
|
Director, Audit Committee Member, and served in various management positions at GE Aerospace/Martin Marietta. In October 2020, Ms. Greenway joined the BoardNCG Committee Member | MBA, Massachusetts Institute of DirectorsTechnology MS (Mechanical Engineering), Syracuse University BS (Industrial Education Engineering), University of Illinois Urbana-Champaign
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| OTHER BOARD SERVICE | |
Electricfil Corporation, a privately owned company with headquartersheadquartered in France specializing in the private design and manufacture of sensors and actuators for powertrain and transmissions. | |
| 2020 to 2021 | Director and Senior Advisor to Chairman and President | |
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Dennis W. Pullin The Company’s BoardIndependent
| Age 64
| |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Virtua Health, a not-for-profit academic health system in New Jersey. | Sustainability/ESG. Insight and commitment to sustainability and to diversity, equity, and inclusion efforts demonstrated by leadership at Virtua Health, emphasizing core values, equity, and inclusion, and supporting sustainability initiatives; and promoting gender equality among Virtua Health’s leadership.
Strategic Thinking. Deep leadership and strategic experience, including customer service focus and digital transformation, and Virtua Health's “Hospital at Home” program, transforming the patient experience.
Cyber / Information Security. Years of Directors concluded that Ms. Greenway should serveinformation security oversight and knowledge gained as a director based on her deep operationshospital system senior executive responsible for protecting patients’ health information while complying with applicable privacy laws and globalpolicies.
Risk Management and Oversight. Extensive background in senior management as an executive at large, diverse organizations with elevated risk profiles.
Mergers and Acquisitions. Extensive leadership experience particularly in the manufacturing industry,mergers and her tenure as a senior executive of a Fortune 500 public company. |
| | F. Joseph Loughrey | Director since 2009
Age 71
|
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Mr. Loughrey has served as a director of the Company since February 2009 and has been Chairperson of the Board since February 2013. In April 2009, he retired from Cummins Inc. (engines and related technology) after serving inacquisitions demonstrated at a variety of roles for 35 years, most recently as Vice Chair of the Board of Directors and as the company’s dynamic organizations.
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| Since 2017 | President and Chief Operating Officer. Mr. Loughrey served onCEO
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MedStar Harbor, a not-for-profit, community-based health care organization comprising ten major hospitals and twenty-five integrated businesses in U. S. Mid-Atlantic region. | |
| 2009 to 2017 | President of MedStar Harbor Hospital
| |
MedStar Washington Hospital Center, largest private teaching and researching hospital based in Washington, D.C. | |
| 2006 to 2009 | COO and Senior Vice President
| |
CHI St. Luke’s Health, a tertiary community teaching hospital in the BoardTexas Medical Center. | |
| 2002 to 2006 | Vice President of DirectorsOperations and Business Development | |
| HILLENBRAND BOARD SERVICE | |
| Since 2021 |
Director, Compensation Committee Member, and NCG Committee Member
| |
| OTHER BOARD SERVICE | |
New Jersey Hospital Association, an organization serving healthcare groups to identify savings opportunities, reduce costs, and provide affordable and flexible education programs. | |
| Since 2019 | Director | EDUCATION | |
Chamber of Cummins from July 2005 until May 2009. Mr. Loughrey currently serves onCommerce Southern New Jersey, a numbermember-driven organization that advocates for economic prosperity. | Certificate for Post-Graduate Studies in Cardiac Rehabilitation, Baylor College of boards, including:Medicine MS (Physiology), Texas A&M University BA (Biology), Texas Lutheran University
| |
| Since 2018 | Director | |
Healthcare for the Lumina FoundationHomeless, a non-profit advocating for Education, where he served as Chair of the Board for four years; Vanguard Group (an investment management company), where he serves on the Audit Committee, the Nominating Committee,affordable housing and the Compensation Committee; Saint Anselm College, where he serves as Chair of the Board; and the V Foundation for Cancer Research. He is past Chair and a current member of the Advisory Councilproviding health care services to the College of Arts & Letters at The University of Notre Dame, where he also serves as Chair of the Advisory Boardhomeless. | |
2013 to the Kellogg Institute for International Studies.The Company’s Board of Directors concluded that Mr. Loughrey should serve as a director based on his service as President and Chief Operating Officer of a major public corporation and his continuing service on several public company and educational and nonprofit boards of directors.
2017 | Director | |
Class III Directors with Terms Expiring in 2023
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| Class III Directors with Terms Expiring in 2026 | |
Daniel C. Hillenbrand Independent | Director since 2018
Age 54 57 | |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Mr. Hillenbrand has served as a director of the Company since May 2018. Mr. Hillenbrand is the Founder and Managing Partner of Clear Water Capital Partners, LLC, a private diversified venture capital firm.
| Strategic Thinking. Decades of operational and investment experience with responsibility for evaluating and pursuing attractive strategic opportunities.
Operations (Manufacturing, Service). Long tenure and deep board and executive experience in private manufacturing companies.
Risk Management and Oversight. Managing partner of various investment firms, including founder of diversified investment firm a position he has held since 2010. leveraging expertise in crisis management, strategy, and business development in the context of risk mitigation.
Mergers and Acquisitions. Extensive experience, including at Clear Water Capital Partners, overseeing and assessing the performance of companies with respect to mergers and acquisitions.
Continuous Improvement (Lean, Six Sigma). Accomplished leader in Lean manufacturing principles, as well as business and brand development; experience creating and driving rapid value appreciation in sourcing, distribution, logistics, and e-commerce.
| |
Since 2002, he has also been the2010 | Founder and Managing Partner of
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Generations, Company, L.P., an investment management company, as well as the company. | |
| Since 2002 | Managing Partner of
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Legacy Company, a real estate investment company. Mr. Hillenbrand previously served as Chairman of the Board (2004–2019) and President and Chief Executive Officer (2005–2007) of Nambé, LLC, a leading international high-end consumer products company, as well as Vice Chairman of the Board of Pri Pak, Inc., a provider of name-brand and private label contract beverage manufacturing services, from 2009-2017. He has also held various leadership roles at | |
| Since 2022 | Managing Partner
| |
Able Manufacturing and Assembly, LLC, a manufacturing company with platforms in metal fabrication, fiberglass composites, and plastic thermoform manufacturing, including as Chairmanmanufacturing. | |
| 2013 to 2019, | CEO | |
| 2002 to 2007 | |
| 2013 to 2014 | President | |
Nambé, LLC, a leading international high-end consumer products company. | |
| 2005 to 2007 | President and CEO
| |
| HILLENBRAND BOARD SERVICE | |
Since 2018
| Director, Audit Committee Member, and NCG Committee Member | |
| OTHER BOARD SERVICE | EDUCATION | |
Spring Grove Cemeteries, National Historic Landmark and cemetery serving the residents of Cincinnati and surrounding communities. | MBA, Northwestern University BA (Political Science), Boston College
| |
| Since 2023 | Director
| |
| Nambé, LLC | |
| 2004 to 2019 | Chair of the Board (2002–present), President (2013–2014), and Chief Executive Officer (2002–2007 and 2013–2019).Prior to that, Mr. Hillenbrand served in various roles with increasing leadership responsibility at Wealthsense, Inc., Hill-Rom Holdings, Inc. (formerly Hillenbrand Industries, Inc.), Abbott Laboratories, and Batesville Casket Company, Inc.
The Company’s Board of Directors concluded that Mr. Hillenbrand should serve as a director based on his long tenure as a managing partner of investment firms and his deep Board and executive experience in private manufacturing companies.
|
| | Thomas H. Johnson | Director since 2008
Age 70
|
Pri Pak, Inc., a provider of name brand and private label contract beverage manufacturing services. |
Mr. Johnson has served as a director
|
| 2009 to 2017 | Vice Chair of the Company since March 2008. In 1998, Mr. Johnson founded Johnson Consulting Group, a consulting firm focused on the death care industry. PriorBoard
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| Able Manufacturing and Assembly, LLC | |
2002 to founding Johnson Consulting, he founded and served as President and Chief Executive Officer of Prime Succession (a funeral home and cemetery operator) from 1992 until 1996. Before Prime Succession, he served in a variety of other capacities in the death care profession, including as an executive of Batesville Casket Company. Mr. Johnson is a 25 percent owner, and the managing member, of Fire and Stone Group, LLC, which owns and operates a funeral home in Batesville, Indiana. Mr. Johnson currently serves on the Advisory Board of Great Western Life Insurance. He previously served on the Board2021 | Chair of the Funeral Service Foundation from 2004 until 2010.The Company’s Board of Directors concluded that Mr. Johnson should serve as a director based on his long service in the death care industry and resultant expertise in funeral services, including as a public company director and his prior service on the Board of the Funeral Service Foundation.
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Neil S. Novich Independent | Director since 2010Age 69
Age 66Chairperson of the Audit Committee
| |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Mr. Novich has served as a director of the Company since February 2010. He is the former Chairman and President and Chief Executive Officer of Ryerson, Inc., a global metals distributor and fabricator. Mr. Novich joined Ryerson in 1994
| Risk Management and Oversight. Former Chair/CEO and board member of Fortune 500 public companies with an understanding of critical success factors for mitigation and executive management of risk.
Operations (Manufacturing Experience). Deep engagement, as Chief Operating Officer and was named President and CEO, in 1995. He servedRyerson’s distribution and fabrication operations, both domestic and international, striving for continuous operations improvement, while providing overall leadership, following more than a decade with a major management consulting firm focused on optimizing strategy development and execution for clients, including marketing, operations, sales, and technology.
Strategic Thinking. Orientation for high engagement in the Boardboard room; recognized for providing innovative strategic insights that support enhanced growth and well-functioning strategic systems.
Cyber/Information Security; Information Technology. Significant experience providing oversight to these functions as Chair of Audit Committee at Hillenbrand, with background knowledge derived from continuing education and certificates in highly analytical subjects.
Human Resources. Leadership experience at Bain and Ryerson from 1994 untilwith responsibility for large teams; significant boardroom experience in executive compensation and other human resources topics. | |
1999 to 2007 adding Chairman to his title in 1999. He remained Chairman | Chairperson, President and CEO until 2007, when the company was sold. Prior | |
1994 to his time at Ryerson, Mr. Novich spent 13 years with 1999 | President and CEO | |
| 1994 to 1996 | Chief Operating Officer
| |
Bain &and Company, an international management consulting firm, where he spent several years as a partner. He currently serves onfirm. | |
| 1981 to 1994 | Partner | |
| HILLENBRAND BOARD SERVICE | |
| Since 2019 | Chairperson of the BoardsAudit Committee | |
| Since 2018 | Audit Committee Member | |
| Since 2013 | M&A Committee Member | |
| 2013 to 2018 | Chairperson of the Compensation Committee | |
| 2010 to 2018 | Compensation Committee Member | |
| Since 2010 | Director and NCG Committee Member | |
| OTHER BOARD SERVICE | |
Beacon Roofing Supply, (aa distributor of residential and non-residential roofing materials), where he chairs thematerials. | |
| Since 2012 | Director; Chair, Compensation Committee and W.W.(since 2018); past Chair, Audit Committee | |
Analog Devices, Inc., a global semiconductor leader. | |
| 2008 to 2020 | Director; Member, Audit Committee; past Chair, Compensation Committee
| |
American Securities, a private equity fund. | EDUCATION | |
| Since 2004 | Member, Executive Council
| MS (Management), Massachusetts Institute of Technology MS (Nuclear Engineering), Massachusetts Institute of Technology BS (Physics), Harvard University | |
WW. Grainger, Inc. (an, an industrial supply company), where he is a member of thecompany. | |
| Since 1999 | Director; Member, Audit Committee, Board Affairs and Nominating Committee, and the Cyber Security Ad Hoc Committee. Mr. Novich is also a trustee of the Governance Committees; past Chair and Member, Compensation Committee | |
Field Museum of NationalNatural History, a Chicago museum. | |
| Since 1999 | Trustee, Former Chair of Research and life trustee of Children’s Home & Aid in Chicago and is a memberTechnology Committees | |
| Ryerson, Inc. | |
| 1994 to 2007 | Director; Chairperson of the Dean’s Council to the Physical Sciences DivisionBoard (since 1999)
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Kimberly K. Ryan Not Independent | Age 57 President and CEO | |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
| Hillenbrand, Inc. | Risk Management and Oversight. Decades of the Universitysenior management experience addressing risks as an executive, as well as oversight of Chicago. Mr. Novich previously served onoverall company risk management as Chairperson of the Board of Directors of Analog Devices,Kimball International, Inc. from 2008 until 2020, where he was a Corporate Finance. A leader in finance, with extensive experience beginning early career at Hill-Rom, as well as CEO and Board Chair of the Compensation Committee and a member of the Audit Committee. The Company’s Board of Directors concluded that Mr. Novich should serve as a director based on his service as President and CEO of a major public corporation and his several years of experience as a partner with a major consulting firm, together with his extensiveat Kimball, and continuing service on the boards of several public companies and non-profit organizations.
|
| | Joe A. Raver | Director since 2013
Age 54
|
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Mr. Raver has served as a director and as President and Chief Executive Officer of the Company since September 2013. He has served as President of the Company’s Advanced Process Solutions (formerly Process Equipment Group) reportable segment since March 2011. Mr. Raver has been a director of Applied Industrial Technologies, Inc. (“AIT”), a leading industrial distributor serving MRO and OEM customers in virtually every industry since August 2017. Mr. Raver currently serves on the Corporate Governance Committee and Executive Organization and Compensation Committee of AIT. He previously servedthrough tenure as President of Batesville CasketCoperion, Hillenbrand's largest business.
Industrial Experience. Deep knowledge of process solutions industries as well as broad-based business, international manufacturing, operations, and procurement experience, including in business-to-business product sales and services for a variety of global industries; service since 1989 in positions of increasing responsibility in finance, strategy, operations, logistics, and information technology at the Company and Hill-Rom (the Company’s former parent company). Information Technology. Experience leading information technology teams from 2008 – 2011. He also previously servedearly career to present, including leadership of enterprise resource planning system project at Hill-Rom and board and executive roles overseeing IT. Cyber/Information Security. Cyber and information security fluency from decades of exposure to this topic, including as Senior Vice President of Information Technology and General ManagerOffice of the respiratory care divisionProgram Leadership at Hill-Rom. | |
| Since 2021 | President and CEO | |
| 2021 | Executive Vice President | |
| 2015 to 2021 | President of Coperion and Senior Vice President of Hillenbrand | |
| 2011 to 2015 | President of Batesville and Senior Vice President of Hillenbrand
| |
Hill-Rom, Holdings (“Hill-Rom”)Inc., a leading global provider of medical equipment and services and the Company’s former parent, as well as Hill‑Rom’sservices. | |
| 2006 to 2011 | Senior Vice President, Post Acute Care Division | |
| 2005 to 2006 | Senior Vice President, Information Technology and Office of StrategyProgram Leadership | |
| 2003 to 2005 | Vice President, Shared Services | |
| HILLENBRAND BOARD SERVICE | |
| Since 2021 | Director | |
| OTHER BOARD SERVICE | |
Kimball International, Inc., a public manufacturing company in the furniture industry. | |
| 2014 to 2023 | Director and Shared Services. PriorMember of Audit Committee | |
2018 to that, Mr. Raver spent 10 years in a variety of leadership positions at Batesville Casket Company and Hill-Rom.2021 | The Company’s Board of Directors concluded that Mr. Raver should serve as a director because of his position as President and Chief Executive OfficerChairperson of the CompanyBoard, Member of Compensation and based on his yearsGovernance Committees
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National Association of experience asManufacturers, a manufacturing industrial trade association. | |
| Since 2022 | Director
| |
Iowa State University, College of Business, a public land-grant institution. | |
| Since 2022 | Deans Advisory Board Council | EDUCATION | |
Conexus Indiana, an Indiana non-profit organization advancing manufacturing and logistics for business and educators. | BA (Accounting), Iowa State University | |
| 2018 to 2021 | Director
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Inderpreet Sawhney Independent | Age 59 | |
| CAREER HIGHLIGHTS | KEY QUALIFICATIONS AND EXPERIENCES | |
Infosys Ltd., a global leader in next-generation digital services. | Cyber/Information Security; Information Technology. Experienced general counsel and senior executive of the Company’s Advanced Process Solutions reportable segment and Batesville Casket Company and hisat large information technology firms with in-depth knowledge of and exposure to technology, legal, compliance, and cyber matters.
Risk Management and Oversight. Extensive experience overseeing risk associated with the death caredevelopment and process equipment industries.growth of digital services including cyber security, technology, and compliance risks from a legal standpoint.
Strategic Thinking. Experience navigating organizations through various high-profile strategic issues, such as employee and customer safety, business continuity, and diversity and inclusion initiatives.
Sustainability/ESG. Track record of executing sustainability initiatives in the context of compliance, equity, and inclusion, in particular as Chief Compliance Officer of Infosys Ltd.
Mergers and Acquisitions. Wide experience in mergers, acquisitions, and strategic transactions as general counsel at large, diverse organizations.
International Business/Global Markets. Extensive international experience with a focus on India, including World Economic Forum, Co-Chair of Global Future Council on Good Governance. | |
| Since 2017 | General Counsel and Chief Compliance Officer
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Wipro Limited, a leading technology services and consulting company with capabilities in consulting, design, engineering, and operations. | |
| 2011 to 2017 | Senior Vice President and General Counsel
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The Chugh Firm, a private law firm. | |
| 1997 to 2011 | Managing Partner of the Silicon Valley Office | |
| HILLENBRAND BOARD SERVICE | |
| Since 2023 |
M&A Committee Member
| |
| Since 2021 |
Director, Audit Committee Member, and NCG Committee Member
| |
| OTHER BOARD SERVICE | |
SABANA (South Asian Bar Association of North America), organization encouraging professional growth and advocating for equal rights and access to justice for South Asian community. | |
| Since 2019 | Advisory Council Member
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Infosys Foundation USA, a nonprofit organization that aims to expand computer science education and training, particularly in underrepresented communities. | |
| Since 2022 | Chair | EDUCATION | |
| Since 2021 | Trustee | LLM, Queens University LLB, Delhi University BS (Economics), Delhi University, Lady Shriram College | |
| |
Skills and Experience Matrix. The graph below summarizes the Skills and Experience Matrix that our Board uses to align its composition with the Company’s strategic priorities and to identify key skills and experiences most relevant to decisions about Board composition. The graph presents the areas for which the Board relies on individual directors, given their relatively deep background in the area, and the number of directors with such background in each area. This presentation does not mean that some directors lack certain skills or experiences, but rather that other directors have relatively deeper expertise. EachThe director and director nominee biographybiographies above describesfurther showcase the diversity of our Board and each person’s qualifications and relevant experience in more detail.
23
THE BOARD OF DIRECTORS AND COMMITTEES
The Company’s business is managed under the direction of its Board of Directors. In this section of the proxy statement, we describe the general and certain specific responsibilities of the Board of Directors and its committees, our governance practices, and how you can communicate with the Board or with individual directors.
Board’s Responsibilities
The Board of Directors is the ultimate decision-making body of the Company, except with respect to those matters reserved to the shareholders. The Board acts as an advisor and counselor to senior management and oversees and monitors management’s performance. The Board also oversees the Company’s management of risk involved or potentially involved in the Company’s business.
Board Leadership Structure and Role in Risk Oversight
The Corporate Governance Standards for our Board of Directors provide that the Company’s Chief Executive Officer (“CEO”) cannot also serve as the Chairperson of the Board. At all times since the Company’s formation, the positions of CEO and Chairperson of the Board have been held by separate individuals. Our Board believes that the separation of these two positions is the most appropriate leadership structure for the Company at this time because it enables us to benefit from the expertise, experience, and strengths of both of the individuals holding those key leadership positions in the Company.
Our CEO, Joe A. Raver, has servedKimberly K. Ryan, began serving as a director beginning in December 2021, in connection with becoming the Company’s President and CEO. During the transition to becoming CEO, she served as the Company’s Executive Vice President beginning in June 2021. Prior to that role, she served as President and CEO of the Company since September 2013. He has served as President of the Company’s Advanced Process Solutions (formerly Process Equipment Group) reportable segment since March 2011. Prior toCoperion business beginning in September 2015, also overseeing Hillenbrand’s Rotex business during part of that he wasperiod. She served as President of the Company’s recently-divested Batesville Casket Companybusiness for severalfour years before that, and was named a Senior Vice President of Hillenbrand in 2011. Before these executive roles, she also held a variety of leadership positions at the Company’s former parent company.company. The Chairperson of the Board, F. Joseph Loughrey,Helen W. Cornell, has extensive executive management and board of director experience, as further described in hisher biographical information set forth under the heading “Proposal No. 1 – Election of Directors” above.
Ms. Cornell also served as the Vice Chairperson of the Board during fiscal 2022 in preparation for the retirement of our previous Chairperson, F. Joseph Loughrey, in January 2023.
The Board of Directors has direct responsibility for overseeing the Company’s exposure to risk. As a part of its responsibility, the Board ensuressatisfies itself that the risk management processes implemented by management are aligned with the Company’s overall strategy and are functioning as directed, and that an appropriate culture of risk-adjusted decision-making exists throughout the organization. At each meeting of the Board of Directors, the Board evaluates any new material risks to the Company in discussions with management. The Board periodically consults with outside advisors and experts on risk management matters, and through the Audit Committee, receives regular reports from the Company’s Chief Compliance Officer, Chief Information Officer, and Chief Information Security Officer. No less than once each year, management makes a formal presentation to the entire Board of Directors that describes all significant risks of the Company, to ensure thatapprise the Board is apprised of the overall risk profile of the Company and to help ensure that such risks are being properly
mitigated and managed.
The Board also receives annual updates on the Company’s cybersecurity program.
In addition, the Compensation and Management Development Committee (the “Compensation Committee”) analyzes and manages risks related to our compensation policies and practices, and the Audit Committee performs the same role with respect to financial-relatedfinancial- and cyber-related risks facing the Company. The Compensation Committee’s risk management efforts are discussed under Part V of the “Executive Compensation” section of this proxy statement.
TheIn particular, the Audit Committee, in accordance with its Charter, fulfills its risk management oversight responsibilities by discussing with senior management “the Company’s guidelines and policies that govern the process by which the Company assesses and manages the Company’s exposure to risks… and the steps management has taken to monitor and control such exposures.” Additional details on the Audit Committee’s risk management duties can be found in its Charter, available on the Company’s web site at www.hillenbrand.com or in print to any shareholder who requests copies through the Company’s Investor Relations Department.
Meetings of the Board and Committees
A proposed agenda for each regularly scheduled Board meeting is developed by the Chairperson of the Board, with assistance from the Vice Chairperson of the Board (when serving), and the Company’s CEO, together with the members of management that the Chairperson or CEO may select. The proposed agenda is circulated to each director for review and comment before it is finalized. Proposed agenda items that fall within the scope of responsibilities of a Board committee are initially developed by the chairperson of that committee with management assistance, as appropriate. Each committee’s chairperson also develops, with the assistance of management, a proposed agenda for each regularly scheduled meeting of that committee. Board and committee materials related to agenda items are provided to Board and committee members sufficiently in advance of meetings (typically one week) to allow the directors to prepare for discussion of the items at the meetings.
At the invitation of the Board and its committees, members of senior management and outside advisors attend Board and committee meetings or portions thereof for the purpose of reporting on specific agenda items and participating in discussions. Generally, discussions of matters to be considered by the Board and its committees are facilitated by the manager responsible for that function or area of the Company’s operations. In addition, directors have free access to all other members of management and employees of the Company. As necessary and appropriate in their discretion, the Board and its committees consult with independent legal, financial, human resource, compensation, accounting, and accountingother advisors to assist in their duties to the Company and its shareholders.
The chairpersons of the committees of the Board preside over the portions of Board meetings in which the principal items to be considered are within the scope of the authority of their respective committees.
Executive sessions, which are meetings of non-employee directors without management present, are held after each Board meeting, and after each committee meeting as scheduled by the chairpersons of the respective committees. The Chairperson of the Board generally presides at executive sessions of the Board and may be assisted by the Vice Chairperson (when serving), while the chairpersons of the committees preside at executive sessions of their committees or at Board
executive sessions in which the principal items to be considered are within the scope of the authority of their respective committees.
Governance Matters
Corporate Governance. Both the Board of Directors and management of the Company are firmly committed to good and accountable corporate governance and believe that an attentive, performing Board is a tangible competitive advantage. To that end, the Board of Directors has taken measures to ensureaimed at continued high standards for corporate governance. Specifically, the Board has adopted:
| 1. | Position specifications, including performance criteria, for its members, the Chairperson of the Board, and the chairpersons of the standing Board committees. These position specifications are discussed in more detail under the heading “Board Composition” below.
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| 2. | Corporate Governance Standards for the Board that, among other important directives, require that at least 80 percent of the directors be independent and describe the Board’s diversity policy, which is discussed in more detail under the heading “Board Composition” below. The Corporate Governance Standards also require each non-employee director to hold shares of the Company’s common stock in an amount equal to five times the director’s annual cash compensation by the fifth anniversary of his or her election to the Board and limit the total annual base compensation for non-employee directors.7 The Board regularly discusses and reviews the Corporate Governance Standards and also general principles of corporate governance to evaluate whether it can improve upon the practices and procedures of the Company.
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| 3. | A Code of Ethical Business Conduct that is applicable to the Board and all employees of the Company and its subsidiaries, including the Company’s Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. No waivers of the requirements of our Code of Ethical Business Conduct were granted during fiscal year 2020. The Company plans to disclose amendments or waivers, if any, of the Code of Ethical Business Conduct on its web site at www.hillenbrand.com.
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| 4. | An Insider Trading and Disclosure Policy, which applies to all employees and directors. This policy promotes sound corporate citizenship and includes, among other provisions, anti-hedging and anti-pledging provisions with respect to the Company’s securities. Additional discussion of the Company’s anti-hedging and anti-pledging policies follows under the heading “Part VII – Anti-Hedging and Anti-Pledging” below.
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1.Position specifications, including performance criteria, for its members, the Chairperson of the Board, the Vice Chairperson of the Board, and the chairpersons of the standing Board committees. These position specifications are discussed in more detail under the heading “Board Composition, Experience, and Skills” below.
2.Corporate Governance Standards for the Board that, among other important directives, require that at least 80 percent of the directors be independent and describe the Board’s diversity policy, which is discussed in more detail under the heading “Board Composition, Experience, and Skills” below. The Corporate Governance Standards also require each non-employee director to hold shares of the Company’s common stock in an amount equal to five times the director’s annual cash compensation by the fifth anniversary of his or her election to the Board. The Board regularly discusses and reviews the Corporate Governance Standards and also general principles of corporate governance to evaluate whether it can improve upon the practices and procedures of the Company.
3.A Code of Ethical Business Conduct that is applicable to the Board and all employees of the Company and its subsidiaries, including the Company’s Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. No waivers of the requirements of our Code of Ethical Business Conduct were granted during fiscal 2023. The Company plans to disclose on its web site amendments or waivers, if any, of the Code of Ethical Business Conduct.
4.An Insider Trading and Disclosure Policy, which applies to all employees and directors. This policy promotes sound corporate citizenship and includes, among other provisions, anti-hedging and anti-pledging provisions with respect to the Company’s securities. Additional discussion of the Company’s anti-hedging and anti-pledging policies follows under the heading “Part VII – Anti-Hedging and Anti-Pledging” below.
5.A limit on the total annual base compensation for non-employee directors of $600,000, approved by the Company’s shareholders as part of the Amended and Restated Hillenbrand, Inc. Stock Incentive Plan (the “Stock Plan”). See the discussion under the heading “Compensation of Directors” below for additional details.
6.A Related Person Transactions Policy that, consistent with New York Stock Exchange rules, authorizes the Nominating/Corporate Governance Committee (the “NCG Committee”) and NCG Committee Chair to review potential related person transactions and requires pre-approval of transactions actually involving related persons, regardless of the size of the transaction.
The Company’s Corporate Governance Standards and Code of Ethical Business Conduct are available in print to any shareholder who requests copies through the Company’s Investor Relations Department and, along with the position specifications, are available on the Company’s web site at www.hillenbrand.com.
7 See the discussion under the heading “Compensation of Directors” below for additional details. An increased limit on total annual base compensation for non-employee directors is proposed to be included in the amendment and restatement of the Stock Plan as further discussed under “Proposal No. 3 – Approval of the Amendment and Restatement of the Hillenbrand, Inc. Stock Incentive Plan” below. If Proposal No. 3 is approved, the limit in the amended and restated Stock Plan will replace the limit in the Corporate Governance Standards.
As part of our commitment to good corporate governance, we annually reach out to key shareholders to discuss a variety of sustainability, corporate governance, and executive compensation topics. This annual outreach program also provides an opportunity for our management to understand and examine the issues that matter most to our shareholders. In prior years, this outreach has covered topics such as the value of a shareholder right to amend the By-laws;Company strategy; executive compensation matters; andcorporate governance matters; the progress of our sustainability program.program; and the impact of the COVID-19 pandemic on the Company’s business, policies, practices, and employees. Our management and directors consider the feedback from these meetings, along with market best practices, policies at peer companies, and our specific circumstances, in making decisions and recommendations regarding our overall governance profile.
Board Composition, Experience, and Skills. The members of our Board have been selected with an emphasis on independence and the mix of characteristics, experiences, and diverse perspectives and skills most appropriate for the Company, as illustrated by the Skills and Experience Matrix described under the heading “Skills and Experience Matrix” above. The Nominating/Corporate GovernanceNCG Committee (the “NCG Committee”) usesregularly refreshes this Skills and Experience Matrix. The NCG Committee uses the Matrix as a guide when evaluating the breadth and depth of the Board’s skills and experience relative to the Company’s business strategy and when considering director nominees. Understanding the importance of Board composition and refreshment for effective oversight, the NCG Committee strives to maintain an appropriate balance of diversity, skills, and experience on the Board.
Position Specifications. As mentioned above, the Board has adopted position specifications applicable to individual directors, and nominees to the Board recommended by the NCG Committee must meet the qualifications set forth in those position specifications. The specifications provide that a candidate for director should never have (i) been the subject of an SEC enforcement action in which he or she consented to the entry of injunctive relief, a cease and desist order, or a suspension or other limitation on the ability to serve as a corporate officer or supervisor; (ii) had any license suspended or revoked due to misconduct of any type; or (iii) violated any fiduciary duty to the Company or any provision of the Code of Ethical Business Conduct. Additionally, each director and nominee should exhibit the following characteristics:
•Have a reputation for industry, integrity, honesty, candor, fairness, and discretion;
•Be an acknowledged expert in his or her chosen field(s) of endeavor, which area of expertise should have some relevance to the Company’s businesses or operations;
•Be knowledgeable, or be willing and able to quickly become knowledgeable, in the critical aspects of the Company’s businesses and operations;
•Be experienced and skillful in serving as a competent overseer of, and trusted advisor to, senior management of a substantial publicly held corporation; and
•For non-employee directors, meet the New York Stock Exchange independence standards then in effect.
As discussed further below under the heading “Board Refreshment and Diversity,” in identifying director nominees, the NCG Committee also seeks talented people with diverse backgrounds who can work together to lead the Company to long-term success.
Board Evaluations. The NCG Committee oversees the annual evaluation of the Board, which, depending on the focus of the evaluation in a particular year, can include a formal evaluation of the whole Board, its various committees, and/or individual directors. The evaluation is typically conducted as a self-assessment, with an opportunity to also provide feedback on Board performance and diversity, committee effectiveness, and individual director performance, and to raise any concerns that an individual director may have. In addition, the Board evaluation also incorporates peer feedback to individual directors, typically in alternating years. Recent Board evaluations have focused on the Board’s effectiveness in relation to topics such as Board composition and skills; Board meetings and materials; strategic directionshareholder communications; Board skills and implementation;composition, including diversity; and Board and executive management leadership succession and evaluation processes; risk management; and regulatory and other compliance.processes. Based upon the assessment results, the Board agrees on improvement goals for the coming year and tracks its progress against those goals over the course of the year. The Board also may engage and pay fees to a third-party consultant to assist in performing the Board evaluation and also in identifying and evaluating potential director nominees. Generally, a third-party consultant assists with the Board evaluation at leastapproximately once every three years. The NCG Committee strives to embed honest feedback into the Board’s culture and to set a tone of open and transparent dialogue throughout the assessment process.
In addition, evaluation results are integrated into the Board succession planning processes described under the heading “Board Refreshment and Diversity” below. As an example, if the evaluation process were to suggest that the Board is underrepresented with respect to a particular background, skill, experience, or diverse characteristic, then selection of a nominee to fill a future vacancy would be informed by that suggestion. The Board’s Skills and Experience Matrix is one of the key tools used in this process, and the Board, with the assistance of the NCG Committee, continues to refine and update its Skills and Experience Matrix on a regular basis.
Board Refreshment and Diversity. The Board from time to time has added new, and replaced retiring, directors, consistently valuing diversity as well as skills and senior-level global diversified industrial experience that align with the Company’s strategic priorities in selecting candidates. In identifying director nominees, the NCG Committee seeks talented people with diverse backgrounds who can work together to lead the Company to long-term success and recommends such candidates to the Board for election.
The Board believes that diversity is good for business. In fiscal 2020 theThe Board has adopted a diversity policy as part of the Company’s Corporate Governance Standards. This policyStandards, which provides that directors will be diverse in terms of gender and of race and ethnicity, and in terms of other characteristics, including background, perspective, knowledge, skills, and experience. The Board will take steps necessary to implement this policy and to help ensure an inclusive environment within the Board and at the
Company. Currently, theThe current diversity and independence profile of our Board is comprised of 11 directors, of whom ten are independent directors, three are women,appears below, and one is African-American. Wewe are committed to continued progress in Board diversity as part of ongoing recruitment and refreshment.
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| Diversity |
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| 5 of 10 directors are female |
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| 3 of 10 directors are ethnically diverse (two Black or African-American, one Asian) |
| Independence |
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| 9 of 10 directors are independent |
In order to encourage refreshment, the Board has implemented a retirement policy requiring that each director to resignmust retire at, or no later than, the first Annual Meeting of shareholders following the date on which the director turns 73 years of age.his or her seventy-third birthday. This retirement policy has no exemptions or conditions. As a result, Company directors vary in age and tenure, with an average age of 62, with ages ranging from 50 to 69, and average tenure of 8 years, with tenure ranging from four months2 to 1215 years. The Board believes that the varying tenures of its members providesprovide a constructive blend of institutional knowledge and fresh external viewpoints.
The Board will continue to focus on refreshment by reviewing, among other things, its composition against the Skills and Experience Matrix described above; the diversity, age, and tenure of Company directors; the results of annual evaluations described above; and overall Board and Committee succession planning. These items remain key aspects of the Board’s refreshment strategy, and the Board will continue to look for ways to improve. Additional details on the Board’s refreshment strategy are contained in the NCG Committee Charter and our Corporate Governance Standards, both of which are available on the Company’s web site at www.hillenbrand.com.
Director Education. We maintain an orientation and continuing education process for directors that we view as a vital component of the Company’s policy requiring the Board as a whole to participate in significant decisions. This process includes furnishing of educational and industry-specific materials, meetings with key management, and attendance at Company and industry events. The Board attempts to hold at least one meeting per year at a Company facility outside of its headquarters in Batesville, Indiana; in 2023, the Board observed this practice by arranging for meetings at certain of the Company’s Advanced Process Solutions facilities in Kansas City, Missouri, involving presentations from local management and their teams. The directors’ education includes, among other things, regular dedicated sessions regarding the Company’s businesses and operations, Audit Committee-sponsored legal and regulatory compliance training and engagement on financial literacy, and regular management and corporate governance presentations at NCG and Compensation Committee meetings. Throughout their terms, directors are expected to continue to deepen their
experience in the industries and markets served by the Company and to remain generally apprised of trends and developments in corporate governance.
SustainabilityPurpose. At Hillenbrand is a global industrial company operating in over 60 countries with more than 10,000 employees serving a wide variety of industries around the world. Our Purpose, Shape What Matters for Tomorrow™, reflects our unique position as industry leaders, creating innovative solutions and end products that impact how people live, work, play, travel, eat, and heal. Guided by our Purpose, we strivepursue excellence, collaboration, and innovation to provide superior return for our shareholders, exceptional value forconsistently shape solutions that best serve our customers, great professional opportunities foremployees, communities, and other stakeholders.We firmly believe that understanding our employees,Purpose allows us to connect what we manufacture to a broader societal impact and enhances our ability to be responsible to our communities through deployment of the Hillenbrand Operating Modelachieve what we stand for.
Sustainability and Environmental, Social, and Governance (“HOM”ESG”). With the support and oversight of our Board of Directors, we are committed to being a company where the positive impacts of our people, products, and partnerships help better the environments in which we operate. Our employees are encouragedIn this way, our sustainability and ESG efforts align well with our Purpose to volunteer their time and talentsShape What Matters For Tomorrow.
The Company has a dedicated sustainability department overseen by its Chief Sustainability Officer, a role established in multiple service and impact programs that we sponsor throughout2021. Supported by our sustainability department, the Company includingdeploys the Hillenbrand Operating Model (“HOM”), a consistent and repeatable framework of tools and key management practices, to help embed sustainability in the way we do business. We believe that strategic investment in sustainability will enhance our annual global community engagement initiative that we callability to engage, innovate, inspire, and drive quality experiences and success for the One Campaign.
Company through our people, products, and partnerships.
In addition, we require compliance with all applicable environmental, human rights, supply chain, and similar laws and regulations,regulations. We believe that everyone must do their part to maintain our high standards for ethics and ourintegrity. Our Code of Ethical Business Conduct (our “Code”) sets the expectation that our employees will make prompt and full disclosure regarding any concerns they have about a potential ethics or compliance-related issue. Our Code also encourages our employees to be proactive and look for ways we can reduce waste and use energy and natural resources more efficiently. We believe that strategic investmentFurther, we have used the HOM to augment our sustainability practices – for example, to better understand our energy use and emissions profile in our communities will enhance our ability to engage, innovate, inspire, and drive quality experiences and success for our employees and the Company.operating companies.
Board Role. The NCG Committee oversees the Company’s policies, objectives, progress, practices, and progress regardingstrategy relating to sustainability and corporate social responsibility.ESG topics, including climate change. The leaders responsible for these efforts make regular presentations to the NCG Committee regarding the Company’s execution on strategy in these areas. In 2020,2023, the NCG Committee met four times, withaddressed sustainability topics addressed in each of these meetings.its regular meetings, and during the year the NCG Committee added human rights oversight to its Charter. The full Board of Directors also addressed sustainability topics during its annual strategy meeting.
Sustainability Reporting. TheIn 2019, the Company has signed on as a participant to the United Nations Global Compact (“UNGC”), a voluntary pledge to develop and exercise corporate responsibility programs and to increase disclosure of the Company’s sustainable business practices. The UNGC requirements include annual publication of a Communication on Progress documenting steps taken to advance the principles of the UNGC in the areas of Human Rights, Labor, Environment, and Anti-Corruption. In fiscal 2020,2023, we published our inauguralfourth annual sustainability report. This sustainability report included, for the first time, disclosures covering Scope 3 emissions data, water use, renewable energy use for our largest manufacturing sites, Purpose survey data, training hours, and the results of a double-materiality assessment highlighting ten key areas of focus as a Communication on Progress underidentified by our stakeholders. The report also included continued alignment to the UNGC.
Sustainability Accounting Standards Board (“SASB”) standards, United Nations Sustainable Development Goals (“SDGs”), and core elements of the Global Reporting Initiative (“GRI”) standards.
We continue to believe that the Company’s participation in the UNGCannual sustainability report is the appropriate frameworkformat for understandingdisclosing the Company’s commitment to and efforts in advancing its sustainability strategy. The Company continues to benchmarkconsider long-term goals that align with otherscience-based targets, and to assess appropriate key performance indicators and additional appropriate frameworks and standards in evaluating its progress and appropriate goals.such as those promulgated by the Task Force on Climate-Related Financial Disclosures (“TCFD”). Additional details about our sustainability efforts, including various sustainability-related policies and a copy of our latest sustainability report, are available at our web site at www.hillenbrand.com/sustainability.
In addition to our Communication on Progress, in 2020 we also adopted new Global Environmental and Human Rights Policies, which are available at www.hillenbrand.com.
Determinations with respect to Independence of Directors
The Corporate Governance Standards adopted by the Board of Directors, in accordance with New York Stock Exchange listing standards, require the Board to make an annual determination regarding the independence of each of the Company’s directors and provide criteria for making those determinations. The Board made those determinations for each director in December 20202023 based on an annual evaluation performed by, and recommendations made by, the NCG Committee.
To assist in the Board’s determinations, each director completed materials designed to identify any relationships that could affect the director’s independence under the applicable New York Stock Exchange and SEC rules and under the criteria set forth in the Corporate Governance Standards. This year, in determining thatmaking determinations regarding director Jennifer W. Rumsey is independent,independence, the NCG Committee evaluated, and the Board considered, certain transactions between the Company and companies affiliated with three of its directors: Cummins, Inc. (“Cummins”), a leading industrial company at which Jennifer W. Rumsey is an executive officer; Infosys Ltd. (“Infosys”), a global leader in next-generation digital services at which Inderpreet Sawhney is an executive officer; and W.W. Grainger, Inc., an industrial supply company at which Neil S. Novich is a member of the Board of Directors and its Audit Committee.
In regard to Cummins, the applicable transactions took place between the Company’s Mold-Masters and Milacron Injection Molding and Extrusion business,businesses, which are part of the reportable segment subsequently renamedCompany’s Molding Technology Solutions reportable operating segment (“MTS”), and various business units of Cummins, a leading industrial company at which Ms. Rumsey is an executive officer.Cummins. In these transactions during fiscal 2020,2023, Cummins purchased capital equipment and aftermarket parts and service from MTS in the total amount of approximately $1,975,000. Notwithstanding$450,000. In regard to Infosys, the applicable transactions took place between Infosys, the Company, and various of their respective subsidiaries in support of a variety of information technology and other technical matters. In these transactions during fiscal 2023, the Company purchased business process outsourcing services, tech support, and other IT and technical services from Infosys in the total amount of approximately $6,360,000. None of the current services provided by Infosys to the Company constitutes consulting services nor does any relate to legal, financial, or accounting matters. In regard to Grainger, the applicable transactions took place between Grainger and various of the Company’s subsidiaries. In these transactions during fiscal 2023, the Company and its subsidiaries purchased equipment and services from Grainger in the total amount of approximately $244,000.
The NCG Committee recommended, and the Board ultimately determined, that Ms. Rumsey, Ms. Sawhney, and Mr. Novich respectively, did not have a material interest in thesethe applicable transactions and, therefore, she had nonotwithstanding these transactions, the directors did not have any material
relationship with the Company that would preclude hertheir ability to be independent, and, therefore, that sheeach is independent under the applicable New York Stock Exchange and SEC rules and under the criteria set forth in the Corporate Governance Standards.
In reaching these determinations with regard to Ms. Rumsey, the following factors were considered, among others:
•the customer relationship with Cummins had already been in place with the MTS businesses for years prior to Ms. Rumsey’s election to the Board;
nearly all of the purchases by Cummins during fiscal 2020 were made prior to Ms. Rumsey’s election;
•Ms. Rumsey’s employment at a customer of the Company was not a consideration in her election as a director;
director, and she is not involved in vendor selection for Cummins;
•Ms. Rumsey’s compensation at Cummins is not directly impacted by the Company having made these purchases from the MTS businesses; and
•the amounts involved in these transactions, particularly in comparison to the fiscal 20202023 net revenue of the Company and Cummins, are immaterial.not material, and have decreased relative to prior years.
In reaching these determinations with regard to Ms. Sawhney, the following factors were considered, among others:
•the vendor relationship with Infosys had already been in place with the Company for more than two years prior to Ms. Sawhney’s election to the Board;
•Ms. Sawhney is not specifically involved in sales, marketing, or other customer acquisition efforts of Infosys and does not have any part of the sales or service delivery organizations reporting to her;
•The services provided by Infosys for the Company are not consulting services and are supplied by a variety of employees and service providers who are supervised generally in their work by the Company’s employees;
•Ms. Sawhney’s employment at a supplier of the Company was not a consideration in her election as a director;
•Ms. Sawhney’s compensation at Infosys is not directly impacted by the purchases by the Company; and
•the amounts involved in these transactions, particularly in comparison to the fiscal 2023 net revenue of the Company and Infosys, are not material.
In reaching these determinations with regard to Mr. Novich, the following factors were considered, among others:
•Mr. Novich is a member of the Board and not an employee of Grainger and does not have a material interest in the transactions;
•Mr. Novich’s role and compensation with Grainger is not directly impacted by the Company having made these purchases from Grainger; and
•the amounts involved in these transactions, particularly in comparison to the fiscal 2023 net revenue of the Company and Grainger, are not material.
On the basis of these considerations and the materials and the standards described above, the Board determined that each of Edward B. Cloues, II, Gary L. Collar, Helen W. Cornell, Joy M. Greenway, Daniel C. Hillenbrand, Thomas H. Johnson, F. Joseph Loughrey, Neil S. Novich, Dennis W. Pullin, Jennifer W. Rumsey, Inderpreet Sawhney, and Stuart A. Taylor, II is independent.independent, including for all purposes with respect to their Committee memberships. The Board determined that Joe A. RaverKimberly K. Ryan does not meet the director independence standards because of hisher current service as President and CEO of the Company. Accordingly, Mr. RaverMs. Ryan does not serve on the Audit, Compensation, or NCG Committees of the Board of Directors.
Committees of the Board of Directors
It is the general policy of the Company that significant decisions be considered by the Board as a whole. As a consequence, the standing committee structure of the Board is limited to those committees considered to be basic to, or required for, the operation of a publicly held company. Currently those committees are the Audit Committee, Compensation Committee, NCG Committee, and Mergers and Acquisitions Committee, each of which has a written charterCharter adopted by the Board of Directors. The NCG Committee recommends the members and chairpersons of those committees to the Board. The Audit Committee, Compensation Committee, and NCG Committee areEach of these Committees is made up only of independent directors. Membership on these committees as of December 14, 2020,January 9, 2024, is shown in the following chart:
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| Audit | Compensation and
Management
Development
| Mergers and Acquisitions | Nominating/Corporate
Governance
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Edward B. Cloues, II
Joy M. Greenway Daniel C. Hillenbrand Thomas H. Johnson
Neil S. Novich ♦ Inderpreet Sawhney ♦ Committee Chairperson | Gary L. Collar ♦ Helen W. Cornell Dennis W. Pullin Jennifer W. Rumsey Stuart A. Taylor, II | Neil S. Novich Inderpreet Sawhney Stuart A. Taylor, II ♦ | Gary L. Collar Helen W. Cornell ♦ F. Joseph Loughrey
Jennifer W. Rumsey
Stuart A. Taylor, II
| Edward B. Cloues, II
Helen W. Cornell
Neil S. Novich
Stuart A. Taylor, II ♦
| Edward B. Cloues, II
Gary L. Collar
Helen W. Cornell
Joy M. Greenway Daniel C. Hillenbrand Thomas H. Johnson
F. Joseph Loughrey ♦
Neil S. Novich Dennis W. Pullin Jennifer W. Rumsey Inderpreet Sawhney Stuart A. Taylor, II |
The current charterCharter for each of the Board’s standing committees is available on the Company’s web site at www.hillenbrand.com and is available in print to any shareholder who requests it through the Company’s Investor Relations Department.
We maintain an orientation and continuing education process for directors that we view as a vital component of the Company’s policy requiring the Board as a whole to participate in significant decisions. This process includes furnishing of educational and industry-specific materials, meetings with key management, and attendance at Company and industry events. The Board attempts to hold at least one meeting per year at a Company facility outside of its headquarters in Batesville, Indiana; in 2020, the Board was unable to observe this practice, given that all meetings following the declaration of the COVID-19 pandemic were held virtually. The directors’ education includes, among other things, regular dedicated sessions regarding the Company��s businesses and operations, Audit Committee-sponsored financial literacy and legal and regulatory compliance training, and regular management and corporate governance presentations at NCG and Compensation Committee meetings. Throughout their terms, directors are expected to continue to deepen their experience in the industries and markets served by the Company and to remain generally apprised of trends and developments in corporate governance.
Audit Committee. The Audit Committee has general oversight responsibilities with respect to the Company’s financial reporting and financial controls, as well asincluding all financial-relatedfinancial- and cyber-related risks facing the Company, the ethics and compliance function, and information technology security matters.and cybersecurity matters, including the extent to which internal and external auditors review IT systems, applications, and security. The Audit Committee annually reviews the Company’s financial reporting process, its system of internal controls regarding accounting, legal, and regulatory compliance that management or the Board has established, the organizational structure of the Company’s ethics and compliance function, information technology securitycybersecurity practices, and the internal and external audit processes of the Company. Each current member of the Audit Committee is independent under SEC Rule 10A-3 and New York Stock Exchange listing standards.
Each member of the Audit Committee meets the financial literacy guidelines established by the Board in the Audit Committee Charter. The Board interprets “financial literacy” to mean the ability to read and understand audited and unaudited consolidated financial statements (including the related notes) and monthly operating statements of the sort released or prepared by the Company, as the case may be, in the normal course of its business. TheIn addition, the Board of Directors has determined that Messrs. Novich and Hillenbrand and Ms. Greenway are each current member of the Audit Committee is an “audit committee financial expert” as that term is defined in Item 407(d) of SEC Regulation S-K.
Compensation and Management Development Committee (the “Compensation Committee”). The Compensation Committee assists the Board in ensuring that the officers and key management of the Company are effectively compensated in terms of salaries, incentive compensation, and other benefits that are internally equitable and externally competitive. As described in more detail in the “Compensation Discussion and Analysis” section, the Compensation Committee is guided by its compensation philosophy – that executives should be fairly compensated for creating appropriate long-term returns for shareholders. As noted above, the Compensation Committee also analyzes and determines the risks, if any, created by our compensation policies and practices. In addition, the Compensation Committee is responsible for reviewing and assessing the talent development and succession strategies concerning the non-CEO officers and key employees of the Company. Each current member of the Compensation Committee is independent as defined by New York Stock Exchange listing standards and SEC rules.
Nominating/Corporate Governance Committee (the “NCG Committee”). The Charter for the NCG Committee provides that the primary functions of this Committee are to assist the Board of Directors in (i) ensuring that the Company is operated in accordance with prudent and practical corporate governance standards; (ii) ensuring that the Board consists of an appropriate number of independent directors, sufficient to satisfy the threshold requirements established by the Company’s Corporate Governance Standards, New York Stock Exchange listing standards, and other regulations; and (iii) identifying potential candidates for the Board. Each current member of the NCG Committee is independent as defined by New York Stock Exchange listing standards and SEC rules. The NCG Committee’s functions relating to CEO succession planning and director nominations and compensation are described in more detail below. Many of the NCG Committee’s other responsibilities and activities are detaileddescribed above under the headings “Sustainability and ESG – Board Role,” “Board Composition,” and “Determinations with respect to Independence of Directors.”
CEO Succession Planning. The Board considers CEO succession planning to be at the core of its ability to reach sound decisions that drive shareholder value. Consequently, the NCG Committee, on which all of our independent directors serve, is responsible for ensuring there is an effective succession plan for the Company’s CEO. Our succession plan addresses both a short-term or unexpected loss of our CEO, as well as long-term succession. The appointment of Kimberly K. Ryan as Chief Executive Officer in 2021 was the culmination of a multi-year leadership development and succession planning process. The NCG Committee led this process with the help of an independent external management consultant and continues to refine its CEO succession planning process.
Director Nominations. The NCG Committee’s policy is to consider director candidates recommended by shareholders. Any such recommendations should be communicated to the Chairperson of the NCG Committee in the manner described below under the heading “How You Can Communicate with Directors” and should be accompanied by the information required under the Company’s By-laws for shareholder nominees.
The Company’s By-laws provide that nominations of persons for election to the Board of Directors may be made for any meeting of shareholders at which directors are to be elected by or at the direction of the Board or by any shareholder entitled to vote for the election of directors at the meeting.meeting who complies with the required notice procedures. For nominations to be made by a shareholder, the shareholder must have given timely notice thereof in writing“proper written form” to the Secretary of the Company, and any nominee must satisfy the qualifications established by the Board from time to time as contained in the Company’s By-laws and Corporate Governance Standards or posted on the Company’s web site at www.hillenbrand.com, all of which may also be summarized in the proxy statement for the immediately preceding Annual Meeting of shareholders or posted on the Company’s web site at www.hillenbrand.com.
shareholders.
To be timely, a shareholder’s notice of nomination must be delivered to or mailed and received by the Secretary at the Company’s principal offices not later thanoffice (i) in the case of the Annual Meeting,an annual meeting, not later than 100 days prior to the anniversary of the date of the immediately preceding Annual Meeting thatannual meeting which was specified in the initial formal notice of such meeting (but(except that, if the date of the forthcoming Annual Meetingannual meeting is more than 30 days after such anniversary date, such written notice will also be timely if received by the Secretary by the later of (a) 100 days prior to the forthcoming meeting date or (b)and the close of business 10 days following the date on which the Company first makes public disclosure of the meeting date), and (ii) in the case of a special meeting, by the close of business on the tenth day following the date on which the Company first makes public disclosure of the meeting date); and (ii)date.
To be in “proper written form,” a shareholder’s notice to the case of a special meeting, the close of business on the tenth day following the date on which the Company first makes public disclosure of the meeting date. The notice given by the shareholderSecretary must set forth: (A)forth the certain information, including:
(i)the name, age, principal occupation or employment, and address of the shareholder who intends to make the nomination and of the person or the persons to be nominated; (B) a representation that the shareholder is a holder of record, setting forth the shares so held, and intends to appear in person or by proxy as a holder of record at the meeting to nominate the person or persons specified in the notice; (C) proposed nominee;
(ii)a description of any transaction, agreement, arrangement, or understanding (including without limitation, any derivativeshort position or short positions, profit interests, options, hedging transactions, and borrowedany borrowing or loaned shares)lending of shares of the Company) that has been entered into as of the date of the shareholder’s noticemade by or on behalf of the shareholder orsuch person;
(iii)a description of any of its affiliates or associates, the effect or intent ofderivative positions in which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the shareholder or any of its affiliates or associatessuch person has an interest with respect to common stockCompany securities;
(iv)descriptions of other agreements, such as voting or other related party agreements with the respect to the Company; (D)
(v)a description of all arrangements or understandings betweenwritten representation and agreement by the nominee covering various topics, including independence; and
(vi)as to such shareholder, and each nominee proposed by the shareholder andbeneficial owner, if any, other person or persons (identifyingon whose behalf such person or persons) pursuant to which the nomination or nominations areis to be made, by the shareholders; (E)name and record address or principal place of business of such otherperson.
In addition to the information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filedor requested pursuant to the proxyimmediately preceding paragraph or any other provision of its By-laws, the Company may require any nominee or proposed nominee for election to the Board of Directors to furnish any other information (i) that may reasonably be requested by the Company to determine whether such nominee or proposed nominee would be independent under the rules and listing standards of the securities exchanges upon which shares of the Company are listed or traded, any applicable rules of the SEC; (F)SEC or any publicly disclosed standards used by the consentBoard of Directors in writingdetermining and disclosing the independence of eachthe directors; (ii) that
could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee or proposed nominee; or (iii) that may reasonably be requested by the Company to determine the eligibility of such nominee or proposed nominee to serve as a director. Shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also comply with the requirements of SEC Rule 14a-19(b). The foregoing description is qualified in all respects by reference to Section 3.11 of the Company if so elected; (G) a description of the qualifications of such nominee to serve as a director of the Company, and (H) an undertaking by the shareholder to notify the Company in writing of any change in the information called for by clauses (B), (C), and (D) as of the record date for such meeting, by notice received by the Secretary not later than the 10th day following such record date, and thereafter by notice so given and received within two business days of any change in such information, and, in any event, as of the close of business of the day preceding the meeting date.Company’s By-Laws.
Director Compensation. The NCG Committee also oversees director compensation. The Company’s Corporate Governance Standards require the assessment ofNCG Committee assesses the Company’s director compensation package periodically, but no less frequently than once every three years, to ensure that it reflects competitive market conditions and sound corporate governance practices. In addition, the NCG Committee annually considers and approves non-employee director compensation for that fiscal year, and any changes in director compensation must be approved by the Board. The NCG Committee last engaged a compensation consultant to conduct a director compensation study in 2019, which resulted2022, resulting in certain changes being considered by the Board for fiscal 2020 as described under the heading “Compensation of Directors” in our proxy statement for fiscal 2019, filed with the SEC on January 2, 2020. But as part of the Company’s response to the COVID-19 pandemic, the Board voluntarily waived its scheduled cashdirector compensation increase for 2020, which increase has been implemented for 2021. These changesthat are described under the heading “Compensation of Directors” below.
Mergers and Acquisitions Committee. Given the importance of mergers and acquisitions in the Company’s overall strategy, a designated committee of the Board has been formed to focus solely on this area. The Mergers and Acquisitions Committee (the “M&A Committee”) (a)(i) reviews with management and the Board the role of mergers and acquisitions within the Company’s overall growth strategy, (b)(ii) provides advice and counsel to management regarding the Company’s various strategic alternatives, with a primary focus on the composition and growth of the Company’s portfolio of businesses, and (c)(iii) reviews material mergers, acquisitions, dispositions, or other potential transactions, and provides guidance to management as it prepares to present its conclusions and recommendations to the Board as appropriate. While the M&A Committee reviews significant transactions with management, the authority to approve such transactions rests with the Board as a whole.
Certain Relationships and Related Person Transactions
The Corporate Governance Standards for the Board require that all transactions between the Company or its subsidiaries and any “related person” (as such term is defined in applicable securities regulation) must be reviewed and pre-approved pursuant to the terms of the Company’s Related Person Transaction Policy. The Related Person Transaction Policy requires approval of such transactiontransactions by the NCG Committee, in the case of material or disclosable transactions, or by the Chairperson of thatthe NCG Committee, in the case of immaterial and non-disclosable transactions. The Related Person Transaction Policy requires that the NCG Committee or its Chairperson, as applicable, consider all relevant facts and circumstances of the transaction, including the commercial reasonableness of the terms, the benefit and perceived benefit to the Company, the availability of alternative transactions, the materiality and character of the related person’s interest, and the actual or apparent conflict of interest of the related person. If the related person is an independent director (or an immediate family member of an independent director), then the impact on the director’s independence must also be considered.
The NCG Committee reviews potential related person transactions in connection with independence determinations for individual directors.each director. In fiscal 2020,2023, the NCG Committee identified no transactions in which any related person had a material interest that would require disclosure.
How You Can Communicate with Directors
Shareholders of the Company and other interested persons may communicate with the Chairperson of the Board, the chairpersons of the Board’s committees, or the non-management directors of the Company as a group, by sending an email to our Investor Relations Department at investors@hillenbrand.com. The email should specify which of the foregoing is the intended recipient so that it can be forwarded accordingly.
Attendance at Meetings
The upcoming Annual Meeting will be the thirteenth Annual Meeting of the Company’s shareholders. Directors are expected to attend each Annual Meeting.Meeting of shareholders. The Chairperson of the Board generally presides at theeach Annual MeetingsMeeting of shareholders, and the Board holds one of its regular meetings in conjunction with each Annual Meeting. All of the then-serving directors attended the Company’s 20202023 Annual Meeting.
The Board held a total of eighteeneight meetings during the fiscal year ended September 30, 2020.2023. During the same fiscal year, the Compensation Committee held nine meetings, the NCG Committee held fourfive meetings, the Audit Committee met tenseven times, and the M&A Committee met fiveten times. NoEach director attended fewer thanat least 75 percent of the aggregate number of meetings of the full Board of Directors and the number of meetings of the committees on which he or she served during his or her tenure in fiscal year 2020.2023.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee had no interlocks or insider participation during fiscal year 2020.2023. Specifically, during fiscal year 2020,2023, directors Collar, Cornell, Loughrey, Pullin, Rumsey, and Taylor served on the Compensation Committee of the Company, and none of them:
•Is or has at any time been an officer or employee of the Company or any of its subsidiaries; or
•Has or has had at any time any direct or indirect material interest in an existing or proposed transaction involving more than $120,000 in which the Company is, was, or was proposed to be a participant, or that is otherwise required to be disclosed by us under the proxy disclosure rules.
Also in that regard, during fiscal year 2020,2023, none of our executive officers served as a member of the board of directors or on the compensation committee of any other company that had an executive officer who served on our Board of Directors or our Compensation Committee.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
In furtherance of our stated goal of creating shareholder value over the long term, we believe it is important for our directors and executive officers to own stock in the Company. In that regard, each non-employee director is required, within five years after becoming a director, to own and maintain ownership of a minimum number of shares of our common stock equal in value to five times his or her annual cash compensation. Such ownership includes shares of restricted stock and restricted stock units but not shares that underlie unexercised stock options. In addition, non-employee directors are required to hold any vested shares of stock awarded as part of their annual equity compensation until after the director ceases to serve on the Board,8 or upon7 a change in control of the Company, or the director’s death or permanent and total disability. OwnershipSimilar ownership requirements for our Named Executive Officers and other executive officers are detailedfurther described in the “Compensation Discussion and Analysis” section of this proxy statement.
In all cases, such ownership may, for purposes of the holding requirements, include shares of restricted stock and time-based restricted stock units but neither shares that underlie unexercised stock options, nor performance-based restricted stock units. The table below shows shares beneficially owned by allour directors and executive officers as of December 14, 2020.
15, 2023.
Security Ownership of Directors:
| | | | | | | | | | | |
| Name | Shares (1) Beneficially Owned As Of December 15, 2023 | Percent Of Total Shares Outstanding |
| | | |
| Helen W. Cornell – Chairperson | 59,247 | (2) | * |
| | | |
| Gary L. Collar | 27,348 | (3) | * |
| | | |
| Joy M. Greenway | 36,012 | (4) | * |
| | | |
| Daniel C. Hillenbrand | 266,918 | (5) | * |
| | | |
| Neil S. Novich | 56,894 | (6) | * |
| | | |
| Dennis W. Pullin | 6,588 | (7) | * |
| | | |
| Jennifer W. Rumsey | 8,971 | (8) | * |
| | | |
| Kimberly K. Ryan | 279,853 | (9) | * |
| | | |
| Inderpreet Sawhney | 6,276 | (10) | * |
| | | |
| Stuart A. Taylor, II | 75,507 | (11) | * |
| Name | | Shares (1) Beneficially Owned As Of December 14, 2020 | | Percent Of Total Shares Outstanding |
| | | | | |
F. Joseph Loughrey – Chairperson | | 97,214
| (2)
| | * |
| | | | | |
Edward B. Cloues, II | | 41,715
| (3)
| | * |
| | | | | |
Gary L. Collar | | 17,911
| (4) | | * |
| | | | | |
Helen W. Cornell | | 35,806
| (5)
| | * |
| | | | | |
Joy M. Greenway | | 26,101
| (6) | | * |
| | | | | |
Daniel C. Hillenbrand | | 255,646
| (7)
| | * |
| | | | | |
Thomas H. Johnson | | 60,122
| (8)
| | * |
| | | | | |
Neil S. Novich | | 45,855
| (9)
| | * |
| | | | | |
Joe A. Raver | | 709,384
| (10)
| | * |
| | | | | |
Jennifer W. Rumsey | | 563
| (11)
| | * |
| | | | | |
Stuart A. Taylor, II | | 63,512
| (12)
| | * |
8
7 For awards granted prior to May 2014, directors must hold the underlying shares of common stock of the Company forthrough the end of six months after they cease serving as a director; for awards granted in May 2014 or later, directors must hold the underlying shares of common stock of the Company forthrough one day after the director ceases serving.
Security Ownership of Named Executive Officers:
| Name | | Shares (1) Beneficially Owned As Of December 14, 2020 | | Percent Of Total Shares Outstanding |
| | | | | |
Kristina A. Cerniglia | | 179,557
| (13)
| | * |
| | | | | |
Kimberly K. Ryan | | 223,683
| (14)
| | * |
| | | | | |
Ling An-Heid | | 109,072
| (15)
| | * |
| | | | | |
Christopher H. Trainor | | 128,564
| (16)
| | * |
| | | | | |
All directors and executive officers of the Company as a group, consisting of 22 persons | | 2,272,779
| (17)
| | 3.03% |
| | | | | | | | | | | |
| Name | Shares (1) Beneficially Owned As Of December 15, 2023 | Percent Of Total Shares Outstanding |
| | | |
| Robert M. VanHimbergen | 23,240 | (12) | * |
| | | |
| Ulrich Bartel | 41,919 | (13) | * |
| | | |
| Nicholas R. Farrell | 103,562 | (14) | * |
| | | |
| J. Michael Whitted | 210,462 | (15) | * |
| | | |
| All directors and executive officers of the Company as a group, consisting of 20 persons | 1,243,287 | (16) | 1.8% |
* | Ownership is less than one percent of the total shares outstanding. |
*Ownership is less than one percent of the total shares outstanding.
(1)The Company’s only class of equity securities outstanding is common stock without par value. Except as otherwise indicated in these footnotes, the persons named have sole voting and investment power with respect to all shares shown as beneficially owned by them. None of the shares beneficially owned by directors or executive officers is pledged as security. Information regarding shares beneficially owned by Ms. Ryan, our President and CEO, is included in the “Security Ownership of Directors” table above.
(1) | The Company’s only class of equity securities outstanding is common stock without par value. Except as otherwise indicated in these footnotes, the persons named have sole voting and investment power with respect to all shares shown as beneficially owned by them. None of the shares beneficially owned by directors or executive officers is pledged as security. Information regarding shares beneficially owned by Mr. Raver, our President and CEO, is included in the “Security Ownership of Directors” table above.
|
(2)Includes 13,191 shares held by trusts of which Ms. Cornell is trustee, and 46,056 restricted stock units held on the books and records of the Company.
(2) | Includes (i) 30,000 shares directly owned by Mr. Loughrey and (ii) 67,214 restricted stock units held on the books and records of the Company.
|
(3)Includes 27,348 restricted stock units held on the books and records of the Company.
(3) | Includes 41,715 restricted stock units held on the books and records of the Company.
|
(4)Includes 36,012 restricted stock units held on the books and records of the Company.
(4) | Includes 17,911 restricted stock units held on the books and records of the Company.
|
(5)Includes (i) 3,448 shares directly owned by Mr. Hillenbrand; (ii) 16,363 restricted stock units held on the books and records of the Company; and (iii) 247,107 shares indirectly beneficially owned by Mr. Hillenbrand, consisting of (a) 135,863 shares owned by Clear Water Capital Partners, LP, (b) 8,631 shares owned by John and Joan GC TR FBO (John, Rose and Olivia), with respect to which Mr. Hillenbrand is a co-trustee, (c) 5,754 shares owned by John and Joan GC TR FBO (Eleanor and Sarah), with respect to which Mr. Hillenbrand is a co-trustee, with respect to which Mr. Hillenbrand disclaims beneficial ownership, (d) 48,611 shares owned by Hillenbrand II TR FBO (John, Rose and Olivia), with respect to which Mr. Hillenbrand is a co-trustee, (e) 28,248 shares owned by John and Joan CRT IMA, with respect to which Mr. Hillenbrand is a co-trustee, and (f) 20,000 shares owned by Anne Hillenbrand Singleton Trust, with respect to which Mr. Hillenbrand disclaims beneficial ownership.
(5) | Includes 1,500 shares held by trust of which Ms. Cornell is trustee, and 34,306 restricted stock units held on the books and records of the Company.
|
(6)Includes 53,545 restricted stock units held on the books and records of the Company and 3,349 shares acquired with deferred director fees and held on the books and records of the Company under the Board’s deferred compensation plan.
(6) | Includes 26,101 restricted stock units held on the books and records of the Company.
|
(7) | Includes (i) 1,000 shares directly owned by Mr. Hillenbrand; (ii) 7,539 restricted stock units held on the books and records of the Company; and (iii) 247,107 shares indirectly beneficially owned by Mr. Hillenbrand, consisting of (a) 135,863 shares owned by Clear Water Capital Partners, LP, (b) 8,631 shares owned by John and Joan GC TR FBO (John, Rose and Olivia), with respect to which Mr. Hillenbrand is a co-trustee, (c) 5,754 shares owned by John and Joan GC TR FBO (Eleanor and Sarah), with respect to which Mr. Hillenbrand is a co-trustee, with respect to which Mr. Hillenbrand disclaims beneficial ownership, (d) 48,611 shares owned by Hillenbrand II TR FBO (John, Rose and Olivia), with respect to which Mr. Hillenbrand is a co-trustee, (e) 28,248 shares owned by John and Joan CRT IMA, with respect to which Mr. Hillenbrand is a co-trustee, and (f) 20,000 shares owned by Anne Hillenbrand Singleton Trust, with respect to which Mr. Hillenbrand disclaims beneficial ownership.
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(7)Includes 6,588 restricted stock units held on the books and records of the Company.
(8)Includes 8,971 restricted stock units held on the books and records of the Company.(9)Includes 128,003 shares directly owned by Ms. Ryan, as well as (a) 136,220 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 15, 2023, and (b) 15,630 restricted stock units that could vest within 60 days of December 15, 2023. Does not include 51,709 restricted stock units that vest in future years pursuant to terms described under the table “Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2023” in Part III under “Executive Compensation.”
(8) | Includes 7,000 shares directly owned by Mr. Johnson and 53,122 restricted stock units held on the books and records of the Company.
|
(10)Includes 6,276 restricted stock units held on the books and records of the Company.
(9) | Includes 42,654 restricted stock units held on the books and records of the Company and 3,201 shares acquired with deferred director fees and held on the books and records of the Company under the Board’s deferred compensation plan.
|
(11)Includes 63,274 restricted stock units held on the books and records of the Company and 12,233 shares acquired with deferred director fees and held on the books and records of the Company under the Board’s deferred compensation plan.
(10) | Includes 182,714 shares directly owned by Mr. Raver, 491,903 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 14, 2020, and 34,767 restricted stock units held on the books and records of the Company.
|
(12)Includes 23,240 shares directly owned by Mr. VanHimbergen. Does not include 63,908 restricted stock units that vest in future years pursuant to terms described under the table “Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2023” in Part III under “Executive Compensation.”
(11) | Includes 563 restricted stock units held on the books and records of the Company.
|
(12) | Includes 51,834 restricted stock units held on the books and records of the Company and 11,678 shares acquired with deferred director fees and held on the books and records of the Company under the Board’s deferred compensation plan.
|
(13)Includes 18,933 shares directly owned by Mr. Bartel, as well as 20,086 shares that may be purchased pursuant to stock options that are exercisable within 60 day of December 15, 2023, and (b) 2,900 restricted stock units that could vest within 60 days of December 15, 2023. Does not include 9,965 restricted stock units that vest in future years pursuant to terms described under the table “Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2023” in Part III under “Executive Compensation.”
(13) | Includes 42,552 shares directly owned by Ms. Cerniglia, 127,879 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 14, 2020, and 9,126 restricted stock units held on the books and records of the Company.
|
(14)Includes 41,951 shares directly owned by Mr. Farrell, as well as 61,611 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 15, 2023. Does not include 40,981 restricted stock units that vest in future years pursuant to terms described under the table “Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2023” in Part III under “Executive Compensation.”
(14) | Includes 74,718 shares directly owned by Ms. Ryan, 140,708 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 14, 2020, and 8,257 restricted stock units held on the books and records of the Company.
|
(15) | Includes 58,275 shares directly owned by Ms. An-Heid, 12,149 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 14, 2020, and 38,648 restricted stock units held on the books and records of the Company.
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(15)Includes 48,522 shares directly owned by Mr. Whitted, as well as 161,940 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 15, 2023. Does not include 29,446 restricted stock units that vest in future years pursuant to terms described under the table “Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2023” in Part III under “Executive Compensation.”
(16) | Includes 40,111 shares directly owned by Mr. Trainor, 82,369 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 14, 2020, and 6,084 restricted stock units held on the books and records of the Company.
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(17) | Includes 488,994 shares directly owned by the applicable director or executive officer, 1,031,446 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 14, 2020, 488,853 restricted stock units held on the books and records of the Company, 86,990 shares held by trusts, 135,863 shares owned by limited partnerships, 25,754 shares with respect to which the director disclaims beneficial ownership, and 14,879 shares acquired with deferred director fees and held on the books and records of the Company under the Board’s deferred compensation plan.
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(16)Includes 289,255 shares directly owned by the applicable director or executive officer, 395,189 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 15, 2023, 282,963 restricted stock units held on the books and records of the Company (including any restricted stock units that could vest within 60 days of December 15, 2023), 98,681 shares held by trusts, 135,863 shares owned by limited partnerships, 25,754 shares with respect to which the director disclaims beneficial ownership, and 15,582 shares acquired with deferred director fees and held on the books and records of the Company under the Board’s deferred compensation plan. Does not include 245,222 restricted stock units awarded to executive officers that vest in future years pursuant to their terms including, if
applicable, as described under the table “Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2023” in Part III under “Executive Compensation.”
DELINQUENT SECTION 16(a) REPORTS
Under Section 16(a) of the Securities Exchange Act of 1934 (“Section 16(a)”), the Company’s directors, certain of its officers, and any person holding more than 10 percent of the Company’s common stock are required to file with the SEC initial reports of ownership and reports of changes in ownership of common stock of the Company. The Company is required to report in this proxy statement any failure to file on a timely basis any reports required by Section 16(a) during the fiscal year ended September 30, 20202023 or prior fiscal years. Based solely on a review of filings made electronically with the SEC, the Company believes that these filing requirements were satisfied by its directors, officers, and 10 percent beneficial owners, except that, as a result of administrative errors: (1) Michael M. Jones, President of the Company’s Milacron Injection Molding & Extrusion business, filed one late report in fiscal 2020 with respect to the purchase of 3,000 shares; and (2) Daniel C. Hillenbrand filed one late report in fiscal 2020 with respect to 22,500 shares held by Generations, L.P., of which Mr. Hillenbrand serves as Managing Partner, which were mistakenly omitted from his initial report.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS OF MORE THAN 5 PERCENT OF THE COMPANY’S COMMON STOCK
The following table provides information regarding all persons or entities known to us that, as of the date indicated, were beneficial owners of more than 5 percent of the Company’s common stock.
| | | | | | | | | | | |
| Name | Shares Beneficially Owned As Of December 15, 2023 | Percent Of Total Shares Outstanding |
| | | |
BlackRock Inc. 55 East 52nd Street New York, NY 10055 | 11,458,385 | (1) | 16.3% |
| | | |
The Vanguard Group P.O. Box 2600, V26 Valley Forge, PA 19482 | 7,616,852 | (2) | 10.9% |
| | | |
Clarkston Capital Partners, LLC 91 West Long Lake Road Bloomfield Hills, MI 48304 | 5,116,720 | (3) | 7.3% |
Name | | Shares
Beneficially Owned As Of
December 14, 2020
| | Percent Of
Total Shares
Outstanding
|
| | | | |
BlackRock Inc.
55 East 52nd Street
New York, NY 10055
| | 11,626,764 (1) | | 15.50% |
| | | | |
Vanguard Group, Inc.
P.O. Box 2600, V26
Valley Forge, PA 19482
| | 8,022,227 (2) | | 10.69% |
| | | | |
Clarkston Capital Partners LLC
| | 5,694,893 (3) | | 7.59% |
(1)This information is based on a Schedule 13G/A filed by BlackRock Inc. with the SEC on January 26, 2023; and reflects sole dispositive power with respect to all shares and sole voting power with respect to 11,337,602 shares, thus indicating no voting power with respect to 120,783 shares.
(1) | This information is based on a Form 13G/A filed by BlackRock Inc. with the SEC on February 4, 2020; reflects sole dispositive power with respect to all shares and sole voting power with respect to 11,347,519 shares, thus indicating no voting power with respect to 279,245 shares.
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(2)This information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023; reflects sole dispositive power with respect to 7,463,879 shares, and shared dispositive power with respect to 152,973 shares; and reflects shared voting power with respect to 83,411 shares, thus indicating no voting power with respect to 7,533,441 shares.
(2) | This information is based on a Form 13G/A filed by Vanguard Group, Inc. with the SEC on February 12, 2020; reflects sole dispositive power with respect to 7,902,735 shares, and shared dispositive power with respect to 119,492 shares; reflects sole voting power with respect to 117,534 shares, shared voting power with respect to 11,242 shares, and no voting power with respect to 7,893,451 shares.
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(3) | This information is based on a Form 13F filed by Clarkston Capital Partners, LLC with the SEC on November 16, 2020; reflects sole investment discretion with respect to 5,694,893 shares; reflects sole voting power with respect to 5,535,293 shares, and no voting power with respect to 159,600 shares.
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(3)This information is based on a Schedule 13G/A filed by Clarkston Capital Partners, LLC with the SEC on February 14, 2023. Clarkston Capital Partners, LLC, an investment advisor, reports (i) sole dispositive power and sole voting power with respect to 500 shares and (ii) shared dispositive power with respect to 5,116,220 shares and shared voting power with respect to 5,008,120 shares with Clarkston Companies, Inc., Modell Capital LLC, Jeffrey A. Hakala, Gerald W. Hakala, and Jeremy J. Modell, thus indicating (iii) no voting power with respect to 108,100 shares.
EXECUTIVE COMPENSATION
Introduction
Part I of thisThis “Executive Compensation” section encompasses several parts. Part I, our Compensation Discussion and Analysis, provides detailed information about our executive compensation philosophy, policies, actions, decisions (and the bases for such decisions), and procedures as they relate to our executive officers who are included in the compensation disclosures in this proxy statement pursuant to SEC rules – persons who are identified as our Named Executive Officers. This sectionpart is organized as follows:
•Our Executive Compensation Philosophy and Focus on Performance-Based Compensation
Unique Circumstances in Fiscal Year 2020
•Factors Considered in Setting Compensation
•Compensation of Our Named Executive Officers for Fiscal Year 2020
2023•Retirement and Savings Plans
•Employment Agreements and Termination Benefits
•Compensation-Related Policies
Part IIThe remaining parts of this “Executive Compensation” section are as follows:
•Part II is a report from the Compensation Committee of our Board of Directors. Following that report, in
•Part III we presentpresents numerous tables that report in detail the compensation of, and the potential amounts payable by the Company under certain contractual agreements with, the Named Executive Officers.
•Part IV provides information regarding the engagement of Deloitte Consulting, LLPPay Governance LLC (“Deloitte Consulting”Pay Governance”), the Compensation Committee’s independent compensation consultant.
•Part V provides information relating to the compensation-related risk assessment and management strategies employed by the Company.
•Part VI discloses our CEO pay ratio information pursuant to Item 402(u) of Regulation S-K.
•Part VII describes our anti-hedging and anti-pledging policies.
•Part VIII covers our pay versus performance disclosure.
We have attempted to enhance the accessibility of the information presented by the use of tables and charts as much as possible. We encourage you to keep two basic thoughts in mind as you read:read the Executive Compensation section of the proxy:
•First, the compensation of our Named Executive Officers is set by our Compensation Committee, which is a committee of independent directors.
•Second, a significant portion of each Named Executive Officer’s compensation is variable based on the performance of the Company or its applicable business unit(s), as well as individual performance. This structure is designed to align compensation with the interests of the shareholders of the Company.
PART I: COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes our compensation program and how it operates for our Named Executive Officers. It also discusses the principles underlying our compensation policies and decisions along with the impacts of the acquisition of Milacron Holdings Corp. (“Milacron”) and the COVID-19 pandemicstrategic developments that our Compensation Committee considered, such as our transformation into a pure-play industrial company, including the divestiture of our historical Batesville business segment, in making these decisions for fiscal 2023.
SEC rules identify our “Named Executive Officers” as those persons who served as (i) our principal executive officer during fiscal 2020.the year ended September 30, 2023, (ii) our principal financial officer during the year ended September 30, 2023, and (iii) our other three most highly compensated executive officers for the year ended September 30, 2023. Our Named Executive Officers for 20202023, with their principal positions, are:
Joe A. Raver
| | | | | |
| Kimberly K. Ryan | President and Chief Executive Officer |
Kristina A. Cerniglia
Robert M. VanHimbergen | Senior Vice President and Chief Financial Officer and Integration Leader9 |
Kimberly K. Ryan
Ulrich Bartel | Senior Vice President and President, of Coperion and Advanced Process Solutions |
Ling An-Heid
| |
| Nicholas R. Farrell | Senior Vice President, General Counsel, and President of Mold-MastersSecretary |
Christopher H. Trainor
| |
| J. Michael Whitted | Senior Vice President, and President of BatesvilleStrategy & Corporate Development |
Our Executive Compensation Philosophy and Focus on Performance-Based Compensation
We believe that Hillenbrand’s executives should be fairly compensated for creating appropriate long-term returns for shareholders. Our Compensation Committee has adopted the following Executive Compensation Philosophy, which describes the principles of our executive compensation program.
The executive compensation program is designed to effectively compensate officers and key management personnel in terms of base salary, incentive compensation, and other benefits that advance the long-term interest of Hillenbrand’s shareholders.47
The compensation program is based on the following principles:
Reinforcing the absolute requirement for ethical behavior in all practices;
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The executive compensation program is designed to effectively compensate officers and key management personnel with base salary and appropriately balanced short-term and long-term incentive compensation, and other benefits that attract, motivate, and retain superior leadership talent while advancing the long-term interests of Hillenbrand’s shareholders. The compensation program is based on the following principles: •Maintaining high standards of governance and reinforcing the absolute requirement for ethical behavior consistent with the Company’s values in all practices; •Structuring incentive targets that lead to long-term growth and value creation for shareholders; •Motivating management to achieve superior results by linking compensation and performance; •Differentiating compensation among executives based on both business unit and individual performance during the year; •Offering and maintaining compensation programs which are competitive against relevant industry peer group median and market practice benchmarks obtained through proxy materials as well as published survey information, with actual positioning for individual executives varying based on factors such as sustained performance, experience, and strategic impact; •Having an appropriate portion of at-risk compensation based on market practice, that, in combination with stock ownership requirements for our top executives, focuses the attention of our executives on driving and increasing shareholder value; •In the case of unforeseen events, allowing the Compensation Committee to exercise its discretion in the administration of the compensation program to motivate executives to act in the best interest of shareholders and the Company; •Discouraging unnecessary and excessive risk taking that may have a material adverse impact on the Company; and •Reflecting the Company’s commitment to initiatives in environmental, social, and governance and diversity, equity and inclusion areas, as well as internal pay equity. |
Aligning management’s interests with those of shareholders, and structuring short-term targets that lead to long-term value creation;
Motivating management to achieve superior results by paying for sustainable performance (superior performance is rewarded with commensurate incentives, while little to no incentive is paid for underperformance);
Offering and maintaining competitive compensation in order to attract and retain superior talent;
Maintaining a significant portion of at-risk compensation (with increased emphasis on at-risk compensation based on greater responsibility in the Company);
Delineating clear accountabilities while discouraging unnecessary and excessive risk taking; and
Providing clarity and transparency in compensation structure.
9 Ms. Cerniglia will assume additional responsibilities as the Integration Leader commencing in fiscal 2021.
Compensation Program Features and Best Practices. Our compensation philosophy and the principles described above serve as the foundation for our executive compensation program. Building on this foundation, our Compensation Committee and the full Board continually seek improvement and alignment with best practices – both in our compensation program itself and in our corporate governance practices that support it – by soliciting feedback from shareholders and consultingadvice from the Company’s independent compensation consultant and other advisors. The result is a compensation program characterized by certain distinct features highlighted below that strengthen the performance orientation of our executive compensation program and reflect our ongoing commitment to align executive pay with long-term shareholder value.
Key Point: Our Focus on Performance-Based Compensation. The central theme of the compensation philosophy of Hillenbrand and our Compensation Committee is that a significant portion of each Named Executive Officer’s compensation will be “performance-based” and, therefore, at risk. This theme is highlighted in the table below. We use a thorough process for determining Named Executive Officer compensation, including a review of peer group compensation data and pay practices.
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Key Components of 20202023 CompensationProgram | | Description Andand Purpose |
“Core Compensation” | Base Salary | | Fixed compensation intended to provide a base level of income regardless of performance and aid in the attraction and retention of talent in a competitive market. |
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| Short-Term Incentive Compensation (“STIC”) | | Performance-based annual cash bonus designed to motivate and reward executives based on achieving individual performance goals and the executive’s individual contributions to the Company’sCompany (Hillenbrand or its business units, where applicable) collective performance goals for a given fiscal year. Also aids in the attraction and retention of talent in a competitive market. |
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Long-Term Incentive Compensation (“LTIC”) | | Two-thirds consist of performance-based annual equity grantawards with a three-year vesting period and in fiscal 2020, one-third consistedconsists of non-qualifiedrestricted stock options,10units that vest ratably over three years, together designed to reward executives for creating long-term shareholder value, as well as to motivate future contributions and decisions aimed at increasing shareholder value. Also aids in the attraction and retention of talent in a competitive market. The Compensation Committee considers time-based restricted stock units to be “at risk,” even though not performance based, since the value fluctuates based on stock price performance and vesting of the full award is contingent upon continued service. |
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| Retirement and Other Benefits | | Fixed component of compensation intended to protect against catastrophic expenses (healthcare, disability, and life insurance) and provide opportunity to save for retirement (401(k)). |
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| Post-Termination Compensation (Severance and Change in Control) | | Severance program designed to allow executives to focus on acting in the best interests of shareholders regardless of the impact on their own employment. |
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10 The Compensation Committee has determined, after considering general market practice and other factors, that beginning in fiscal 2021, this one-third portion of the annual equity grant for our Named Executive Officers will be made in restricted stock units that vest ratably over three years, rather than in stock options.
As summarized in the chart above, a significant portion of our Named Executive Officer’s “core compensation” is performance-based. STIC payouts to our Named Executive Officers vary based on the annual performance of the Company or its applicable business unit and the individual officer, and the Compensation Committee may designate and structure any awards under the Stock Plan as performance-based awards. In particular, two-thirds of all annual LTIC awards made to executive officers in 2020 were explicitly performance-based awards, meaning that either the granting or vesting (or both) of the award was made subject to the achievement of performance objectives approved by the Compensation Committee. One-third of the annual LTIC awards made to executive officers in 2020 were stock options, which share many of the same characteristics as performance-based awards. The criteria underlying performance-based awards may apply to the Company as a whole and/or to one or more business units as an absolute measure, as a measure of improvement relative to prior performance, or as a measure of comparable performance relative to a peer group of companies.
In fiscal 2020, consistent with its historical use of time-based RSU awards as a retention tool for certain key executives, the Compensation Committee approved the granting of an initial, non-recurring sign-on award of time-based RSUs to Ling An-Heid, President of the Company’s Mold-Masters business, who joined the Company in connection with the Milacron acquisition. Ms. An-Heid was a key executive at Milacron prior to the acquisition, and the Compensation Committee determined to make this award as part of her retention and with the aim of facilitating a successful integration of Milacron. In addition, for fiscal 2021, in an effort to enhance the effectiveness of equity compensation in attracting and retaining talent in a competitive market, the Compensation Committee determined on a go-forward basis to replace stock options with RSUs that vest ratably over three years. The Compensation Committee believes that this step will bring the Company’s compensation practices more in line with general market practice.
Target Core Compensation Mix. The Company’s approach to core compensation described above has generally produced a core compensation mix of approximately 2015 percent base salary, 20 percent STIC, and 6065 percent LTIC for our President and CEO. As shown in the chart below, in fiscal 2020,2023, approximately 8485 percent of theMs. Ryan’s target core compensation of the Company’s President and CEO for the year was performance-based andconsidered at risk8 by our Compensation Committee, while 1615 percent was fixed. Furthermore, the majority of Ms. Ryan’s compensation was explicitly performance-based. Given the role of the CEO in ultimately
8 This includes time-based restricted stock units, which the Compensation Committee considers to be “at risk” since the value fluctuates based on stock price performance and vesting of all tranches is contingent upon continued service.
driving results throughout the organization, the Compensation Committee believes the resulting emphasis on performance-based, at-risk compensation – and in particular, long-term incentives – is appropriate and in the best interests of shareholders. Ms. Ryan’s target core compensation mix is shown in further detail in the chart below.
Base salary
The approach used for compensation of our other Named Executive Officers remained flat from the prior year, as their regularly scheduled merit-based salary increases were cancelled in connection with the COVID-19 pandemic, but the approach used for their compensation is otherwise similar to that of our President and CEO, although the other executives generally have a higher percentage of base salary, and a correspondingly lower percentage of STIC and LTIC.
Unique Circumstances in Fiscal Year 2020
Against the backdrop of the Company’s compensation philosophy and key focus on performance-based compensation, fiscal 2020 brought unique circumstances that provided additional context for many of the Compensation Committee’s decisions. Throughout the year, the impacts of the Milacron acquisition and COVID-19 pandemic on the Company’s results remained near the forefront of discussions about executive compensation.
The Milacron Acquisition. On November 21, 2019, the Company completed the acquisition of Milacron, the largest acquisition in the Company’s history. The acquisition provides the Company with increased scale and meaningful product diversification, enhancing its ability to serve customers with expanded capabilities across the plastics value chain. The Company has been engaged in a comprehensive integration project, which proceeded largely as planned during the fiscal year despite limitations on some integration activities due to the COVID-19 pandemic. Hillenbrand exceeded its target for year-one cost synergies in fiscal 2020.
The Impact of the COVID-19 Pandemic. The challenges brought on by the COVID-19 pandemic in fiscal 2020 were unlike any in the Company’s recent history, with efforts to contain the spread of COVID-19 intensifying during our fiscal 2020 second and third quarters. Most states and municipalities within the U.S. enacted temporary closures of businesses, issued quarantine orders and took other restrictive measures in response to the COVID-19 pandemic, and we experienced disruptions from similar measures taken by other countries, including China and India. These disruptions were at times severe and impactful, and management recommended, and the Compensation Committee agreed, to take the following compensation-related actions as part of the Company’s broader strategy in response to the COVID-19 pandemic:
Voluntary reduction in CEO fiscal year 2020 base salary by 30 percent beginning in April, and cancellation of the regularly scheduled merit-based salary increases of our Named Executive Officers;
Voluntary waiver by the Board of Directors of its scheduled cash compensation increase for 2020;
Cancellation of all regularly scheduled merit-based salary increases for other salaried US- and Canada-based employees; and
Suspension of all hiring for exempt and nonexempt positions, except for critical positions.
Despite the closures and other pandemic-related disruptions, the Company was able to conclude fiscal 2020 with record revenue and order backlog, and Batesville delivered strong top- and bottom-line results, driven by higher burial casket volume. On the relative strength of this performance, the Company now has begun or expects to begin cautiously resuming many pre-pandemic pay levels and activities. The Company continues to monitor the global situation to be prepared for any further proactive measures that may be prudent.
Factors Considered in Setting Compensation
Notwithstanding the unprecedented circumstances of fiscal 2020, theThe Compensation Committee remained focused oncontinued to diligently apply the principles of our Executive Compensation Philosophy in setting compensation for our Named Executive Officers.Officers in fiscal 2023. Indeed, the Compensation Committee considers and analyzes a number of factors when establishing and adjusting the elements of our executive compensation program and the compensation packages for the Named Executive Officers. No single factor determines the outcome, and theThe Compensation Committee strives to establish compensation packages that enable the Company to attract, retain, and motivate the executive talent needed to operate the Company in a manner that is in the best interests of the shareholders.
The primary factors that the Compensation Committee considers are discussed below. They are not discussed in any order of priority, and no one factor standing alone determines the outcome or is necessarily more important than the others.
Peer Group Data.The Compensation Committee compares the components and levels of our compensation program to those of a selected peer group of companies. Our Compensation Committee believes that we have to remain competitive in comparison to our industry peers in order to attract, retain, and motivate our executive talent.
Our Compensation Committee benchmarks the target compensation of our Named Executive Officers to the 50th50th percentile of the compensation paid by our peer group, although actual
compensation paid in any given year may be above or below the benchmark, as a result of the performance-based nature of our executive compensation program and a variety of other factors that the Compensation Committee considers in setting compensation, including: level and breadth of experience and responsibility of the officer; the complexity of the position; individual performance and growth potential; the difficulty of replacement; the individual’s tenure in his/her role; and internal equity.
The Compensation Committee reviews the composition of the Company’s peer group at least annually and, as appropriate, updates the group to reflect changes among peer companies, industry consolidation, and the Company’s own evolution as a global diversifiedpure-play industrial company. In considering our peer group, our Compensation Committee, aided by its independent compensation consultant, reviews various business attributes and financial metrics to assess whether additions or deletions to the current peer group are appropriate. Qualitative factors considered in developing the peer group include the complexity of a company’s product line, extent of its global operations, and number of business units. Quantitative factors include revenues, EBITDA, market capitalization, enterprise value, and number of employees, among others. In addition, various members of management provide input to the Compensation Committee relative to understanding the Company’s key financial metrics, key competitors for talent, key competitors in the end markets we serve, the Company’s business plan, and other factors. Notwithstanding the above, decisions regarding the composition of the peer group ultimately rest with the Compensation Committee.
InAt the start of fiscal year 2020, primarily as a result of the acquisition of Milacron, the Compensation Committee conducted a detailed review of2023, the peer group in place, which was last changed in 2017. The Compensation Committee made several changesutilized to the composition of the peer group to reflect the post-acquisition size, including market capitalization and revenue profile, of Hillenbrand, including the removal of the following companies from the peer group: Actuant Corporation; Barnes Group Inc.; Bruker Corporation; Graco Inc.; EnPro Industries, Inc.; John Bean Technologies Corporation; and Matthews International Corporation. Effective upon the close of the Milacron acquisition, the Compensation Committee added ten new members to the peer group, including: Dover Corporation; Fortive Corporation; Xylem Inc.; Flowserve Corporation; Colfax Corporation; The Timken Company; Crane Co.; Donaldson Company, Inc.; Woodward, Inc.; and Nordson Corporation. Consequently, the peer groupbenchmark target compensation for fiscal year 2020our Named Executive Officers, consisted of the following 20 companies:companies, as disclosed in the Company’s 2022 proxy statement:
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Acuity Brands, Inc. Colfax Corporation
Crane Co. Donaldson Company, Inc. Dover Corporation ESAB Corporation Flowserve Corporation Fortive Corporation Herman Miller, Inc.
HNI Corporation IDEX Corporation Itron, Inc. | Itron,MillerKnoll, Inc.
Nordson Corporation Regal Rexnord Corporation Steelcase Inc. Tempur Sealy International, Inc. The Middleby Corporation The Timken Company Waters Corporation Woodward, Inc. Xylem Inc. |
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During fiscal 2023, the Compensation Committee conducted a detailed review of the peer group and determined to remove certain of those peer companies, and to add other new peer companies, in order to better reflect the Company’s divestiture of its Batesville business and transformation into a pure-play industrial company. As a result, Flowserve Corporation, HNI Corporation, MillerKnoll, Inc., Steelcase, Inc., Tempur Sealy International, Inc., Waters Corporation, and Xylem Inc. were removed from the Company’s peer group. Meanwhile, the Compensation Committee added Barnes Group Inc., Chart Industries, Inc., ITT Inc., John Bean Technology Corp., and Kennametal Inc. to the peer group. Therefore, the peer group (excluding the Company) at the end of fiscal 2023 consisted of the following 18 companies:
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Acuity Brands, Inc. Barnes Group Inc. Chart Industries, Inc. Crane Co. Donaldson Company, Inc. Dover Corporation ESAB Corporation Fortive Corporation IDEX Corporation Itron, Inc. | ITT Inc. John Bean Technology Corp. Kennametal Inc. Nordson Corporation Regal Rexnord Corporation The Middleby Corporation The Timken Company Woodward, Inc. |
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Independent Compensation Consultant Expertise. The Compensation Committee engages an independent compensation consultant to provide various items of relevant information and to perform various services in connection with the establishment of the elements of our executive compensation program. The Compensation Committee seeks and considers the expert advice and recommendations of the independent compensation consultant in connection with the design of our compensation program and the establishment of appropriate compensation components and levels with respect to our Named Executive Officers.
The Compensation Committee retained Pay Governance as its independent compensation consultant for fiscal 2023.
The independent compensation consultant advises the Compensation Committee on an ongoing basis with regard to the general competitive landscape and trends in compensation matters, including (i) incentive plan design, (ii) peer group selection and competitive market analyses, (iii) compensation risk management, and (iv) developments in emerging trends and practices. The consultant attends meetings of the Compensation Committee and at the request of the Chairperson participates in its executive sessions.
See “Compensation Consultant Matters” in Part IV of “Executive Compensation” below for additional information regarding the Compensation Committee’s engagement of Deloitte ConsultingPay Governance as its compensation consultant, as well as amounts paid to Deloitte Consulting and its affiliates duringconsultants in fiscal year 2020 for executive compensation consulting and other services.2023.
Survey Data. In addition to peer group data, the Compensation Committee considers published compensation survey data provided by its independent compensation consultant, focusing on compensation data for companies in the manufacturing industry with revenues within a comparable range ofto the Company’s revenue. The survey data provides additionalsupplements other factors considered in setting executive compensation dataas a reference for market compensation levels and is targeted to the specific job responsibilities of our Named Executive Officers.senior executives.
External Market Conditions. When establishing the total compensation of each Named Executive Officer, the Compensation Committee also considers external market conditions, which include competitive pressures for the executive’s particular position within the industry, economic developments, and the condition of the labor markets.
Performance.Individual performance of our Named Executive Officers is evaluated in large part based upon the achievement of groupcollective and personal goals that are evaluated and established by
management and approved by the Compensation Committee each year. TheseThe goals for fiscal year 20202023 are described below.
20202023 Collective Performance Goals. Management identified and the Compensation Committee approved six common objectives for all of our Named Executive Officers for fiscal year 2020.2023. They were as follows:
•Ensure successful operating company performance – provide oversight and resources needed to generate profitable organic and acquisition growth, strong cash flows, and improved return on invested capital. This will be accomplished through the establishment of clear goals and objectives, appropriate oversight to ensure goal achievement, a transparent resource allocation process, a continued increase in the education, adoption, and a commitment toresults expectations of the HOM.
HOM for both manufacturing and commercial elements of the Company, and by driving innovative new product offerings.•Actively manage the Company’s portfolio to align with its strategy to build scalable platforms – identify prudent acquisition opportunities that meet our strategic criteria, provide attractive long-term returns for shareholders, generate profitable revenue and earnings per share growth, and leverage the HOM. Ensure acquisition success by planning, preparing for, and executing due diligence and integration with excellence, focusing on the critical few key areas of greatest value generation. Identify, plan, prepare for, and execute divestitures and other strategic alternatives as appropriate.
•Accelerate our progress on developing a strong, deep, and diverse talent pool and building an inclusive culture – ensure the experiences and skill sets necessary to achieve the corporate strategy are present in the organization, especially in creating a more representative workforce. This will be accomplished by creating an inclusive environment so that we can attract, further develop, and retain top talent individuals from within the Company and from the talent market. Play a leading role in embedding our Purpose and Core Values throughout the organization.
Implement•Progress and expandexecute on our efforts on ESG activities – drive substantial improvement in our defined key metrics enterprise-wide on sustainability related initiatives to help drive sustainable growth, value for our customers, developmental opportunities for our employees, and contributions to the communities in which we operate.
•Continue to drive the implementation of the HOM – drive the foundation of the HOM across the enterprise, leveraging the framework to produce sustainable and predictable results. Enhance and teach the organization the fundamentals and management practices at the core of the HOM. Expand the HOM to include additional practices and tools aimed at expanding enterprise value.value and growth, and driving productivity improvement programs. Implement the HOM in newly acquired companies.
•Develop world class corporate capabilities to support the Company’s strategy and projected growth –growth; make certain that resources, processes, procedures, technology, and controls are aligned with the Company’s transformation strategy.
Maintain a strong, deep, and diverse talent pool – ensure the experiences and skill sets necessary to achieve the corporate strategy are present in the organization. This will be accomplished by creating an environment so compelling that we can attract, further develop, and retain top talent individuals.
Execute on Milacron integration with excellence – drive the execution of the integration plan across all work streams with a focus on synergy achievement and long-term shareholder value.
20202023 Individual Performance Goals. The following uniqueUnique personal objectives were identified for each of the Named Executive Officers for fiscal year 2020:2023, as described below:
| • | For Mr. Raver –
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| Name/Title | Goals |
| Kimberly K. Ryan | Develop and execute the Company’s strategy and business plan and achieve the Company’s financial and operational objectives; allocate capital to create shareholder value; lead the Company’s growth initiatives; oversee the Company’s acquisition and divestiture activities; overseechampion the efforts focused on DEI and ESG initiatives designed to drive sustainable growth, value for our customers, developmental opportunities for our employees, and contributions to the communities in which we operate; strengthen the talent pool, capabilities, and competencies of the Company; and ensure that the Company engages in appropriate, meaningful, and transparent conversations with key stakeholders.11stakeholders; and champion our culture shaping initiative from concept to implementation, driving understanding and adoption across the enterprise. |
| •Robert M. VanHimbergen | For Ms. Cerniglia – Provide financial and information technology leadership with excellence to the Company and where necessary, its subsidiaries; ensure thatestablish appropriate processes and procedures for the corporate financial and enterprise information systems (EIS) functions are in place;function; ensure that appropriate internal controls to safeguard financial assets and proprietary information are developed and maintained and there is adherence to accounting rules, including those recently adopted; employ Leana continuous improvement mindset and activities throughout the finance and EIS functionsfunction to increase efficiency, effectiveness, productivity, and effectiveness;quality; manage financial and information technology due diligence and integration efforts in the Company’s acquisition activities; ensure there is a high performing corporate finance and EIS team with the appropriate experiences and skill sets; and lead all aspects of the Enterprise Risk Management (ERM) process in alignment with the strategy management process with focuses on cyber security and early identification and mitigating action for significant risks to the business. business; and ensure there is a high performing corporate finance team with the appropriate experiences and skill sets to drive business continuity.
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| Ulrich Bartel | Develop and execute the strategicstrategy and operating plans of Cimcoolthe Coperion and DME;Rotex Operating Companies constituting the Advanced Process Solutions segment (APS); grow revenue, IBTEBITDA, and cash flow organically by penetrating growing end markets, accelerating geographic expansion and driving improved operational performance; use the HOM to realize the full value of the DME organization and to deliver sustainable and predictable results. Work with Strategy and Corporate Development on identifying, planning, preparing for, and executing strategic alternatives for the Cimcool business.12 |
| • | For Ms. Ryan – Develop and execute the strategy and operating plans of Coperion, Rotex, and ABEL; grow revenue, income before taxes, and cash flow organically by penetrating growing end markets, accelerating geographic expansion, and driving improved operational performance; use the HOM to realize the full value of the Coperion Rotex, and ABELRotex organizations and to deliver sustainable and predictable results; and identify, execute, and integrate future strategic acquisitions in line with the Coperion, Rotex,APS segment strategies; and ABEL strategies.13
ensure there is a high performing team with appropriate experiences and skill sets to drive business continuity. |
11 During the course of fiscal 2020, Mr. Raver and Ms. Cerniglia assumed shared responsibility for the Milacron integration management office (“IMO”), and executing on the Milacron integration with excellence was a key component of their individual performance goals, in addition to being a collective performance goal. Beginning in fiscal 2021, Ms. Cerniglia will assume sole responsibility for the IMO as the Integration Leader.
12 The Company completed the divestiture of its Cimcool business in March 2020. Also, please see footnote 11 above regarding Ms. Cerniglia’s responsibility for the IMO.
13 Ms. Ryan took on the additional role of interim Chief Human Resources Officer after the Company’s annual process for identifying individual performance goals. Thus, in addition to the personal objectives identified above, she undertook various responsibilities related to this interim role for the latter part of fiscal 2020. Ms. Ryan no longer serves in this interim capacity following the hire of a new Chief Human Resources Officer in fiscal 2021.
For Ms. An-Heid – Develop and execute the strategy and operating plan of Mold-Masters; grow revenue, income before taxes, and cash flow organically by penetrating growing end markets, accelerating geographic expansion, and driving improved operational performance; use the HOM to realize the full value of the Mold-Masters organization and to deliver sustainable and predictable results.
Nicholas R. Farrell | • | For Mr. Trainor – DevelopProvide legal counsel with excellence to the Company and executeits subsidiaries; ensure appropriate processes and procedures for the strategiclegal function are in place; oversee all securities and operating plan of Batesville; usepublic company governance matters; ensure appropriate compliance programs are in place and followed; co-lead the Company’s ESG efforts; employ the HOM throughout the legal function to deliver sustainableincrease efficiency, effectiveness, productivity, and predictable results; maintainquality; manage legal due diligence efforts, transaction documentation, and integration in the strong cash flow generation capabilitiesCompany’s acquisition activities; manage all litigation involving the Company; and ensure there is a high performing legal team with appropriate experiences and skill sets to drive business continuity.
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| J. Michael Whitted | Lead the execution of Batesville; ensureHillenbrand’s inorganic growth strategy; oversee the organization is sized appropriately to demand; continue to gain efficiencieswork of multi-disciplinary teams involved in the Company’s acquisition and maintain margin through Lean;divestiture efforts, particularly in opportunity identification and provide talent toanalysis, due diligence, and integration; foster global M&A relationships; and assist with integration of acquired companies in coordination with the rest ofCEO/CFO/GC, the organization.14M&A Committee, and Operating Company leadership teams. |
Aggregate Compensation. The Compensation Committee considers the aggregate value of the Named Executive Officers’ core compensation components of base salary and STIC and LTIC at target levels. The Compensation Committee compares the aggregate amount of these elements for our Named Executive Officers to the aggregate amount of the same elements of executive officer compensation at other companies using peer group and survey data.
As previously discussed under the heading “Peer Group Data,” our The Compensation Committee benchmarksgenerally targets total direct compensation levels at the target compensation of our Named Executive Officers to the 50th percentile of the compensation paid by our peer group, although actual compensation paid in any given year may be above or below the benchmark, due to the performance-based nature of our executive compensation program and a variety of other factors that the Committee considers in setting compensation. In the case ofmedian, including for new hires or promotions, the Compensation Committeebut total pay opportunity levels may target total direct compensation levelsvary above or below the median depending on experience level.level and other
factors. For example, a newly hired executive with substantial experience may be provided with above median compensation, whereas a newly promoted executive from within the Company may be targeted below the median due to their newness to the position.
Additionally, the Compensation Committee periodically reviews “tally sheets” reflecting all compensation paid to our Named Executive Officers, including retirement and other benefits and perquisites, and amounts potentially payable to them upon a “change in control” of the Company. The Compensation Committee also considers projections as to the potential future value of long-term equity awards made to the Named Executive Officers.
14 Mr. Trainor took on interim secondary supervisory responsibilities of the Company’s TerraSource Global business, as well as its HOM function, after the Company’s annual process for identifying individual performance goals. Thus, in addition to the personal objectives identified above, he undertook various responsibilities related to this interim role for the latter part of fiscal 2020.
Shareholder Say on Pay Vote.At each Annual Meeting of the Company’s shareholders since 2011, the Company has held a “Say on Pay Vote,” which is a non-binding advisory resolution stating that shareholders approve the compensation paid to the Company’s Named Executive Officers. The Compensation Committee carefully considers the results of this vote each year. Company shareholders have approved the Say on Pay Vote with over 9694 percent support each year for the past seventen years. The Compensation Committee believes that the historical level of support for these votes reflects favorably on the Company’s executive compensation program and the actions taken by our Compensation Committee.
Compensation of Our Named Executive Officers for Fiscal Year 20202023
Compensation-Setting Process.Prior to or shortly after the start of each fiscal year, our Compensation Committee and its consultant, as well as our President and CEO, take steps to establish that year’s compensation program and performance for the preceding fiscal year as detailedshown in the table below. This process was followed in fiscal 2020.
Compensation Consultant
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Compensation Committee
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Develop
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| Compensation Consultant | Compensation Committee |
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Develops Executive Compensation Market Analysis (“ECMA”) that reports competitive compensation data using disclosures from the Company’s compensation peer group, and supplemented with data from variousindustry-relevant, published compensation surveys | surveys. | Discusses the recommendations, reviews individual performance, and considers Company performance data and competitive benchmark information for all Named Executive Officers. |
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| Solicits feedback from each director regarding the CEO’s performance during the prior year, with feedback based on CEO’s self-review and each director’s own independent evaluationevaluation. |
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| | Meets in executive session with the full Board present without the CEO present to determine the CEO’s performance-based compensation15 for the current fiscal year and core compensation for the following fiscal year.9 |
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President and CEO
| | Approves base salaries and target STIC and LTIC awards for all Named Executive Officers for the new fiscal year year. |
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Develops recommendationrecommendations for Named Executive Officer compensation (other than hisher own) based on ECMAECMA. | Develops self-review for her individual performance in the prior year. | Determines the performance objectives of and the formula to calculate the STIC and LTIC awards for the new fiscal year, along with the LTIC award mix |
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Develops self-review for his individual performance in the prior yearall Named Executive Officers.
| | With support from the Company’s internal audit team, certifies performance for STIC and LTIC and confirms the computation of the actual STIC awards to be paid to the Named Executive Officers with respect to the prior fiscal year
year.
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The individual components of our Named Executive Officers’ 20202023 compensation packages are described in further detail below.
15
9 A summary of these discussions is provided to the CEO and is also used to set the CEO’s compensation and leadership goals for the following year.
Base Salaries. Our Named Executive Officers were paid the following base salaries1610 during the fiscal year ended September 30, 2020:2023:
Name | Base Salary | | | | |
| Name | Base Salary |
Joe A. Raver17
| $724,462 |
Kristina A. Cerniglia
| $538,395 |
Kimberly K. Ryan | $501,496916,346 |
Ling An-Heid18
| $433,805 |
Christopher H. Trainor
Robert M. VanHimbergen | $450,895525,577 |
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| Ulrich Bartel | $455,157 |
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| Nicholas R. Farrell | $533,854 |
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| J. Michael Whitted | $472,977 |
The Compensation Committee believes these salaries are not only appropriate in light of available comparative data and the total mix of compensation for each of these officers but alsoand necessary in order to provide a guaranteed level of income to aid in the attraction and retention of talent in a competitive market. On account of the COVID-19 pandemic, all Named Executive Officers’ merit-based salary increases were cancelled for fiscal 2020, and Mr. Raver also voluntarily waived 30 percent of his fiscal year 2020 base salary beginning in April.
Annual Cash Incentive Awards
The payment of annual cash STIC to our Named Executive Officers for fiscal year 20202023 was formula-based and governed by our SecondThird Amended and Restated Short-Term Incentive Compensation Plan for Key Executives (“STIC Plan”).
The STIC Plan is designed to motivate our Named Executive Officers to perform and to meet both collective and individual annual objectives. Itobjectives, including to contribute to Company and, where applicable, business unit performance goals, by providing for performance-based incentive compensation. To support this design, the STIC Plan contains provisions that specifically contemplate awards based on performance periods that may differ from our fiscal year; permits the use of various award types, including discretionary bonuses; and provides authority to adjust performance goals or related achievement levels to reflect changes in business operations, corporate transactions, or similar events. Our STIC Plan is consistent with our philosophy that employees should share in the Company’s success when our short-term financial objectives are achieved, as we believe such achievement ultimately results in creating value for our shareholders. The potential to be paid short-term cash incentive awards plays an important role in the attraction and retention of our Named Executive Officers.
At the beginning of each fiscal year, the Compensation Committee approves each Named Executive Officer’s target STIC award. The target STIC award opportunities for our Named Executive Officers for 2023, expressed as a percentage of annual base salary, remained unchanged from 2019 levels for those Named Executive Officers employed by us in fiscal 2019.
1610 The salary amounts shown in this table vary slightly from those shown in the “Summary Compensation Table” in Part III below because this table reflects salary actually paid during the fiscal year, while the “Summary Compensation Table” is presented based on salary earned during the fiscal year. The salary paid shown in this table is the basis used for the annual cash incentiveSTIC calculation described below. In addition, as Ms. An-Heid joined the Company in November 2019, the salary figure set forththis proxy statement.
Mr. Bartel is based in theGermany and employed by Hillenbrand Germany Holding GmbH. The amounts reported in this table, reflects only the partial year salary paid from her start date through the end of the fiscal year.
17 Mr. Raver’s unreduced base salary was $850,000 prior to the COVID-19 related reduction described above, and salary paid thus appears higher than salary earned in part due to the effects of the extra day for leap year falling during the portion of fiscal 2020 prior to the voluntary reduction of his salary.
18 Ms. An-Heid’s base salary was calculated in CAD. The values throughout this proxy statement, that were paid in Euros have been converted to U.S. dollars at an average exchange rate for fiscal 20202023 of 1.34409 CAD.9369 EUR per $1.00 USD based on Bloomberg data.
52from 2022 levels, other than an increase in Ms. Ryan’s target STIC award opportunity to continue her transition to market median and to incentivize continued high performance.11 These appear below.
| | | | | |
| Name | 20202023 Target STIC Opportunity
(as a % of base salary)
|
Joe A. Raver19
| 110% |
Kristina A. Cerniglia
| 75% |
Kimberly K. Ryan | 75%115% |
Ling An-Heid
| 75% |
Christopher H. Trainor
Robert M. VanHimbergen | 75% |
| |
| Ulrich Bartel | 75% |
| |
| Nicholas R. Farrell | 70% |
| |
| J. Michael Whitted | 75% |
| |
Our formula for calculating the STIC awards payable to our Named Executive Officers for fiscal year 20202023 was as follows:
For 2020,2023, the Company Performance Factor was based on our achievement of designated levels of “STIC IBT,“Adjusted EBITDA,” “Net Revenue” (or, solely for the Company’s Coperion business,or “Order Intake”)Intake12,” and “Cash Conversion CycleCycle” (or CCC),” each of which is further described below.in Appendix A. These performance metrics translate to operational and financial performance, efficiency, and sustainable improvement. The metrics generally track the performance of Hillenbrand, Inc. on a consolidated basis, but for a Named Executive Officer who has direct responsibility to a business unit other than Hillenbrand, Inc., 75 percent of the Company Performance Factor is allocated to the performance of the relevant business unit(s), as set forth in the following chart:
| | Percentage Of Company Performance Factor Allocated To…. |
| | | | | |
| Name | Hillenbrand | Batesville | Coperion | Mold-Masters |
Joe A. Raver | 100% | – | – | – |
Kristina A. Cerniglia | 100% | – | – | – |
Kimberly K. Ryan20 | 25% | – | 75% | – |
Ling An-Heid | 25% | – | – | 75% |
Christopher H. Trainor | 25% | 75% | – | – |
19 For purposes
11 In fiscal 2022, Ms. Ryan’s Target STIC Opportunity was disclosed as 105%. This percentage reflected a blended rate of calculating Mr. Raver’s STIC award opportunity,90 percent for three months of the Compensation Committee used the level of his base salary actually paid during fiscal 2020, taking into account Mr. Raver’s voluntary reduction of a portion of his fiscal year 2020 base salary beginning in April.
20In fiscal 2019, Ms. Ryan’s STIC award reflected performanceuntil her election as Chief Executive Officer and 110 percent for the nine months of the Company’s Rotex business in addition to that of Coperion. For fiscal 2020, however, the Compensation Committee determined to base the calculation the Company Performance Factor underlying STIC awardsyear thereafter.
12 Order Intake replaces Net Revenue for our Named Executive Officers solely on such officers’ primary areas of responsibility. This decision was madeCoperion subsidiary as further detailed in part based on the increased complexity of secondary supervisory responsibilities of many of our Named Executive Officers following the acquisition of Milacron and in part in order to maintain an administratively straightforward, consistent solution for our executive compensation program. Consequently, the Company Performance Factor for Ms. Ryan’s STIC and those of other Named Executive Officers do not take into account businesses over which they have secondary supervisory responsibility only.
this section.
| | | | | | | | |
| Percentage Of Company Performance Factor Allocated To…. |
| | |
| Name | Hillenbrand | Coperion |
| Kimberly K. Ryan | 100% | |
| | |
| Robert M. VanHimbergen | 100% | |
| | |
| Ulrich Bartel | 25% | 75% |
| | |
| Nicholas R. Farrell | 100% | |
| | |
| J. Michael Whitted | 100% | |
| | |
The 2020 financial performance targets under the STIC Plan for each of Hillenbrand and theits applicable operating divisions, along with the actual results and payout levels,2113 were as follows:
Hillenbrand | Weight | Threshold (50%)
| Target (100%) | Maximum (200%) | Actual Results | Payout Level |
STIC IBT22 | 50% | $243.4 million | $304.3 million | $350.0 million | $296.7 million | 93.7% |
Net Revenue | 25% | $2,216.4 million | $2,770.5 million | $3,186.0 million | $2,645.7 million | 88.7% |
CCC | 25% | 76.2 days | 69.2 days | 65.8 days | 75.2 days | 57.1% |
| Company Performance Factor for Hillenbrand (Consolidated) | 83.3% |
Batesville | Weight | Threshold (50%)
| Target (100%) | Maximum (175%) | Actual Results | Payout Level |
STIC IBT | 50% | $79.2 million | $99.0 million | $108.9 million | $116.4 million | 175.0% |
Net Revenue | 25% | $421.6 million | $527.0 million | $579.7 million | $553.3 million | 137.4% |
CCC | 25% | 45.9 days | 43.8 days | 41.6 days | 38.4 days | 175.0% |
| Company Performance Factor for Batesville | 165.6% |
| Coperion | Weight | Threshold (50%)
| Target (100%) | Maximum (200%) | Actual Results | Payout Level |
STIC IBT | 50% | $142.5 million | $178.1 million | $213.7 million | $169.9 million | 88.5% |
Order Intake | 25% | $887.4 million | $1,109.2 million | $1,331.1 million | $1,118.1 million | 104.0% |
CCC | 25% | 34.1 days | 31.0 days | 29.4 days | 32.0 days | 82.8% |
| Company Performance Factor for Coperion | 91.0% |
Mold-Masters | Weight | Threshold (50%)
| Target (100%) | Maximum (200%) | Actual Results | Payout Level |
STIC IBT | 50% | $58.4 million | $73.0 million | $87.6 million | $52.6 million | 0.0% |
Net Revenue | 25% | $217.0 million | $271.2 million | $325.4 million | $262.9 million | 92.4% |
CCC | 25% | 126.5 days | 115.0 days | 109.3 days | 124.6 days | 58.4% |
| Company Performance Factor for Mold-Masters | 37.7% |
| | | | | | | | | | | | | | | | | | | | |
| Hillenbrand | Weight | Threshold | Target | Maximum | Actual Results | Payout Level |
| | | | | | |
Adjusted EBITDA 14 | 50% | $503 | $552 | $591 | $518 | 79% |
Net Revenue 15 | 25% | $2,922 | $3,211 | $3,436 | $2,866 | –% |
| CCC | 25% | 68.5 Days | 57.1 Days | 45.7 Days | 77.3 Days | –% |
| | | | | | |
| Company Performance Factor for Hillenbrand (Consolidated) | 39.5% |
| | | | | | | | | | | | | | | | | | | | |
| Coperion | Weight | Threshold | Target | Maximum | Actual Results | Payout
Level |
| | | | | | |
| Adjusted EBITDA | 50% | $284 | $315 | $341 | $304 | 88.4% |
| Order Intake | 25% | $1,595 | $1,772 | $1,914 | $1,493 | –% |
| CCC | 25% | 49.9 Days | 41.6 Days | 33.3 Days | 53.8 Days | –% |
| | | | | | |
| Company Performance Factor for Coperion | 44.2% |
2113 As part of the annual compensation setting process, the Compensation Committee translates percentage achievement of each STIC component into the payout levels used to arrive at the overall Company Performance Factor. Adjusted EBITDA, Net Revenue, and Order Intake are shown in millions.
22 STIC IBT14 Adjusted EBITDA at the Hillenbrand level reflects the impact of the full amount of corporate overhead costs for the enterprise.
15 The targets for Net Revenue and CCC for fiscal 2023 were influenced by the timing of the divestiture of our historical Batesville business as the targets were modified per the STIC Plan upon the divestiture in order to account for the financial impacts of the divestiture. Historically, Batesville’s CCC was significantly lower than the rest of Hillenbrand and as Batesville was divested four months into the fiscal year, the fiscal 2023 Net Revenue target was lower and the CCC target was higher compared to fiscal 2022 results.
Coperion’s Order Intake is the value of firm orders received from customers (net of all cancellations), as further defined in Appendix A, and is used in lieu of Net Revenue for STIC calculations as a measure that more accurately reflects our Coperion subsidiary’s business cycles.
For fiscal 2023, the Compensation Committee conducted a comprehensive review of the performance and payout curves associated with the metrics within the STIC plan and determined that the wider and flatter curves used in the prior two fiscal years in order to address the economic and supply chain uncertainty brought about by COVID were no longer necessary or appropriate. Therefore, the Compensation Committee set performance and payout curves to levels more consistent with pre-pandemic levels, and which aligned with the going-forward needs of the Company.16
The following table shows the fiscal 2023 performance and payout curves:
| | | | | | | | | | | |
| | | |
| Threshold | Target | Maximum |
| | | |
| Adjusted EBITDA | 50% | 100% | 200% |
| Revenue/Order Intake | 50% | 100% | 200% |
| CCC | 50% | 100% | 200% |
The Compensation Committee periodically evaluates the appropriateness of individual STIC components and makes changes as warranted. For fiscal 2023, the Compensation Committee determined, among other STIC program updates, to replace the Adjusted IBT measure with an Adjusted EBITDA measure. The updated measure further aligns internal compensation with externally reported metrics while preserving the overall focuses of top- and bottom-line growth, together with healthy cash generation, and the Company’s balance of STIC components. For fiscal 2024, the Compensation Committee has determined to lower the threshold for Adjusted EBITDA to a 33 1/3% payout for 80% of the target (from a 50% payout for 85% of the target) to mitigate against artificial “cliffs” and to meet the going forward needs of the Company.
The definitions for each of the STIC performance metrics are set forth in Appendix A. Each of these performance metrics is also adjusted for the effects of the followingcertain unusual or infrequent items, (the “Adjusting Items”), which are generally determined in advance by the Compensation Committee, during or as close as possible to the first quarter of each performance period, and may include, among other things:
–acquisitions made during the fiscal year:year (plan targets are adjusted accordingly);
–divestitures made during the fiscal year (plan targets are adjusted accordingly); and
| − | acquisitions made during the fiscal year (plan targets are adjusted accordingly);
|
| − | divestitures made during the fiscal year (plan targets are adjusted accordingly);
|
| − | changes in accounting pronouncements in United States GAAP, applicable international standards, or accounting methods that cause an inconsistency in computation as originally designed; and
|
| − | the foreign exchange translation of income statements at exchange rates that differ from those assumed in the STIC Plan.
|
–the foreign exchange translation of income statements at exchange rates that differ from those assumed in the STIC Plan.
The following chart sets forth the definitionsfinal results for each of thethese performance metrics:
Performance Goal
|
Definition
|
STIC IBT23
| Means income before taxes, adjusted to eliminate the effects of the Adjusting Items and certain other unusual and/or infrequent items, including the following (which are also determined in advance by the Compensation Committee during or as close as possible to the first quarter of each fiscal year):
− all professional fees, due diligence fees, expenses, and integration costs related to a specific acquisition;
− all professional fees, due diligence fees, expenses, and integration costs related to a specific divestiture;
− stock compensation expense;
− extraordinary external legal costs; and
− restructuring charges and other items related to a restructuring plan approved by the Company’s CEO.
|
Net Revenue
| Means revenue, ignoring the effects of certain unusual and/or infrequent items, including the Adjusting Items.
|
23 Beginning with awards made in fiscal 2021, the Company plansmetrics are used to replace this measure with an adjusted IBT measure, which excludes amortization and better aligns with measures used in the Company’s external reporting.
Performance Goal
|
Definition
|
Cash Conversion Cycle or CCC
| Means the time (in days) required to generate cash flows from the production and sales process. The CCC calculation is based on a 12-month average, and is adjusted to eliminate the effects of the Adjusting Items and certain other unusual and/or infrequent items, including the following (which are also determined in advance by the Compensation Committee during or as close as possible to the first quarter of each fiscal year):
− all professional fees, due diligence fees, expenses, and integration costs related to a specific acquisition;
− all professional fees, due diligence fees, expenses, and integration costs related to a specific divestiture;
− stock compensation expense; and
− restructuring charges and other items related to a restructuring plan approved by the Company’s CEO.
|
Order Intake
| Means the value of firm orders received from customers (net of all cancellations), adjusted to eliminate the effects of certain unusual and/or infrequent items, including the Adjusting Items.
|
Aftercalculate the Company Performance Factor is determined,at the end of the applicable performance period. After the end of the fiscal year, the Board or Compensation Committee assigns an Individual Performance Factor to each Named Executive Officer
16 The CCC curve did not change during COVID because the Compensation Committee determined that the pandemic and associated supply chain disruptions were not likely to have the same kind of potentially distortive impacts on CCC as on the other components.
based on its review of the CEO’s assessment of the officer’s performance during the year,performance period, including performance relative to his or her collectiveindividual and individualcollective objectives described above under the heading “Factors Considered in Setting Compensation.” For fiscal 2023, this review was conducted once, at the end of the fiscal year. The Individual Performance Factor can range from 1.0x at target performance, to 1.2x for superior performance, and to below 1.0x if target levels have not been achieved.
For fiscal year 2020,2023, STIC awards for our Named Executive Officers were calculated as follows:
| Name | Target STIC Award24 | x | Applicable Company Performance Factor | x | Individual Performance Factor | = | STIC Award Paid25 |
Joe A. Raver26 | $796,908 | | 83.3% | | 100% | | $663,800 |
Kristina A. Cerniglia | $403,797 | | 83.3% | | 110% | | $370,000 |
Kimberly K. Ryan | $376,122 | | 89.1% | | 110% | | $368,600 |
Ling An-Heid27 | $325,354 | | 49.1% | | 100% | | $159,700 |
Christopher H. Trainor | $338,172 | | 145.0% | | 110% | | $539,400 |
For fiscal 2021,described above, and the Compensation Committee
has approved a modified STIC program that measurescertified performance
based on two consecutive six-month periods duringand confirmed the
fiscal year, but that still pays out at the end of the year. The Compensation Committee approved this approach after discussing and considering various factors, including the uncertainty in global markets relating to the COVID-19 pandemic.following calculation: | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Target STIC Award 17 | x | Applicable Company Performance Factor | x | Individual Performance Factor | = | Total STIC Award Paid |
| Kimberly K. Ryan | $1,053,798 | | 39.5% | | 100% | | $416,250 |
| | | | | | | |
| Robert M. VanHimbergen | $394,183 | | 39.5% | | 105% | | $163,487 |
| | | | | | | |
| Ulrich Bartel | $349,099 | | 43% | | 95% | | $142,607 |
| | | | | | | |
| Nicholas R. Farrell | $373,698 | | 39.5% | | 120% 18 | | $177,133 |
| | | | | | | |
| J. Michael Whitted | $354,733 | | 39.5% | | 120% 19 | | $168,143 |
Long-Term Incentive Compensation
Overview. We provide LTIC to our Named Executive Officers and other employees by awarding them a combination of stock options, time-based RSUs, and performance-based restricted stock units (“RSUs”). Historically, our Named Executive Officers received their annual LTIC award as one-third stock options and two-thirds performance-based RSUs. Beginning with fiscal 2021, the Compensation Committee determined that the proportion of LTIC awards that historically consisted of stock options will, for future awards, consist of time-based RSUs. The Compensation Committee made this change in an effort to enhance the effectiveness of equity compensation in attracting and retaining talent in a competitive market. In particular, the Compensation Committee believes that this step brings the Company’s compensation practices more in line with the general market.
In setting the amount of each annual LTIC award granted to our Named Executive Officers, the Compensation Committee bases its decision on comparative data from the Company’s compensation peer group and applicable survey data, benchmarked at the 50th percentile. For fiscal 2020, primarily given the changespercentile, while aiming to the Company’s compensation peer groupencourage high performance, resulting from the Milacron acquisition, the Compensation Committee increasedin the LTIC award opportunities for certain of our Named Executive Officers to bring their total direct compensation levels and pay mix closer to this market median.awards set forth below.
24
17 The target STIC award is calculated as base salary earnings times the individual’s target bonus percentage; the calculation uses salary amounts that vary slightly from those shown in the “Summary Compensation Table” in Part III below because that table is presented based on salary earned during the fiscal year, while fiscal 2023 STIC awards are calculated based on salary actually paid.
18 Mr. Farrell’s Individual Performance Factor reflects his leadership and execution of the Company’s successful portfolio changes during the fiscal year.year which transformed the Company into a pure-play industrial.
25 The Compensation Committee approved STIC award payments rounded to the nearest hundred dollars.
2619 Mr. Raver’s target STIC award is calculated usingWhitted’s Individual Performance Factor reflects his base salary paid during fiscal 2020, of $724,462.
27 As mentioned above, Ms. An-Heid’s salary figure set forth in the table reflects only the partial year salary paid from her November 2019 start date through the endleadership and execution of the Company’s successful portfolio changes during the fiscal year.
year which transformed the Company into a pure-play industrial.
| | | | | | | | |
| Name | 2022 LTIC
Opportunity | 2023 LTIC
Opportunity |
| Kimberly K. Ryan | $3,000,000 | $4,350,000 |
| | |
| Robert M. VanHimbergen | $1,100,000 | $1,240,000 |
| | |
Ulrich Bartel20 | N/A | $800,000 |
| | |
| Nicholas R. Farrell | $600,000 | $650,000 |
| | |
| J. Michael Whitted | $700,000 | $750,000 |
The LTIC opportunity for Ms. Ryan was increased for fiscal year 2023 as part of Ms. Ryan’s continued transition to market median.
| Name | 2019 LTIC Opportunity | 2020 LTIC Opportunity |
Joe A. Raver | $3,350,000 | $3,600,000 |
Kristina A. Cerniglia | $825,000 | $950,000 |
Kimberly K. Ryan | $700,000 | $850,000 |
Ling An-Heid28 | N/A | $725,000 |
Christopher H. Trainor | $600,000 | $600,000 |
The Compensation Committee then allocated the 20202023 LTIC award opportunity to stock optionsperformance-based and performance-basedtime-based RSUs as follows:
| | | | | | | | |
| Award Type | Allocation Of
LTIC Award
Value
| Brief Description Of Award Type |
Performance-Based RSUs | 2/3 | Performance measured over a three-year period commencing October 1, 2019 2022 Split equally between: •awards that vest based on our shareholder value formula (“Shareholder Value RSUs”), and •awards that vest based on our relative total shareholder return (“TSR”) formula (“Relative TSR RSUs”) |
| | |
Stock Options
Time-Based RSUs | 1/3 | Exercise priceNumber of RSUs set atbased on fair market value on date of award; vest over a three-year period
|
20 Mr. Bartel was not a Named Executive Officer in fiscal 2022.
We believe that by linking a significant portion of the pay of our Named Executive Officers to the achievement of targets over three years, our LTIC program shapes investment strategies that improve the Company’s value over the long term. Historically,At times over the course of the Company’s history, actual achievement levels have resulted in actual payouts of our various performance-based equity awards in athat cover nearly the full range of performance, between no payout (zero percent) to close to the maximum payout of 175 percent for historical awards. Beginning with awards granted during fiscal 2023, the maximum payout for Shareholder Value RSUs and Relative TSR RSUs was changed from 175 to 200 percent. The Compensation Committee made this change after assessing our executive compensation program in comparison to peers, survey data, and other factors. The change aligned with recommendations made by the Committee’s independent compensation consultant, as part of an effort to continue to incentivize executives to exceed target levels of performance, and for the Company to remain in general alignment with the market for executive talent.
In general, the Company’s annual performance-based RSU payouts have ranged from approximately 12540 percent to approximately 120 percent of the targeted amount, with very occasional payouts exceedingonly few years falling above or below that level, whichrange. As a result, we believe demonstrates the Company’s establishment ofLTIC award structure and overall program reflect appropriate stretch goals for each business cycle. However, during the measurement period we reserve within the Stock Plan a number of shares equal to the maximum potential payout (175 percent) to ensure sufficient availability of shares and for administrative purposes. Consequently, at any given time we maintain under our Stock Plan a number of shares that is significantly higher than the number that is likely to be issued with respect to then-outstanding awards. Once the measurement period for a particular award ends and the award vests, excess reserved shares are returned to the Stock Plan to be again available for issuance.
28 Ms. An-Heid was not a Named Executive Officer of the Company in 2019, becoming one in connection with the acquisition of Milacron in fiscal 2020.
Compared to the average of our compensation peer group’s mix of long-term incentive compensation awards, our annual LTIC grants to Named Executive Officers in fiscal 2020 reflect general alignment2023 were generally aligned, but included a heavier emphasis on performance-based awards, as shown in the charts below.
Peer Group Average in Fiscal 2020*
| Hillenbrand, Inc. in Fiscal 2020
|
| |
|  |
*Source: Proxy filings
The allocation of the annual LTIC award opportunity in fiscal 20202023 among stock options,time-based RSUs, Shareholder Value RSUs, and Relative TSR RSUs resulted in the following targeted award levels:levels (as of grant date):
| | | Performance-Based RSUs At Target |
Name29 | Stock Option Shares | Shareholder Value | Relative TSR |
Joe A. Raver | 180,968 | 37,570 | 37,570 |
Kristina A. Cerniglia | 47,755 | 9,914 | 9,914 |
Kimberly K. Ryan | 42,728 | 8,870 | 8,870 |
Ling An-Heid30 | 36,444 | 7,566 | 7,566 |
Christopher H. Trainor | 30,161 | 6,261 | 6,261 |
| | | | | | | | | | | |
|
| Performance-Based RSUs At Target |
Name 21 | Time-Based RSUs | Shareholder Value | Relative TSR |
| Kimberly K. Ryan | 28,098 | 28,098 | 28,098 |
|
|
|
|
| Robert M. VanHimbergen | 8,009 | 8,009 | 8,009 |
|
|
|
|
| Ulrich Bartel | 5,167 | 5,167 | 5,167 |
| | | |
| Nicholas R. Farrell | 4,198 | 4,198 | 4,198 |
| | | |
| J. Michael Whitted | 4,844 | 4,844 | 4,844 |
Stock Options. The stock options awarded in fiscal 2020 become exercisable ratably on the first, second, and third anniversaries of the grant date (1/3 on each grant date anniversary) and are subject to a ten-year term, in both cases consistent with the Company’s historical practice. These were granted as non-qualified stock options upon terms determined by the Compensation Committee.
Shareholder Value RSUs. The Shareholder Value RSUs granted in fiscal 2023 are earned based on the actual shareholder value created during the three-year period commencing October 1, 20192022 (referred to as “Shareholder Value Delivered”) above or below what was expected during that same period (referred to as “Shareholder Value Expected”). For the award granted, as further described in fiscal 2020, theAppendix A. The amount of Shareholder Value Expected as of the end of the three-year measurement period is $4,657.9$4,819.9 million, reflecting the targeted amount of growth ineconomic value overat the end of the three years ending on September 30, 2022,2025, subject to certain adjustments for acquisitions, integrations, and dispositions, if any, as described below.
29 The LTIC award value allocated to stock options was converted to a number of shares using the Black-Scholes option pricing model based on the average of highbelow and low stock price on the date of grant. The LTIC award value allocated to the Shareholder Value RSUs and Relative TSR RSUs was converted to a number of shares at target based on the average of high and low stock price on the date of grant.
30 In addition to these amounts, Ms. An-Heid received an initial, non-recurring sign-on award of time-based RSUs in fiscal 2020 as further described under the heading “Time-Based RSU Awards in Fiscal 2020.”
At the end of the three-year measurement period the Shareholder Value RSUs will vest in an amount equal to the product of (i) the target number of shares, times (ii) a multiplier based on the ratio, expressed as a percentage, of Shareholder Value Delivered to Shareholder Value Expected as follows:follows (achievement between the points is interpolated linearly to calculate the corresponding multiplier):
| | | | | |
Shareholder Value Delivered As Percentage Of Shareholder Value Expected | | Multiplier |
| | |
Less than 70% | | zero (no units earned) |
| | |
At least 70% but less than 130% | | 0.25 plus an additional 0.025 for each full percentage point achieved above minimum for range (minimum number of units earned) |
| | |
100% | 1.00 (target number of units earned) |
| |
| At least 130% | | 1.752.00 (maximum number of units earned)
|
21 The LTIC award value allocated to the time-based RSUs, Shareholder Value RSUs, and Relative TSR RSUs was converted to a number of shares at target based on the average of high and low stock price on the date of grant.
The achievement levels and corresponding multipliers set forth above are expressed in further detail in the payout curve set forth below:below.
The Compensation Committee has determined that dividend equivalent amounts are accrued on Shareholder Value RSUs during the measurement period as dividends are declared on the Company’s common stock. These equivalent amounts are deemed to be reinvested in additional shares of Company common stock and then ultimately paid in the form of additional shares when the underlying award vests, using the same multiplier as the underlying award.
Our formula for calculating the shareholder value components of these awards is a discounted cash flow model that is designed to reflect the true economic return to investors. The key inputs into the model are:
•the Company’s net operating profit after tax, which is calculated by taking net income and adding back certain unusual and/or infrequent non-cash items (“NOPAT”);
•the established “hurdle rate,” which is a reflection of the Company’s enterprise-wide weighted average cost of capital and targeted capital structure (the “Hurdle Rate”).
It is contemplated that the Hurdle Rate will typically equal or exceed the Company’s weighted average cost of capital. In general, the Shareholder Value RSUs are designed to pay on the basis of the growth in economic value to an investor over three years, and the Company must earn a return that meets the applicable Hurdle Rate in order for a Named Executive Officer to earn the targeted award. The return must exceed the Hurdle Rate to exceed the targeted award. We believe that linking the pay of our Named Executive Officers with the growth in the economic value of the Company in this way aligns the interests of the executive management team with those of the Company’s shareholders.
Calculation of Shareholder Value Expected. The amount of Shareholder Value Expected as of the end of a measurement period is generally calculated as (i) the Company’s Adjusted NOPAT (defined below)
(defined in Appendix A) for the prior fiscal year, (ii) divided by the Hurdle Rate, and (iii) multiplied by the cube of (1 + Hurdle Rate):, with certain limited exceptions set forth in Appendix A:
For the awards made in fiscal 2020, ifThe Compensation Committee makes adjustments for divestitures during the measurementcourse of the performance period of these awards. During the performance period ending with fiscal 2023, the Company acquires, divests, or integrates a business or operating unit, thendivested four businesses (Red Valve, ABEL, TerraSource Global, and Batesville). For these divestitures, the Shareholder Value Expected atCompensation Committee adjusted the end ofapplicable targets to align with the measurement period andrespective partial ownership periods. Similarly, the Hurdle Rate shall beCompensation Committee has in the past adjusted award calculations to reflect the expected impact, if any,include newly-acquired businesses. In order to simplify calculations of such acquisition, divestiture, or integration duringtargets and reduce the measurement period, and, for acquisitions and integrations, taking into account the projected NOPAT and cash flows upon which the Board’s approvallikelihood of such acquisition was based. The actual financial results of the acquired business or operating unit will be reflected accordingly for purposes of calculating the Shareholder Value Delivered at the end of the measurement period.31
Calculation of Shareholder Value Delivered. The amount of Shareholder Value Delivered as of the end of a measurement period is calculated by adding two components: the NOPAT Component and the Cash Flow Component.
The NOPAT Component of Shareholder Value Delivered is the Company’s Adjusted NOPAT (as defined below) for the last fiscal year of the measurement period, divided by the Hurdle Rate.
31 For Shareholder Value RSU awards made beginning in fiscal 2021, Shareholder Value Expected and Shareholder Value Delivered will not be adjusted to include any acquired businesses, as part of an effort to simplify the calculations to better align with measures used in the Company’s external reporting.
The Cash Flow Component of Shareholder Value Delivered is the sum of the following:
| o | Adjusted Cash Flows (as defined below) for the third fiscal year in the measurement period;
|
| o | Adjusted Cash Flows for the second fiscal year in the measurement period, multiplied by (1 + Hurdle Rate); and
|
| o | Adjusted Cash Flows for the first fiscal year in the measurement period, multiplied by the square of (1 + Hurdle Rate).
|
Definitions. The following definitions of terms used above reflect the meanings for the awards made in fiscal 2020.32
“Adjusted NOPAT” means NOPAT as adjusted (net of tax where applicable) to exclude certain items, including the following:
| o | income, losses, or impairments from specific financial instruments transferred to the Company as part of our spin-off in 2008;
|
| o | interest income on corporate investments and interest expense on corporate debt;
|
| o | all professional fees, due diligence fees, expenses, and integration costs related to a specific acquisition or disposition;
|
| o | amortization expense of intangible long-lived assets where internally generated costs are not customarily capitalized in the normal course of the business (e.g., customer lists, patents, etc.);
|
| o | all adjustments made to net income related to changes in the fair value of contingent earn-out awards;
|
| o | extraordinary external, non-recurring, and material legal costs;
|
| o | restructuring charges and other items related to a restructuring plan approved by the Company’s CEO; and
|
| o | changes in accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed.
|
“Adjusted Cash Flows” means net cash provided by operating activities (whetherdistortive effects on compensation, whether positive or negative) during a fiscal year, less capital expenditures net of proceeds onnegative, the disposal of property, all as shown on audited financial statements for that fiscal year, as adjusted (net of tax where applicable) to exclude the effects of certain items, including the following:
32 BeginningCompensation Committee determined, beginning with awards made in fiscal 2021, replacementnot to adjust such awards for the impact of any acquisitions made during the performance measures corresponding to Adjusted NOPAT and Adjusted Cash Flows will be used including as described in footnote 32 above, with the result that related adjustments will be simplified to better align with measures used in the Company’s external reporting.
| o | cash receipts or disbursements from financial instruments transferred to the Company as part of our spin-off in 2008;
|
| o | interest income on corporate investments and interest expense on corporate debt;
|
| o | the difference between the cash pension payment for an active defined benefit plan actually made and the pension expense recorded;
|
| o | extraordinary external, non-recurring, and material legal disbursements;
|
| o | changes in accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed; and
|
| o | the cost of consummated acquisitions or dispositions, including the purchase price, all professional fees, due diligence fees, expenses, and integration costs.
|
period.
The foregoing adjustments, along with any described in the definitions set forth in Appendix A, are not intended to be comprehensive, and the Compensation Committee retains discretion to make additional adjustments consistent with the terms of the Stock Plan and awards thereunder.
Calculation of Shareholder Value Delivered. The amount of Shareholder Value Delivered as of the end of a measurement period is calculated by adding two components: the Ending NOPAT Component and the Ending Cash Flow Component. See Appendix A for applicable definitions.
Relative TSR RSUs. The Relative TSR RSUs granted in fiscal 20202023 are earned based on the change in the market price of the Company’s common stock during the three-year period commencing October 1, 2019,2022, compared to the change in market price of the stock of the members of the Standard & Poor’s 400 Mid Cap Industrials index (referred to herein as the “Index Companies”) during that same period, taking dividends into account as further described below. This is a change from prior year grants, when we used our then-applicable compensation peer group to measure relative TSR. As described below, the Relative TSR RSUs that were granted in fiscal 2018 and vested in fiscal 2020 (as well as those granted in fiscal 2019 and vesting in 2021) were measured in comparison to the compensation peer group, rather than the Index Companies. In either case, byBy linking the pay of our Named Executive Officers with the relative return earned by our shareholders compared to our peers, the Relative TSR RSUs create an incentive for our executive management team to produce above market returns for our shareholders.
In general for awards granted before fiscal 2020, the target award is earned if the Company’s relative TSR during the measurement period ranks between the 45th and 55th percentiles of the compensation peer group, and the award pays out proportionately higher or lower if relative TSR is above or below that range, as illustrated in more detail below. At the end of the three-year measurement period in fiscal 2020 the Relative TSR RSUs granted in fiscal 2018 vested in an amount equal to the product of (i) the target number of shares times (ii) a multiplier based on the ranking, expressed as a percentile, of the Company’s TSR within the companies in its compensation peer group as follows:
Relative Percentile Rank Of
Company TSR
| | Multiplier |
| | |
Equal to or less than 24.99%
| | zero (no RSUs earned) |
At least 25% up to 29.99%
| | 0.40 |
At least 30% up to 34.99%
| | 0.55 |
At least 35% up to 39.99%
| | 0.70 |
At least 40% up to 44.99%
| | 0.85 |
At least 45% up to 54.99%33
| | 1.00 |
At least 55% up to 59.99%
| | 1.15 |
At least 60% up to 64.99%
| | 1.30 |
At least 65% up to 69.99%
| | 1.45 |
At least 70% up to 74.99%
| | 1.60 |
At least 75%
| | 1.75 |
Whereas dividends accrue during the measurement period with respect to shares underlying the Shareholder Value RSUs as described above, the Compensation Committee has determined that dividends do not accrue during the measurement period with respect to shares underlying Relative TSR RSUs, and as a result the determination of the grant date value of the Relative TSR RSUs assumedassumes no dividends are paid on these shares.
Beginning withFor the awards made in fiscal 20202023 and vesting inat the end of fiscal 2022,2025, the Compensation Committee modified theused a payout formula described above for Relative TSR RSUs to providethat provides a 25 percent of target minimum payout for achievement at 25 percent achievement,the 25th percentile, 100 percent of target payout at 50 percent50th percentile achievement, and 175200 percent of target payout at 75 percent75th percentile achievement and above. Performance below the 25th percentile earns a zero payout. The formula will useuses linear interpolation for payouts between these markers, rather than the “banded” approach we have historically used. Thus, in general,25th and 75th percentiles, and the Company’s relative TSR must be achieved at median to receive the target payout going forward.payout.
The key inputs and award calculation formula for these Relative TSR RSU awards are the Beginning Average Price and Ending Average Price of the stock of the Company and the Company’s compensation peer group companies or Index Companies, as applicable; the Dividend Reinvestment Multiplier applicable to each such company; and the TSR of each such company during the measurement period.
The Beginning Average Price Definitions of stock with respect to the Company and each of its compensation peer group companies for the LTIC awards grantedthese terms are set forth in fiscal 2018 and fiscal 2019, is the average closing price of that company’s stock over the 20 trading days immediately preceding (but not including) the first day of the measurement period, adjusted for dividends by applying that company’s Dividend Reinvestment Multiplier. For the LTIC awards granted in fiscal 2020, the comparison is based on the Index Companies, not the compensation peer group companies, and on the closing price of that company’s stock on the trading day immediately preceding the first day of the measurement period, using the same Dividend Reinvestment Multiplier.
33 Actual vesting level for Relative TSR RSUs awarded in fiscal 2018.
The Ending Average Price of stock with respect to the Company and each of its compensation peer group companies for the LTIC awards granted in fiscal 2018 and fiscal 2019, is the average closing price of that company’s stock over the 20 trading days immediately preceding (and including) the last day of the measurement period, adjusted for dividends by applying that company’s Dividend Reinvestment Multiplier. For the LTIC awards granted in fiscal 2020, the comparison is based on the Index Companies, not the compensation peer group companies, and on the closing price of that company’s stock on the last trading day of the measurement period, using the same Dividend Reinvestment Multiplier.
The Dividend Reinvestment Multiplier applicable to the Company and each of its compensation peer group companies or the Index Companies, as applicable, is a calculation of the value of dividends paid out by that company, assuming reinvestment of those dividends in that company’s stock, calculated by dividing each dividend paid out by that company over the applicable period by its closing share price on the ex-dividend date.
Appendix A. The TSR of the Company and each of its compensation peer group companies or the Index Companies during the measurement period is calculated by subtracting one from the quotient of (i) the Ending Average Price for that company, divided by (ii) the Beginning Average Price for that company:
company, as shown below.
Vesting of Fiscal Year 20182021 LTIC Awards. On September 30, 2020,2023, the three-year measurement period for the Company’s LTIC awards that were granted in fiscal year 20182021 closed. Those awards vested in accordance with our two performance-based LTIC award formulas described above. During the three-year measurement period (fiscal years 2018-2020)2021-2023), the Company achieved an actual shareholder value increase equal to 106130 percent of the target for that measurement period, resulting in a vested award amount equal to 116175 percent of the targeted number of shares (i.e., the number of shares that would be earned upon achievement in full of the target shareholder value increase).
Under the relative TSR formula, at the end of the three-year measurement period, the Company ranked 10 outat the 46th percentile of the 18 companies in the Company’s compensation peer groupIndex Companies constituted as of the date of the award, (as described above, the percentile calculation includes the 17 peer group companies plus the Company), resulting in a percentile figurepayout at 89 percent of 47.0 percent, and, therefore, a multiplier of 1.0 times the target award.
target.
Additional details regarding the LTIC awards granted in fiscal year 20182021 are set forth under the heading “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis” section of our proxy statement for our 20192022 Annual Meeting of shareholders that was filed with the SEC on January 2, 2019.December 30, 2021. See the “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2020”2023” table in Part III below for additional detail regarding the vesting of the LTIC awards granted in fiscal 2018.2021.
Non-recurring Time-Based RSU AwardsRSUs. The grants of annual time-based RSUs awarded in Fiscal 2020fiscal 2023 vest ratably on the first, second, and third anniversaries of the grant date (one-third on each grant date anniversary). In fiscal 2020, consistent with its historical use of time-based RSU awards as a retention tool for certain key executives, theThe Compensation Committee approvedhas determined that dividend equivalent amounts are accrued on unvested time-based RSUs during the grantingvesting period as dividends are declared on the Company’s common stock. Dividends paid on the Company common stock are accrued and deemed to be reinvested in Company common stock at the market value on the date of an initial, non-recurring time-based RSU sign-on award to Ling An-Heid, Presidentsuch dividend, and paid in additional shares on the vesting date of the Company’s Mold-Masters business, who joined the Companyunderlying award in connection with the Milacron acquisition. Ms. An-Heid was a key executive at Milacron priorproportion to the acquisition, and the Compensation Committee determined to make this award as partnumber of her retention and with the aim of facilitating a successful integration of Milacron. Consequently, Ms. An-Heid received an award of 31,308 time-based RSUs, vesting 50 percent on each of December 5, 2021, and December 5, 2022. See the “Outstanding Equity Awards at September 30, 2020” table in Part III below for additional detail regarding Ms. An-Heid’s LTIC awards granted in fiscal 2020.shares that vest.
Retirement and Savings Plans
Savings Plan. We maintain a tax-qualified defined contribution savings plan (the “Savings Plan”) in which most of our U.S.-domiciled employees from Hillenbrand companies prior to(excluding employees added in connection with the acquisitionacquisitions of Milacron,LINXIS and the Schenck Process Food and Performance Materials Business), including all of the Named Executive Officers other than Ms. An-Heid,Mr. Bartel, are eligible to participate. The employees participating in the Savings Plan may contribute a percentage of their compensation thereto
on a pre-tax or Roth after-tax basis, subject to applicable limits. For the Savings Plan, the Company matches contributions for all eligible employees, not accruing legacy pension benefits, which includes all of the Named Executive Officers other than Ms. An-Heid.Mr. Bartel. Additionally, whether or not employees eligible to contribute to the Savings Plan did so, the Company provided an automatic contribution per pay period to the Savings Plan. All contributions by employees and the automatic Company contribution are fully vested immediately, but the Company matching contributions havedid not historically vestedvest until after three years of credited service, at which point further Company matching contributions vestvested immediately when made. In addition, an employee’s actual annual cash bonus amount was historically excluded as compensation from the contribution formula under the plan. Beginning in 2021, all contributions, including Company matching contributions, will vestvested immediately when made. Since the acquisition of Milacron through 2020, we also have maintained, among other plans, a registered retirement savings plan (employee contributions)made, and deferred profit sharing plan (employer contributions) in Canada, and Ms. An-Heid is eligibleactual annual cash bonus amount began to participate in these (but did not in fiscal 2020). As with the Savings Plan, the Canadian deferred profit sharing plan provides matching contributionsbe included as compensation (in addition to participating employees.
base salary) for calculating contributions.
For information regarding compensation paid to our Named Executive Officers under the Savings Plan, see footnote 5 to the “Summary Compensation Table” in Part III below.
Supplemental Retirement Plan. We maintain a Supplemental Retirement Plan administered by Fidelity Management Trust Company (the “SRP”) that provides a defined contribution benefit to plan participants. All of the Named Executive Officers other than Ms. An-Heid, whoMr. Bartel (who is not a U.S.-domiciled employee,employee) participate in the SRP. The SRP is designed to supplement the amount of retirement benefits that participants are entitled to receive from our Savings Plan.
The Internal Revenue Code establishes certain limits with respect to tax-qualified retirement plans like our Savings Plan, including a limit on the maximum amount of compensation that can be counted as earnings of the participant for purposes of calculating benefits. The application of these tax law limits can reduce the amount that would otherwise be payable to a participant under the terms of a tax-qualified retirement plan. Additionally, our Savings Plan excludes any cash bonus amounts from the definition of compensation for plan purposes, focusing the contribution formula only on base salary. Beginning in 2021, the contribution formula will also take cash bonus amounts into account.
In general, the SRP is designed to “make whole” a participant by paying benefits otherwise lost under the Savings Plan due to the application of tax law limits and the exclusion of the annual cash bonus from the plan’s contribution formula. The SRP annually accrues future benefits for the participants equal to the difference between (i) the benefit amount that is actually contributed for a participant under the Savings Plan, and (ii) the amount that would have been contributed if (a) the tax law limits were not applied, and (b) the participant’s targeted annual cash bonus amount were included as compensation (in addition to base salary) in the contribution formula under the plan.
applied.
Once benefits under the SRP have vested, they are generally payable following retirement or termination of employment. However, if a participant’s employment is terminated for “cause” (as such term is defined in the SRP), contributions under the SRP may be forfeited.
Under the SRP, participants are permitted to direct the investment of their accrued accounts (on a hypothetical basis because this is non-cash “shadow” deferred compensation) into various Fidelity mutual funds and/or Company common stock.funds. The Company then actually makes those designated investments for the Company’s own account with funds contributed by the Company under a “Rabbi Trust” arrangement so that the Company can actually fund the earnings or losses experienced by each participant in his or her hypothetical investments when distributions are made.arrangement. The SRP also permits a participant, when permitted by Section 409A of the U.S. Internal Revenue Code, to elect to defer all or a portion of his or her annual cash bonus for payment at a later time and to invest the deferred amounts in Fidelity mutual funds and/or Company common stock on a hypothetical basis.
For information concerning benefits payable to our Named Executive Officers under the SRP, see the table entitled “Nonqualified Deferred Compensation for Fiscal Year Ended September 30, 2020”2023” in Part III below.
None of our U.S. Named Executive Officers participates in or has account balances in any non-qualified defined benefit plan sponsored by us.
Mr. Bartel is domiciled in Germany and, like all of our employees domiciled outside the U.S., is not eligible to participate in the SRP or Savings Plan. Mr. Bartel does have a vested account balance in a Coperion-sponsored pension, but Coperion contributions to the pension stopped in 2009.
Employment Agreements and Termination Benefits
Employment Agreements. We have entered into employment agreements with each of theour Named Executive Officers. We believe that it is appropriate for our senior executives to have employment agreements because they provide the Company certain contractual protections that we might not otherwise have, including provisions relating to not competing with us, not soliciting our employees, and maintaining the confidentiality of our proprietary information. The employment agreements we have with our Named Executive Officers contain non-competition and non-solicitation agreements that generally continue in effect for a period of one to two years after the termination of the Named Executive Officer’s employment. Additionally, we believe that employment agreements are a useful tool in the recruiting and retention of senior-level executives. The employment agreements are substantially similar among our Named Executive Officers other than a fewas described for our Chief Executive Officer, and differences in the employment agreement of Ling An-HeidUlrich Bartel due to CanadianGerman law and local market practices that are described in more detail below.
Termination Benefits Under Employment Agreements with Named Executive Officers Based in the United States. The employment agreements with our U.S. Named Executive Officers based in the United States provide for employment “at will.” They are terminable by the Named Executive Officer without “cause” or without “good reason” on 60 days’ written notice, by the Company at any time without “cause,” and also by the Company at any time (subject to certain cure rights) for “cause,” as such term is defined in each employment agreement. These Named Executive Officers are also entitled to terminate their employment agreements for “good reason,” as such term is defined in their agreements. If we terminate the employment of a Named Executive Officer without “cause,” or if his or her employment is terminated with “good reason,” then we are obligated to provide severance compensation in connection with such termination. No severance compensation is payable under our employment agreements with theour Named Executive Officers if we terminate with “cause,” if the executive terminates without “good reason,” or if the employment relationship is terminated on account of death or disability.
If the employment of a U.S. Named Executive Officer based on the United States is terminated by usthe Company without cause or is terminated by the executive officer upon the occurrence, without the executive officer’s consent, of a good reason event, we are required under the officer’s employment agreement to provide severance compensation to such Named Executive Officer as follows:
•continuation of the officer’s base salary for 12 months (24 months for Mr. Raver)the CEO), subject to required tax withholdings, which payments may need to be delayed for six months under certain provisions of the Internal Revenue Code;
•continued health coverage and, in some cases, group life insurance, until the continuation of base salary period described above is complete; and
•limited out-placement counseling.
Termination Benefits Under the Employment Agreement with Ling An-HeidUlrich Bartel (the “An-Heid“Bartel Agreement”). The An-Heid Agreement provides for specific circumstances under which it may be terminatedBecause Mr. Bartel is domiciled in Germany and employed by either Ms. An-Heid or the Company’s Mold-Masters German
affiliate, that is a party thereto (“Mold-Masters”). Hillenbrand Germany Holding GmbH, his agreement and termination benefits are based in German law and are generally comparable to those provided to our other German employees and differ from those in the employment agreements with our U.S. Named Executive Officers.
The An-HeidBartel Agreement is terminable by Ms. An-Heid for any reason on four weeks’Mr. Bartel or our German affiliate without “cause” (as defined by his agreement) upon twelve months’ written notice or a longer period if required in certain cases under German law. Following delivery of such a termination notice by Mold-Masters ateither party, Mr. Bartel must continue to work for the Company during this 12-month “notice period” and is entitled to his normal compensation, including the full amount of any timeSTIC award attributable to the notice period. However, our German affiliate may elect to instead release Mr. Bartel from his duty to work for “cause,the Company during his notice period, placing him on “garden leave,” as such term is defined in which case his agreement entitles him to his normal base salary plus any STIC award attributable to that period. During a garden leave period, Mr. Bartel remains bound to other obligations stipulated in his employment agreement, including loyalty and non-competition obligations. Pursuant to the An-HeidBartel Agreement, and also by Mold-Masters at any time without “cause” upon providing Ms. An-Heid with appropriate statutory notice and severance, as well asno additional contractual notice. No severance compensation is payable underto Mr. Bartel following the An-Heid Agreement if Ms. An-Heidend of his notice period, whether or not a garden leave is terminated with “cause.”
elected. If Ms. An-Heid’sMr. Bartel’s employment is terminated by Mold-Masters without cause,on account of death, the An-HeidBartel Agreement requires notice and severance compensationthe Company to Ms. An-Heid as follows:continue to pay his base salary to his surviving dependents for a period of three months.
minimum statutory notice of eight weeks plus four additional weeks of notice per year of service, up to seventy additional weeks, all or a portion of which may be paid in lieu of notice;
minimum statutory severance of twenty-six weeks; and
continuation of health insurance benefits throughout the eight-week statutory notice period, including payment of premiums on Ms. An-Heid’s behalf.
In addition, upon termination, Ms. An-Heid is entitled to payment of pro-rated unused vacation pay (or a corresponding deduction for any excess vacation pay) based on ten percent of the gross wages paid to her during the applicable calendar year.
Post-Termination Payments of STIC and LTIC. A Named Executive Officer whose employment terminates may or may not be entitled to the post-termination payment of all or a pro rata portion of the STIC or LTIC award that would have been payable to the Named Executive Officer if his or her employment had continued through the end of the applicable measurement period. The amount payable, if any, depends on the performance of the Company or its applicable business unit throughout the measurement period in question and the circumstances under which employment terminates.
STIC. Post-termination STIC is payable to a Named Executive Officer after the performance period in question has ended and only if it is determined under the applicable performance formula that an amount would have been payable to the former officer had his or her employment continued through the end of the performance period. The amount, if any, that is payable depends upon the circumstances of the termination.
If employment terminates due to death, disability, retirement (after age 55 and five years of service), involuntary termination without “cause,” or voluntary termination for “good reason,” then the former officer is entitled to a pro-ratapro rata payment of his or her STIC award based on the portion of the fiscal year during which he or she remained employed, subject to a reduction of up to one-third of that amount at the discretion of the Compensation Committee. No pro-ratapro rata STIC is payable to officers upon an involuntary termination with cause or a voluntary termination without good reason.
LTIC. Following termination, the RSUperformance-based portion of an LTIC award is payable to a Named Executive Officer only after the measurement period in question has ended and only if it is determined under the applicable performance formula that an amount would have been payable to the former officer had his or her employment continued through the end of the measurement period. Once the amount that would have been paid had employment continued (the “Full Period Award”) is determined, if employment terminates due to death, disability, or retirement (after age 55 and five years of service), involuntarily without cause, or voluntarily for “good reason,” the Named Executive Officer is entitled to a pro-ratapro rata amount of the Full Period Award based on the portion of the
measurement period during which he or she remained employed, and in any other circumstance, all outstanding performance-based RSUs are forfeited upon termination of employment.
Following termination, any unvested portion of a Named Executive Officer’s annual time-based RSUs are forfeited except as follows:
With respect to stock options, all unvested options become fully vested upon a termination of•if employment terminates due to death or disability or retirement occurring more thanafter one year afterand one day following the grant date. Unless otherwise expressly approved by the Compensation Committee,date, all unvested options are forfeited upon a termination of employment due to any other circumstance. Vested stock options will be treated as follows:shares shall become vested shares; and
•if employment terminatedterminates due to death, disability, or retirement (as defined above), or if employment is terminated by the Company without “cause,” orvoluntarily by the executive for “good reason,”reason” pursuant to an employment agreement, or, beginning with awards granted in fiscal 2022, involuntarily by the Company without cause, the Named Executive Officer will have the lesser of one year or the original expiration of the stock options to exercise; and
receive prorated vesting.inIn any other circumstance, all unvested shares of time-based RSUs are forfeited upon termination of employment.
For both performance- and time-based RSUs, vesting upon a change in control is governed by the Named Executive Officer will have the lesser of 90 days or the original expiration dateterms of the stock options to exercise.
69
Stock Plan and any applicable change in control agreement, as discussed further below.For more information regarding the severance benefits payable to our Named Executive Officers under their employment agreements and our STIC and LTIC compensation programs, see the tables under the heading “Potential Payments Upon Termination” in Part III below.
Change in Control Agreements. We believe it is important that management be in a position to provide an objective assessment and advice to the Company’s Board of Directors regarding any proposed business transaction without being unduly distracted by the uncertainties and risks that a proposed change in control of the Company creates with respect to management. Accordingly, we have entered into change in control agreements with each of our Named Executive Officers and other key executives that provide compensation to the executive if his or her employment is terminated in connection with a change in the control of the Company. CompensationThe compensation provided under the change in controlthese agreements is paid only upon an executive’s termination of employment and is in lieu of severance compensation provided under that executive’s employment agreement.
These change in control agreements provide for the following:
Paymentpayment of benefits only upon a “double-trigger,” requiring not only a change in control but also a qualified termination of employment in order for benefits to be realized. Qualified terminations are any termination in anticipation of or within two years after the occurrence of a change in control (a “double trigger”), but excluding terminations on account of death or disability retirement, or for “cause.”“cause” or by the executive without good reason (a “Qualified Termination”). These change in control agreements expressly supersede the Company’s Stock Plan, which provides for single-trigger vesting of equity awards.
Under the change in control agreements, the benefits to be provided upon a Qualified Termination include:
•a lump sum payment in cash equal to two times the executive’s annual base salary and two times target STIC (three times for the CEO);
•continued health insurance for the executive and his or her dependents for 24 months (36 months for the CEO), with the right to purchase continued medical insurance (at COBRA rates) from the end of benefits without any tax gross-up payments relatingthis period until the executive reaches Social Security retirement age;
•a lump sum payment equal to his or her respective pro rata current year STIC award, assuming the excise tax on excess “parachute payments” imposed by Section 4999greater of target or actual achievement in that year of the Internal Revenue Code.relevant performance targets under the STIC Plan, prorated through the date of termination of employment; and
•immediate vesting of all outstanding stock options and equity awards, assuming (where applicable) (i) the greater of target or actual achievement of the relevant performance goals for such awards made after February 11, 2021, and (ii) target achievement of the relevant performance goals for such awards made prior to February 11, 2021.
These rights and benefits are subject to certain customary non-competition obligations and are contingent upon the execution of a release. In addition, the rights and benefits provided in the change in control agreements are not subject to tax gross-ups. If an executive is entitled to receive payments upon a change in control that may be subject to the excise tax, he or she will either be paid the full amount (and remain personally liable for the excise tax) or be paid a reduced amount that does not give rise to the excise tax, whichever is greater on an after-tax basis.
The benefits to be provided upon a qualified termination include:
a lump sum payment in cash equal to two times the executive’s annual base salary (three times for Mr. Raver);
continued health insurance for the executive and his or her dependents for 24 months (36 months for Mr. Raver) and continued life insurance coverage for 24 months, with the right to purchase continued medical insurance (at COBRA rates) from the end of this period until the executive reaches Social Security retirement age;
a lump sum payment equal to two times (three times for Mr. Raver) the amount of the additional amounts, if any, accrued during the last 12 months in the executive’s defined contribution accounts under the Company’s Supplemental Retirement Plan;
a lump sum payment equal to his or her respective current year STIC award, assuming 100 percent achievement in that year of the relevant performance targets under the STIC Plan; and
immediate vesting of all outstanding stock options and equity awards, assuming (where applicable) 100 percent achievement of the relevant performance targets.
Under the change in control agreements, a “change in control” is defined generallyin conformance with the Stock Plan as: (i) the acquisition of beneficial ownership of 35 percent or more of the voting power of all of the Company’s voting securities by a person or group; (ii) the consummation of certain mergers or consolidations; (iii) a change in the composition of a majority of the members of ourthe Company’s Board of Directors; (iv) the consummation of a sale of substantially all of the Company’s assets;assets (i.e., 50 percent or more of the assets) in one or a series of transactions within any period of 12 consecutive months; or (v) the approval by ourthe Company’s shareholders of a plan of complete liquidation of the Company.
The amounts potentially payable to our Named Executive Officers in connection with a change in control are set forth in the tables under the headings “Potential Payments Upon Termination” and “Change in Control Benefits” in Part III below. Pending approval of the Stock Plan proposal by the Company’s shareholders, the Company intends to amend the change in control agreements described above to make corresponding changes and certain other updates to reflect market practice in this area.
Other Personal Benefits
In addition to the compensation components discussed above, we also provide our U.S.-based Named Executive Officers, as well as certain other U.S.-based employees and officers, with other benefits as described below. We generally disfavor providing extensive perquisites but do provide modest benefits intended to enhance the effectiveness of our Named Executive Officers and complement the highly variable, performance-oriented compensation components we utilize. We also provide these benefits in order to remain competitive with the market and believe that these benefits help us to attract and retain qualified executives.
Executive Financial Planning, Estate Planning, and Tax Preparation Service Program. Our U.S. Named Executive Officers and certain other officers are eligible for limited reimbursement of (i) financial and estate planning services and (ii) income tax preparation services. Reimbursement is approved for up to $5,000 per calendar year.
Executive Physical. We provide theour U.S.-based Named Executive Officers and certain other officers with the opportunity to receive executive annual physicals. We cover 100 percent of the cost of this program for officers who see the Company’s selected provider or reimburse an equivalent amount for any officer who selects his or her own provider. This program was developed to promote the physical well-being and health of our senior-level managers. We believe that this program is in the best long-term interests of our shareholders. Certain of our Germany-based employees, including Mr. Bartel, are also eligible for a company-paid annual executive physical.
Other Benefits. Our Named Executive Officers also participate in other benefit plans that we fully or partially subsidize. Their participation is generally on the same terms as other employees. Some of the more significant of these benefits include medical, dental, life, disability, and vision insurance, as well as relocation reimbursement, tuition reimbursement, and holiday and vacation benefits. Many employees, including all of our U.S.-based Named Executive Officers, participate in our group term life insurance program, which provides death benefit coverage of up to twoone and one-half times base salary or $500,000, whichever is less. In addition, our U.S. Named Executive Officers and certain other employees are eligible to participate in our optional supplemental group term life insurance program, in which participants may purchase additional term life insurance at their own expense in amounts up to the lesser of five times base annual salary or $600,000. Furthermore, in certain cases, our U.S. Named Executive Officers may receive supplemental long-term disability premiums paid by the Company and other modest personal benefits as set forth in the footnotes to the Summary Compensation Table below.
Compensation-Related Policies
In connection with the Company’s compensation program, we have established certain policies that relate to executive compensation. The most significant of these policies are described below.
Stock Ownership Requirement. All of our Named Executive Officers, as well as certain other officers, are required to own a significant number of shares of Company common stock. Specifically, the officers identified below, from and after the fifth anniversary of the date on which such individual first became such an officer, or, in the case of a promotion, from and after the third anniversary of becoming subject to a higher Required Ownership Level, are required to hold shares of our common stock or equivalents (as further described below) with a minimum aggregate value at the following levels (“Required Ownership Level”):
Position | | | | | |
| |
| Position | Required Ownership Level |
| | |
| |
| Chief Executive Officer of the Company | | 5 x Base Annual Salary |
| | |
Senior Vice Presidents of the Company | | 2 x Base Annual Salary |
| | |
| Certain senior officers of the Company and its subsidiaries as designated by the Company Chief Executive Officer from time to time | | 1 x Base Annual Salary |
OurEach of our Named Executive Officers currently holdholds shares of our common stock or stock equivalents at levels greater than or equal to the Required Ownership Level. Shares owned outright and shares represented by RSUs or restricted stock awards, whether vested or unvested, including excluding
performance-based shares, at the target award level, count as share equivalents toward the Required Ownership Level. Unexercised stock options do not count toward the Required Ownership Level.
Failure to achieve or maintain the Required Ownership Level may result in (i) the applicable individual being required to hold all after-tax vested stock award shares and after-tax shares acquired upon exercise of stock options, or (ii) suspension of future equity awards, until the Required Ownership Level is achieved. The Compensation Committee (or its designee) may make exceptions, in its sole discretion, in the event of disability or great financial hardship.
Anti-Hedging Policyand Anti-Pledging Policies. For a discussion of the Company’s anti-hedging policy,and anti-pledging policies, see Part VII of this proxy statement.
Clawback. For STIC and LTIC awards, In 2023, the Company has adopted a revised “clawback” policy applicable to executive officers. Specifically, officers, consistent with the final rules promulgated by the SEC and NYSE under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under the revised policy, the Compensation Committee is required to pursue recoupment of certain “erroneously awarded” compensation from the executive officers of the Company under the following circumstances:
•if the Company is required becauseto make an accounting restatement due to the material noncompliance of fraud or negligence, to restatethe Company with any financial results for any period (the “Restatement Period”) in a manner thatreporting requirement under the securities laws; and
•if such noncompliance would have adversely affected the amount of the payout of any STIC or LTIC awards, the Compensation Committee has the rightincentive-based compensation paid during the three-year period followingthree completed fiscal years prior to the Restatement Period to reviewdate the matter and determine what, if any, repayment executives will beCompany is required to submit.prepare such a restatement.
Tax Deduction Management. The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, includes several significant changes to the Internal Revenue Code, such as the repeal of the performance-based compensation exemption and the expansion of the individuals subject to the provision (for example, by including the Chief Financial Officer and certain former Named Executive Officers). Because of these changes, except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act, compensation paid to any of our Named Executive Officers generally will not be deductible to the extent that it exceeds $1.0 million.
PART II: COMPENSATION COMMITTEE REPORT
Each member of the Compensation Committee of the Board of Directors of Hillenbrand, Inc. is “independent,” as that term is defined under (i) the New York Stock Exchange listing standards, (ii) the non-employee director standards of Rule 16b-3 of the Securities Exchange Act of 1934, as amended, (iii) the outside director requirements of Section 162(m) of the Internal Revenue Code, and (iv)(iii) the Company’s Corporate Governance Standards. The Compensation Committee currently consists of Gary L. Collar, Helen W. Cornell, F. Joseph Loughrey,Dennis W. Pullin, Jennifer W. Rumsey, and Stuart A. Taylor, II.
As a committee, one of our obligations is to ensure Hillenbrand’s executive compensation program is performance-based, in order to align management interests with the short-term and long-term interests of shareholders, and is competitive, in order to enable the Company to attract and retain superior executive personnel. We engage an independent executive compensation consulting firm to assist us in our review of the Company’s executive compensation programs to ensure these programs are competitive and consistent with our stated objectives. The executive compensation consultant is retained by and directly accountable to us, and we generally approve all related fees paid to the executive compensation consultant. We have no interlocks or insider participation, and we engage in annual self-evaluations to determine our effectiveness as a committee. We have adopted a Charter, which may be found on Hillenbrand’s web site at www.hillenbrand.com.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.2023.
| Respectfully submitted,
| | | | |
| Respectfully submitted, |
| |
| Gary L. Collar (Chairperson) |
| Helen W. Cornell (Chairperson) |
| Gary L. Collar
Dennis W. Pullin |
| F. Joseph Loughrey
|
| Jennifer W. Rumsey |
| Stuart A. Taylor, II |
PART III: EXECUTIVE COMPENSATION TABLES
Tabular Compensation Information
In the following pages we present numerous tables that set out various elements of compensation for our Named Executive Officers. No one table alone presents the “total picture”; instead, you should review all the information carefully to understand the amounts and manner in which our Named Executive Officers have been paid. To understand all the numbers in the tables below, you need to carefully read the footnotes, which explain various assumptions and calculations that give rise to the dollar amounts in the tables.
Compensation of Named Executive Officers
Summary Compensation Table
The following table summarizes the total compensation paid to or earned by each of the Named Executive Officers for the fiscal years ended September 30, 2020, 2019,2023, 2022, and 2018,2021, except where otherwise noted. We have entered into employment agreements with each of the Named Executive Officers, which are described in detail in the “Employment Agreements and Termination Benefits” section of Part I above.
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
Name And Principal
Position
(As Of September 30, 2020)
| | Year | | | Salary
$ (1)
| | | Bonus
$
| | | Stock
Awards
$ (2)
| | | Option
Awards
$ (3)
| | | Non-Equity
Incentive Plan
Compensation
$ (4)
| | | Change In
Pension Value
And
Nonqualified Deferred Compensation Earnings
$
| | | All Other Compensation
$ (5)
| | | Total
$
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Joe A. Raver
President and Chief
Executive Officer
| | | 2020
2019
2018
| | | $
$
$
| 723,197
844,178
809,685
| | | $
$
$
| –
–
–
| | | $
$
$
| 2,417,254
2,233,248
1,999,942
| | | $
$
$
| 1,199,999
1,116,640
999,999
| | | $
$
$
| 663,800
1,250,897
1,420,254
| | | $
$
$
| –
–
–
| | | $
$
$
| 47,779
17,765
100,616
| | | $
$
$
| 5,052,029
5,462,728
5,330,496
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Kristina A. Cerniglia
Senior Vice President,
Chief Financial
Officer, and
Integration Leader
| | | 2020
2019
2018
| | | $
$
$
| 538,395
535,346
521,695
| | | $
$
$
| –
–
–
| | | $
$
$
| 637,867
549,946
499,951
| | | $
$
$
| 316,663
274,991
249,994
| | | $
$
$
| 370,000
567,904
655,000
| | | $
$
$
| –
–
–
| | | $
$
$
| 64,275
78,065
56,742
| | | $
$
$
| 1,927,200
2,006,252
1,983,382
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Kimberly K. Ryan
Senior Vice President
and President of
Coperion
| | | 2020
2019
2018
| | | $
$
$
| 501,496
498,644
485,892
| | | $
$
$
| –
–
–
| | | $
$
$
| 570,696
466,613
433,287
| | | $
$
$
| 283,329
233,327
216,661
| | | $
$
$
| 368,600
550,569
570,600
| | | $
$
$
| –
–
–
| | | $
$
$
| 465,540
2,023,261
1,731,089
| | | $
$
$
| 2,189,661
3,772,414
3,437,529
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ling An-Heid (6)
Senior Vice President
and President of
Mold-Masters
|
|
| 2020
2019
2018
| | | | 433,805
N/A
N/A
| | | $
$
$
| 435,129
N/A
N/A
| | | $
$
$
| 1,486,774
N/A
N/A
| | | $
$
$
| 241,660
N/A
N/A
| | | $
$
$
| 159,700
N/A
N/A
| | | $
$
$
| –
N/A
N/A
| | | $
$
$
| 12,202
N/A
N/A
| | | $
$
$
| 2,769,270
N/A
N/A
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Christopher H. Trainor
Senior Vice President
and President of
Batesville
| | | 2020
2019
2018
| | | $
$
$
| 450,895
447,834
434,746
| | | $
$
$
| –
–
–
| | | $
$
$
| 402,833
399,972
399,924
| | | $
$
$
| 199,998
199,991
200,000
| | | $
$
$
| 539,400
252,975
264,200
| | | $
$
$
| –
–
–
| | | $
$
$
| 58,186
58,665
44,153
| | | $
$
$
| 1,651,312
1,359,437
1,343,023
| |
(1) | The amounts indicated represent the dollar value of base salary earned during fiscal years 2020, 2019, and 2018, as applicable.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
Name And Principal Position (As of September 30, 2023) | | | | Salary | | Bonus | | Stock Awards | | Option Awards | | Non-Equity Incentive Plan Compensation | | Change In Pension Value And Nonqualified Deferred Compensation Earnings | | All Other Compensation | | Total |
| | | | | | | | | | | | | | | | | |
| Year | | $ (1) | | $ | | $ (2) | | $ | | $ (3) | | $ | | $ (4) | | $ |
Kimberly K. Ryan President and Chief Executive Officer | | 2023 | | $ | 917,808 | | | $ | — | | | $ | 5,100,067 | | | $ | — | | | $ | 416,250 | | | $ | — | | | $ | 134,755 | | | $ | 6,568,880 | |
| 2022 | | $ | 786,356 | | | $ | — | | | $ | 3,220,167 | | | $ | — | | | $ | 1,044,844 | | | $ | — | | | $ | 169,691 | | | $ | 5,221,058 | |
| 2021 | | $ | 566,913 | | | $ | — | | | $ | 1,034,272 | | | $ | — | | | $ | 672,400 | | | $ | — | | | $ | 343,945 | | | $ | 2,617,530 | |
| | | | | | | | | | | | | | | | | | |
Robert M. VanHimbergen (5) Senior Vice President and Chief Financial Officer | | 2023 | | $ | 525,986 | | | $ | — | | | $ | 1,453,713 | | | $ | — | | | $ | 163,487 | | | $ | — | | | $ | 59,838 | | | $ | 2,203,024 | |
| 2022 | | $ | 273,973 | | | $ | — | | | $ | 4,034,836 | | | $ | — | | | $ | 254,847 | | | $ | — | | | $ | 44,755 | | | $ | 4,608,411 | |
| 2021 | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A |
| | | | | | | | | | | | | |
| | | |
|
Ulrich Bartel (5) Senior Vice President and President, Coperion and Advanced Process Solutions | | 2023 | | $ | 455,218 | | | $ | — | | | $ | 937,862 | | | $ | — | | | $ | 142,607 | | | $ | — | | | $ | 19,883 | | | $ | 1,555,570 | |
| 2022 | | $ N/A | | $ N/A | | $ N/A | | $ | — | | | $ N/A | | $ | — | | | $ N/A | | $ N/A |
| 2021 | | $ N/A | | $ N/A | | $ N/A | | $ | — | | | $ N/A | | $ | — | | | $ N/A | | $ N/A |
| | | | | | | | | | | | | |
| | | |
|
Nicholas R. Farrell (5) Senior Vice President, General Counsel and Secretary | | 2023 | | $ | 534,368 | | | $ | — | | | $ | 761,979 | | | $ | — | | | $ | 177,133 | | | $ | — | | | $ | 69,517 | | | $ | 1,542,997 | |
| 2022 | | $ | 511,096 | | | $ | — | | | $ | 2,443,902 | | | $ | — | | | $ | 472,915 | | | $ | — | | | $ | 46,308 | | | $ | 3,474,221 | |
| 2021 | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A | | $ N/A |
| | | | | | | | | | | | | | | | | | |
J. Michael Whitted Senior Vice President, Strategy and Corporate Development | | 2023 | | $ | 473,519 | | | $ | — | | | $ | 879,235 | | | $ | — | | | $ | 168,143 | | | $ | — | | | $ | 65,733 | | | $ | 1,586,630 | |
| 2022 | | $ | 449,658 | | | $ | — | | | $ | 751,282 | | | $ | — | | | $ | 445,786 | | | $ | — | | | $ | 54,119 | | | $ | 1,700,845 | |
| 2021 | | $ | 435,963 | | | $ | — | | | $ | 2,862,049 | | | $ | — | | | $ | 539,600 | | | $ | — | | | $ | 53,623 | | | $ | 3,891,235 | |
(1)The amounts indicated represent the dollar value of base salary earned during fiscal years 2023, 2022, and 2021, as applicable. Named Executive Officers who worked less than thefull fiscal year, including Mr. VanHimbergen in 2022, were paid a pro rata salary reflecting days worked during the year. The amounts indicated for Ms. Ryan reflect her transition to President and CEO during fiscal 2022 and the accompanying changes in compensation.
(2)The amounts indicated represent the grant date fair value related to awards of restricted stock units granted during fiscal years 2023, 2022, and 2021, computed in accordance with stock-based accounting rules (FASB ASC Topic 718). The determination of this value is based on the methodology set forth in Note 11 to our audited financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 15, 2023. Awards that are performance-based are valued for purposes of this table above based on the targeted 100 percent performance achievement level. The maximum award amounts when the grants were made, at the highest possible performance achievement level, were 175 percent of the values shown in the table for grants made in fiscal years 2022 and 2021, and 200 percent for grants made in fiscal year 2023. The amounts indicated include one-time awards, including the previously disclosed sign-on and retention awards in 2022 for Mr. VanHimbergen and Mr. Farrell respectively.
(3)The amounts indicated represent cash awards earned for fiscal years 2023, 2022, and 2021, and paid in the first quarter of fiscal 2024, 2023, and 2022, respectively, under our STIC Plan. Named Executive Officers who worked less than the full fiscal year, including Mr. VanHimbergen in 2022, were paid a pro rata cash award for the year.
(4)Includes, where applicable for fiscal 2023 as set forth in the table below this note, (a) Company contributions to the Savings Plan and the SRP, (b) tax reimbursements received, and (c) other personal benefits (which are itemized and further described in the table below this note).
(5)Mr. VanHimbergen, Mr. Bartel, and Mr. Farrell were not Named Executive Officers in 2021, and Mr. Bartel was not a Named Executive Officer in 2022.
(2) | The amounts indicated represent the grant date fair value related to awards of restricted stock units granted during fiscal years 2020, 2019, and 2018, computed in accordance with stock-based accounting rules (FASB ASC Topic 718). The determination of this value is based on the methodology set forth in Note 10 to our audited financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 12, 2020. Awards that are performance-based are valued for purposes of this table above based on the targeted 100 percent performance achievement level. The maximum award amounts when the grants were made, at the highest possible performance achievement level, were 175 percent of the values shown in the table.
|
(3) | The amounts indicated represent the grant date fair value related to stock option awards granted during fiscal years 2020, 2019, and 2018, computed in accordance with stock-based accounting rules (FASB ASC Topic 718). The determination of this value is based on the methodology set forth in Note 10 to our audited financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 12, 2020.
|
(4) | The amounts indicated represent cash awards earned for fiscal years 2020, 2019, and 2018, and paid in the first quarter of fiscal 2021, 2020, and 2019, respectively, under our STIC Plan. See the “Annual Cash Incentive Awards” section of Part I above.
|
(5) | Includes, where applicable for fiscal year 2020 as set forth in the table below this note, (a) Company contributions to the Savings Plan and the SRP, (b) tax gross-ups and reimbursements received, and (c) other personal benefits (which are itemized and further described in the table below this note).
|
Other Compensation – Additional Detail (Fiscal Year 2020)2023)
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | Company Contribution | Tax
Reimbursements | Additional Personal Benefits Aggregating $10,000 Or More | Termination
Payments |
| 401(K) | Supp
401(K) |
| | | | | | | |
| | | | | | | |
| Kimberly K. Ryan | $ | 14,867 | | $ | 119,888 | | $ | – | | * | $ | – | | | $ | – | |
| | | | | | | |
| Robert M. VanHimbergen | $ | 21,946 | | $ | 37,892 | | $ | – | | | $ | – | | | $ | – | |
| | | | | | | |
| Ulrich Bartel | $ | – | | $ | – | | $ | – | | | $ | 18,383 | | ** | $ | – | |
| | | | | | | |
| Nicholas R. Farrell | $ | 16,764 | | $ | 42,091 | | $ | – | | | $ | 10,662 | | *** | $ | – | |
| | | | | | | |
| J. Michael Whitted | $ | 14,500 | | $ | 37,611 | | $ | – | | | $ | 13,623 | | **** | $ | – | |
| | Company Contribution | | |
| | |
| |
| Name | | | 401(K) |
| | Supp 401(K) | | | Tax Reimbursements And Gross-Ups | | | Personal Benefits Aggregating $10,000 Or More | |
| | | | | | | | | | | | | | |
Joe A. Raver | | $ | 20,150 | | | $ | 69,466 | | | $ | (41,837 | )* | | $ | – | |
Kristina A. Cerniglia | | $ | 19,676 | | | $ | 34,591 | | | $ | – | | | $ | 10,008 | ** |
Kimberly K. Ryan | | $ | 19,085 | | | $ | 31,200 | | | $ | 415,255 | * | | $ | – | |
Ling An-Heid | | $ | – | | | $ | – | | | $ | – | | | $ | 12,202 | *** |
Christopher H. Trainor | | $ | 20,211 | | | $ | 25,762 | | | $ | – | | | $ | 12,213 | **** |
*Under the Company’s expatriation policies, the Company paid certain of Ms. Ryan’s foreign taxes that related to her work conducted on behalf of the Company while residing in Germany in 2016-2018, and the applicable portions of LTIC awards granted during that time that were exercised. The Company received a refund from the Internal Revenue Service related to those payments and as a result, during fiscal 2023, Ms. Ryan reimbursed the Company $165,491. This payment from Ms. Ryan is not reflected in the Summary Compensation Table.
| * | Under the Company’s expatriation policies, the Company paid certain of Mr. Raver’s and Ms. Ryan’s foreign taxes. For Mr. Raver, the amount reported in this column reflects reimbursements made by Mr. Raver to the Company for correction of a foreign tax gross-up paid by the Company on Mr. Raver’s behalf during fiscal year 2017 and relates to his work conducted on behalf of the Company while residing in Switzerland. Mr. Raver completed this work and returned to the United States in 2013. For Ms. Ryan, the amount reported in this column reflects foreign tax payments made by the Company on Ms. Ryan’s behalf during fiscal year 2020 and relates to her work conducted on behalf of the Company while residing in Germany.
|
| ** | The personal benefits amount reported for Ms. Cerniglia in the table above is attributed to payments made by the Company in fiscal 2020 for calendar year 2020 financial planning and tax preparation ($2,700), calendar year 2019 financial planning and tax preparation ($3,000), and long-term disability insurance premiums ($4,308)** As a non-U.S. employee, Mr. Bartel does not participate in a defined contribution plan. The personal benefits amount reported for Mr. Bartel in the table above reflects vehicle allowances associated with his employment agreement.
*** The personal amount reported for Mr. Farrell in the table above is attributed to payments made by the Company in fiscal 2023 for calendar year 2023 financial planning and tax preparation ($4,900), executive physical ($2,100), and long-term disability insurance premiums ($3,662).
**** The personal amount reported for Mr. Whitted in the table above is attributed to payments made by the Company in fiscal 2023 for calendar year 2023 financial planning and tax preparation ($5,000) and calendar year 2022 financial planning and tax preparation ($2,762), executive physical ($2,200),and long-term disability insurance premiums ($3,661). |
| *** | The personal benefits amount reported for Ms. An-Heid in the table above is attributed to payments made by the Company in fiscal 2020 for a car allowance ($10,988) and long-term disability insurance premiums ($1,214). The Company provided a car allowance for Ms. An-Heid because of the travel required for her position and given that her car is primarily used for business purposes.
|
| **** | The personal benefits amount reported for Mr. Trainor in the table above is attributed to payments made by the Company in fiscal 2020 for calendar year 2020 financial planning ($3,925), an executive physical ($2,100), transportation and other costs related to Mr. Trainor’s spouse joining him as host of the annual Batesville sales performance trip ($2,308), and long-term disability insurance premiums ($3,880).
|
(6) | Ms. An-Heid was not a Named Executive Officer in 2018 and 2019 or for the first approximately seven weeks of fiscal 2020, becoming one in connection with the acquisition of Milacron. The compensation for Ms. An-Heid set forth in this table includes only compensation paid by the Company (i.e., excluding compensation paid by Milacron in fiscal 2020 prior to its acquisition by the Company). Ms. An-Heid’s base salary earned during fiscal 2020 included $51,651 of pay in lieu of vacation in connection with her joining the Company. Ms. An-Heid’s cash compensation was paid in Canadian dollars (“CAD”). The values throughout this Part III have been converted to U.S. dollars at an average exchange rate for fiscal 2020 of 1.34409 CAD per $1.00 USD based on Bloomberg data.
|
Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2020
2023
The following table summarizes the grants of plan-based awards to each of the Named Executive Officers for the fiscal year ended September 30, 2020.2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Shares Earned Under Equity Incentive Plan Awards (2) | | All Other Stock Awards Number Of Shares Or Units # | | All Other Option Awards Number Of Securities Underlying Options # | | | | | | Grant Date Fair Value Of Stock And Option Awards $ (3) |
| | | | | | | | | Exercise Or Base Price Of Option Awards $/Sh | | Grant Date Closing Market Price $/Sh | |
| Name | | Grant Date | | Threshold $ | | Target $ | | Maximum $ | | Threshold # | | Target # | | Maximum # | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Kimberly K. Ryan | | | | | $ | 1 | | $ | 1,053,798 | | $ | 2,529,115 | | | | | | | | | | | | | | | | |
| | 12/7/2022 | (4) | | | | | | | | 7,024 | | 28,098 | | 56,196 | | | | | | | | | | $ | 1,449,997 | |
| | 12/7/2022 | (5) | | | | | | | | 7,024 | | 28,098 | | 56,196 | | | | | | | | | | $ | 2,200,073 | |
| | 12/7/2022 | (6) | | | | | | | | | | | | | | 28,098 | | | | | | | | $ | 1,449,997 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Robert M. VanHimbergen | | | $ | 1 | | $ | 394,183 | | $ | 946,039 | | | | | | | | | | | | | | | | |
| | 12/7/2022 | (4) | | | | | | | | 2,002 | | 8,009 | | 16,018 | | | | | | | | | | $ | 413,304 | |
| | 3/14/2022 | (5) | | | | | | | | 2,002 | | 8,009 | | 16,018 | | | | | | | | | | $ | 627,105 | |
| | 12/7/2022 | (6) | | | | | | | | | | | | | | 8,009 | | | | | | | | $ | 413,304 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Ulrich Bartel | | | | | $ | 1 | | $ | 349,099 | | $ | 837,838 | | | | | | | | | | | | | | | | |
| | 12/7/2022 | (4) | | | | | | | | 1,291 | | 5,167 | | 10,334 | | | | | | | | | | $ | 266,643 | |
| | 12/7/2022 | (5) | | | | | | | | 1,291 | | 5,167 | | 10,334 | | | | | | | | | | $ | 404,576 | |
| | 12/7/2022 | (6) | | | | | | | | | | | | | | 5,167 | | | | | | | | $ | 266,643 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Nicholas R. Farrell | | | | | $ | 1 | | $ | 373,698 | | $ | 896,875 | | | | | | | | | | | | | | | | |
| | 12/7/2022 | (4) | | | | | | | | 1,049 | | 4,198 | | 8,396 | | | | | | | | | | $ | 216,638 | |
| | 12/7/2022 | (5) | | | | | | | | 1,049 | | 4,198 | | 8,396 | | | | | | | | | | $ | 328,703 | |
| | 12/7/2022 | (6) | | | | | | | | | | | | | | 4,198 | | | | | | | | $ | 216,638 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| J. Michael Whitted | | | | | $ | 1 | | | $ | 354,733 | | | $ | 851,359 | | | | | | | | | | | | | | | | | |
| | 12/7/2022 | (4) | | | | | | | | 1,211 | | 4,844 | | 9,688 | | | | | | | | | | $ | 249,975 | |
| | 12/7/2022 | (5) | | | | | | | | 1,211 | | 4,844 | | 9,688 | | | | | | | | | | $ | 379,285 | |
| | 12/7/2022 | (6) | | | | | | | | | | | | | | 4,844 | | | | | | | | $ | 249,975 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
(a)
| | (b)
| | (c)
| | | (d)
| | | (e)
| | | (f)
| | | (g)
| | | (h)
| | | (i)
| | | (j)
| | | (k)
| | | (l)
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Shares Earned Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: | | | All Other Option | | |
|
| | | Grant Date Fair Value Of | |
Awards: Number Of | Exercise Or | Grant Date |
| Name | | Grant Date | | Threshold $ | | | Target $ | | | Maximum $ |
|
| Threshold # | | | Target # | | | Maximum # | | | Number Of Shares Or Units # | | | Securities Underlying Options # (3) | | | Base Price Of Option Awards $/Sh | Closing Market Price $/Sh | | | Stock And Option | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Joe A. Raver | | | | $ | 99,613 | | | $ | 796,908 | | | $ | 1,912,579 | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2/12/2020 (5) | | | | | | | | | | | | | | | 9,392 | | | | 37,570 | | | | 65,747 | | | | | | | | | | | | | $ | 1,103,431 | |
| | 12/5/2019 (6) | | | | | | | | | | | | | | | 9,392 | | | | 37,570 | | | | 65,747 | | | | | | | | | | | | | $ | 1,313,823 | |
| | | 12/5/2019 (7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 180,968 | | | $ | 31.94 | | | | $ | 1,199,999 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Kristina A. Cerniglia | | | | $ | 50,475 | | | $ | 403,797 | | | $ | 969,112 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2/12/2020 (5) | | | | | | | | | | | | | | | 2,478 | | | | 9,914 | | | | 17,349 | | | | | | | | | | | | | | | $ | 291,174 | |
| | 12/5/2019 (6) | | | | | | | | | | | | | | | 2,478 | | | | 9,914 | | | | 17,349 | | | | | | | | | | | | | | | $ | 346,693 | |
| | 12/5/2019 (7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 47,755 | | | $ | 31.94 | | | | $ | 316,663 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Kimberly K. Ryan | | | | $ | 47,015 | | | $ | 376,122 | | | $ | 902,692 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2/12/2020 (5) | | | | | | | | | | | | | | | 2,217 | | | | 8,870 | | | | 15,522 | | | | | | | | | | | | | | | $ | 260,512 | |
| | 12/5/2019 (6) | | | | | | | | | | | | | | | 2,217 | | | | 8,870 | | | | 15,522 | | | | | | | | | | | | | | | $ | 310,184 | |
| | 12/5/2019 (7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 42,728 | | | $ | 31.94 | | | | $ | 283,329 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ling An-Heid | | | | $ | 40,669 | | | $ | 325,354 | | | $ | 780,849 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2/12/2020 (5) | | | | | | | | | | | | | | | 1,891 | | | | 7,566 | | | | 13,240 | | | | | | | | | | | | | | | $ | 222,213 | |
| | 12/5/2019 (6) | | | | | | | | | | | | | | | 1,891 | | | | 7,566 | | | | 13,240 | | | | | | | | | | | | | | | $ | 264,583 | |
| | 12/5/2019 (7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 36,444 | | | $ | 31.94 | | | | $ | 241,660 | |
| | 12/5/2019 (8) | | | | | | | | | | | | | | | | | | | | | | | | | | | 31,308 | | | | | | | | | | | | $ | 999,978 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Christopher H. Trainor | | | | $ | 42,271 | | | $ | 338,172 | | | $ | 710,160 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 12/5/2019 (5) | | | | | | | | | | | | | | | 1,565 | | | | 6,261 | | | | 10,956 | | | | | | | | | | | | | | | | $ | 183,886 | |
| | 12/5/2019 (6) | | | | | | | | | | | | | | | 1,565 | | | | 6,261 | | | | 10,956 | | | | | | | | | | | | | | | | $ | 218,947 | |
| | 12/5/2019 (7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,161 | | | $ | 31.94 | | | | $ | 199,998 |
|
(1) | The amounts indicated represent potential cash awards that could have been paid – at the threshold, target (100 percent), and maximum levels – under the STIC Plan. See the “Annual Cash Incentive Awards” section of Part I above for a discussion of this plan. See the Non-Equity Incentive Plan Compensation column of the “Summary Compensation Table” above in this Part III for the actual amounts earned, which were paid in December 2020. Mr. Raver’s target STIC award is calculated using his base salary paid taking into effect the COVID-19 related voluntary reduction.
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(2) | The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the financial performance of the Company during the three-fiscal-year measurement period 2020-2022. During that period, shares represented by the RSUs that are issued based on the shareholder value formula (see footnote 5 below) accrue dividend equivalent amounts as dividends are declared on the Company’s common stock. These equivalent amounts are deemed to be reinvested in additional shares of Company common stock and then ultimately paid in the form of additional shares on the distribution date of the underlying award, in proportion to the number of shares that vest and are distributed in accordance with the award formula. Dividends do not accrue during the measurement period with respect to shares represented by the RSUs that are issued based on the relative TSR formula (see footnote 6 below). The amounts in the table represent the number of shares that could be earned under the awards at the threshold, target (100 percent), and maximum achievement of the applicable performance targets. The vesting schedules for stock awards granted during fiscal year 2020 are disclosed by individual Named Executive Officer in the footnotes to the “Outstanding Equity Awards at September 30, 2020” table below.
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(2)The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the financial performance of the Company during the three-fiscal-year measurement period 2023–2025. During that period, shares represented by the restricted stock units that are issued based on the shareholder value formula (see footnote 4 below) accrue dividend equivalent amounts as dividends are declared on the Company’s common stock. These equivalent amounts are deemed to be reinvested in additional shares of Company common stock and then ultimately paid in the form of additional shares on the distribution date of the underlying award, in proportion to the number of shares that vest and are distributed in accordance with the award formula. Dividends do not accrue during the measurement period with respect to shares represented by the restricted stock units that are
issued based on the relative TSR formula (see footnote 5 below). The amounts in the table represent the number of shares that could be earned under the awards at the threshold, target (100 percent), and maximum achievement of the applicable performance targets. The vesting schedules for stock awards granted during fiscal 2023 are disclosed by individual Named Executive Officer in the footnotes to the “Outstanding Equity Awards at September 30, 2023” table below.(3)The valuations of performance-based restricted stock units are grant date fair values computed in accordance with stock-based accounting rules (FASB ASC Topic 718) and are based on the methodology set forth in Note 11 to our financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 15, 2023. The amounts used in column (l) for performance-based equity awards are based on an assumed 100 percent achievement of the applicable performance targets.
(3) | Options expire ten years from date of grant and will vest in equal increments on the first three anniversaries of the option grant date.
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(4)The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the increase in shareholder value of the Company during the three-fiscal-year measurement period 2023-2025. See the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Shareholder Value RSUs.”
(4) | The valuations of stock options and RSUs are grant date fair values computed in accordance with stock-based accounting rules (FASB ASC Topic 718) and are based on the methodology set forth in Note 10 to our financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 12, 2020. The amounts used in column (l) for performance-based equity awards are based on an assumed 100 percent achievement of the applicable performance targets.
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(5)The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the percentile ranking of the Company’s TSR compared to the Index Companies during the three-fiscal-year measurement period 2023-2025. See the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Relative TSR RSUs.”
(5) | The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the increase in shareholder value of the Company during the three-fiscal-year measurement period 2020-2022. See the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Shareholder Value RSUs.” Ordinarily, these performance-based RSU awards are granted in December of each year; however, in fiscal 2020, the Company required additional time to set the corresponding targets for such awards given that the acquisition of Milacron closed only weeks before the time the awards otherwise would have been approved and granted. As a result, these awards were not granted until the next regularly scheduled Compensation Committee meeting, in February 2020, after the Company had completed its analysis and target-setting process that included adjustments for the Milacron acquisition.
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(6)The number of shares indicated represents a grant of time-based restricted stock units that vest 33-1/3 percent per year over a three-year period.
(6) | The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the percentile ranking of the Company’s TSR compared to the Index Companies during the three-fiscal-year measurement period 2020-2022. See the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Relative TSR RSUs.”
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(7) | The number of shares indicated represents a grant of non-qualified stock options which vest 33‑1/3 percent per year over a three-year period.
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(8) | See footnote 11 to the table below entitled “Outstanding Equity Awards at September 30, 2020.”
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Outstanding Equity Awards at September 30, 2020
2023
The following table summarizes the number and terms of awards of stock options and restricted stock units outstanding for each of the Named Executive Officers as of September 30, 2020.2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards (1) |
| | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | | (d) | | (e) | | (f) | | (g) | | | (h) | | (i) | | | (j) |
| | | | | | | | | | | | | | | | | | | | | |
| Name | | Number Of Securities Underlying Unexercised Options # Exercisable | | Number Of Securities Underlying Unexercised Options # Unexercisable | | Equity Incentive Plan Awards: Number Of Securities Underlying Unexercised Unearned Options # | | Option Exercise Price $ | | Option Expiration Date | | Number Of Shares Or Units Of Stock That Have Not Vested # | | Market Value Of Shares Or Units Of Stock That Have Not Vested $ (2) | | Equity Incentive Plan Awards: Number Of Unearned Shares, Units Or Other Rights That Have Not Vested # | | Equity Incentive Plan Awards: Market Or Payout Value Of Unearned Shares, Units Or Other Rights That Have Not Vested $ (2) |
| | | | | | | | | | | | | | | | | | | | | |
| Kimberly K. Ryan | | 26,396 | | | | | | | $ | 31.11 | | 12/2/2025 | | | | | | | | | | |
| | 24,605 | | | | | | | $ | 36.08 | | 12/7/2026 | | | | | | | | | | |
| | 19,519 | | | | | | | $ | 45.78 | | 12/7/2027 | | | | | | | | | | |
| | 22,972 | | | | | | | $ | 41.32 | | 12/6/2028 | | | | | | | 51,164 | (3)(5) | | $ | 2,164,749 |
| | 42,728 | | | | | | | $ | 31.94 | | 12/6/2029 | | 46,578 | (6) | | $ | 1,970,715 | | 49,752 | (4)(5) | | $ | 2,105,007 |
| | | | | | | | | | | | | | | | | | | | | |
| Robert M. VanHimbergen | | | | | | | | | | | | | | | | | | 16,650 | (3)(7) | | $ | 704,462 |
| | | | | | | | | | | | | 58,002 | (8) | | $ | 2,454,065 | | 16,205 | (4)(7) | | $ | 685,634 |
| | | | | | | | | | | | | | | | | | | | | |
| Ulrich Bartel | | 5,664 | | | | | | | $ | 31.11 | | | 12/2/2025 | | | | | | | | | | |
| | 5,340 | | | | | | | $ | 36.08 | | | 12/7/2026 | | | | | | | | | | |
| | 4,427 | | | | | | | $ | 45.78 | | | 12/7/2027 | | | | | | | | 9,390 | (3)(9) | | $ | 397,291 |
| | 4,655 | | | | | | | $ | 41.32 | | | 12/6/2028 | | | 8,946 | (10) | | $ | 378,505 | | | 9,136 | (4)(9) | | $ | 386,544 |
| | | | | | | | | | | | | | | | | | | | | |
| Nicholas R. Farrell | | 8,542 | | | | | | | $ | 31.11 | | 12/2/2025 | | | | | | | | | | |
| | 9,953 | | | | | | | $ | 36.08 | | 12/7/2026 | | | | | | | | | | |
| | 9,009 | | | | | | | $ | 45.78 | | 12/7/2027 | | | | | | | | | | |
| | 11,486 | | | | | | | $ | 41.32 | | 12/6/2028 | | | | | | | 8,780 | (3)(11) | | $ | 371,482 |
| | 22,621 | | | | | | | $ | 31.94 | | 12/6/2029 | | 39,143 | (12) | | $ | 1,656,140 | | 8,528 | (4)(11) | | $ | 360,820 |
| | | | | | | | | | | | | | | | | | | | | | |
| J. Michael Whitted | | 127,239 | | | | | | | $ | 46.38 | | 6/18/2028 | | | | | | | | | | | |
| | 22,972 | | | | | | | $ | 41.32 | | 12/6/2028 | | | | | | | | 10,187 | (3)(13) | | $ | 431,012 |
| | 11,729 | | | | | | | $ | 31.94 | | 12/6/2029 | | | 28,272 | (14) | | $ | 1,196,188 | | 9,896 | (4)(13) | | $ | 418,700 |
| | | Option Awards | | Stock Awards (1) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | | (c) | | | (d) | | (e) | | (f) | | (g) | | | (h) | | | (i) | | | (j) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Name |
| Number Of Securities Underlying Unexercised Options # Exercisable | | | Number Of Securities Underlying Unexercised Options # Unexercisable | | Equity Incentive Plan Awards: Number Of Securities Underlying Unexercised Unearned Options
# |
| Option Exercise Price $ | | Option Expiration Date | | Number Of Shares Or Units Of Stock That Have Not Vested # | | Market Value Of Shares Or Units Of Stock That Have Not Vested $ (2) | | | Equity Incentive Plan Awards: Number Of Unearned Shares, Units Or Other Rights That Have Not Vested # | | Equity Incentive Plan Awards: Market Or Payout Value Of Unearned Shares, Units Or Other Rights That Have Not Vested $ (2) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Joe A. Raver | | | 30,592 | | | | | | | | $ | 22.26 | | 12/6/2021 | | | | | | | | | | | | |
| | | | 34,806 | | | | | | | | $ | 20.675 | | 12/4/2022 | | | | | | | | | | | | |
| | | | 45,267 | | | | | | | | $ | 28.155 | | 12/3/2023 | | | | | | | | | | | | |
| | | | 46,220 | | | | | | | | $ | 32.655 | | 12/3/2024 | | | | | | | | | | | | |
| | | | 81,154 | | | | | | | | $ | 31.11 | | 12/2/2025 | | | | | | | | | | | | |
| | | | 95,556 | | | | | | | | $ | 36.08 | | 12/7/2026 | | | | | | | | | | | | |
| | | | 60,061 | | | | 30,029 | (3) | | | | $ | 45.78 | | 12/7/2027 | | | | | | | | | | | | |
| | | | 36,647 | | | | 73,291 | (4) | | | | $ | 41.32 | | 12/6/2028 | | | | | | | | | 67,128 | (6)(8) | | $ | 1,903,750 | |
| | | | | | | | 180,968 | (5) | | | | $ | 31.94 | | 12/6/2029 | | | | | | | | | 64,064 | (7)(8) | | $ | 1,816,855 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Kristina A. Cerniglia | | | 17,891 | | | | | | | | | $ | 32.655 | | 12/3/2024 | | | | | | | | | | | | | | |
| | | | 25,627 | | | | | | | | | $ | 31.11 | | 12/2/2025 | | | | | | | | | | | | | | |
| | | | 27,870 | | | | | | | | | $ | 36.08 | | 12/7/2026 | | | | | | | | | | | | | | |
| | | | 15,015 | | | | 7,507 | (3) | | | | $ | 45.78 | | 12/7/2027 | | | | | | | | | | | | | | |
| | | | 9,025 | | | | 18,049 | (4) | | | | $ | 41.32 | | 12/6/2028 | | | | | | | | | 17,206 | (6)(9) | | $ | 487,962 | |
| | | | | | | | 47,755 | (5) | | | | $ | 31.94 | | 12/6/2029 | | | | | | | | | 16,438 | (7)(9) | | $ | 466,182 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Kimberly K. Ryan | | | 22,202 | | | | | | | | | $ | 28.155 | | 12/3/2023 | | | | | | | | | | | | | | |
| | | | 18,428 | | | | | | | | | $ | 32.655 | | 12/3/2024 | | | | | | | | | | | | | | |
| | | | 26,396 | | | | | | | | | $ | 31.11 | | 12/2/2025 | | | | | | | | | | | | | | |
| | | | 24,605 | | | | | | | | | $ | 36.08 | | 12/7/2026 | | | | | | | | | | | | | | |
| | | | 13,013 | | | | 6,506 | (3) | | | | $ | 45.78 | | 12/7/2027 | | | | | | | | | | | | | | |
| | | | 7,658 | | | | 15,314 | (4) | | | | $ | 41.32 | | 12/6/2028 | | | | | | | | | 15,069 | (6)(10) | | $ | 427,357 | |
| | | | | | | | 42,728 | (5) | | | | $ | 31.94 | | 12/6/2029 | | | | | | | | | 14,406 | (7)(10) | | $ | 408,554 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ling An-Heid | | | | | | | 36,444 | (5) | | | | $ | 31.94 | | 12/6/2029 | | | 32,347 | (11) | | $ | 917,361 | | | | 7,767 | (6)(12) | | $ | 220,272 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 7,566 | (7)(12) | | $ | 214,572 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Christopher H. Trainor | | | 4,993 | | | | | | | | | $ | 28.155 | | 12/3/2023 | | | | | | | | | | | | | | | | |
| | | | 7,454 | | | | | | | | | $ | 32.655 | | 12/3/2024 | | | | | | | | | | | | | | | | |
| | | | 12,813 | | | | | | | | | $ | 31.11 | | 12/2/2025 | | | | | | | | | | | | | | | | |
| | | | 20,903 | | | | | | | | | $ | 36.08 | | 12/7/2026 | | | | | | | | | | | | | | | | |
| | | | 12,013 | | | | 6,005 | (3) | | | | $ | 45.78 | | 12/7/2027 | | | | | | | | | | | | | | | | |
| | | | 6,564 | | | | 13,126 | (4) | | | | $ | 41.32 | | 12/6/2028 | | | | | | | | | | | 11,537 | (6)(13) | | $ | 327,189 | |
| | | | | | | | 30,161 | (5) | | | | $ | 31.94 | | 12/6/2029 | | | | | | | | | | | 11,006 | (7)(13) | | $ | 312,130 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)Figures include accrued dividends where applicable.
(2)Value is based on the closing price of Hillenbrand common stock of $42.31 on September 30, 2023, as reported on the New York Stock Exchange.
(3)Such performance-based RSU awards are subject to vesting conditions based on the increase in shareholder value of the Company during a three-fiscal-year measurement period. For additional detail regarding these awards, including information regarding how dividends accrue, see the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Shareholder Value RSUs.” The amounts in the table represent the award amounts at 100 percent achievement of the targeted increase in shareholder value associated with the award, plus accrued dividends where applicable. Generally, award vesting is contingent upon continued employment. See the section titled “Employment Agreements and Termination Benefits” in Part I above for additional information regarding vesting.
(4)Such performance-based RSU awards are subject to vesting conditions based on the percentile ranking of the Company’s TSR compared to the Index Companies during a three-fiscal-year
measurement period. Whereas dividends accrue during the measurement period with respect to shares underlying RSU awards based on the increase in shareholder value (see above), dividends do not accrue during the measurement period with respect to shares underlying RSU awards based on relative TSR. For additional detail regarding these awards, see the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Relative TSR RSUs.” The amounts in the table represent the award amounts at the targeted percentile ranking of the Company’s relative TSR. Generally, award vesting is contingent upon continued employment. See the section titled “Employment Agreements and Termination Benefits” in Part I above for additional information regarding vesting.
(5)Ms. Ryan was awarded the following performance-based RSUs (excluding accrued dividends):
(1) | Figures below include accrued dividends where applicable.
| | | | | | | | | | | | | |
(2) | Value is based on the closing price of Hillenbrand common stock of $28.36 on September 30, 2020, as reported on the New York Stock Exchange.
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(3) | The options were granted on December 7, 2017. The options fully vested on December 7, 2020.
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(4) | The options were granted on December 6, 2018. One-third of the options vested on each of December 6, 2019 and December 6, 2020. The remaining one-third will vest on December 6, 2021.
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(5) | The options were granted on December 5, 2019. One-third of the options vested on December 5, 2020. The remaining two-thirds will vest in two equal portions on each of December 5, 2021 and December 5, 2022.
|
(6) | Such performance-based RSU awards are subject to vesting conditions based on the increase in shareholder value of the Company during a three-fiscal-year measurement period. For additional detail regarding these awards, including information regarding how dividends accrue, see the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Shareholder Value RSUs.” The amounts in the table represent the award amounts at 100 percent achievement of the targeted increase in shareholder value associated with the award, plus accrued dividends where applicable. Generally, award vesting is contingent upon continued employment. See the section titled “Employment Agreements and Termination Benefits” in Part I above for additional information regarding vesting.
|
(7) | Such performance-based RSU awards are subject to vesting conditions based on the percentile ranking of the Company’s TSR compared to its peers (either the Company’s compensation peer group or the Index Companies, as applicable) during a three-fiscal-year measurement period. Whereas dividends accrue during the measurement period with respect to shares underlying RSU awards based on the increase in shareholder value (see footnote 6 above), dividends do not accrue during the measurement period with respect to shares underlying RSU awards based on relative TSR. For additional detail regarding these awards, see the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Relative TSR RSUs.” The amounts in the table represent the award amounts at the targeted percentile ranking of the Company’s relative TSR. Generally, award vesting is contingent upon continued employment. See the section titled “Employment Agreements and Termination Benefits” in Part I above for additional information regarding vesting
|
(8) | Mr. Raver was awarded the following performance-based RSUs (excluding accrued dividends):
|
| Award Date | | Restricted Stock Units Awarded | | Vesting Schedule |
| | | | |
December 6, 20182, 2021 | | 27,02421,654 | | Award will vest on September 30, 2021,2024, assuming 100% achievement of the targeted increase in shareholder value. value metric. |
December 6, 2018 2, 2021 | | 26,49421,654 | | Award will vest on September 30, 2021,2024, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
December 5, 2019 7, 2022 | | 37,57028,098 | | Award will vest on September 30, 2025, assuming 100% achievement of the targeted shareholder value metric. |
| December 7, 2022 | | 28,098 | | Award will vest on September 30, 2025, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
(6)Ms. Ryan was awarded the following time-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
February 12, 2020
| | 37,570 | | Award will vest on September 30, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
(9) | Ms. Cerniglia was awarded the following performance-based RSUs (excluding accrued dividends):
|
| Award Date | | Restricted Stock Units Awarded | | Vesting Schedule |
| | | | |
December 6, 20183, 2020 | | 8,257 | | Award vested one-third on December 3, 2021, one-third on December 3, 2022, and one-third on December 3, 2023. |
| December 2, 2021 | | 21,654 | | Award vested one-third on December 2, 2022 and one-third on December 2, 2023. The remaining units will vest on December 2, 2024. |
| December 7, 2022 | | 28,098 | | Award vested one-third on December 7, 2023. The remaining units will vest one-third on December 7, 2024 and one-third on December 7, 2025. |
(7)Mr. VanHimbergen was awarded the following performance-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
| Award Date | | Restricted Stock Units Awarded | | 6,655Vesting Schedule |
| | | | |
| March 14, 2022 | | 8,196 | | Award will vest on September 30, 2021,2024, assuming 100% achievement of the targeted increase in shareholder value.value metric. |
December 6, 2018
March 14, 2022 | | 6,5248,196 | | Award will vest on September 30, 2021,2024, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
December 5, 2019 7, 2022 | | 9,9148,009 | | Award will vest on September 30, 2025, assuming 100% achievement of the targeted shareholder value metric. |
| December 7, 2022 | | 8,009 | | Award will vest on September 30, 2025, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
(8)Mr. VanHimbergen was awarded the following time-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
February 12, 2020
| | 9,914 | | Award will vest on September 20, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
(10) | Ms. Ryan was awarded the following performance-based RSUs (excluding accrued dividends):
|
| Award Date | | Restricted Stock Units Awarded | | Vesting Schedule |
| | | | |
| March 14, 2022 | | 63,971 | | Award vested one-third on March 14, 2023. The remaining units will vest one-third on March 14, 2024, and one-third on March 14, 2025. |
| March 14, 2022 | | 8,196 | | Award vested one-third on December 6, 20182, 2022 and one-third on December 2, 2023. The remaining units will vest on December 2, 2024. |
| December 7, 2022 | | 8,009 | | Award vested one-third on December 7, 2023. The remaining units will vest one-third on December 7, 2024 and one-third on December 7, 2025. |
(9)Mr. Bartel was awarded the following performance-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
| Award Date | | Restricted Stock Units Awarded | | 5,646Vesting Schedule |
| | | | |
| December 2, 2021 | | 3,969 | | Award will vest on September 30, 2021,2024, assuming 100% achievement of the targeted increase in shareholder value.value metric. |
December 6, 2018 2, 2021 | | 5,5363,969 | | Award will vest on September 30, 2021,2024, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
December 5, 2019 7, 2022 | | 8,8705,167 | | Award will vest on September 30, 2025, assuming 100% achievement of the targeted shareholder value metric. |
| December 7, 2022 | | 5,167 | | Award will vest on September 30, 2025, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
(10)Mr. Bartel was awarded the following time-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
February 12, 2020
| | 8,870 | | Award will vest on September 30, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
(11) | Ms. An-Heid was awarded the following time-based RSUs as part of an initial, non-recurring sign-on award in connection with her joining the Company as part of the Milacron acquisition (excluding accrued dividends):
|
| Award Date | | Restricted Stock Units Awarded | | Vesting Schedule |
| | | | |
December 5, 20193, 2020 | | 31,3082,639 | | Award vested one-third on December 3, 2021, one-third on December 3, 2022, and one-third on December 3, 2023. |
| December 2, 2021 | | 3,969 | | Award vested one-third on December 2, 2022 and one-third on December 2, 2023. The remaining units will vest 50% on each of December 5, 20212, 2024. |
| December 7, 2022 | | 5,167 | | Award vested one-third on December 7, 2023. The remaining units will vest one-third on December 7, 2024 and one-third on December 5, 2022.7, 2025. |
Ms. An-Heid was a key executive at Milacron prior to the acquisition, and the Compensation Committee determined to make this award as part of her retention and with the aim of facilitating a successful integration of Milacron.
(11)Mr. Farrell was awarded the following performance-based RSUs (excluding accrued dividends):(12) | Ms. An-Heid was awarded the following performance-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | |
| Award Date | | Restricted Stock Units Awarded | | Vesting Schedule |
| | | | |
December 5, 20192, 2021 | | 7,5664,330 | | Award will vest on September 30, 2022,2024, assuming 100% achievement of the targeted shareholder value metric. |
| December 2, 2021 | | 4,330 | | Award will vest on September 30, 2024, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
February 12, 2020
December 7, 2022 | | 7,5664,198 | | Award will vest on September 30, 2022,2025, assuming 100% achievement of the targeted increase in shareholder value. |
(13) | Mr. Trainor was awarded the following performance-based RSUs (excluding accrued dividends):
|
Award Date | | Restricted Stock
Units Awarded
| | Vesting Schedulevalue metric. |
December 6, 2018 7, 2022 | | 4,8404,198 | | Award will vest on September 30, 2021, assuming 100% achievement of the targeted increase in shareholder value. |
December 6, 2018
| | 4,745 | | Award will vest on September 30, 2021,2025, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR.
|
(12)Mr. Farrell was awarded the following time-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
| Award Date | | December 5, 2019Restricted Stock
Units Awarded | | 6,261Vesting Schedule |
| | | | |
| December 3, 2020 | | 4,345 | | Award vested one-third on December 3, 2021, one-third on December 3, 2022, and one-third on December 3, 2023. |
| December 2, 2021 | | 4,330 | | Award vested one-third on December 2, 2022 and one-third on December 2, 2023. The remaining units will vest on December 2, 2024. |
| December 7, 2022 | | 4,198 | | Award vested one-third on December 7, 2023. The remaining units will vest one-third on December 7, 2024 and one-third on December 7, 2025. |
| June 29, 2022 | | 44,362 | | Award vested one-third on June 29, 2023. The remaining units will vest one-third on June 29, 2024 and one-third on June 29, 2025. |
(13)Mr. Whitted was awarded the following performance-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
| Award Date | | Restricted Stock Units Awarded | | Vesting Schedule |
| | | | |
| December 2, 2021 | | 5,052 | | Award will vest on September 30, 2022,2024, assuming 100% achievement of the targeted shareholder value metric. |
| December 2, 2021 | | 5,052 | | Award will vest on September 30, 2024, assuming 100% achievement of the targeted percentile ranking of the Company’sCompany's relative TSR. |
February 12, 2020
December 7, 2022 | | 6,2614,844 | | Award will vest on September 30, 2022,2025, assuming 100% achievement of the targeted increase in shareholder value. value metric. |
| December 7, 2022 | | 4,844 | | Award will vest on September 30, 2025, assuming 100% achievement of the targeted percentile ranking of the Company's relative TSR. |
(14)Mr. Whitted was awarded the following time-based RSUs (excluding accrued dividends):
| | | | | | | | | | | | | | |
| Award Date | | Restricted Stock Units Awarded | | Vesting Schedule |
| | | | |
| December 3, 2020 | | 6,084 | | Award vested one-third on December 3, 2021, one-third on December 3, 2022, and one-third on December 3, 2023. |
| June 18, 2021 | | 50,859 | | Award vested one-third on June 18, 2022 and one-third on June 18, 2023. The remaining units will vest one-third on June 18, 2024. |
| December 2, 2021 | | 5,052 | | Award vested one-third on December 2, 2022 and one-third on December 2, 2023. The remaining units will vest on December 2, 2024. |
| December 7, 2022 | | 4,844 | | Award vested one-third on December 7, 2023. The remaining units will vest one-third on December 7, 2024 and one-third on December 7, 2025. |
Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2020
2023
The following table summarizes the value realized upon vesting of stock awards (including the dividends accrued thereon) during the fiscal year ended September 30, 2020,2023, for the Named Executive Officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number Of Shares Acquired On Exercise # | | Value Realized On Exercise $ | | Number Of Shares Acquired On Vesting # | | Value Realized On Vesting $ |
| | | | | | | | | | |
| Kimberly K. Ryan | | 40,630 | | $ | 813,889 | | 22,671 | (3) | | $ | 907,520 | (1) |
| | | | | | 10,225 | (4) | | $ | 530,678 | (2) |
| | | | | | | | | | |
| Robert M. VanHimbergen | | – | | $ | – | | 24,555 | (4) | | $ | 1,126,138 | (2) |
| | | | | | | | | | |
| Ulrich Bartel | | 8,079 | | $ | 144,365 | | 1,173 | (3) | | $ | 46,955 | (1) |
| | | | | | 3,299 | (4) | | $ | 170,425 | (2) |
| | | | | | | | | | |
| Nicholas R. Farrell | | – | | $ | – | | 11,924 | (3) | | $ | 477,318 | (1) |
| | | | | | 18,058 | (4) | | $ | 921,884 | (2) |
| | | | | | | | | | |
| J. Michael Whitted | | – | | $ | – | | 16,702 | (3) | | $ | 668,572 | (1) |
| | | | | | 21,440 | (4) | | $ | 1,124,571 | (2) |
| | | Option Awards | | | Stock Awards | |
| Name | | Number Of Shares Acquired On Exercise # | | | Value Realized On Exercise $ | | | Number Of Shares Acquired On Vesting # | | | Value Realized On Vesting $ | |
| | | | | | | | | | | | | |
Joe A. Raver | | | – | | | $ | – | | | | 27,247(2 | ) | | $ | 1,037,293(1 | ) |
| | | | – | | | $ | – | | | | 16,228(3 | ) | | $ | 617,800(1 | ) |
| | | | | | | | | | | | | | | | | |
Kristina A. Cerniglia | | | – | | | $ | – | | | | 6,804(2 | ) | | $ | 259,028(1 | ) |
| | | | – | | | $ | – | | | | 4,057(3 | ) | | $ | 154,450(1 | ) |
| | | | | | | | | | | | | | | | | |
Kimberly K. Ryan | | | 31,586 | | | $ | 387,781 | | | | 5,897(2 | ) | | $ | 224,499(1 | ) |
| | | | – | | | $ | – | | | | 3,516(3 | ) | | $ | 133,854(1 | ) |
| | | | | | | | | | | | | | | | | |
Ling An-Heid | | | – | | | $ | – | | | | – | | | $ | – | |
| | | | – | | | $ | – | | | | – | | | $ | – | |
| | | | | | | | | | | | | | | | | |
Christopher H. Trainor | | | – | | | $ | – | | | | 5,440(2 | ) | | $ | 207,101(1 | ) |
| | | | – | | | $ | – | | | | 3,245(3 | ) | | $ | 123,537(1 | ) |
(1)Based upon the mean between the high and low sale prices of Hillenbrand common stock on the New York Stock Exchange on the date the Board of Directors of the Company approved distribution of the underlying awards.
(1) | Based upon the mean between the high and low sale prices of Hillenbrand common stock on the New York Stock Exchange on the date the Board of Directors of the Company approved distribution of the underlying awards.
|
(2)Based upon the mean between the high and low sale prices of Hillenbrand common stock on the New York Stock Exchange on the vesting date.
(2) | These amounts are presented on a pre-tax basis (i.e., not accounting for withholding) and include dividends that were accrued during the measurement period and paid out upon vesting in proportion to the number of shares that vested. These amounts reflect the vesting of shareholder value performance-based RSU awards granted by the Company under its LTIC program in fiscal year 2018, in accordance with the award formula then in effect. Additional details regarding the LTIC awards granted in fiscal year 2018 are set forth under the heading “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis” section of our proxy statement for our 2019 Annual Meeting of shareholders, which was filed with the SEC on January 2, 2019. See the discussion in the “Long-Term Incentive Compensation” section of Part I above for additional explanation of the Company’s LTIC program.
|
(3)These amounts are presented on a pre-tax basis (i.e., not accounting for withholding) and include dividends that were accrued during the measurement period and paid out upon vesting in proportion to the number of shares that vested. These amounts reflect the vesting of shareholder value performance-based RSU awards and of the relative TSR performance-based RSU awards granted by the Company under its LTIC program in fiscal 2021, in accordance with the award formula then in effect. Additional details regarding the LTIC awards granted in fiscal 2021 are set forth under the heading “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis” section of our proxy statement for our 2022 Annual Meeting of shareholders, which was filed with the SEC on December 30, 2021. See the discussion in the “Long-Term Incentive Compensation” section of Part I above for additional explanation of the Company’s LTIC program.
(3) | These amounts are presented on a pre-tax basis (i.e., not accounting for withholding) and do not include dividends. These amounts reflect the vesting of relative TSR performance-based RSU awards granted by the Company under its LTIC program in fiscal year 2018, in accordance with the award formula then in effect. Whereas dividends accrue during the measurement period with respect to shares underlying RSU awards based on the increase in shareholder value, dividends do not accrue during the measurement period with respect to shares underlying RSU awards based on relative TSR (for additional information, see footnotes 6 and 7 to the table above titled “Outstanding Equity Awards at September 30, 2020”). Additional details regarding the LTIC awards granted in fiscal year 2018 are set forth under the heading “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis” section of our proxy statement for our 2019 Annual Meeting of shareholders, which was filed with the SEC on January 2, 2019. See the discussion in the “Long-Term Incentive Compensation” section of Part I above for additional explanation of the Company’s LTIC program.
|
(4)These amounts are presented on a pre-tax basis (i.e., not accounting for withholding) and include dividends that were accrued and paid out upon vesting. These amounts reflect the vesting of time-based RSU awards. For additional information regarding these awards, see the footnotes to the table above titled “Outstanding Equity Awards at September 30, 2023.”
Nonqualified Deferred Compensation for Fiscal Year Ended September 30, 2020
2023
The following table quantifies the “defined contribution” benefits expected to be paid from the Supplemental Retirement Plan (the “SRP”).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
| Name | | Executive Contributions In Last Fiscal Year $ | | Company Contributions In Last Fiscal Year $ (1) | | Aggregate Earnings In Last Fiscal Year $ | | Aggregate Withdrawals/ Distributions $ | | Aggregate Balance At Last Fiscal Year End $ |
| | | | | | | | | | |
| Kimberly K. Ryan | | $ | – | | $ | 119,888 | | $ | 74,304 | | $ | – | | $ | 742,286 |
| | | | | | | | | | |
| Robert M. VanHimbergen | | $ | – | | $ | 37,892 | | $ | (403) | | $ | – | | $ | 37,489 |
| | | | | | | | | | |
| Ulrich Bartel | | $ | – | | $ | – | | $ | – | | $ | – | | $ | – |
| | | | | | | | | | |
| Nicholas R. Farrell | | $ | – | | $ | 42,091 | | $ | 20,217 | | $ | – | | $ | 169,105 |
| | | | | | | | | | |
| J. Michael Whitted | | $ | – | | $ | 37,611 | | $ | 17,446 | | $ | – | | $ | 168,097 |
| (a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | |
| Name | | Executive Contributions In Last Fiscal Year $ | | | Company Contributions In Last Fiscal Year $ (1) | | | Aggregate Earnings In Last Fiscal Year $ | | | Aggregate Withdrawals/ Distributions $ | | | Aggregate Balance At Last Fiscal Year End $ | |
| | | | | | | | | | | | | | | | |
Joe A. Raver | | $ | – | | | $ | 69,466 | | | $ | 69,185 | | | $ | – | | | $ | 1,060,159 | |
Kristina A. Cerniglia | | $ | – | | | $ | 34,591 | | | $ | 45,871 | | | $ | – | | | $ | 363,694 | |
Kimberly K. Ryan | | $ | – | | | $ | 31,200 | | | $ | 29,623 | | | $ | – | | | $ | 465,078 | |
Ling An-Heid | | $ | – | | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Christopher H. Trainor | | $ | – | | | $ | 25,762 | | | $ | 25,483 | | | $ | – | | | $ | 193,042 | |
(1) | The Company maintains the SRP to provide additional retirement benefits to certain employees selected by the Compensation Committee whose benefits under the Company’s Savings Plan are reduced, curtailed, or otherwise limited as a result of certain limitations under the Internal Revenue Code and as a result of excluding their annual cash bonuses from the definition of “compensation” under the contribution formula in the Savings Plan. The additional benefits provided by the SRP are designed to reflect the amount by which benefits under the Savings Plan are so reduced, curtailed, or limited by reason of the application of such limitations and exclusion.
|
(1)The Company maintains the SRP to provide additional retirement benefits to certain employees selected by the Compensation Committee whose benefits under the Company’s Savings Plan are reduced, curtailed, or otherwise limited as a result of certain limitations under the Internal Revenue Code and as a result of historically excluding their annual cash bonuses from the definition of “compensation” under the contribution formula in the Savings Plan. As noted under the heading “Retirement and Savings Plans” in Part I above, beginning in 2021, the contribution formula also took actual cash bonuses into account. The additional benefits provided by the SRP are designed to reflect the amount by which benefits under the Savings Plan are so reduced, curtailed, or limited by reason of the application of such limitations and exclusion.
“Compensation” under the SRP means the corresponding definition of compensation under the Savings Plan (which is generally equivalent to base salary)salary plus the participant’s targetedactual cash bonus as determined under the Company’s Short-Term Incentive Compensation (STIC) Plan.Plan). Amounts reported here are also reported as Supplemental 401(k) in the “Summary Compensation Table” above in the column entitled All Other Compensation and are further detaileddescribed in footnote 5 thereto. Generally, a lump sum cash payment is available to the participant within one year of retirement or termination of employment. In the alternative, a participant may defer receipt by electing a stream of equal annual payments for up to 15 years.
See the more detailed description of the SRP under the heading “Retirement and Savings Plans” in Part I above. The Compensation Committee continues to oversee the selection of which executives are permitted to participate in the plan.
The following amounts represent employer contributions and above-market earnings that have been reported as compensation in the “Summary Compensation Table” in fiscal year 20202023 and previous fiscal years:
| | | | | | | | | | | | | | | | | |
| Name | 2023 | | 2022 | | 2021 |
| | | | | |
| Kimberly K. Ryan | $ | 119,888 | | $ | 69,300 | | $ | 42,794 |
| | | | | |
Robert M. VanHimbergen22 | $ | 37,892 | | n/a | | n/a |
| | | | | |
Ulrich Bartel23 | $ | — | | $ | — | | $ | — |
| | | | | |
| Nicholas R. Farrell | $ | 42,091 | | $ | 30,870 | | $ | 25,625 |
| | | | | |
| J. Michael Whitted | $ | 37,611 | | $ | 29,031 | | $ | 29,669 |
| Name | | 2020 | | | 2019 | | | 2018 | |
| | | | | | | | | | |
Joe A. Raver | | $ | 69,466 | | | $ | 130,025 | | | $ | 74,218 | |
Kristina A. Cerniglia | | $ | 34,591 | | | $ | 57,315 | | | $ | 33,443 | |
Kimberly K. Ryan | | $ | 31,200 | | | $ | 51,717 | | | $ | 30,163 | |
Ling An-Heid (1) | | $ | – | | | $ | N/A | | | $ | N/A | |
Christopher H. Trainor | | $ | 25,762 | | | $ | 39,248 | | | $ | 22,064 | |
(1) | Ms. An-Heid was not a Named Executive Officer for 2018 and 2019, becoming one in connection with the acquisition of Milacron in fiscal 2020.
|
Potential Payments Upon Termination
The following tables present the benefits that would be received by each of the Named Executive Officers in the event of a hypothetical termination as of September 30, 2020.2023. For information regarding definitions of termination events included in the employment agreements with the Named Executive Officers, see “Employment Agreements and Termination Benefits” in Part I above.
Joe A. Raver
| Event | | Salary And Other Cash Payments (1) | | | Accelerated Vesting Of Stock Awards (2) | | | Continuance Of Health And Welfare Benefits | | | Total | |
| | | | | | | | | | | | | |
Permanent Disability | | $ | 2,837,805 | | | $ | 2,998,981 | | | $ | 47,445 | | | $ | 5,884,231 | |
Death | | $ | 1,163,824 | | | $ | 2,998,981 | | | $ | 25,298 | | | $ | 4,188,103 | |
Termination without Cause | | $ | 1,853,824 | | | $ | 2,998,981 | | | $ | 47,445 | | | $ | 4,900,250 | |
Resignation with Good Reason | | $ | 1,853,824 | | | $ | 2,998,981 | | | $ | 47,445 | | | $ | 4,900,250 | |
Termination for Cause | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Resignation without Good Reason | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Retirement | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Change in Control (3) | | | | | | | | | | | | | | | | |
Kristina A. Cerniglia
| Event | | Salary And Other Cash Payments (1) | | | Accelerated Vesting Of Stock Awards (2) | | | Continuance Of Health And Welfare Benefits | | | Total | |
| | | | | | | | | | | | | |
Permanent Disability | | $ | 2,557,855 | | | $ | 755,523 | | | $ | 23,722 | | | $ | 3,337,100 | |
Death | | $ | 836,363 | | | $ | 755,523 | | | $ | 12,649 | | | $ | 1,604,535 | |
Termination without Cause | | $ | 874,758 | | | $ | 755,523 | | | $ | 23,722 | | | $ | 1,654,003 | |
Resignation with Good Reason | | $ | 874,758 | | | $ | 755,523 | | | $ | 23,722 | | | $ | 1,654,003 | |
Termination for Cause | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Resignation without Good Reason | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Retirement | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Change in Control (3) | | | | | | | | | | | | | | | | |
Kimberly K. Ryan
| | Event | | Salary And Other Cash Payments (1) | | | Accelerated Vesting Of Stock Awards (2) | | | Continuance Of Health And Welfare Benefits | | | Total | | Event | Salary And Other Cash Payments (1) | | Accelerated Vesting Of Stock Awards (2) | | Continuance Of Health And Welfare Benefits | | Total |
| | | | | | | | | | | | | | | |
Permanent Disability | | $ | 2,572,291 | | | $ | 655,454 | | | $ | 20,489 | | | $ | 3,248,234 | | Permanent Disability | $ | 2,237,876 | | | $ | 3,520,444 | | | $ | 43,173 | | | $ | 5,801,493 |
Death | | $ | 835,031 | | | $ | 655,454 | | | $ | 11,114 | | | $ | 1,501,599 | | Death | $ | 916,250 | | | $ | 3,520,444 | | | $ | – | | | $ | 4,436,694 |
Termination without Cause | | $ | 836,527 | | | $ | 655,454 | | | $ | 20,489 | | | $ | 1,512,470 | | Termination without Cause | $ | 2,316,250 | | | $ | 3,725,336 | | | $ | 43,173 | | | $ | 6,084,759 |
Resignation with Good Reason | | $ | 836,527 | | | $ | 655,454 | | | $ | 20,489 | | | $ | 1,512,470 | | Resignation with Good Reason | $ | 2,316,250 | | | $ | 3,842,626 | | | $ | 43,173 | | | $ | 6,202,049 |
Termination for Cause | | $ | – | | | $ | – | | | $ | – | | | $ | – | | Termination for Cause | $ | – | | | $ | – | | | $ | – | | | $ | – |
Resignation without Good Reason | | $ | – | | | $ | – | | | $ | – | | | $ | – | | Resignation without Good Reason | $ | – | | | $ | – | | | $ | – | | | $ | – |
Retirement | | $ | – | | | $ | – | | | $ | – | | | $ | – | | Retirement | $ | 2,316,250 | | | $ | 3,850,394 | | | $ | – | | | $ | 6,166,644 |
Change in Control (3) | | | | | | | | | | | | | Change in Control (3) | |
Ling An-Heid
Event (4) | | Salary And Other Cash Payments (1) | | | Accelerated Vesting Of Stock Awards (2) | | | Continuance Of Health And Welfare Benefits | | | Total | |
| | | | | | | | | | | | | |
Permanent Disability | | $ | 2,038,362 | | | $ | 1,062,309 | | | $ | 15,405 | | | $ | 3,116,076 | |
Death | | $ | 694,325 | | | $ | 1,062,309 | | | $ | – | | | $ | 1,756,634 | |
Termination without Cause | | $ | 2,038,362 | | | $ | 144,948 | | | $ | 15,405 | | | $ | 2,198,715 | |
Termination for Cause | | $ | 34,576 | | | $ | – | | | $ | – | | | $ | 34,576 | |
Retirement | | $ | 194,325 | | | $ | 1,062,309 | | | $ | – | | | $ | 1,256,634 | |
Change in Control (3) | | | | | | | | | | | | | | | | |
22 Mr. VanHimbergen became eligible to participate in the SRP after the end of the 2022 fiscal year.
23 Mr. Bartel is domiciled in Germany and, as such, is not eligible to participate in the SRP.
Christopher H. TrainorRobert M. VanHimbergen
| Event | | Salary And Other Cash Payments (1) | | | Accelerated Vesting Of Stock Awards (2) | | | Continuance Of Health And Welfare Benefits | | | Total | |
| | | | | | | | | | | | | |
Permanent Disability | | $ | 3,142,846 | | | $ | 553,663 | | | $ | 21,954 | | | $ | 3,718,463 | |
Death | | $ | 990,434 | | | $ | 553,663 | | | $ | 11,914 | | | $ | 1,556,011 | |
Termination without Cause | | $ | 941,329 | | | $ | 553,663 | | | $ | 21,954 | | | $ | 1,516,946 | |
Resignation with Good Reason | | $ | 941,329 | | | $ | 553,663 | | | $ | 21,954 | | | $ | 1,516,946 | |
Termination for Cause | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Resignation without Good Reason | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Retirement | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Change in Control (3) | | | | | | | | | | | | | | | | |
(1) | Includes, as applicable in each scenario, severance compensation, prorated STIC, and insurance proceeds.
|
(2) | For those Named Executive Officers who were employed at the relevant time, the accelerated vesting value of performance-based stock awards includes the annual LTIC awards granted in fiscal year 2018, which vested on September 30, 2020, and the annual LTIC awards granted in fiscal years 2019 and 2020, which have not vested. The accelerated vesting value of the awards granted in fiscal year 2018 in the table is based on (a) the actual level of achievement of the targeted shareholder value increase as described in footnote 2 to the table above titled “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2020,” and (b) the actual level of achievement of the targeted relative TSR as described in footnote 3 to the table above titled “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2020.” The accelerated vesting values of the annual LTIC awards granted in fiscal years 2019 and 2020 assume 100 percent achievement of the applicable performance targets and the closing stock price on September 30, 2020. However, the actual value that would be realized would be based on the actual achievement of such performance targets at the end of the applicable measurement period and the stock price on September 30, 2022, and September 30, 2021, which is unknown at this time.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Event | Salary And Other Cash Payments (1) | | Accelerated Vesting Of Stock Awards (2) | | Continuance Of Health And Welfare Benefits | | Total |
| | | | | | | |
| | | | | | | |
| Permanent Disability | $ | 2,527,223 | | $ | 1,793,518 | | $ | 20,483 | | $ | 4,341,224 |
| Death | $ | 655,702 | | $ | 1,793,518 | | $ | – | | $ | 2,449,220 |
| Termination without Cause | $ | 690,702 | | $ | 1,872,987 | | $ | 20,483 | | $ | 2,584,172 |
| Resignation with Good Reason | $ | 690,702 | | $ | 1,885,093 | | $ | 20,483 | | $ | 2,596,278 |
| Termination for Cause | $ | – | | $ | – | | $ | – | | $ | – |
| Resignation without Good Reason | $ | – | | $ | – | | $ | – | | $ | – |
| Retirement | $ | – | | $ | – | | $ | – | | $ | – |
| Change in Control (3) | | | | | | | |
In addition, Ulrich Bartel
. | | | | | | | | | | | | | | | | | | | | | | | |
| Event | Salary And Other Cash Payments (1) | | Accelerated Vesting Of Stock Awards (2) | | Continuance Of Health And Welfare Benefits | | Total |
| | | | | | | |
| | | | | | | |
| Permanent Disability | $ | 859,865 | | $ | 534,335 | | $ | – | | $ | 1,394,200 |
| Death | $ | 650,885 | | $ | 534,335 | | $ | – | | $ | 1,185,220 |
| Termination without Cause | $ | 640,203 | | $ | 556,204 | | $ | – | | $ | 1,196,407 |
| Resignation with Good Reason | $ | 640,203 | | $ | 593,575 | | $ | – | | $ | 1,233,778 |
| Termination for Cause | $ | – | | $ | – | | $ | – | | $ | – |
| Resignation without Good Reason | $ | – | | $ | – | | $ | – | | $ | – |
| Retirement | $ | 640,203 | | $ | 556,204 | | $ | – | | $ | 1,196,407 |
| Change in Control (3) | | | | | | | |
Nicholas R. Farrell
| | | | | | | | | | | | | | | | | | | | | | | |
| Event | Salary And Other Cash Payments (1) | | Accelerated Vesting Of Stock Awards (2) | | Continuance Of Health And Welfare Benefits | | Total |
| | | | | | | |
| | | | | | | |
| Permanent Disability | $ | 2,715,235 | | $ | 1,559,326 | | $ | 20,178 | | $ | 4,294,739 |
| Death | $ | 647,611 | | $ | 1,559,326 | | $ | – | | $ | 2,206,937 |
| Termination without Cause | $ | 688,411 | | $ | 1,537,323 | | $ | 20,178 | | $ | 2,245,912 |
| Resignation with Good Reason | $ | 688,411 | | $ | 1,599,018 | | $ | 20,178 | | $ | 2,307,607 |
| Termination for Cause | $ | – | | $ | – | | $ | – | | $ | – |
| Resignation without Good Reason | $ | – | | $ | – | | $ | – | | $ | – |
| Retirement | $ | – | | $ | – | | $ | – | | $ | – |
| Change in Control (3) | | | | | | | |
J. Michael Whitted
| | | | | | | | | | | | | | | | | | | | | | | |
| Event | Salary And Other Cash Payments (1) | | Accelerated Vesting Of Stock Awards (2) | | Continuance Of Health And Welfare Benefits | | Total |
| | | | | | | |
| Permanent Disability | $ | 2,196,222 | | $ | 1,893,181 | | $ | 19,915 | | $ | 4,109,318 |
| Death | $ | 640,119 | | $ | 1,893,181 | | $ | – | | $ | 2,533,300 |
| Termination without Cause | $ | 620,419 | | $ | 1,286,485 | | $ | 19,915 | | $ | 1,926,819 |
| Resignation with Good Reason | $ | 620,419 | | $ | 1,944,781 | | $ | 19,915 | | $ | 2,585,115 |
| Termination for Cause | $ | – | | $ | – | | $ | – | | $ | – |
| Resignation without Good Reason | $ | – | | $ | – | | $ | – | | $ | – |
| Retirement | $ | – | | $ | – | | $ | – | | $ | – |
| Change in Control (3) | | | | | | | |
(1)Includes, as applicable in each scenario, severance compensation, prorated STIC, and insurance proceeds.
(2)The accelerated vesting value of performance-based restricted stock unit awards includes the annual LTIC awards granted in fiscal 2021, which vested on September 30, 2023, and the annual LTIC awards granted in fiscal years 2022 and 2023, which have not vested. The accelerated vesting value of the awards granted in fiscal 2021 in the table is based on (a) the actual level of achievement of the targeted shareholder value increase as described in footnote 3 to the table above titled “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2023,” and (b) the actual level of achievement of the targeted relative TSR as described in footnote 3 to the table above titled “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2023.” The accelerated vesting values of the annual performance-based LTIC awards granted in fiscal years 2022 and 2023 assume 100 percent achievement of the applicable performance targets and the closing stock price on September 30, 2023. However, the actual value that would be realized would be based on the actual achievement of such performance targets at the end of the applicable measurement period and the stock price on September 30, 2024, and September 30, 2025, which is unknown at this time.
The accelerated vesting value of time-based RSUs is based on the vesting terms set forth in the applicable award agreements and assumes the closing stock price on September 30, 2023. However, the actual value that would be realized would be based on the circumstances of the termination and the stock price on the termination date, which is unknown at this time.
Ms. An-Heid qualifiesRyan and Mr. Bartel qualified for special accelerated vesting in the retirement context due to her agetheir
ages at September 30, 2020.2023. None of our other Named Executive Officers currently qualifyqualifies for the same;
same as of such date; however, in the event of a qualifying retirement in the future, these
executives would be entitled to accelerated vesting value.
(3)See table below titled “Change in Control Benefits.”
(3) | See table below titled “Change in Control Benefits.”
|
(4) | Under Canadian law, Ms. An-Heid is entitled to payment for her accrued and unused vacation under each of the termination scenarios presented.
|
Change in Control Benefits
The change in control agreements we have with Named Executive Officers may provide the estimated benefits set forth in the following table, calculated assuming a hypothetical termination as of September 30, 2020.2023. For more detail regarding the change in control agreements generally, see the discussion under “Employment Agreements and Termination Benefits” in Part I above. Benefits under our change in control agreements are payable only upon a “double-trigger.” Therefore, the amounts shown in the table below assume not only a change in control but also the requisite qualified termination of employment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Salary-Based Compensation | | Incentive Compensation | | Continuance Of Health And Welfare Benefits | | Pension Benefits | | Retirement Savings Plan Benefit | | Accelerated Vesting Of Stock-Based Awards | | Tax Gross-Up / Cutback (1) | | Total |
| | | | | | | | | | | | | | | | |
| Kimberly K. Ryan | | $ | 2,850,000 | | | $ | 3,693,750 | | | $ | 73,394 | | | $ | – | | | $ | – | | | $ | 6,743,986 | | | $ | – | | | $ | 13,361,130 | |
| | | | | | | | | | | | | | | | |
| Robert M. VanHimbergen | | $ | 1,070,000 | | | $ | 958,202 | | | $ | 44,053 | | | $ | – | | | $ | – | | | $ | 3,760,052 | | | $ | (746,845) | | | $ | 5,085,462 | |
| | | | | | | | | | | | | | | | |
| Ulrich Bartel | | $ | 978,635 | | | $ | 884,861 | | | $ | – | | | $ | – | | | $ | – | | | $ | 1,177,931 | | | $ | (60,114) | | | $ | 2,981,313 | |
| | | | | | | | | | | | | | | | |
| Nicholas R. Farrell | | $ | 1,081,600 | | | $ | 904,731 | | | $ | 43,387 | | | $ | – | | | $ | – | | | $ | 2,725,442 | | | $ | (347,767) | | | $ | 4,407,393 | |
| | | | | | | | | | | | | | | | |
| J. Michael Whitted | | $ | 960,600 | | | $ | 860,569 | | | $ | 42,814 | | | $ | – | | | $ | – | | | $ | 2,528,251 | | | $ | – | | | $ | 4,392,234 | |
| Name | | Salary-Based Compensation | | | Incentive Compensation | | | Continuance Of Health And Welfare Benefits | | | Pension Benefits | | | Retirement Savings Plan Benefit | | | Accelerated Vesting Of Stock-Based Awards | | | Tax Gross-Up / Cutback (1) | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Joe A. Raver | | $ | 1,785,000 | | | $ | 796,908 | | | $ | 82,531 | | | $ | – | | | $ | 208,398 | | | $ | 4,846,979 | | | $ | – | | | $ | 7,719,816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Kristina A. Cerniglia | | $ | 1,076,791 | | | $ | 403,797 | | | $ | 52,240 | | | $ | – | | | $ | 69,182 | | | $ | 1,235,560 | | | $ | – | | | $ | 2,837,570 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Kimberly K. Ryan | | $ | 1,002,991 | | | $ | 376,122 | | | $ | 45,120 | | | $ | – | | | $ | 62,400 | | | $ | 1,079,807 | | | $ | – | | | $ | 2,566,440 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ling An-Heid | | $ | 922,019 | | | $ | 325,354 | | | $ | 8,481 | | | $ | – | | | $ | – | | | $ | 1,352,205 | | | $ | – | | | $ | 2,608,059 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Christopher H. Trainor | | $ | 901,791 | | | $ | 338,172 | | | $ | 48,345 | | | $ | – | | | $ | 51,524 | | | $ | 864,356 | | | $ | – | | | $ | 2,204,188 | |
(1) | As discussed in Part I above under the heading “Employment Agreements and Termination Benefits,” our change in control agreements do not provide for any tax gross-up payments relating to the excise tax on excess “parachute payments” imposed by Section 4999 of the Internal Revenue Code. If an executive is entitled to receive payments upon a change in control that may be subject to the excise tax, he or she will either be paid the full amount (and remain personally liable for the excise tax) or be paid a reduced amount (cutback) that does not give rise to the excise tax, whichever is greater on an after-tax basis.
|
(1)As discussed in Part I above under the heading “Employment Agreements and Termination Benefits,” our change in control agreements do not provide for any tax gross-up payments relating to the excise tax on excess “parachute payments” imposed by Section 4999 of the Internal Revenue Code. If an executive is entitled to receive payments upon a change in control that may be subject to the excise tax, he or she will either be paid the full amount (and remain personally liable for the excise tax) or be paid a reduced amount (cutback) that does not give rise to the excise tax, whichever is greater on an after-tax basis.
These calculations do not consider the value of non-compete provisions that executives must adhere to in order to receive certain payments upon a change in control. These provisions are valuable to the Company and are expected to be enforced in the event of an actual transaction.
Pending approval of the Stock Plan proposal by the Company’s shareholders, the Company intends to amend these change in control agreements to make corresponding changes and certain other updates to reflect market practice in this area.
PART IV: COMPENSATION CONSULTANT MATTERS
The Compensation Committee’s independent compensation consultant was regularly invited to attend Committee meetings during fiscal year 2020.2023.
Deloitte ConsultingPay Governance was engaged as the independent compensation consultant by the Compensation Committee to assist the Committee in determining the form and amount of compensation paid to our Named Executive Officers for fiscal year 2020. Deloitte Consulting2023. Among other things, Pay Governance provided advice and recommendations regarding the Company’s executive compensation levels and practices; the Company’s compensation philosophy and strategies; advice on the Company’s peer group; evaluation of performance metrics and peer performance; analysis and recommendations regarding ourthe Company’s STIC and LTIC programs, including changes in connection with the acquisition of Milacron;programs; advice on the Company’s CEO pay ratio disclosure; advice on the Company’s revised clawback policy; advice on the Company’s Pay versus Performance disclosure; advice and recommendations relating to the tax treatment of incentive compensation awards; review and recommendations on CEO and other executive officer compensation for fiscal year 2021;2023; and periodic reports to the Compensation Committee on market and industry compensation trends and regulatory developments. Fees for those services, which were approved by the Compensation Committee, totaled $494,240 during fiscal year 2020. The Compensation Committee has reviewed the independence of Deloitte ConsultingPay Governance in light of applicable SEC rules and NYSE listing standards regarding compensation consultant independence and has affirmatively concluded that Deloitte ConsultingPay Governance is independent from the Company and has no conflict of interest relating to its engagement by the Compensation Committee.
Other Engagements
The Company also engaged Deloitte Consulting or its affiliates during fiscal year 2020 to provide services unrelated to executive compensation. These engagements primarily consisted of (a) significant support for integration planning and readiness activities in connection with the Milacron acquisition and first combined quarterly reporting; (b) purchase price accounting and related valuation services in connection with the Milacron acquisition; (c) tax and other mobility advice on expatriate assignments; (d) international business tax and legal consulting for the Company and certain of its subsidiaries; and (e) support on Internal Revenue Code section 280G matters. Fees paid to Deloitte Consulting and its affiliates for these engagements totaled $5,793,852 during fiscal year 2020. Management initiated these engagements – the Board was not asked to approve them. However, the Chairperson of the Compensation Committee was consulted prior to each material engagement of Deloitte Consulting or any of its affiliates for non-executive compensation-related services. Given the nature and scope of these services, the Compensation Committee believes that these services did not raise a conflict of interest and did not impair Deloitte Consulting’s ability to provide independent advice to the Committee concerning executive compensation matters. In making this determination, the Compensation Committee considered, among other things, the following factors:
The types of non-compensation services provided by Deloitte Consulting;93
The amounts of fees for such non-compensation services, noting in particular that such fees are negligible when considered in the context of Deloitte Consulting’s and its affiliates’ total revenues for the period;
Deloitte Consulting’s policies and procedures concerning conflicts of interest;
Deloitte Consulting representatives who advise the Compensation Committee do not provide any non-compensation-related services to the Company;
There are no other business or personal relationships between management of the Company or members of the Compensation Committee and the Deloitte Consulting representatives who provide compensation services to the Company; and
Neither Deloitte Consulting nor any of the Deloitte Consulting representatives who provide compensation services to the Company own any common stock or other securities of the Company.
PART V: COMPENSATION-RELATED RISK ASSESSMENT
The Compensation Committee analyzes on an annual basis the actual or anticipated effect (including, as appropriate, a deterrent effect) that our compensation policies and practices have had or may have on our employees with respect to creating any excessive and undesirable risk-taking in the performance of their duties for the Company. The Compensation Committee then makes a determination, on an annual basis, as to whether any of our compensation policies and practices creates risks that are reasonably likely to have a material adverse effect on the Company. At its regularly scheduled meeting held on December 2, 2020,6, 2023, the Compensation Committee determined that the Company’s current compensation policies and practices do not create any such risks.
The Compensation Committee’s determination was based on an assessment of the Company’s variable compensation risk that was led by the Company’s internal audit personnel and supported by its Director of Compensation.Senior Vice President, Chief Human Resources Officer and its Total Rewards Director. The Compensation Committee, with its independent compensation consultant, evaluated the results of this assessment and solicited feedback from a number of other sources, including Company management and internal legal, finance, and human resources personnel. The Company’s executive management team discussed its review and analysis of the results of the assessment with the Company’s Audit Committee and the Compensation Committee before the Compensation Committee made its annual determination regarding compensation-related risk.
The Compensation Committee seeks to discourage and deter inappropriate risk-taking through the compensation programs it adopts and implements for our Named Executive Officers and our employees generally. We believe that the compensation-related programs employed by the Company are consistent with those objectives and align our employees’ incentives for risk-taking with the best long-term interests of our shareholders. These programs provide a holistic approach to compensation that provides a mix of fixed and variable compensation, with the variable component impacting both short-term cash compensation and long-term equity compensation. Program features, such as stock ownership guidelines, limits on the payout of variable compensation, and clawback policies, provide additional balance between risk and reward.
PART VI: CEO PAY RATIO
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Regulation S-K under the Exchange Act, we are providing information regarding the relationship of annual total compensation of our CEO and our median employee (the CEO“CEO pay ratio)ratio”). Our CEO pay ratio is a reasonable good faith estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. The ratio set forth below may not be comparable to the ratio for other companies due to differences in operations, industry, locations, employee populations, and compensation practices. Additionally, companies may utilize different methodologies, exclusions, estimates, and assumptions in calculating their CEO pay ratio.
For purposes of the CEO pay ratio, we are required to identify a median employee, without regard to location, compensation arrangements, or employment status. The median employee was identified from our global employee population as of September 30, 2019, using gross fiscal wages of all global employees. Gross fiscal wages includes base salary plus overtime, short-term incentive compensation, long-term incentive compensation distributions, and other income. We did not perform any full-time equivalency adjustments for part-time or temporary employees, annualize for employees hired throughout the year, or exclude any non-US employees. Amounts in foreign currency were converted from local currency to U.S. dollars. Additionally, we did not make any cost-of-living adjustments.
The rules adopted by the SEC require a registrant to identify its median employee only once every three years andunless there has been a change to the employee population that the registrant reasonably believes would result in a significant change to its CEO pay ratio disclosure. While our median employee was originallylast identified in 2019. In fiscal 2020, there was no2021, the Company believes the divestiture of our Batesville business segment would have resulted in a change into the Company’s employee population that would significantly change our disclosure. As a result, we have identified a new median employee this year.
The median employee was identified from our global employee population as of September 30, 2023. As of September 30, 2023, our global employee population for purposes of our CEO pay ratio consisted of 7,823 employees, with 1,953 or employee compensation arrangements thatapproximately 25 percent, located in the United States, and 5,870, or approximately 75 percent, located outside of the United States. These figures include employees who joined the Company believes would significantly impactthrough acquisitions which closed prior to the Company’s pay ratio disclosure, excluding for this purpose thecommencement of fiscal year 2023,24 but exclude any employees who joined the Company as a result of the Milacron acquisitionacquisitions that closed on November 21, 2019 (approximately 4,000 employees as of September 30, 2020),during fiscal year 2023,25 as permitted by the instructions to Item 402(u) of Regulation S-K. As indicated, we have also excluded any employees who left the Company as part of the Batesville divestiture.
The de minimis exception of the pay ratio rules also permits exclusion of up to 5 percent of our employees based outside of the U.S. Pursuant to the de minimis exception, we excluded 333 of our non-U.S. employees (approximately 4.3 percent of our total employee population).26
To identify the median employee from the resulting employee population of 7,490, we first identified a middle 20th percentile based on annual base salary and hourly wages plus target bonuses, which represent the principal forms of compensation provided to our employees. Then for this middle 20th percentile population of 1,481 employees, we collected actual total earnings including base pay, base pay equivalents such as vacation pay and holiday pay, overtime, and actual bonuses for the fiscal year and identified the median employee from that population using those figures. We did not perform any full-time equivalency adjustments for part-time or temporary employees or annualize for employees hired throughout the year. Amounts in foreign currency were converted from local currency to U.S. dollars based on exchange rates as of September 30, 2023.
24 This includes employees who joined as part of the acquisitions of Herbold Meckesheim GmbH and Gabler Engineering GmbH acquisitions which closed in fiscal year 2022.
25 This exclusion includes approximately 2,587 employees who joined as part of the acquisitions of LINXIS Group (closed October 6, 2022), Peerless Food Equipment (closed December 1, 2022), and Schenck Process Food and Performance Materials Business (closed September 1, 2023).
26 We excluded all employees from the following jurisdictions (applicable numbers in parentheses): Mexico (75); Singapore (44); Japan (34); Brazil (33); France (27); Saudi Arabia (26); Spain (21); Belgium (19); South Korea (18); Thailand (13); Austria (10); Poland (4); Turkey (3); Netherlands (2); Luxembourg (1).
Our median employee is located in the United States. Once the median employee was identified, the employee’s annual total compensation was calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.
The annual total compensation for fiscal year 20202023 for our CEO as calculated above was $5,052,029$6,568,880 and the median employee (excluding the CEO) was $53,446.$50,282. The resulting CEO pay ratio for the fiscal year is estimated to be 95131 to 1. Due to the variability of the CEO’s performance-based compensation, the CEO pay ratio can differ significantly from year to year.
PART VII: ANTI-HEDGING AND ANTI-PLEDGING
Directors, officers, and all other employees of the Company, or any of their designees, are prohibited from purchasing financial instruments or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s securities either (i) granted to the employee or director by the Company as part of the compensation of the employee or director, or (ii) held (directly or indirectly) by the employee or director.
Our policy also prohibits purchasing financial instruments or engaging in any transactions that suggest speculation in or hedging against the Company’s securities; engaging in “short sales”; and holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
PART VIII: PAY VERSUS PERFORMANCE
As discussed throughout this proxy statement, we believe that Hillenbrand’s executives should be fairly compensated for creating appropriate long-term returns for shareholders, and the central theme of our compensation philosophy is that a significant portion of our executive compensation will be “performance-based.” Our Compensation Committee and the full Board continually seek improvement and alignment with best practices – both in our compensation program itself and in our corporate governance practices that support it – by soliciting feedback from shareholders and consulting the Company’s independent compensation consultant and other advisors.
The following disclosure is required by the SEC’s pay versus performance rules, containing certain information regarding how the compensation actually paid to our Named Executive Officers relates to Company financial performance. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the 1934 Act and does not necessarily reflect the value actually realized by our Named Executive Officers or how the Compensation Committee evaluates compensation decisions in light of Company or individual performance. For a discussion of how the Compensation Committee seeks to align pay with performance when making compensation decisions, please review the Compensation Discussion and Analysis section above.
This table provides information about the total compensation of our principal executive officers and our other Named Executive Officers as presented in the Summary Compensation Table (“SCT”) above , the Compensation Actually Paid (“CAP”) to our principal executive officers and our other Named Executive Officers, and the relationship of the CAP to Company performance measures and the relationship of our Total Shareholder Return (“TSR”) to that of the S&P 400 Midcap Industrials Index, our “Peer Group”, as further detailed below.
2023 Pay Versus Performance Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Value of Initial Fixed $100 Investment Based on4: | | |
| Year | Summary Compensation Table Total for Joe Raver1, 2 | Compensation Actually Paid to Joe Raver1, 3 | Summary Compensation Table Total for Kimberly Ryan1, 2 | Compensation Actually Paid to Kimberly Ryan1, 3 | Average Summary Compensation Table Total for Other Named Executive Officers1, 2 | Average Compensation Actually Paid to Other Named Executive Officers1, 3 | Total Shareholder Return | Peer Group Total Shareholder Return5 | Net Income (in millions) | Adjusted EBITDA6 (in millions) |
| (a) | (b) | (c ) | (d) | (e ) | (f) | (g) | (h) | (i) | (j) | (k) |
| 2023 | n/a | n/a | $6,568,880 | $6,080,094 | $1,722,055 | $1,991,291 | $117.62 | $113.55 | $569.70 | $552.50 |
| 2022 | $837,858
| $(3,862,089) | $5,221,058 | $4,489,948 | $3,534,856 | $2,688,243 | $87.9 | $83.44 | $208.90 | $527.40 |
| 2021 | $7,052,435 | $12,871,772 | n/a | n/a | $3,724,707 | $5,030,433 | $153.42 | $141.90 | $249.90 | $533.90 |
1.The principal executive officers and other Named Executive Officers for the three applicable fiscal years were as follows:
• Fiscal year 2023: Ms. Ryan served as principal executive officer for the entirety of fiscal year 2023. The Company’s other Named Executive Officers for fiscal year 2023 were: Robert VanHimbergen, Ulrich Bartel, Nicholas Farrell, and J. Michael Whitted.
• Fiscal year 2022: Ms. Ryan was appointed as principal executive officer effective December 30, 2021, and Mr. Raver served as principal executive officer prior to Ms. Ryan’s appointment. The Company’s other Named Executive Officers for fiscal year 2022 were: Robert VanHimbergen, Kristina Cerniglia, Aneesha Arora, Nicholas Farrell, and Chris Trainor.
• Fiscal year 2021: Mr. Raver served as principal executive officer for the entirety of fiscal year 2021. The Company’s other Named Executive Officers for fiscal year 2021 were: Kristina Cerniglia, Kimberly Ryan, Chris Trainor, and J. Michael Whitted.
2.Amounts reported in this column represent (i) the total compensation reported in the SCT for the applicable year in which the Named Executive Officer served as principal executive officer in the case of Ms. Ryan and Mr. Raver and (ii) the average of the total compensation reported in the SCT for the Company’s other Named Executive Officers reported for the applicable year.
3.Adjustments were made to the amounts reported in the SCT for the applicable year to calculate the CAP. A reconciliation of the adjustments for the principal executive officers and for the average of the other Named Executive Officers is provided following the footnotes to this table.
4.The comparison assumes $100 was invested at market close on September 30, 2020, and held through the end of each fiscal year. Under the applicable SEC rules, TSR is calculated as the difference between the Company stock price at the end and the beginning of the measurement period, plus dividends (assumed to be reinvested in Company stock), divided by the Company’s stock price at the beginning of the measurement period. Historic stock price performance is not necessarily indicative of future stock price performance.
5.The Peer Group used for the TSR is the S&P 400 Midcap Industrials Index, which is also used for the Company’s stock performance chart in the Annual Report on Form 10-K for the year ended September 30, 2023. This Peer Group is also used for the calculation of TSR for LTIC purposes even though it is calculated differently.
6.The Compensation Committee selected Adjusted EBITDA as the key metric for measuring and rewarding performance for our Named Executive Officers. This measure is used to determine the payout of 50% of the 2023 STIC awards for the Named Executive Officers. Adjusted EBITDA is a non-GAAP financial measure and is calculated based on the Company’s adjusted earnings before interest, income taxes, depreciation and amortization. See Appendix A for applicable definitions.
The following table shows the amounts deducted from and added to the applicable Named Executive Officer’s annual total compensation as set forth in the Summary Compensation Table (for purposes of this Part VIII, “SCT Total”) to arrive at the CAP for each of the applicable years, as shown in columns (c), (e), and (g) in the chart above. The SCT Total and CAP amounts do not necessarily reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v) disclosure rules. Fair value amounts were computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under GAAP. The fair value amounts were calculated using our stock price on the last day of each fiscal year or the date of vesting, as applicable, and based upon the probable outcome of applicable performance conditions as of the last day of each fiscal year.
| | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | 2022 | 2023 |
| Joe Raver | Average Other Named Executive Officers | Joe Raver | Kimberly Ryan | Average Other Named Executive Officers | Kimberly Ryan | Average Other Named Executive Officers |
| SCT Total | $7,052,435 | $3,724,707 | $837,858 | $5,221,058 | $3,534,856 | $6,568,880 | $1,722,055 |
| Plus (Less) Grant Date Fair Value of Stock Awards Granted in Fiscal Year | $(4,354,914) | $(2,456,619) | $— | $(3,220,166) | $(2,130,098) | $(5,100,068) | $(1,008,197) |
| Plus (Less) Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year | $6,003,634 | $2,830,529 | $— | $2,793,996 | $1,615,820 | $4,383,449 | $866,384 |
| Plus (Less) Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years | $2,531,849 | $544,076 | $(2,866,168) | $(153,096) | $(223,885) | $32,560 | $155,461 |
| Plus (Less) Change in Fair Value at Vesting of Stock Awards Granted in Fiscal Year that Vested During Fiscal Year | $— | $— | $— | $— | $11,489 | $— | $— |
| Plus (Less) Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Year For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $1,638,768 | $387,740 | $(1,833,779) | $(155,844) | $(114,418) | $195,272 | $255,587 |
| Plus (Less) Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $— | $— | $— | $— | $(5,521) | $— | $— |
| Plus (Less) Dividends Accrued During Fiscal Year | $— | $— | $— | $— | $— | $— | $— |
| Compensation Actually Paid (CAP) | $12,871,772 | $5,030,433 | $(3,862,089) | $4,489,948 | $2,688,243 | $6,080,094 | $1,991,291 |
Relationship Between Compensation Actually Paid and Performance Measures
We believe the CAP in each of the fiscal years reflects the Compensation Committee’s philosophy on “pay-for-performance” as the CAP fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement against performance goals under our STIC and LTIC plans.
The following graphs show the relationship between our TSR and our Peer Group TSR, as well as the CAP as calculated for the principal executive officers and other Named Executive Officers and each of the three respective financial metrics of TSR, Net Income and Adjusted EBITDA. The CAP reflects adjustments to the fair value of equity awards during the three fiscal years, which is impacted by the price of our common stock, and the projected and actual achievement against performance goals. For fiscal 2022, only Ms. Ryan’s CAP is shown in the charts below as Mr. Raver’s 2022 CAP was a negative value, ($3,862,089), and does not align with the performance metrics included in the charts below.
Relationship between TSR and Peer Group TSR
Relationship between CAP and TSR
Relationship between CAP and Net Income
Relationship between CAP and Adjusted EBITDA
Tabular List of Financial Performance Measures
The following table contains a list of financial performance measures which we believe represent the most important financial performance measures used by the Company to link compensation actually paid to our Named Executive Officers for fiscal year 2023. See the “Compensation Discussion and Analysis” section of this proxy statement for a further description of the metrics used in the Company’s executive compensation program, as well as Appendix A for applicable definitions.
| | | | | |
| Financial Performance Measure |
| 1. | Adjusted EBITDA |
| 2. | Revenue/Order Intake |
| 3. | Cash Conversion Cycle |
| 4. | Relative TSR (calculated as a percentile ranking as compared to companies in the S&P Midcap Industrial 400 Index in the applicable award year) |
| 5. | Shareholder Value |
PROPOSAL NO. 2 – NON-BINDING ADVISORY VOTE TO APPROVE COMPENSATION
OF NAMED EXECUTIVE OFFICERS
The core of Hillenbrand’s executive compensation policies and practices continues to be to pay for performance. Our executive officers are compensated in a manner consistent with our strategy, competitive practice, sound corporate governance principles, and shareholder interests and concerns. We believe our compensation program is strongly aligned with the long-term interests of our shareholders. We urge you to read the “Compensation Discussion and Analysis” section of this proxy statement for additional details on our executive compensation, including our compensation philosophy and objectives and the 20202023 compensation of our Named Executive Officers.
The U.S. Congress has enacted requirements commonly referred to as the “Say on Pay” rules. Our shareholders have elected, pursuant to an advisory vote at the Annual Meeting of shareholders in 2017,2023, to hold a Say on Pay Vote each year. Accordingly, we are asking you to vote in favor of the adoption of the following resolution:
BE IT RESOLVED by the shareholders of Hillenbrand, Inc., that the shareholders approve the compensation of Hillenbrand’s Named Executive Officers as disclosed in the proxy statement pursuant to the SEC’s compensation disclosure rules.
As an advisory vote, this Proposal is non-binding. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers.
The Board of Directors recommends that the shareholders vote FOR Proposal No. 2 to approve the adoption of the above resolution.
The affirmative vote of a majority of the votes cast on this Proposal No. 2 is required for approval of this non-binding Proposal. If you own shares through a bank, broker, or other holder of record, you must instruct your bank, broker, or other holder of record how to vote your shares in order for your vote to be counted on this Proposal. Abstentions and broker non-votes are not counted as votes cast and, therefore, do not affect the outcome of this Proposal.
COMPENSATION OF DIRECTORS
The NCG Committee determines the compensation of itsthe Company’s non-employee directors. The Company’s director compensation program uses a combination of cash and stock-based compensation to attract and retain highly qualified individuals to serve on the Board. In setting director compensation, the NCG Committee considers the significant amount of time that directors expend in fulfilling their duties to the Company, as well as the skill level required for members of the Board.
The NCG Committee assesses the Company’s director compensation package periodically, but no less frequently than once every three years, to ensure that it reflects competitive market conditions and sound corporate governance practices. AnyIn addition, the NCG Committee annually considers and approves non-employee director compensation for that fiscal year, and any changes in director compensation must be approved by the Board. The NCG Committee last engaged aan independent compensation consultant to conduct a director compensation study in 2019,2022, and the resultsoutcome of this study were consideredwas presented to the Board and resulted in changes in director compensation described below.
Types and Amounts of Director Compensation. Our non-employee director compensation includes a cash component (approximately 40 percent) and an equity component (approximately 60 percent). The cash component for fiscal 2023 was paid quarterly, consisting of a base amount plus additional retainers for our Committee Chairpersons and the Chairperson of the Board. On the date of the 2023 Annual Meeting of the Company’s shareholders, each non-employee director was awarded restricted stock units (“RSUs”) based on a value on that date of $125,000, and the Chairperson was awarded additional RSUs based on a value on that date of $85,000.
Directors who retire or join the Board during the year receive a prorated number of RSUs based on the portion of the fiscal year served. The annual award of RSUs to non-employee directors (including the Chairperson) is issued pursuant to the Stock Plan and is determined using the average of the high and low sale prices of the Company’s common stock on the date of grant.
Members of certain non-permanent committees may also receive additional retainers as determined by the Board, but no such retainers were paid during fiscal 2023. Directors do not receive additional per-meeting fees for Board or committee meeting attendance.
Recent Changes to Director Compensation. In conformance with the outcome of the independent compensation consultant’s director compensation study in 2022, the NCG Committee recommended and initially adoptedthe Board approved various changes to the compensation of our independent directors explained in the footnotes below, as well as updating the compensation of the Chairperson of the Board to align more closely with the market median, as follows:
•effective January 1, 2023, the annual cash retainer for independent members of our Board of Directors increased from $80,000 to $95,000;
•also effective January 1, 2023, Committee Chairperson fees increased to $20,000 for the Audit Committee Chairperson and $15,000 for all other standing committee Chairpersons, from $12,500 each;
•effective January 1, 2024, the additional annual cash retainer of the Chairperson of the Board will increase from $35,000 to $40,000;
•effective October 1, 2023, the annual RSU award levels for directors increased from $125,000 to $140,000; and
•effective October 1, 2024, the additional annual RSU award level for the Chairperson of the Board will increase from $85,000 to $90,000.
The change in Chairperson compensation has a later effective date at the recommendation of the former Board Chairperson and Vice Chairperson, in recognition of Ms. Cornell’s recent elevation to the role, consistent with the Company’s general practice with respect to internally promoted executives growing into a new role. In addition, although the Board’s practice generally has been to pay all Committee Chairpersons equally, the Board has determined that the Audit Committee Chairperson should be effective during 2020. As partpaid moderately more than other Committee Chairpersons in light of developing market practice in this regard and the outcome of the director compensation study mentioned above, as well as the recognition of the additional responsibilities of an Audit Committee Chairperson.
Characteristics of Director RSUs. For fiscal 2023, RSUs awarded to non-employee directors vest upon the earlier to occur of (1) the first anniversary of the grant date or (2) the time immediately prior to the commencement of the first annual meeting of the Company’s responseshareholders that occurs after (not including) the grant date. In all cases, the directors are required to hold the shares underlying these grants – and the shares are not delivered – until after the occurrence of one of the following: a change in control of the Company, the director’s death or permanent and total disability, or the date the director ceases to be a director of the Company. For more information on the grants, please refer to the COVID-19 pandemic,discussion found under the section, “Security Ownership of Directors and Management” above. These RSUs carry no voting rights until such time as the underlying shares are delivered. Dividends paid on the Company common stock are accrued with regard to the RSUs awarded, deemed to be reinvested in Company common stock at the market value on the date of such dividend, and paid in additional shares on the distribution date of the underlying award in proportion to the number of shares that are distributed.
Deferred Compensation Plan. Non-employee directors may also participate in the Board voluntarily waived its scheduled cashdeferred compensation increaseplan, in which directors may elect to defer receipt of fees earned. Under the Company’s Supplemental Retirement Plan, deferred amounts may be invested in a variety of Fidelity mutual funds and, at previous times, in Company common stock. Various Hillenbrand directors have participated in this program, and Neil S. Novich and Stuart A. Taylor, II, presently own deferred shares of Company common stock acquired through this program. See the “Retirement and Savings Plans” section of Part I of “Executive Compensation” above for 2020, which increase has been implemented for 2021.more detail regarding the Supplemental Retirement Plan.
Director Compensation Limit. Our Corporate Governance Standards set forth stock ownership guidelines for our non-employee directors and limit total annual base compensation for non-employee directors. An increasedshareholders have approved a limit on total annual base compensation for non-employee directors, is proposed to be includedcontained in the amendment and restatementour Stock Plan, of the Company’s Stock Incentive Plan as further discussed under “Proposal No. 3 – Approval of the Amendment and Restatement of the Hillenbrand, Inc. Stock Incentive Plan” below. If Proposal No. 3 is approved, the compensation limit as set forth in the Amended and Restated Stock Incentive Plan will be increased, to $600,000, and will replace the limit in the Corporate Governance Standards.$600,000. This limit including as proposed,was adopted to bring the Company further into alignment with general market practices and is inclusive of the value of both the annual cash retainer and the grant date fair value of the annual RSU award butaward. The limit excludes amounts payable for service as a Board or Committee Chairperson. The
Director Stock Ownership Guidelines. Our Corporate Governance Standards set forth stock ownership guidelines that require our non-employee directors to own an amount of our stock (including, for this purpose, time-based RSUs) equal to five times the director’s annual cash compensation. Our new directors have five years to come into compliance with this requirement, and
all of our current non-employee directors (other than Ms. Rumsey, who was elected to the Board in August 2020)2020, Mr. Pullin, who was elected to the Board in May 2021, and Ms. Sawhney, who was elected to the Board in June 2021) are currently in compliance. Ms. Rumsey, isMr. Pullin, and Ms. Sawhney are under the five-year compliance deadline.
The following table sets forth the compensation paid to our non-employee directors in fiscal year 2020.2023. Directors who are also employees of the Company receive no additional remuneration for services as a director. Of the Company’s current directors, only Mr. Raver isMs. Ryan was a salaried employee of the Company.
96
Company during fiscal 2023.Director Compensation for the Fiscal Year Ended September 30, 20202023
| (a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | |
| | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned Or Paid In Cash $ (1) | | | Stock Awards $ (2) | | | Option Awards $ | | | Non-Equity Incentive Plan Compensation $ | | | Change In Pension Value And Nonqualified Deferred Compensation Earnings $ | | | All Other Compensation $ (3) | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | |
F. Joseph Loughrey – Chairperson | | $ | 112,500 | | | $ | 164,995 | | | $ | – | | | $ | – | | | $ | – | | | $ | 304 | | | $ | 277,799 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Edward B. Cloues, II | | $ | 70,000 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | – | | | $ | 179,997 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gary L. Collar | | $ | 70,000 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | 304 | | | $ | 180,301 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Helen W. Cornell | | $ | 82,500 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | 304 | | | $ | 192,801 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Joy M. Greenway | | $ | 70,000 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | 304 | | | $ | 180,301 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Daniel C. Hillenbrand | | $ | 70,000 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | 221 | | | $ | 180,218 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Thomas H. Johnson | | $ | 70,000 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | 304 | | | $ | 180,301 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Neil S. Novich | | $ | 82,500 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | 304 | | | $ | 192,801 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jennifer W. Rumsey | | $ | 10,931 | | | $ | 17,159 | | | $ | – | | | $ | – | | | $ | – | | | $ | 37 | | | $ | 28,127 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stuart A. Taylor, II | | $ | 82,500 | | | $ | 109,997 | | | $ | – | | | $ | – | | | $ | – | | | $ | 304 | | | $ | 192,801 | |
(1) | From January 1, 2017 through the end of 2020, directors received an annual cash retainer of $70,000. Effective January 1, 2021, this annual cash retainer is planned to increase to $80,000, in order to align more closely with the market median, as recommended by the latest Board compensation study. In the past, the Chairperson of the Board received an additional annual cash retainer of $30,000. Effective January 1, 2021, this additional annual cash retainer is planned to increase to $35,000, as recommended by the compensation study, in order to align more closely with the market. In fiscal 2020, Chairpersons of the Audit, Nominating/Corporate Governance, Compensation, and M&A Committees received an additional annual cash retainer of $12,500. Members of certain non-permanent committees may receive additional retainers as determined by the Board. Directors receive no additional per-meeting fee for Board or committee meeting attendance. Non-employee directors may participate in the Board deferred compensation plan, in which directors may elect to defer receipt of fees earned. Under the Company’s Supplemental Retirement Plan, deferred amounts may be invested in a variety of Fidelity mutual funds and/or Company common stock. See the “Retirement and Savings Plans” section of Part I of “Executive Compensation” above for more detail regarding the Supplemental Retirement Plan.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) |
| | | | | | | | | | | | | | |
| Name | | Fees Earned Or Paid In Cash $ (1) | | Stock Awards $ (2) | | Option Awards $ | | Non-Equity Incentive Plan Compensation $ | | Change In Pension Value And Nonqualified Deferred Compensation Earnings $ | | All Other Compensation $ (3) | | Total |
| | | | | | | | | | | | | | |
| F. Joseph Loughrey - Former Chairperson (4) | | $ | 32,312 | | | $ | 58,685 | | | $ | – | | | $ | – | | | $ | – | | | $ | 28 | | | $ | 91,024 | |
| | | | | | | | | | | | | | |
Helen W. Cornell – Chairperson (4) | | $ | 130,567 | | | $ | 186,215 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 316,911 | |
| | | | | | | | | | | | | | |
| Gary L. Collar | | $ | 105,625 | | | $ | 124,988 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 230,742 | |
| | | | | | | | | | | | | | |
| Joy M. Greenway | | $ | 91,250 | | | $ | 124,988 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 216,367 | |
| | | | | | | | | | | | | | |
| Daniel C. Hillenbrand | | $ | 91,250 | | | $ | 124,988 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 216,367 | |
| | | | | | | | | | | | | | |
| Neil S. Novich | | $ | 109,375 | | | $ | 124,988 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 234,492 | |
| | | | | | | | | | | | | | |
| Dennis W. Pullin | | $ | 91,250 | | | $ | 124,988 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 216,367 | |
| | | | | | | | | | | | | | |
| Jennifer W. Rumsey | | $ | 91,250 | | | $ | 124,988 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 216,367 | |
| | | | | | | | | | | | | | |
| Inderpreet Sawhney | | $ | 91,250 | | | $ | 124,988 | | | $ | – | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 216,367 | |
| | | | | | | | | | | | | | |
| Stuart A. Taylor, II | | $ | 105,625 | | | $ | 124,988 | | | $ | ��� | | | $ | – | | | $ | – | | | $ | 129 | | | $ | 230,742 | |
97(1)As described above, at the beginning of fiscal 2023, the directors’ annual cash retainer was $80,000 and increased to $95,000 on January 1, 2023 and the Chairperson of the Board’s additional annual cash retainer was $35,000. In fiscal 2023, Chairpersons of the Nominating/Corporate Governance, Compensation, and M&A Committees received an additional annual cash retainer of $12,500 which increased to $15,000 on January 1, 2023 and the Chairperson of the Audit Committee received an additional annual cash retainer of $12,500 which increased to $20,000 on January 1, 2023. The amounts in this column reflect the total cash retainer actually paid to each director.
(2) | Following the close of the 2020(2)Following the close of the 2023 Annual Meeting of the Company’s shareholders and on the date thereof, each director was awarded restricted stock units (RSUs) based on a value on that date of $110,000, and the Chairperson was awarded additional RSUs based on a value on that date of $55,000, in each case with respect to fiscal 2020. Effective October 1, 2020, this annual award of RSUs was increased to $125,000, and the Chairperson’s additional annual award of RSUs was increased to $85,000, each as recommended by the compensation study and in order to align more closely with the market. The annual award of RSUs to non-employee directors (including the Chairperson) is issued pursuant to the Stock Plan and is valued using the average of the high and low sale prices of the Company’s common stock on the date of grant. Historically, RSUs awarded to non-employee directors vested immediately upon grant, including those granted in fiscal 2020; however, beginning with awards made in fiscal 2021, subject to shareholder approval of the amendment and restatement of the Stock Plan, the Company expects to make RSU awards to non-employee directors subject to vesting upon the earlier to occur of (1) the first anniversary of the grant date or (2) the time immediately prior to the commencement of the first annual meeting of the Company’s shareholders that occurs after (not including) the grant date. In all cases, the directors are required to hold the shares underlying these grants – and the shares are not delivered – until after the occurrence of one of the following: a change in control of the Company, the director’s death or permanent and total disability, or the date the director ceases to be a director of the Company. (For more information on the grants, please refer to the discussion found under the section, “Security Ownership of Directors and Management” above.) These RSUs carry no voting rights until such time as the underlying shares are delivered. Dividends paid on the Company common stock are accrued with regard to the RSUs awarded, deemed to be reinvested in Company common stock at the market value on the date of such dividend, and paid in additional shares on the distribution date of the underlying award in proportion to the number of shares that vest. |
On February 13, 2020, 3,81824, 2023, 2,713 RSUs with a fair value of $109,997approximately $125,000 were granted to each person who was a non-employee director as of that date, anddate. The determination of this value is based on the Board Chairperson received an additional 1,909 RSUsmethodology set forth in Note 11 to our audited financial statements included in our Annual Report on Form 10-K, which was filed with a fair value of $54,998 for his service in such capacity.the SEC on November 15, 2023. As of September 30, 2020,2023, the
aggregate numbers of shares represented by vested restricted stock unit awards for our directors were as follows:
| | | | | | | | |
| Name | Vested RSU Awards # | Unvested RSU Awards # |
| | |
| | |
| F. Joseph Loughrey - Former Chairperson | 0 | 0 |
| Gary L. Collar | 24,475 | 2,750 |
| Helen W. Cornell - Chairperson | 41,748 | 4,098 |
| Joy M. Greenway | 33,096 | 2,750 |
| Daniel C. Hillenbrand | 13,545 | 2,750 |
| Neil S. Novich | 53,876 | 2,750 |
| Dennis W. Pullin | 3,820 | 2,750 |
| Jennifer W. Rumsey | 6,190 | 2,750 |
| Inderpreet Sawhney | 3,509 | 2,750 |
| Stuart A. Taylor, II | 72,403 | 2,750 |
Name | Vested
RSU Awards
#
|
| |
F. Joseph Loughrey – Chairperson
| 67,214 |
Edward B. Cloues, II
| 41,715 |
Gary L. Collar
| 17,911 |
Helen W. Cornell
| 34,306 |
Joy M. Greenway
| 26,101 |
Daniel C. Hillenbrand
| 7,539 |
Thomas H. Johnson
| 53,122 |
Neil S. Novich
| 45,855 |
Jennifer W. Rumsey
| 563 |
Stuart A. Taylor, II
| 63,512 |
(3)Consists of Company-provided term life insurance, the value of which is net of premiums paid. Participation in the life insurance program is voluntary and may be declined.
(3) | Consists of Company-provided term life insurance, the value of which is net of premiums paid. Participation in the life insurance program is voluntary and may be declined.
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(4)As previously disclosed, Mr. Loughrey served as Chairperson of the Board during fiscal 2022 and part of fiscal 2023 until his retirement on January 10, 2023, at which point Ms. Cornell became Chairperson of the Board.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information concerning the Company’s equity compensation plans as of September 30, 2020:2023:
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| | (a) | | (b) | | (c) |
| Plan Category | | Number Of Securities To Be Issued Upon Exercise Of Outstanding Options, Warrants, And Rights # (1) | | Weighted-Average Exercise Price Of Outstanding Options, Warrants, And Rights $ | | Number Of Securities Remaining Available For Issuance Under Equity Compensation Plans (Excluding Securities Reflected In Column (a)) # |
| | | | | | |
| Equity compensation plans approved by security holders | | 1,988,836 | | $46.12 | | 3,199,541 |
| | | (a) | | | (b) | | | (c) | |
| Plan Category | | Number Of Securities To Be Issued Upon Exercise Of Outstanding Options, Warrants, And Rights # (1) | | | Weighted-Average Exercise Price Of Outstanding Options, Warrants, And Rights $ | | | Number Of Securities Remaining Available For Issuance Under Equity Compensation Plans (Excluding Securities Reflected In Column (a)) # | |
| | | | | | | | | | |
Equity compensation plans approved by security holders | | | 3,835,201 | | | $ | 35.06 | | | | 1,911,305 | |
(1) | Shares underlying awards of performance-based restricted stock units are reflected in this column as follows: (i) with respect to awards that vested on September 30, 2020,(1)Shares underlying awards of performance-based restricted stock units are reflected in this column as follows: (i) with respect to awards that vested on September 30, 2023, this column reflects the actual vesting of awards and, therefore, the number of shares actually issued with respect to such awards; and (ii) with respect to awards that are scheduled to vest on September 30, 2021 and September 30, 2022, this column reflects a number of shares that would be issued if the maximum 175 percent potential payout were earned. The discussion above in the “Compensation Discussion and Analysis” section under the heading “Long-Term Incentive Compensation” explains how we reserve within our Stock Plan a number of shares sufficient to cover the maximum 175 percent potential payout of our then-outstanding performance-based equity awards.
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PROPOSAL NO. 3 – APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE HILLENBRAND, INC.STOCK INCENTIVE PLAN
The Board of Directors is asking our shareholders to approve an amendment and restatement of the Stock Plan. The Stock Plan was adopted on December 19, 2008. The Stock Plan has since been amended and restated and was most recently approved by our shareholders on February 26, 2014. On December 3, 2020, the Board of Directors, upon the recommendation of the Compensation Committee, approved another amendment and restatement of the Stock Plan, subject to shareholder approval, in order to:
Increase the number of shares of our Common Stock (the “Shares”) reserved for issuance under the Stock Plan by 2,700,000 Shares;
Extend the expiration date of the Stock Plan from December 3, 2023 to December 1, 2030;
Impose a cap in the Stock Plan on the annual compensation paid to our non-employee directors; and
Reflect market practices.
The complete text of the Stock Plan is attached as Appendix A to this proxy statement. The following summary of the Stock Plan does not purport to be complete and is qualified in its entirety by reference to Appendix A.
How We Calculated the Proposed Increase in Share Authorization
The Board of Directors believes that the future success of the Company depends, in large part, on our ability to attract, motivate and retain high-caliber employees and directors. Equity compensation is a key component of our compensation program, because it helps us attract, motivate and retain talented employees and directors and align their interests with those of our shareholders.
As of December 14, 2020, and excluding the proposed Share increase, 1,284,907 Shares remained available for issuance or delivery under the Stock Plan. Based on our historical grant practices, as summarized below, and our projected recruiting and retention needs, we anticipate that the Company will deplete the remaining Share reserve by the end of calendar year 2021 without sufficient Shares to make projected annual grants in December 2021 unless we reserve more Shares for issuance under the Stock Plan.
In order to maintain the flexibility to keep pace with our competitors and effectively attract, motivate and retain the high-caliber employees and directors, we are asking our shareholders to authorize an additional 2,700,000 Shares for issuance as awards under the Stock Plan, which would increase the aggregate number of Shares reserved for issuance under the Stock Plan from 12,535,436 to 15,235,436 Shares. We intend to grant future equity awards under the Stock Plan in amounts that are reasonable and consistent with market data prepared by the Compensation Committee’s independent consultant. Based on our projected recruiting and retention needs, we believe that the proposed Share increase would allow us to continue granting equity awards under the Stock Plan to employees and directors for approximately three more years.
Without shareholder approval of the additional Shares under the Stock Plan, we may be required to increase the cash components of our compensation program, which would significantly inhibit our ability to attract, motivate and retain high-caliber employees and directors in a competitive marketplace and align their interests with those of our shareholders.
In determining the size of this Share request, the Compensation Committee considered, among other things, our outstanding equity awards, our burn rate, our stock price and volatility, our projected recruiting and retention needs, the potential dilution of our equity compensation program, the voting guidelines of certain institutional investors and proxy advisory firms, and competitive market practices. The results of this comprehensive analysis were presented to the Compensation Committee and the Board of Directors for its consideration. Certain of these factors are outlined below:
Outstanding Awards.As of December 14, 2020, there were 1,575,134 Shares subject to outstanding time- and performance-based RSU awards (calculated at maximum), and 2,302,023 Shares subject to outstanding stock options under the Stock Plan.34 The Company’s practiceactually issued with respect to performance-based RSUsuch awards; and (ii) with respect to awards is, duringthat are scheduled to vest on September 30, 2024 and September 30, 2025, this column reflects a number of shares that would be issued if the measurement period, tomaximum (either 175 or 200 percent based on previously disclosed changes) potential payout were earned. We reserve within theour Stock Plan a number of shares equalsufficient to cover the maximum potential payout to ensure sufficient availability of shares and for administrative purposes.
As of that date, the weighted average exercise price of the outstanding stock options was $35.60, the weighted average remaining contractual term for the stock options was 6.22 years, and the closing market price of a Share as reported on the NYSE was $37.98 per Share.
Burn Rate. We use our burn rate to measure the potential life expectancy of the Stock Plan and shareholder dilution. Our burn rate is summarized in the table below, which provides data on our Share usage (including awards to employees and non-employee directors) for the last three completed fiscal years.
Fiscal Year | Stock Options Granted | Time-Based RSUs Granted | Performance- Based RSUs Earned | Total Shares (1) | Burn Rate |
2018 | 479,991 | 34,166 | 243,310 | 1,034,943 | 1.64% |
2019 | 431,726 | 29,651 | 134,140 | 759,308 | 1.21% |
2020 | 454,929 | 338,105 | 114,043 | 1,359,225 | 1.85% |
3-year Average Burn Rate (2018-2020) | 1.57% |
(1) | The total number of Shares is calculated by multiplying (i) the sum of Time-Based RSUs Granted and Performance-Based RSUs Earned, by (ii) a factor of 2, which is intended to reflect our stock price volatility, and then adding that amount to the Stock Options Granted.
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Dilution and Overhang. We measure the dilutive impact of our then-outstanding performance-based equity program (the so-called “overhang”) by dividing (i) the number of Shares subject to outstanding awards (with performance-based RSUs calculated at maximum) plus the number of Shares available to be granted under the Stock Plan (the “numerator”), by (ii) our total Shares outstanding plus the Shares included in the numerator. As of December 14, 2020, our fully diluted overhang was approximately 6.23 percent. The 2,700,000 additional Shares being requested under the Stock Plan would bring our fully diluted overhang to approximately 9.49 percent, which we believe to be within industry norms.
34 These amounts include the grant in December 2020 of 257,806 time-based RSUs and 359,931 performance-based RSUs (calculated at maximum).awards.
Summary of Other Material Changes to the Stock Plan
In addition to the proposed increase in the Share reserve, as described above, the Board of Directors approved the following additional changes to the Stock Plan:
Extended Term. The term of the Stock Plan is extended from December 3, 2023 to December 1, 2030.
Cap on Director Compensation. The Stock Plan imposes a cap on equity awards granted to non-employee directors, so that the accounting value of those equity awards, when added to any cash retainers for service as a director, cannot exceed $600,000 per year.
Cap on Awards to Employees. The Stock Plan increases the cap on equity awards granted to employees, so that no employee may be granted stock options and/or stock appreciation rights under the Stock Plan for more than 750,000 Shares in any fiscal year (up from 500,000 Shares prior to the amendment), and no employee may be granted restricted stock, restricted stock units, and/or bonus stock awards for more than 500,000 Shares in any fiscal year (up from 300,000 Shares prior to the amendment).
Minimum Vesting Provisions. The amendment provides that all awards granted under the Stock Plan are subject to a minimum vesting requirement of at least one year, with an exception for awards covering up to five percent of the Shares available for issuance as of the Annual Meeting and for director awards that vest on the earlier of the first anniversary of the grant date or the next Annual Meeting of shareholders. Prior to the amendment, the Stock Plan imposed a minimum vesting requirement only on stock options and appreciation rights (which could vest at a rate no faster than 1/3 per year).
Limit on Dividend Equivalents. Dividends or dividend equivalents payable with respect to any awards granted under the Stock Plan will be accumulated or reinvested until such award is earned, and the dividends or dividend equivalents shall not be paid if the underlying award does not become vested. Additionally, no dividend equivalents will be granted with respect to Shares underlying a stock option or appreciation right.
Clawback Policy. Awards granted under the Stock Plan are subject to recoupment under our clawback policy, as described under the heading “Compensation Discussion and Analysis – Compensation-Related Policies” above.
Other Changes. The Stock Plan includes additional changes to eliminate references to a prior spin-off transaction and to reflect the repeal of the performance-based compensation exception to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
Summary of the Other Material Provisions of the Stock Plan
The following is a summary of the other material provisions of the Stock Plan, as amended and proposed for approval by the shareholders.
Share Reserve. As noted above, the maximum number of Shares that may be issued or transferred with respect to awards under the Stock Plan is 15,235,436, subject to adjustment as provided below (which includes the original 4,635,436 Shares reserved under the Stock Plan as of December 19, 2008, the addition of 4,000,000 Shares to the Stock Plan as approved by shareholders on February 24, 2010, the addition of 3,900,000 Shares to the Stock Plan as approved by shareholders on February 26, 2014, and the proposed addition of 2,700,000 Shares to the Stock Plan as set forth above). Shares issued under the Stock Plan may include authorized but unissued Shares, treasury Shares, Shares purchased in the open market, or a combination of the foregoing. Shares underlying awards that are settled in cash or that terminate or are forfeited, cancelled or surrendered without the issuance of Shares will again be available for issuance under the Stock Plan. Shares delivered under awards that are granted in assumption of, or in substitution or exchange for, outstanding awards previously granted by an entity acquired directly or indirectly by the Company or with which the Company directly or indirectly combines (“Substitute Awards”), shall not count against the Stock Plan’s share limit, except as may be required by the rules and regulations of any stock exchange or trading market.
No Share Recycling. Shares surrendered to pay the exercise price of stock options, repurchased by us with option proceeds, or withheld for taxes upon exercise or vesting of an award, will not again be available for issuance under the Stock Plan. When a stock appreciation right is exercised and settled in Shares, all of the Shares underlying the stock appreciation right will be counted against the Share limit of the Stock Plan regardless of the number of Shares used to settle the stock appreciation right.
Adjustments. In the event of any equity restructuring, such as a stock dividend, stock split, spin off, rights offering or recapitalization through a large, nonrecurring cash dividend, the Compensation Committee will adjust the number and kind of Shares that may be delivered under the Stock Plan, the individual award limits, and, with respect to outstanding awards, the number and kind of Shares subject to outstanding awards and the exercise price or other price of Shares subject to outstanding awards, to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Compensation Committee may, in its discretion, make such equitable adjustment as described in the foregoing sentence, to prevent dilution or enlargement of rights. Moreover, in the event of any such transaction or event, the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards such alternative consideration (including cash) as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced.
Eligibility. All employees, officers, and non-employee directors of the Company and its subsidiaries are eligible to receive equity awards under the Stock Plan, except that Incentive Stock Options may not be granted to non-employee directors. Currently, there are approximately 10,700 worldwide employees (including our executive officers) and 10 non-employee directors eligible to participate in the Stock Plan. The Compensation Committee is authorized to select the employees who will receive awards under the Stock Plan from time-to-time. Under our current director compensation program, each of the non-employee directors receives a grant of equity awards at the conclusion of each Annual Meeting of shareholders.
Administration. The Compensation Committee has the authority and responsibility to administer the Stock Plan. The Compensation Committee consists solely of members intended to be “non-employee directors” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and “independent directors” under the NYSE rules. The Compensation Committee may exercise broad discretionary authority in the administration of the Stock Plan, including the authority to determine the treatment of awards upon an employee’s retirement, disability, death, termination for cause or other termination of employment, or during a leave of absence. In addition, the Compensation Committee is authorized to delegate some or all of its administrative duties to one or more of its members or to one or more employees or agents of the Company. The Board of Directors retains authority to administer and issue awards under the Stock Plan and specifically reserves the exclusive authority to approve and administer all awards granted to non-employee directors and to approve the compensation of our President and CEO.
Amendments and Termination. The Board of Directors may amend or discontinue the Stock Plan at any time, with shareholder approval to the extent required by applicable laws. No such amendment or termination, however, may adversely affect any holder of outstanding awards without his or her consent.
No Repricing. The Stock Plan does not permit the “repricing” of stock options and stock appreciation rights without shareholder approval. This includes a prohibition on reducing the exercise price of stock options or appreciation rights, cancellation of stock options or appreciation rights in exchange for an award having a lower exercise price, for another award, or for cash, and “reloads” in connection with the exercise of stock options or appreciation rights.
Types of Awards. The Stock Plan permits the Board of Directors or Compensation Committee to grant the following types of awards:
| o | Stock Options. Stock options entitle the holder to elect to purchase up to a specified number of Shares at a specified price (the exercise price). The exercise price (other than Substitute Awards) cannot be less than the fair market value of the Shares when the options are granted. Under the Stock Plan, stock options may be Incentive Stock Options or “Non-Qualified Options” under the Code. Stock options may not be exercised more than ten years from the date of grant, unless the Compensation Committee determines otherwise on an individual basis.
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The applicable option exercise price is payable at the time of exercise in any of the following methods, to the extent permitted by the Compensation Committee: (i) cash, (ii) delivery of unrestricted Shares owned by the optionee having a value at the time of exercise equal to the exercise price, (iii) a cashless exercise (including withholding of Shares otherwise deliverable on exercise or a broker-assisted arrangement as permitted by applicable laws), (iv) any other manner permitted by law, or (v) any combination of the foregoing.
| o | Stock Appreciation Rights. A stock appreciation right entitles the holder to receive, for each Share as to which the award is granted, payment of an amount, in cash, in Shares, or in a combination, as determined by the Compensation Committee, equal in value to the excess of the fair market value of a Share on the date of exercise over the fair market value of a Share on the day the stock appreciation right was granted.
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| o | Restricted Stock. Restricted stock means Shares that are actually issued to the recipient of the award, but the recipient has no right to sell them, pledge them, or otherwise transfer any interest in them until it is determined in the future how many Shares the recipient is entitled to retain (free of such restrictions) and how many Shares must be forfeited back to the Company. Such determination will be based on the conditions the Compensation Committee attaches to the award, which may include performance-based conditions (as described below).
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| o | Restricted Stock Unit (“RSU”). An RSU award is a promise by the Company to issue up to a fixed number of Shares to the award recipient at some point in the future, with the number of Shares that are actually issued and the number of Shares that are forfeited being determined by the conditions attached to the award by the Compensation Committee (which may include performance-based conditions, as described below). Except as provided by the Compensation Committee, RSU awards that are unvested at the time the holder’s employment or other relationship with the Company is terminated will be forfeited.
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| o | Bonus Stock. Bonus stock means unrestricted Shares that are issued to an award recipient at no cost to the recipient or at a discount from its fair market value.
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Vesting and Forfeiture of Awards. Subject to the minimum vesting requirements described above, the exercisability of stock options, and the vesting or forfeiture of all other equity awards under the Stock Plan may be conditioned in any manner that the Compensation Committee chooses. The Stock Plan grants broad discretion to the Compensation Committee to determine the terms and conditions applicable to awards. For example, time-based equity awards may be granted with the condition that they will become earned (vested) ratably over a period of years as long as the recipient remains employed. Performance-based equity awards may be granted with the condition that they will become earned (vested) or be forfeited in accordance with the attainment of specified financial or other performance objectives.
Performance-Based Awards. The Compensation Committee has the right under the Stock Plan to grant awards that will become earned (vested) or be forfeited based on the level of achievement of objective and pre-established performance objectives. These objectives are established by the Compensation Committee based on one or more of the following criteria, in each case applied to the Company on a consolidated basis and/or to a business unit, and which the Compensation Committee may use as an absolute measure, as a measure of improvement relative to prior performance, or as a measure of comparable performance relative to a peer group of companies: sales, operating profits, operating profits before taxes, operating profits before interest expense and taxes, net earnings, earnings per share, return on equity, return on assets, return on invested capital, total shareholder return, cash flow, debt to equity ratio, market share, stock price, and shareholder, economic or market value added. In establishing and measuring performance targets for a year, the Compensation Committee may provide for appropriate objectively determinable adjustments to any performance measure for extraordinary and/or non-recurring items.
Transferability of Certain Awards. Unless otherwise provided by the Compensation Committee, stock options and stock appreciation rights granted under the Stock Plan will not be transferable by a participant other than by will or the laws of descent and distribution, and restricted stock and RSU awards may not be sold, assigned, transferred, pledged, or otherwise encumbered during the vesting period. In no event may the Compensation Committee permit a stock option to be transferred for consideration.
Change in Control. Unless an award is granted with contrary provisions or the participant has a change in control agreement with the Company with contrary provisions, a “change in control” of the Company will result in the immediate full vesting of all Shares under outstanding awards under the Stock Plan; provided that, any awards with respect to which the number of Shares earned depends upon performance shall vest based on the greater of: (i) an assumed achievement of all relevant performance goals at their “target” level, or (ii) the actual level of achievement of all relevant performance goals against target as of the date immediately prior to the change in control (or as close to such date as administratively practicable). In addition, the Compensation Committee has the right to cancel any outstanding awards in connection with a change in control, in exchange for a payment in cash or other property (including shares of the resulting entity) in an amount equal to the excess of the fair market value of the Shares subject to the award over any exercise price related to the award, including the right to cancel any “underwater” stock options and stock appreciation rights without payment therefor. Notwithstanding the default provisions of the Stock Plan, certain Company executives, including the Named Executive Officers, have superseding agreements with the Company that provide for vesting of outstanding equity awards only if there has been both a change in control transaction and a qualifying termination of employment – referred to as “double-trigger” vesting. Pending approval of the amendments to the Stock Plan by the Company’s shareholders, the Company intends to amend these agreements to make corresponding changes and certain other updates to reflect market practices.
The Stock Plan includes a provision that could result in a reduction of the amount paid to a participant in the event any payment or benefit resulting from an award, including accelerated vesting of any equity compensation, would constitute a “parachute payment” within the meaning of Section 280G of the Code and could be subject to the excise tax imposed by Section 4999 of the Code. In that event, the payment would be either provided to the recipient in full or provided to the recipient to such lesser extent which would result in no portion of such payment being subject to the excise tax, whichever of the foregoing amounts results in the receipt by the recipient, on an after-tax basis, of the greatest amount of the payment.
A change in control generally means (i) the acquisition of securities representing 35 percent or more of the voting power of our outstanding securities; (ii) our incumbent directors ceasing to constitute at least a majority of the members of our Board; (iii) a reorganization, merger or consolidation, unless (a) substantially all of the beneficial owners of our outstanding stock prior to the transaction continue to own (in the same proportions) shares entitling them to 50 percent or more of the voting power of the outstanding securities of the combined or resulting entity, (b) no person owns 35 percent or more of the voting power of the outstanding securities of the combined or resulting entity, and (c) at least a majority of the members of the board of the resulting corporation are individuals who were our incumbent directors prior to the transaction; (iv) a sale or other disposition of all or substantially all (i.e., 50 percent or more) of the assets of the Company in one transaction or a series of transactions within any period of 12 consecutive months; or (v) shareholder approval of our complete liquidation or dissolution.
Waiver of Conditions. The authority of the Compensation Committee under the Stock Plan includes the right to waive the satisfaction of any or all conditions in an award as to the vesting of the Shares awarded.
Federal Income Tax Consequences to Participants
Overview. The following discussion is limited to a summary of the U.S. federal income tax consequences of the grant, exercise, and vesting of awards under the Stock Plan. The tax consequences of awards may vary according to country of participation. Also, the tax consequences of the grant, exercise, or vesting of awards may vary depending upon the particular circumstances, and it should be noted that income tax laws, regulations, and interpretations change frequently. Participants should rely upon their own tax advisors for advice concerning the specific tax consequences applicable to them, including the applicability and effect of state, local, and foreign tax laws.
| • | Non-Qualified Stock Options. In general, (i) a participant will not recognize income at the time a Non-Qualified Option is granted; (ii) a participant will recognize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the Shares on the date of exercise over the option exercise price paid for the Shares; and (iii) at the time of sale of Shares acquired pursuant to the exercise of the non-qualified option, appreciation (or depreciation) in value of the Shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the Shares have been held.
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| • | Incentive Stock Options. A participant will not recognize income at the time an Incentive Stock Option is granted or exercised. However, the excess of the fair market value of the Shares on the date of exercise over the option exercise price paid may constitute a preference item for the alternative minimum tax. If Shares are issued to the optionee pursuant to the exercise of an Incentive Stock Option, and if no disqualifying disposition of such Shares is made by such optionee within two years after the date of the grant or within one year after the issuance of such Shares to the optionee, then upon sale of such Shares, any amount realized in excess of the option price will be taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss. If Shares acquired upon the exercise of an Incentive Stock Option are disposed of prior to the expiration of either holding period described above, the optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of such Shares as of the time of exercise (or, if less, the amount realized on the disposition of such Shares if a sale or exchange) over the option price paid for such Shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.
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| • | Stock Appreciation Rights. A participant will not recognize income upon the grant of stock appreciation rights. The participant generally will recognize ordinary income when the stock appreciation rights are exercised in an amount equal to the cash and the fair market value of any unrestricted Shares received on the exercise.
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| • | Restricted Stock. A participant will not be subject to tax until the Shares of restricted stock are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code. At that time, the participant will be subject to tax at ordinary income rates on the fair market value of the restricted Shares (reduced by any amount paid by the participant for such restricted Shares). However, a participant who so elects under Section 83(b) of the Code within 30 days of the date of transfer of the Shares will have taxable ordinary income on the date of transfer of the Shares equal to the excess of the fair market value of such Shares (determined without regard to the restrictions) over the purchase price, if any, of such restricted Shares. Any appreciation (or depreciation) realized upon a later disposition of such Shares will be treated as long-term or short-term capital gain depending upon how long the Shares have been held. If a Section 83(b) election has not been made, any dividends received with respect to restricted Shares that are subject to forfeiture and transfer restrictions generally will be treated as compensation that is taxable as ordinary income to the participant.
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| • | RSUs. A participant will not recognize income upon the grant of an RSU award. Upon payment of the awards, the participant generally will recognize ordinary income in an amount equal to the cash and the fair market value of any unrestricted Shares received.
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| • | Bonus Stock. A participant will recognize ordinary income upon the grant of a bonus stock award equal to the fair market value of the unrestricted Shares received by the participant.
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| • | Dividends or Dividend Equivalents. Any dividend or dividend equivalents awarded with respect to awards granted under the Stock Plan and paid in cash or unrestricted Shares will be taxed to the participant at ordinary income rates when such cash or unrestricted Shares are received by the participant.
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| • | Section 409A. The Stock Plan permits the grant of various types of awards that may or may not be exempt from Section 409A of the Code. If an award is subject to Section 409A, and if the requirements of Section 409A are not met, the award could be subject to tax at an earlier time than described above and could be subject to additional taxes and penalties. Awards granted under the Stock Plan generally will be designed either to be exempt from, or to comply with the requirements of, Section 409A.
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Federal Income Tax Consequences to the Company. To the extent that a participant recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding federal income tax deduction provided that, among other things, the income (i) meets the test of reasonableness, is an ordinary and necessary business expense, and is not an “excess parachute payment” within the meaning of Section 280G of the Code; and (ii) is not disallowed by the $1 million limitation on executive compensation under Section 162(m) of the Code.
Registration with the SEC. The Company intends to file a Registration Statement on Form S-8 relating to the issuance of additional Shares under the Stock Plan with the SEC pursuant to the Securities Act of 1933, as amended, after approval of the Stock Plan, as amended and restated, by the Company’s shareholders.
Plan Benefits Under the Stock Plan. Because it is within the discretion of the Compensation Committee to determine which directors, officers, employees and consultants will receive awards and the amount and type of awards received, it is not presently possible to determine the number of individuals to whom awards will be made in the future under the Stock Plan or the amount of the awards.
The Board of Directors has approved the Amended and Restated Hillenbrand, Inc. Stock Incentive Plan and recommends that the shareholders vote FOR Proposal No. 3 to approve and adopt such plan.
The affirmative vote of a majority of the votes cast on this Proposal No. 3 is required for approval of this Proposal. If you own Shares through a bank, broker, or other holder of record, you must instruct your bank, broker, or other holder of record how to vote your Shares in order for your vote to be counted on this Proposal. Abstentions will have the same effect as votes against the Proposal and broker non-votes are not counted as votes cast and, therefore, do not affect the outcome of the Proposal.
The Audit Committee of the Board of Directors (the “Committee”) is composed of fivefour directors, each of whom is independent under SEC Rule 10A-3 and the New York Stock Exchange listing standards. The Committee operates under a written Charter adopted by the Board of Directors, a copy of which can be accessed at http:https://ir.hillenbrand.com/investor-relations/corporate-governance/governance-documents. The Committee has the authority to conduct or authorize investigations into any matters within the scope of its responsibilities and the authority to retain such outside counsel, experts, and other advisors as it determines appropriate to assist it in the conduct of any such investigation.
Management has the primary responsibility for the Company’s financial statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness of internal control over financial reporting. The independent registered public accounting firm of Ernst & Young LLP (“EY”) was responsible in fiscal year 20202023 for performing an integrated audit of the Company’s consolidated financial statements and its internal control over financial reporting in accordance with standards of the Public Company Accounting Oversight Board (PCAOB) and the issuance of a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. In addition, the Committee approves, subject to shareholder ratification, the appointment of the Company’s independent registered public accounting firm and pre-approves all audit and non-audit services to be performed by the firm.
The Committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended September 30, 2020,2023, with management and representatives of EY. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles. Representatives of EY discussed with the Committee matters required to be discussed by Auditing Standard No. 1301, ‘Communications“Communications with Audit Committees,’” as adopted by PCAOB.
EY also provided to the Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee regarding independence, and the Audit Committee discussed with EY its independence. In addition, the Committee considered whether non-audit consulting services provided by EY impaired its independence and concluded that such services did not impair its independence.
Based upon these procedures and discussions, the Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020,2023, for filing with the Securities and Exchange Commission.
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| Submitted by the Audit Committee, |
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| Neil S. Novich (Chairperson) |
| Edward B. Cloues, II
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| Joy M. Greenway |
| Daniel C. Hillenbrand |
| Thomas H. Johnson
Inderpreet Sawhney |
PROPOSAL NO. 43 – RATIFICATION OF APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Subject to shareholder ratification, the Audit Committee of the Board of Directors of the Company has appointed the firm of EY, certified public accountants, as the independent registered public accounting firm to make an examination of the consolidated financial statements of the Company for its fiscal year ending September 30, 2021.2024. EY served as the independent registered public accounting firm of the Company for the fiscal year ended September 30, 2020, replacing PricewaterhouseCoopers LLP, which had served more than 10 years.2023. As we intend to hold our Annual Meeting in person, we expect that a representative of EY will be available at the Annual Meeting with an opportunity to make a statement if he or she desires to do so and will also be available to respond to appropriate questions. If we determine that alternative arrangements are needed for the Annual Meeting, we will endeavor to have a representative of EY similarly available.
The Board of Directors, at the request of the Audit Committee, recommends that the shareholders vote FOR Proposal No. 43 to ratify the appointment of EY as the Company’s independent registered public accounting firm for fiscal year 2021.
2024.
The affirmative vote of a majority in voting power of the votes cast on this Proposal No. 43 is required for approval of this Proposal. Abstentions and broker non-votes are not counted as votes cast and, therefore, do not affect the outcome of the Proposal.
If the appointment is not ratified by a majority of the votes cast, the adverse vote will be considered as an indication to the Audit Committee that it should consider selecting another independent registered public accounting firm for the following fiscal year.
Principal Accountant Fees and Services
The Audit Committee has adopted a policy requiring that all services to be performed by the independent registered public accounting firm be pre-approved by the Audit Committee or its delegate (Chairperson) and has adopted guidelines that fees for non-audit related services, including tax consulting, tax compliance, and tax preparation fees, should not exceed the total of audit and audit-related fees. During each of the fiscal yearyears ended September 30, 2020,2022, and 2023, EY’s fees, all of which were approved by the Audit Committee, fell within these guidelines.
The table below sets forth the aggregate amount of fees billed for professional services rendered by EY to the Company and its subsidiaries for this period. Since EY was appointed in fiscal 2020, there were no fees billed for professional
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| 2023 | | 2022 |
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| Audit Fees (1) | $ | 4,658,000 | | | $ | 4,027,000 | |
| Audit-Related Fees (2) | $ | 90,000 | | | $ | 92,000 | |
| Tax Fees (3) | $ | 549,000 | | | $ | 839,000 | |
| All Other Fees (4) | $ | 4,000 | | | $ | 354,000 | |
| Total | $ | 5,301,000 | | | $ | 5,312,000 | |
(1)Audit Fees services renderedinclude: (i) the audit by EY duringof the fiscal year ended September 30, 2019.
| | | 2020 | |
| | | | |
Audit Fees (1) | | $ | 3,663,000 | |
Audit-Related Fees (2) | | $ | 78,000 | |
Tax Fees (3) | | $ | 345,000 | |
All Other Fees (4) | | $ | 3,000 | |
Total | | $ | 4,089,000 | |
financial statements included in our annual reports on Form 10-K; (ii) reviews by EY of the interim financial statements included in our quarterly reports on Form 10-Q; and (iii) statutory audits by EY of certain subsidiaries.
(2)Audit-Related Fees services include out of pocket expenses for EY.(3)Tax Fees services include general tax consulting services from EY.
(1) | Audit Fees services include: (i) the audit by EY of the financial statements included in our annual reports on Form 10-K; (ii) reviews by EY of the interim financial statements included in our quarterly reports on Form 10-Q; and (iii) statutory audits by EY of certain subsidiaries.
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(2) | Audit-Related Fees services include out of pocket expenses for EY.
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(3) | Tax Fees services include general tax consulting services from EY.
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(4) | All Other Fees services include a subscription to EY Atlas, a cloud-based platform and research tool.
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(4)All Other Fees primarily include fees related to preparing a standalone financial statement of the Batesville business in 2022 in connection with the divestiture, as well as a subscription to EY Atlas, a cloud-based platform and research tool.
OTHER MATTERS
The Board of Directors does not know of any matters that will be brought before the 20212024 Annual Meeting other than those listed in the notice of meeting. If any other matters are properly introduced at the meeting for consideration, the individuals named on the proxy card will have authority to vote on such matters in their discretion.
December 29, 2020
January 9, 2024
APPENDIX A
INCENTIVE PLAN DEFINITIONS
This Appendix A
The proposed amendment and restatement outlines the definitions of the Hillenbrand, Inc. Stock Incentive Plan that the shareholders are being asked to approve is set forth below.
AMENDED AND RESTATED
HILLENBRAND, INC.
STOCK INCENTIVE PLAN
(Amended and Restated as of December 3, 2020)
RECITALS
WHEREAS, the Board of Directors of Hillenbrand, Inc. (hereinafter referred to as “Hillenbrand” or the “Company”) adopted with shareholder approval the Hillenbrand, Inc. Stock Incentive Plan (the “Plan”) as of December 19, 2008, which was amended and restated, with shareholder approval, as of February 24, 2010 and December 4, 2013;
WHEREAS, the Board of Directors of the Company has determined that it isterms used in the best interest of the Company and its shareholders to increase the total number of shares of Common Stock that can potentially be issued under the Plan and to make certain other amendments to reflect market practices and the elimination of the performance-based compensation exception to Section 162(m) of the Internal Revenue Code; and
WHEREAS, the Board of Directors of the Company has, subject to shareholder approval, re-adopted the Planproxy statement, primarily in the form that follows to amend, restate, supersedeCompensation Discussion and replace the form thereof previously adopted (when approved by the shareholders of the Company).Analysis.
STIC Plan Definitions
SECTION 1. | Purpose | | | | |
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Performance Metric | Definition |
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| Adjusted EBITDA | Means adjusted earnings before interest, taxes, depreciation, and Typesamortization, an externally reported financial metric and non-GAAP operating performance measure. |
| Adjusted IBT | Means income before taxes, using adjusted net income attributable to Hillenbrand, an externally reported financial metric and non-GAAP operating performance measure, as the starting point for the calculation and adding back adjusted income taxes and noncontrolling interest. |
| Net Revenue | Means GAAP net revenue. |
| Cash Conversion Cycle or CCC | Means the time (in days) required to generate cash flows from the production and sales process. The CCC calculation is based on a 12-month average. |
| Order Intake | Means the value of Awardsfirm orders received from customers (net of all cancellations), adjusted to eliminate the effects of certain extraordinary and non-recurring items. |
1.1 The purposesShareholder Value RSU Definitions
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Element of Formula | Definition |
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| Shareholder Value Expected | Means (a) if applicable, Adjusted NOPAT for certain recently acquired businesses, as determined by the Compensation Committee, in each case divided by the Hurdle Rate, plus (b) prior year Adjusted NOPAT for all of the Company’s other business units, divided by the Hurdle Rate, times the cube of one plus the Hurdle Rate, plus (c) the Expected Cash Flow Component. |
Expected Cash Flow Component (only for certain recently acquired businesses, as determined by the Compensation Committee) 27 | Means the sum of the following: •Adjusted Cash Flows for the prior fiscal year for the applicable business unit multiplied by the square of (1 + Hurdle Rate); •Adjusted Cash Flows for the prior fiscal year for the applicable business unit multiplied by (1 + Hurdle Rate); and •Adjusted Cash Flows for the prior fiscal year for the applicable business unit. |
| Ending NOPAT Component of Shareholder Value Delivered | Means the Company’s Adjusted NOPAT for the last fiscal year of the measurement period, divided by the Hurdle Rate. For divested businesses, the calculation uses tax-effected sale proceeds of, and free cash flow generated prior to, divestiture. |
| Ending Cash Flow Component of Shareholder Value Delivered | Means the sum of the following: •Adjusted Cash Flows for the first fiscal year in the measurement period, multiplied by the square of (1 + Hurdle Rate); •Adjusted Cash Flows for the second fiscal year in the measurement period, multiplied by (1 + Hurdle Rate); and •Adjusted Cash Flows (as defined below) for the third fiscal year in the measurement period. |
27 For awards granted in fiscal 2023, the Plan are to enable the Company to attract, retain and reward its employees, officers and directors, and strengthen the mutuality of interests between such persons andExpected Cash Flow Component reflected the Company’s shareholders by offering such persons an equity interest in the CompanyHerbold Meckesheim GmbH and thereby enabling them to participate in the long-term success and growth of the Company.
1.2 Awards under the Plan may be in the form of (i) Stock Options; (ii) Stock Appreciation Rights; (iii) Restricted Stock; (iv) Restricted Stock Units; (v) Bonus Stock and/or (vi) Substitute Awards. Each Award shall be subject to the minimum vesting provisions set forth in Section 15.8 of the Plan.
2.1 When capitalized in this Plan, the following terms shall have the meanings specified below (or as elsewhere defined), unless the context otherwise requires:
“Award” means an award of Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Bonus Stock or Substitute Awards granted pursuant to the terms and conditions of the Plan.
“Board” shall mean the Board of Directors of the Company.
Gabler Engineering GmbH acquisitions. .
“Bonus Stock” shall mean an Award described in Section 10 of the Plan.
“Change in Control” shall have the meaning set forth in Section 14.2.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Committee” shall mean the Compensation and Management Development Committee of the Board or such other committee of independent directors (within the meaning of the applicable exchange listing standards) of the Board designated by the Board to administer the Plan, or if no committee is designated, and in any case with respect to Awards to non-employee directors, the entire Board.
“Common Stock” shall mean the common stock of the Company, without par value.
“Company” shall mean Hillenbrand, Inc. and its successors.
“Employee” shall mean an employee of the Company or of any Subsidiary of the Company.
“Fair Market Value” of the Common Stock on any date shall mean the value determined in good faith by the Committee, by formula or other method consistent with the determination of fair market value under Code Section 409A and its interpretive regulations; provided, however, that unless the Committee determines to use a different measure, the fair market value of the Common Stock shall be the average of the high and the low sales prices of the Common Stock (on such exchange or market as is determined by the Board to be the primary market for the Common Stock) on the date in question (or if shares of Common Stock were not traded on such date, then on the next preceding trading day on which a sale of Common Stock occurred).
“Full Value Award” shall mean any Award other than a Stock Option or Stock Appreciation Right.
“Incentive Option” shall mean a Stock Option granted under the Plan that both is designated as an Incentive Option and qualifies as an incentive stock option within the meaning of Section 422 of the Code.
“Non-Employee Director” shall mean a director of the Company who is not employed by the Company or any of its Subsidiaries.
“Non-Qualified Option” shall mean a Stock Option granted under the Plan that either is designated as a Non-Qualified Option or does not qualify as an incentive stock option within the meaning of Section 422 of the Code.
“Optionee” shall mean any person who has been granted a Stock Option under the Plan or who is otherwise entitled to exercise a Stock Option.
“Option Period” shall mean, with respect to any portion of a Stock Option, the period after such portion has become exercisable and before it has expired or terminated.
“Plan” shall have the meaning set forth in the recitals.
“Relationship” shall mean the status of employee, officer or director of the Company or any Subsidiary of the Company.
“Restricted Stock” shall mean an Award described in Section 8 of the Plan.
“Restricted Stock Units” or “RSUs” shall mean an Award described in Section 9 of the Plan.
“Shareholder Approval Date” shall mean the date of shareholder approval of the Plan as amended and restated as set forth herein.
“Stock Appreciation Right” shall mean an Award described in Section 7 of the Plan.
“Stock Option” shall mean an Incentive Option or a Non-Qualified Option and, unless the context requires otherwise, shall include Director Options.
“Subsidiary” shall mean any corporation, partnership, joint venture or other entity in which the Company owns, directly or indirectly, more than 50% of the ownership interests; provided, however, that for purposes of granting Incentive Options, the term “Subsidiary” shall mean any company (other than the Company) that is a “subsidiary corporation” within the meaning of Section 424 of the Code.
“Substitute Award” means an Award that is granted in assumption of, or in substitution or exchange for, an outstanding award previously granted by an entity acquired directly or indirectly by the Company or with which the Company directly or indirectly combines.
2.2 The following rules shall govern in interpreting the Plan:
(a) The Plan and all Awards are intended to be exempt from, or to comply with, the provisions of Section 409A of the Code, and the Plan and all Awards shall be administered to effect compliance with such intent.
(b) Any reference herein to a provision of law, regulation or rule shall be deemed to include a reference to the successor of such law, regulation or rule.
(c) To the extent consistent with the context, any masculine term shall include the feminine, and vice versa, and the singular shall include the plural, and vice versa.
(d) If any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity of that provision shall not affect the remaining parts of the Plan, and the Plan shall be interpreted and enforced as if the illegal or invalid provision had never been included herein.
3.1 The Plan shall be administered by the Committee. Notwithstanding anything to the contrary contained herein, only the Board shall have authority to grant Awards to Non-Employee Directors and to amend and interpret such Awards.
3.2 The Committee shall have the authority and discretion with respect to Awards to take the following actions, if consistent with Section 15.7 of the Plan and subject to the conditions of Section 3.2A of the Plan: to grant and amend (provided, however, that no amendment shall impair the rights of the Award holder without his or her written consent) Awards to eligible persons under the Plan; to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award; and to make all factual and other determinations necessary or advisable for the administration of the Plan. In particular, and without limiting its authority and powers, the Committee shall have the authority and discretion:
(a) to select the persons to whom Awards will be granted from among those eligible;
(b) to determine the number of shares of Common Stock to be covered by each Award, subject to the limitations contained herein;
(c) subject to Section 15.8 of the Plan, to determine the terms and conditions of any Award, including, but not limited to, any vesting or other restrictions based on such continued employment, performance objectives and such other factors as the Committee may establish, and to determine whether the terms and conditions of the Award have been satisfied;
(d) to determine the treatment of Awards upon an Employee’s retirement, disability, death, termination for cause or other termination of employment, or during a leave of absence or upon a Non-Employee Director’s termination of Relationship as allowed by law;
(e) to determine, in establishing the terms of the Award agreement, that the Award holder has no rights with respect to any dividends declared with respect to any shares covered by an Award or that amounts equal to the amount of any dividends declared with respect to the number of shares covered by an Award;
(f) to amend the terms of any Award, prospectively or retroactively, provided, however, that no amendment shall impair the rights of the Award holder without his or her written consent;
(g) to determine the Fair Market Value of the Common Stock on a given date;
(h) to adopt one or more sub-plans or appendices to Award agreements containing such provisions as may be necessary or desirable to enable Awards to comply with the laws of other jurisdictions and/or qualify for preferred tax treatment under such laws; and
(i) to delegate such administrative duties as it may deem advisable to one or more of its members or to one or more Employees or agents.
3.2A Except for adjustments made pursuant to Sections 4.4 or 14.1 of the Plan, the Board or the Committee will not, without the further approval of the shareholders of the Company, authorize the amendment of any outstanding Stock Option or Stock Appreciation Right to reduce the exercise price. No Stock Option or Stock Appreciation Right will be cancelled and replaced with an Award having a lower exercise price, or for another Award, or for cash without further approval of the stockholders of the Company, except as provided in Sections 4.4 or 14.1. Furthermore, no Stock Option or Stock Appreciation Right will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award without further approval of the stockholders of the Company. This Section 3.2A is intended to prohibit the repricing of “underwater” Stock Options or Stock Appreciation Rights without shareholder approval and will not be construed to prohibit the adjustments provided for in Sections 4.4 or 14.1 of the Plan.
3.3 The Committee shall have the right to designate Awards as “performance Awards.” The grant or vesting of a performance Award shall be subject to the achievement of performance objectives established by the Committee based on such criteria as determined by the Committee, which may include (without limitation) one or more of the following criteria: sales, operating profits, operating profits before taxes, operating profits before interest expense and taxes, net earnings, earnings per share, return on equity, return on assets, return on invested capital, total shareholder return, cash flow, debt to equity ratio, market share, stock price, and shareholder, economic or market value added. As determined by the Committee, any performance objectives may be applied to the Company on a consolidated basis and/or to a business unit and may be used as an absolute measure, as a measure of improvement relative to prior performance, or as a measure of comparable performance relative to a peer group of companies. In establishing and measuring performance objectives for a performance period, the Committee may provide for appropriate adjustments to any performance measure for extraordinary and/or non-recurring items. The Committee may establish minimum, target and maximum performance targets, with the Award amount based on the level of the performance target(s) achieved.
3.4 All determinations and interpretations made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Award holders. Determinations by the Committee under the Plan relating to the form, amount and terms and conditions of Awards need not be uniform and may be made selectively among persons who receive or are eligible to receive Awards, whether or not such persons are similarly situated.
3.5 No member of the Board or the Committee, nor any officer or Employee of the Company or its Subsidiaries acting on behalf of the Board or the Committee, shall be personally liable for any action, determination or interpretation taken or made with respect to the Plan or any Award hereunder. The Company shall indemnify all members of the Board and the Committee and all such officers and Employees acting on their behalf, to the extent permitted by law, from and against any and all liabilities, costs and expenses incurred by such persons as a result of any act, or omission to act, in connection with the performance of such persons’ duties, responsibilities and obligations under the Plan.
SECTION 4. | Stock Subject to Plan |
4.1 Subject to adjustment as provided in Section 4.4, the total number of shares of Common Stock which may be issued under the Plan shall be 15,235,436 (all of which may be granted as Incentive Stock Options), which includes the original 4,635,436 shares reserved under the Plan as of December 19, 2008, the addition of 4,000,000 shares to the Plan as approved by shareholders on February 24, 2010, the addition of 3,900,000 shares to the Plan as approved by shareholders on February 26, 2014, and the addition of 2,700,000 shares to the Plan as of December 3, 2020, subject to approval of the shareholders. Such shares may consist of authorized but unissued shares or shares that have been issued and reacquired by the Company.
4.2 For the purposes hereof, the following shares of Common Stock covered by previously-granted Awards shall be deemed not to have been issued under the Plan and will remain available for Awards: (a) shares of Common Stock covered by an Award that expires or is forfeited, canceled, surrendered, or otherwise terminated without the issuance of such shares; (b) shares of Common Stock covered by an Award that is settled only in cash; and (c) Substitute Awards (except as may be required by reason of the rules and regulations of any stock exchange or other trading market on which the Shares are listed). The following shares of Common Stock may not again be made available for issuance as Awards: (i) shares of Common Stock tendered in payment of the exercise price of a Stock Option; (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy a tax withholding obligation with respect to an Award; and (iii) shares of Common Stock that are repurchased by the Company with Stock Option proceeds. Without limiting the foregoing, with respect to any Stock Appreciation Right that is settled in shares of Common Stock, the full number of shares subject to the Award shall count against the number of shares available for Awards under the Plan regardless of the number of shares used to settle the Stock Appreciation Right upon exercise.
4.3 No Employee shall be granted Stock Options and/or Stock Appreciation Rights with respect to more than 750,000 shares of Common Stock in any fiscal year, and no Employee shall be granted Restricted Stock, Restricted Stock Units and/or Bonus Stock with respect to more than 500,000 shares of Common Stock in any fiscal year, subject to adjustment as provided in Section 4.4.
4.4 In the event of any recapitalization, stock dividend, extraordinary cash dividend, stock split, spin-off, split-up, split-off, distribution of assets or other change in corporate structure affecting the Common Stock such that an adjustment is determined by the Board in its discretion to be appropriate in order to prevent dilution or enlargement of benefits under the Plan, then the Committee shall, in such a manner as it may in its discretion deem equitable, cause there to be an equitable adjustment in the number and kind of shares of Common Stock specified in Section 4.1 of the Plan and, with respect to outstanding Awards, in the number and kind of shares of Common Stock subject to outstanding Awards and the exercise price or other price of shares subject to outstanding Awards, in each case to prevent dilution or enlargement of the rights of participants. In the event of any merger, consolidation, liquidation, or similar transaction, the Committee may, in its sole discretion, cause there to be an equitable adjustment as described in the foregoing sentence, to prevent dilution or enlargement of rights and may provide in substitution for any or all outstanding Awards such alternative consideration (including cash or other property) as it, in good faith, may determine to be equitable in the circumstances, and may require in connection therewith the surrender of all Awards so replaced. Notwithstanding the foregoing, the Committee shall not make any adjustment pursuant to this Section 4.4 that would cause an Award that is otherwise exempt from Section 409A of the Code to become subject to Section 409A or to cause an Award that is subject to Section 409A of the Code to fail to satisfy the requirements of Section 409A. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on all persons.
4.5 No fractional shares shall be issued or delivered under the Plan. The Committee shall determine whether the value of fractional shares shall be paid in cash or other property, or whether such fractional shares and any rights thereto shall be cancelled without payment.
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SECTION 5.
Element of
Formula | EligibilityDefinition |
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| Adjusted NOPAT | Means the Company’s externally reported “adjusted net income attributable to Hillenbrand” measure adjusted for certain items, including the following (net of tax where applicable): •Income attributable to non-controlling interests (included); •Interest income, losses, or impairments on corporate investments and interest expense on corporate debt (excluded); •Changes in tax law or regulation or accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed (excluded); and •The effect of acquisitions during the measurement period (excluded for the duration of the measurement period). |
| Adjusted Cash Flows | Means net cash provided by operating activities (whether positive or negative) during a fiscal year, less capital expenditures net of proceeds on the disposal of property, all as shown on audited financial statements for that fiscal year, as adjusted (net of tax where applicable) to exclude the effects of certain items, including the following: •cash receipts or disbursements from investments; •interest income on corporate investments and interest expense on corporate debt; •the difference between the cash pension payment for an active defined benefit plan actually made and the pension expense recorded; •changes in tax law or regulation or accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed; •the effect of acquisitions during the measurement period, which shall be excluded for the duration of such period; and •all other externally reported adjustments to GAAP net income that, consistent with “adjusted net income attributable to Hillenbrand” as externally reported by the Company, result in cash inflow or outflow, to be included or excluded as applicable. 28 |
28 This approach more closely aligns the cash flows calculation with certain other externally reported adjustments.
5.1 The persons who are eligible for Awards under Sections 6, 7, 8, 9, and 10 of the Plan are Employees, officers and directors of the Company or of any Subsidiary of the Company. In addition, Awards under such Sections may be granted to prospective Employees, officers or directors, but such Awards shall not become effective until the recipient’s commencement of employment or service with the Company or a Subsidiary. Incentive Options may be granted only to Employees and prospective Employees, but such Awards shall not become effective until the recipient’s commencement of employment or service with the Company or a Subsidiary. Award recipients under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible.
5.2 Non-Employee Directors shall be granted Awards under Section 12 in addition to any Awards which may be granted to them under other Sections of the Plan.
Relative TSR RSU Definitions
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SECTION 6.
Element of
Formula | Stock OptionsDefinition |
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| Beginning Average Price (of stock) | Means with respect to the Company and each of the Index Companies, the average closing price of that company’s stock on the trading day immediately preceding the first day of the measurement period using the same Dividend Reinvestment Multiplier. |
| Ending Average Price (of stock) | Means, with respect to the Company and each of the Index Companies, the average closing price of that company’s stock on the last trading day of the measurement period, using the same Dividend Reinvestment Multiplier. |
| Dividend Reinvestment Multiplier | Means, for the Company and each of the Index Companies, a calculation of the value of dividends paid out by that company, assuming reinvestment of those dividends in that company’s stock, calculated by dividing each dividend paid out by that company over the applicable period by its closing share price on the ex-dividend date. |
6.1 The Stock Options granted to eligible persons under the Plan may be of two types: (a) Incentive Options, and (b) Non-Qualified Options. To the extent that any Stock Option granted to an Employee does not qualify as an Incentive Option, it shall constitute a Non-Qualified Option. All Stock Options granted to persons who are not Employees shall be Non-Qualified Options.
6.2 Subject to the following provisions, Stock Options granted under Section 6 of the Plan shall be in such form and shall have such terms and conditions as the Committee may determine.
(a)Option Price. The option price per share of Common Stock purchasable under a Stock Option (other than a Substitute Award) shall be determined by the Committee and may not be less than the Fair Market Value of the Common Stock on the date of grant of the Stock Option (or, with respect to Awards to prospective Employees, on the first date of employment).
(b)Option Term. Unless otherwise provided by the Committee in the applicable Award agreement, the term of each Stock Option shall be fixed by the Committee and shall not exceed ten years.
(c)Exercisability. Stock Options shall be exercisable and shall vest at such time or times and subject to such terms and conditions as shall be determined by the Committee, subject to the minimum vesting provisions of Section 15.8 of the Plan.
(d)Method of Exercise. Stock Options may be exercised in whole or in part at any time during the Option Period by giving the Company notice of exercise in the form approved by the Committee (which may be written or electronic) specifying the number of whole shares to be purchased, accompanied by payment of the aggregate option price for such shares. Payment of the option price shall be made in such manner as the Committee may provide in the Award agreement, which may include (i) cash (including cash equivalents), (ii) delivery of shares of Common Stock already owned by the Optionee, (iii) by a cashless exercise (including by withholding shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable laws), (iv) any other manner permitted by law, or (v) any combination of the foregoing.
(e)No Shareholder Rights. An Optionee shall have no rights to dividends or other rights of a shareholder with respect to shares subject to a Stock Option until the Optionee has duly exercised the Stock Option and a certificate for such shares has been duly issued (or the Optionee has otherwise been duly recorded as the owner of the shares on the books of the Company). Moreover, no dividend equivalents may be granted under the Plan with respect to the shares of Common Stock underlying any Stock Option.
(f)Termination of Employment or Relationship. Following the termination of an Optionee’s employment or other Relationship with the Company or its Subsidiaries, the Stock Option shall be exercisable to the extent determined by the Committee. The Committee may provide different post-termination exercise provisions which may vary based on the nature of and reason for the termination. The Committee shall have absolute discretion to determine the date and circumstances of any termination of employment or other Relationship.
(g)Non-transferability. Unless otherwise provided by the Committee in the applicable Award agreement, (i) Stock Options shall not be transferable by the Optionee other than by will or the laws of descent and distribution, and (ii) during the Optionee’s lifetime, all Stock Options shall be exercisable only by such Optionee. The Committee, in its sole discretion, may permit Stock Options to be transferred to such other transferees and on such terms and conditions as may be determined by the Committee; provided, however, that in no event shall the Committee permit a Stock Option to be transferred for consideration.
6.3 Notwithstanding the provisions of Section 6.2, Incentive Options shall be subject to the following additional restrictions:
(a)Option Term. No Incentive Option shall be exercisable more than ten years after the date such Incentive Option is granted.
(b)Additional Limitations for 10% Shareholders. No Incentive Option granted to an Employee who owns more than 10% of the total combined voting power of all classes of stock of the Company or any of its parent or subsidiary corporations, as defined in Section 424 of the Code, shall (i) have an option price which is less than 110% of the Fair Market Value of the Common Stock on the date of grant of the Incentive Option, or (ii) be exercisable more than five years after the date such Incentive Option is granted.
(c)Exercisability. The aggregate Fair Market Value (determined as of the time the Incentive Option is granted) of the shares with respect to which Incentive Options (granted under the Plan and any other plans of the Company, its parent corporation or subsidiary corporations, as defined in Section 424 of the Code) are exercisable for the first time by an Optionee in any calendar year shall not exceed $100,000. Any Stock Options in excess of such $100,000 limitation shall be treated as Non-Qualified Options.
(d)Notice of Disqualifying Disposition. An Optionee’s right to exercise an Incentive Option shall be subject to the Optionee’s agreement to notify the Company of any “disqualifying disposition” (for purposes of Section 422 of the Code) of the shares acquired upon such exercise.
(e)Non-transferability. Incentive Options shall not be transferable by the Optionee, other than by will or by the laws of descent and distribution. During the Optionee’s lifetime, all Incentive Options shall be exercisable only by such Optionee.
(f)Last Grant Date. No Incentive Option shall be granted more than ten years after the earlier of the date of adoption or re-adoption of the Plan, as applicable, by the Board or approval of the Plan by the Company’s shareholders.
The Committee may, with the consent of the Optionee, amend an Incentive Option in a manner that would cause loss of Incentive Option status, provided the Stock Option as so amended satisfies the requirements of Section 6.2.
SECTION 7. | Stock Appreciation Rights |
7.1 A Stock Appreciation Right shall entitle the holder thereof to receive, for each share as to which the Award is granted, payment of an amount, in cash, shares of Common Stock, or a combination thereof, as determined by the Committee, equal in value to the excess of the Fair Market Value of a share of Common Stock on the date of exercise over the Fair Market Value of a share of Common Stock on the day such Stock Appreciation Right was granted. Any such Award shall be in such form and shall have such terms and conditions as the Committee may determine, subject to the minimum vesting provisions of Section 15.8 of the Plan. Unless otherwise provided by the Committee in the applicable Award agreement, the term of each Stock Appreciation Right shall not exceed ten years. The grant shall specify the number of shares of Common Stock as to which the Stock Appreciation Right is granted. No dividend equivalents may be granted under the Plan with respect to the shares of Common Stock underlying any Stock Appreciation Right.
SECTION 8. | Restricted Stock |
Subject to the following provisions, all grants of Restricted Stock shall be in such form and shall have such terms and conditions as the Committee may determine:
(a) The Restricted Stock agreement shall specify the number of shares of Restricted Stock to be granted, the price, if any, to be paid by the recipient of the Restricted Stock and the date or dates on which, or the conditions upon the satisfaction of which, the Restricted Stock will vest. The grant and/or the vesting of Restricted Stock may be conditioned upon the completion of a specified period of service with the Company and/or its Subsidiaries, upon the attainment of specified performance objectives, or upon such other criteria as the Committee may determine, in each case subject to the minimum vesting provisions of Section 15.8 of the Plan.
(b) Stock certificates or book entry shares representing the Restricted Stock granted under the Plan shall be registered in the Award holder’s name, but the Committee may direct that any such certificates, if applicable, be held by the Company on behalf of the Award holder. Except as may be permitted by the Committee, no share of Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered by the Award holder until such share has vested in accordance with the terms of the Restricted Stock agreement. At the time Restricted Stock vests, such vested shares shall be delivered (via stock certificate or book entry) to the Award holder (or his or her designated beneficiary in the event of death), free of such restriction.
(c) The Committee may provide that the Award holder shall have the right to vote and/or receive dividends on Restricted Stock; provided, however, that any dividends with respect to unvested Restricted Stock shall be accumulated or deemed reinvested in additional Restricted Stock (as determined by the Committee in its sole discretion and set forth in the applicable Award agreement), subject to the same terms and conditions as the original Award until such Award is earned and vested.
(d) Except as may be provided by the Committee, in the event of an Award holder’s termination of employment or other Relationship before all of his or her Restricted Stock has vested, or in the event any conditions to the vesting of Restricted Stock have not been satisfied prior to any deadline for the satisfaction of such conditions set forth in the Award agreement, the shares of Restricted Stock which have not vested shall be forfeited, and the Committee may provide that (i) any purchase price paid by the Award holder shall be returned to the Award holder, or (ii) a cash payment equal to the Restricted Stock’s Fair Market Value on the date of forfeiture, if lower, shall be paid to the Award holder.
SECTION 9.
| Restricted Stock Units (RSUs) |
Subject to the following provisions, all grants of Restricted Stock Units shall be in such form and shall have such terms and conditions as the Committee may determine:
(a) The Restricted Stock Unit agreement shall specify the number of shares of Common Stock to be paid and the duration of the period (the “Vesting Period”) during which, and the conditions under which, receipt of the underlying Common Stock will be deferred. The Committee may condition the grant or vesting of RSUs, or receipt of Common Stock or cash at the end of the Vesting Period, upon the completion of a specified period of service with the Company and/or its Subsidiaries, upon the attainment of specified performance objectives, or upon such other criteria as the Committee may determine, in each case subject to the minimum vesting provisions of Section 15.8 of the Plan.
(b) Except as may be provided by the Committee, RSUs may not be sold, assigned, transferred, pledged or otherwise encumbered during the Vesting Period.
(c) At the expiration of the Vesting Period, as soon as administratively practical and in no event later than two and one-half months following the end of the Vesting Period, the Award holder (or his or her designated beneficiary, if applicable) shall receive (i) certificates for the appropriate number of shares of Common Stock designated by the RSU agreement, (ii) cash equal to the Fair Market Value of such Common Stock, or (iii) a combination of shares and cash, as the Committee may determine.
(d) Except as may be provided by the Committee, in the event of an Award holder’s termination of employment or other Relationship before the RSU has vested, such Award shall be forfeited.
(e) RSUs may provide the Award holder with dividend equivalents, payable on a contingent basis and either in cash or in additional shares of Common Stock, as determined by the Committee in its sole discretion and set forth in the related Award agreement; provided, however, that any dividend equivalents with respect to unvested RSUs shall be accumulated or deemed reinvested, subject to the same terms and conditions as the original RSUs until such Award is earned and vested.
The Committee may grant Bonus Stock to any eligible Award recipient subject to such terms and conditions as the Committee shall determine. The grant of Bonus Stock may, but need not, be conditioned upon the attainment of specified performance objectives or upon such other criteria as the Committee may determine, subject to the minimum vesting provisions of Section 15.8 of the Plan. Unless otherwise specified by the Committee, no money shall be paid by the recipient for the Bonus Stock. Alternatively, the Committee may, after considering any accounting impact to the Company, offer eligible Employees the opportunity to purchase Bonus Stock at a discount from its Fair Market Value. The Bonus Stock may be satisfied by the delivery of the designated number of shares of Common Stock which are not subject to restriction. Bonus Stock may provide the Award holder with dividend equivalents, payable on a contingent basis and either in cash or in additional shares of Common Stock, as determined by the Committee in its sole discretion and set forth in the related Award agreement; provided, however, that any dividend equivalents with respect to unvested Bonus Stock shall be accumulated or deemed reinvested, subject to the same terms and conditions as the original Bonus Stock terms, until such Award is earned and vested.
SECTION 11.
| Election to Defer |
To the extent permitted by Section 409A of the Code, the Committee may permit an Award recipient to elect to defer payment of an Award other than a Stock Option for a specified period or until a specified event, upon such terms as are determined by the Committee. An Award holder may elect to defer the distribution date of the payout of Restricted Stock Units or Bonus Stock, provided that such election is made and delivered to the Company in compliance with Section 409A of the Code, when applicable.
SECTION 12.
| Non-Employee Director Awards |
The Board shall have the discretion to determine the number and types of Awards to be granted to Non-Employee Directors and the terms of such Awards, including but not limited to the exercisability and the effect of a director’s termination of service, in each case subject to the minimum vesting provisions of Section 15.8 of the Plan. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (determined as of the applicable date(s) of grant in accordance with applicable financial accounting rules) of all Awards granted to any Non-Employee Director during any single calendar year for services as a director, taken together with any cash fees payable to such person during such calendar year (excluding any amounts payable for service as a Board or committee chairperson), shall not exceed $600,000.
SECTION 13.
| Tax Withholding |
13.1 Each Award holder shall, no later than the date as of which an amount with respect to an Award first becomes includible in such person’s gross income for applicable tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any federal, state, local or other taxes of any kind required by law to be withheld with respect to the Award. The obligations of the Company under the Plan shall be conditional on such payment or arrangements. The Company (and, where applicable, its Subsidiaries) shall, to the extent permitted by law, have the right to deduct any applicable tax withholdings from any such taxes from any payment of any kind otherwise due to the Award holder.
13.2 To the extent permitted by the Committee, and subject to such terms and conditions as the Committee may provide, an Employee may elect to have any applicable tax withholdings with respect to any Awards hereunder, satisfied by (a) having the Company withhold shares of Common Stock otherwise deliverable to such person with respect to the Award; (b) delivering to the Company shares of unrestricted Common Stock already owned by the Employee; (c) broker-assisted “cashless exercise;” (d) any other manner permitted by law; or (e) any combination of the foregoing. Alternatively, the Committee may require that a portion of the shares of Common Stock otherwise deliverable be applied to satisfy the withholding tax obligations with respect to the Award. In no event will the value of the shares of Common Stock to be withheld or tendered pursuant to this Section 13 to satisfy applicable withholding taxes exceed the amount of taxes required to be withheld based on the maximum statutory tax rates in the applicable taxing jurisdictions.
SECTION 14.
| Change in Control |
14.1In the event of a Change in Control, unless otherwise provided under the terms of any applicable change in control agreement between the Company and an Award holder, and notwithstanding anything in Section 15.8 of the Plan to the contrary:(a) subject to Section 14.1(c) below, all outstanding Stock Options and all outstanding Stock Appreciation Rights awarded under the Plan shall become fully exercisable and vested;
(b) subject to Section 14.1(c) below, the restrictions and vesting conditions applicable to any outstanding Restricted Stock, Restricted Stock Unit and Bonus Stock awards under the Plan shall lapse and such shares and awards shall be deemed fully vested;
(c)any Awards with respect to which the number of shares of Common Stock earned depends upon performance shall vest based on the greater of: (i) an assumed achievement of all relevant performance goals at their “target” level, or (ii) the actual level of achievement of all relevant performance goals against target measured through the date immediately prior to the Change in Control (or as close to such date as administratively practicable);(d) the Committee may, in its sole discretion, accelerate the payment date of all Restricted Stock Unit awards to the extent permitted under Section 409A of the Code;
(e) the Committee may, in its sole discretion and without the consent of Award holders, provide that any outstanding and vested Award (or a portion thereof), including those that vest by reason of this Section 14.1, shall, upon the occurrence of such Change in Control, be cancelled in exchange for a payment in cash or other property (including shares of the resulting entity in connection with a Change in Control) in an amount equal to the excess, if any, of the Fair Market Value of the shares subject to the Award, over any exercise price related to the Award, which amount may be zero if the Fair Market Value of a share does not exceed the exercise price per share of the applicable Awards.
14.2A “Change in Control” shall be deemed to occur on:
(a) the date that any person, corporation, partnership, syndicate, trust, estate or other group acting with a view to the acquisition, holding or disposition of securities of the Company, becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the Company representing 35% or more of the voting power of all securities of the Company having the right under ordinary circumstances to vote at an election of the Board (“Voting Securities”), other than by reason of (i) the acquisition of securities of the Company by the Company or any of its Subsidiaries or any employee benefit plan of the Company or any of its Subsidiaries, or (ii) the acquisition of securities of the Company directly from the Company;(b) the consummation of a merger or consolidation of the Company with another corporation unless;
(i) the shareholders of the Company, immediately prior to the merger or consolidation, beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 50% or more of the voting power of all securities of the corporation surviving the merger or consolidation having the right under ordinary circumstances to vote at an election of directors in substantially the same proportions as their ownership, immediately prior to such merger or consolidation, of Voting Securities of the Company;
(ii) no person, corporation, partnership, syndicate, trust, estate or other group beneficially owns, directly or indirectly, 35% or more of the voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation except to the extent that such ownership existed prior to such merger or consolidation; and
(iii) the members of the Company’s Board, immediately prior to the merger or consolidation, constitute, immediately after the merger or consolidation, a majority of the board of directors of the corporation issuing cash or securities in the merger;
(c) the date on which individuals who at the beginning of the 24-month period ending on such date constituted the entire Board (“Current Directors”) shall cease for any reason to constitute a majority of the Board, unless the nomination or election of each new director was approved by a majority vote of the Current Directors;
(d)the consummation of a sale or other disposition of all or substantially all (i.e., 50% or more) of the assets of the Company in one transaction or a series of transactions within any period of 12 consecutive months; or
(e) the date of approval by the shareholders of the Company of a plan of complete liquidation of the Company.
Notwithstanding any other provision of this Section to the contrary, to the extent an Award is subject to Section 409A of the Code, then to the extent required to comply with Section 409A of the Code, an occurrence shall not constitute a Change in Control if it does not constitute a change in the ownership or effective control, or in the ownership of a substantial portion of the assets of, the Company or another allowable acceleration event under Section 409A of the Code and its interpretive regulations.14.3 This Section 14 shall apply only to Awards granted on and after the Shareholder Approval Date. All Awards granted prior to the Shareholder Approval Date shall be subject to the applicable change in control provisions of the Plan as in effect before the Shareholder Approval Date.
SECTION 15.
| General Provisions |
15.1 Each Award shall be subject to the requirement that, if at any time the Committee shall determine that (a) the listing, registration or qualification of the Common Stock subject or related thereto upon any securities exchange or market or under any state or federal law, or (b) the consent or approval of any government regulatory body, or (c) an agreement by the recipient of an Award with respect to the disposition of Common Stock, is necessary or desirable in order to satisfy any legal requirements, or (d) the issuance, sale or delivery of any shares of Common Stock is or may in the circumstances be unlawful under the laws or regulations of any applicable jurisdiction, the right to exercise such Stock Option shall be suspended, such Award shall not be granted and such shares will not be issued, sold or delivered, in whole or in part, unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee, and the Committee determines that the issuance, sale or delivery of the shares is lawful. The application of this Section shall not extend the term of any Stock Option or other Award. The Company shall have no obligation to effect any registration or qualification of the Common Stock under federal or state laws or to compensate the Award holder for any loss caused by the implementation of this Section 15.1.
15.2 Any Award shall be subject to forfeiture or repayment pursuant to the terms of any applicable compensation recovery policy maintained by the Company from time to time, including any such policy that may be maintained to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any rules or regulations issued by the SEC or applicable securities exchange. In addition, the Committee may provide, at the time of grant or by amendment with the Award holder’s consent, that an Award and/or Common Stock acquired under the Plan shall be forfeited, including after exercise or vesting, if within a specified period of time the Award holder engages in any of the following disqualifying conduct: (a) the Award holder’s performance of service for a competitor of the Company and/or its Subsidiaries, including service as an employee, director or consultant, or the establishing by the Award holder of a business which competes with the Company and/or its Subsidiaries; (b) the Award holder’s solicitation of employees or customers of the Company and/or its Subsidiaries; (c) the Award holder’s improper use or disclosure of confidential information of the Company and/or its Subsidiaries; or (d) material misconduct by the Award holder in the performance of such Award holder’s duties for the Company and/or its Subsidiaries, as determined by the Committee.
15.3 Nothing set forth in this Plan shall prevent the Board or Committee from adopting other or additional compensation arrangements.
15.4 Nothing in the Plan nor in any Award hereunder shall confer upon any Award holder any right to continuation of his or her employment by or other Relationship with the Company or its Subsidiaries or interfere in any way with the rights of any such company to terminate such employment or other Relationship.
15.5 Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or Subsidiary and an Award recipient, and no Award recipient will, by participation in the Plan, acquire any right in any specific Company property, including any property the Company may set aside in connection with the Plan. To the extent that any Award recipient acquires a right to receive payments from the Company or any Subsidiary pursuant to an Award, such right shall not be greater than the right of an unsecured general creditor of the Company or its Subsidiaries.
15.6 Except to the extent preempted by United States federal law or as otherwise expressly provided herein, the Plan and all Awards shall be interpreted in accordance with and governed by the internal laws of the State of Indiana without giving effect to any choice or conflict of law provisions, principles or rules.
15.7 The Plan and all Awards shall be interpreted and applied in a manner consistent with the applicable standards for nonqualified deferred compensation plans established by Code Section 409A and its interpretive regulations and other regulatory guidance. To the extent that any terms of the Plan or an Award would subject an Employee to gross income inclusion, interest or additional tax pursuant to Code Section 409A, those terms are to that extent superseded by, and shall be adjusted to the minimum extent necessary to satisfy or to be exempt from, the Code Section 409A standards. If as of the date Employee’s employment terminates, an Employee is a “key employee,” within the meaning of Code Section 416(i), without regard to paragraph 416(i)(5), and if the Company has stock that is publicly traded on an established securities market or otherwise, any payment of deferred compensation, within the meaning of Code Section 409A, otherwise payable because of employment termination will be suspended until, and will be paid to the Employee on, the first day of the seventh month following the month in which the Employee’s last day of employment occurs.
15.8 Notwithstanding any other provision of the Plan to the contrary, all Awards granted on and after the Shareholder Approval Date shall vest or become exercisable no earlier than the first anniversary of the date of grant of the Award (excluding, for this purpose, any (a) Substitute Awards, and (b) Awards to Non-Employee Directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of shareholders (provided that such vesting period may not be less than 50 weeks after grant)); provided, however, that the Committee may grant Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of the shares of Common Stock remaining available for issuance under the Plan under Section 4.1 as of the Shareholder Approval Date (subject to adjustment thereafter under Section 4.4); and, provided further that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award as provided in Section 3.2(d) of the Plan, by the terms of the Award agreement or otherwise.
15.9 Adjustments.
(a) Except as otherwise provided in any award agreement or in any applicable change in control agreement between the Company and an Award recipient, if any payment or benefit resulting from an Award under the Plan or otherwise, including accelerated vesting of any equity compensation (all such payments and/or benefits hereinafter, “Payment”), would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either (x) provided to the recipient in full, or (y) provided to the recipient to such lesser extent which would result in no portion of such Payment being subject to the excise tax, further reduced by $5,000 (including such further reduction, the “Cutback Amount”), whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, such excise tax and other applicable taxes, (all computed at the highest applicable marginal rates), results in the receipt by the recipient, on an after-tax basis, of the greatest amount of the Payment, notwithstanding that all or a portion of such Payment may be subject to the excise tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Cutback Amount, reduction shall occur in the following order: (A) cash payments of accelerated Awards under the Plan shall be reduced first and in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the event triggering such excise tax will be the first cash payment to be reduced; (B) accelerated vesting of performance-based equity Awards shall be cancelled or reduced next and in the reverse order of the date of grant for such Awards (i.e., the vesting of the most recently granted Awards will be reduced first), with Full Value Awards reduced before any performance-based stock option or stock appreciation rights are reduced; and (C) accelerated vesting of time-based equity Awards shall be cancelled or reduced last and in the reverse order of the date of grant for such Awards (i.e., the vesting of the most recently granted Awards will be reduced first), with Full Value Awards reduced before any time-based stock option or stock appreciation rights are reduced.
(b) The Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder and perform the foregoing calculations. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and the Award recipient within fifteen (15) calendar days after the date on which right to a Payment is triggered (if requested at that time by the Company or recipient). Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and the recipient.
SECTION 16.
| Amendments and Termination |
16.1 The Plan shall terminate at the close of business on December 1, 2030. The Board may discontinue the Plan at any time prior to the date referenced in the prior sentence and may amend it from time to time. No amendment or discontinuation of the Plan shall adversely affect any Award previously granted without the Award holder’s written consent. Amendments may be made without shareholder approval except as required to satisfy applicable laws or regulations or the requirements of any stock exchange or market on which the Common Stock is listed or traded.
16.2 The Committee may amend the terms of any Award prospectively or retroactively; provided, however, that no amendment shall impair the rights of the Award holder without his or her written consent.
SECTION 17.
| Effective Date of Plan |
17.1 This revised version of the Plan was approved and adopted by the Board on December 3, 2020, and is to be effective as of such date, and is to amend, restate, supersede, and replace prior versions of the Plan adopted by the Board, contingent upon the approval thereof by the shareholders of the Company within 12 months following the adoption by the Board.
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HILLENBRAND, INC.
ONE BATESVILLE BLVD
BATESVILLE, IN 47006
| VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 02/10/2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
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VOTE BY PHONE - 1-800-690-6903
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |
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| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
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All | Withhold
All | For All
Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | |
| | The Board of Directors recommends you vote FOR the following: | ☐ | ☐ | ☐ | | | | | | |
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| | 1. | Election of Directors - Election of these Directors is for three-year terms expiring in 2024. | | | | | | | | | | |
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| | 01) | Helen W. Cornell 02) Jennifer W. Rumsey 03) Stuart A. Taylor, II | |
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| | The Board of Directors recommends you vote FOR proposals 2, 3 and 4: | | | | For | Against | Abstain | |
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| | 2. | To approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers. | | ☐ | ☐ | ☐ | |
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| | 3. | To approve the amendment and restatement of the Company's Stock Incentive Plan. | | ☐ | ☐ | ☐ | |
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| | 4. | To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal year 2021. | | ☐ | ☐ | ☐ | |
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| | NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | | | | | |
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| | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | |
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| | Signature [PLEASE SIGN WITHIN BOX] | Date | | | | | Signature (Joint Owners) | Date | | | | |
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0000477745_1 R1.0.1.18
HILLENBRAND, INC. | 2021 ANNUAL MEETING OF SHAREHOLDERS
ADMISSION TICKET |
Shareholders are cordially invited to attend the Annual Meeting of shareholders on Thursday, February 11, 2021. The Meeting will be held at the Company's headquarters at One Batesville Boulevard, Batesville, Indiana 47006, at 10:00 a.m., Eastern Standard Time.
(Please detach this ticket from your proxy card and bring it as identification. Directions to the meeting site are included on this ticket for convenience. The use of an Admission Ticket is for mutual convenience; however, the right to attend without an Admission Ticket, upon proper identification, is not affected.)
Nicholas R. Farrell
Secretary
(FOR THE PERSONAL USE OF THE NAMED SHAREHOLDER(S) ON THE BACK – NOT TRANSFERABLE)
Directions to Hillenbrand, Inc.
Hillenbrand, Inc. is located between Cincinnati, Ohio and Indianapolis, Indiana. Shareholders traveling from the Cincinnati area should take 1-74 West toward Indianapolis to Exit 149 (Batesville) and turn left off the exit ramp. Go straight through the first stop light to the next light and turn left at the intersection of State Road 229 and Highway 46.
Shareholders traveling from the Indianapolis area should take 1-74 East toward Cincinnati to Exit 149 (Batesville) and turn right off the exit ramp. Go to the first stop light and turn left at the intersection of State Road 229 and Highway 46.
To reach Hillenbrand, Inc.'s headquarters, travel on Highway 46 through three stop lights and turn left onto Batesville Boulevard. Hillenbrand, Inc. is the second office building on Batesville Boulevard.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com
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This Proxy and Voting Instruction is solicited on
behalf of the Board of Directors for the Annual Meeting of
Shareholders on February 11, 2021
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| The undersigned appoints F. Joseph Loughrey and Joe A. Raver, or either of them, with full power of substitution, as proxies to vote all the shares of the undersigned of Hillenbrand, Inc. (the "Company") at the Annual Meeting of Shareholders to be held at the Company's headquarters, One Batesville Boulevard, Batesville, Indiana 47006-7798, on February 11, 2021, at 10:00 a.m., local time (Eastern Standard Time), and any adjournments of the meeting, on the matters listed on the reverse.
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| SIGNED PROXIES RETURNED WITHOUT SPECIFIC VOTING DIRECTIONS WILL BE VOTED: (1) in favor of the election of the Board of Directors' nominees for three directors; (2) To approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers; (3) To approve the amendment and restatement of the Company’s Stock Incentive Plan; (4) To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2021; and (5) in the discretion of the proxy holders upon such other business as may properly come before the Annual Meeting.
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0000477745_2 R1.0.1.18
